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OPEN MEETING OF
THE ADVISORY COMMITTEE ON PUBLIC INTEREST OBLIGATIONS
OF DIGITAL TELEVISION BROADCASTERS
Monday, November 9, 1998
The Ronald Reagan Building and
International Trade Center
Polaris Room, Concourse Level
1300 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Transcript of the morning session,
part one
(Click here to view part two
of the morning session)
(Click here to view the afternoon
session)
P R O C E E D I N G S
(9:00 a.m.)
WELCOME AND OPENING REMARKS
MR. ORNSTEIN: Ladies and gentlemen, if we can
get started.
I would like to welcome you all. It looks like
although we will have some necessary comings and goings,
we are actually going to have everybody here for some
portion of the day, which is quite something, given
everybody's busy lives.
One of those who has a busy day is Cass
Sunstein. And Cass is going momentarily to testify in
front of the House Judiciary Committee on impeachment, a
theoretical discussion, becoming increasingly theoretical,
it appears.
MR. MOONVES: Does that disqualify him from
talking at this panel?
(Laughter.)
MR. ORNSTEIN: No. As long as they are not
impeaching us. So he will be back after that testimony.
But we wanted to give him a chance just to say something
at the beginning, since he will have to miss some of the
morning session. Then we will turn to our formal
proceeding.
MR. SUNSTEIN: Thank you very much. I wanted to
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congratulate the co-chairs on what I think is an excellent
foundation for our final report. And I would just offer a
couple of notes about why it seems to be excellent, and
about the direction we might go at the beginning. We had
a kind of division among us, between those who favored or
were inclined to complete the regulation and those who
were inclined towards strengthened mandates. And what
this does, I think, is to break that logjam, by pointing
in three different directions that bypass that tired, old
debate.
First, information disclosure; second, voluntary
self-regulation; and third, economic or financial
incentives, as in the pay or play idea and in the
multiplexing proposal -- all of these backed by some
really minimum standards. This idea of information
voluntary self-regulation and economic incentives really
is the wave of the future in all of modern regulation
because of its flexibility. So I think what we have here
is a domestic and international model really for a
regulation of communications in the public interest. We
should all be very proud of that -- even excited about it.
In terms of the future, my hope is that we can
get a consensus on many or most of the provisions in this
draft report. And here is a plea that whatever we
disagree about, can we at least agree, all or almost all
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of us, on the disclosure requirement, which should not be
expensive. Even for small firms to disclose what they're
doing is relatively cheap. Disclosure requirements in
other areas have been terrifically successful in producing
improvements inexpensively.
So my hope is that if we get a consensus on
anything, that one we really should get agreement on. And
we can go provision by provision to get agreement, I
think, on much of this.
If we can confine the disagreement in that way,
that would be good. Let me suggest, where we cannot
confine the disagreement, that is where we are going to
have de-sensus. What we ought to do is just accept the
fact we are going to have de-sensus where we have it. And
the price of de-sensus, I would suggest that we
strengthen, not weaken, those parts of the report which
are right now tepid. So we get a consensus where we can,
the price for those who are not willing to go along with
this pretty moderate statement is that we toughen it up.
And I do not mean toughen it up in the sense of
going to very rigorous command and control, but being more
specific, so that those who don't like this moderate
report, you know, let's see where we can have a meeting of
the minds. And if not, let's see if we can do a little
more in the public interest.
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Thank you.
MR. ORNSTEIN: Okay. Les, for an opening
statement.
MR. MOONVES: Thank you, Norm.
Thank you all for coming. This is a very
important meeting for all of us. I am clearly excited
about a great deal about what this report has. I think
there is a lot of positive steps that have been taken in
many, many areas. And I think we are going to be able to
find consensus in most of what this report stands for.
I am troubled in a couple of areas. And I need
to, as part of my introductory remarks, deal with some of
these areas, which we will get into a great deal later. I
was very pleased with the September 9th document. There
clearly were a lot of dissent on some of those issues.
There were subcommittees formed to deal with these issues.
The two areas most troubling to me are the
subcommittee reports on minimum standards, which I feel
has gone way too far to be acceptable to most
broadcasters. I do not disagree with Cass that disclosure
and reporting are important. I must say I do disagree
with some of the findings of the subcommittee in that
area, as well.
I feel like to a certain extent in these two
areas -- and most specifically, on the minimum
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requirements -- there has been a tendency to pile on, to
add the kitchen sink to that report. I do want to hear
from everybody on this committee. I am sure we will have
an opportunity for a great deal of discussion on these
areas. That's what we are here for.
I think there needs to be more volunteerism put
back into the report. I do not want to make this a
generalized document. I do agree with Cass, specificity
is important in certain areas where it is applicable.
However, as I said, I am troubled by a great deal of it.
But, once again, to reiterate, there is 80
percent of this document that I am totally in favor of and
I think we could have agreement on. The extent of what
the dissent is I think depends ultimately on what the
committee wants in the report.
On another issue, there had been a request from
many of us, both inside this Commission and outside, to
discuss diversity. We have prepared a document to deal
with that, which I am going to pass out and which Norm
totally is aware of, and Karen as well. Once again, it is
a preliminary document which we have prepared. None of
you have seen it. We will begin discussing it after
lunch. And once again, all comments are welcome and, you
know, we can certainly deal with that after lunch. So we
will pass that around.
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It is my honest desire that we have as much
consensus as possible. However, I do feel, once again, to
reiterate my stance in certain areas, there has been a
tendency to pile on. And to what extent that goes into
the final document I think will be of extreme importance.
Thanks, Norm.
MR. ORNSTEIN: Okay, Les, thanks.
A couple of things to start with. I have been
hopeful from the beginning that we can work this through
and achieve the broadest consensus on most of the areas
that we have. And I think we are there. We are very
close to being there, with a couple of areas where some
members may take issue. I am very hopeful that we will
confine that to individual dissents and individual
portions of the report.
I do not expect that we will get unanimity here.
I never did. Consensus doesn't mean unanimity, I will
repeat. But I am hoping that in the spirit of comity, we
can emerge from this with everybody, or virtually
everybody, signing on to this report with disagreements
limited to individual dissents in individual areas. And
that has been the goal from the beginning. And that is
what we will try to do.
The recommendations here reflect a lot of
thrusts that have come together. Cass mentioned some of
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them. We are trying to come up with a new way of looking
at how you can deal with obligations in a very different
world -- different not just because of digital television,
but because of a whole lot of other changes in the economy
and otherwise -- that require a different kind of compact
between government and the private sector. It can't be
simply a rigid model of regulation. But neither can it be
just let the market forces work because everything good
will come out of them. That is clear.
And so what we are trying to do is come up with
a menu of things that provide appropriate flexibility for
an industry that is moving into an unknown world and
uncharted waters, while also protecting the public
interest. And that is reflected, I think, in the very
different recommendations that we have.
And I should note that in at least a couple of
these areas where there is controversy, we have taken many
of the specifics and not built them into the body of the
report, recognizing that we are body that makes
recommendations that others are going to have to
implement. And so even when it comes to something like
minimum standards, this doesn't get -- if we accept these
recommendations -- move suddenly to being implemented. It
is going to have to be considered by other bodies. We
have offered ideas out there. And that is basically all
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that we are doing.
Now, I do think the issue of diversity -- just a
few, more or less, housekeeping matters -- we have
struggled with this and have not managed adequately in the
past to build into the report the intentions, I think,
that we have, of making sure that we have spoken on the
various issues of diversity that matter here and that need
to be addressed for the digital age. So I am very hopeful
that we can take a look at this language and, after lunch,
have some discussion of it and see that we can address it
in an appropriate fashion.
Secondly, let me note first that one member will
not be here. Jose Luis Ruiz, is unable to attend the
meeting, although he will be joining us via teleconference
shortly. And I hope it works a little better than it did
in Minneapolis.
(Laughter.)
MR. ORNSTEIN: The meeting is, as usual, being
broadcast over the Internet, thanks once again to Rob
Glaser and Real Networks, which is sponsoring it. And
members of the public can log onto it from the NTIA Web
page at Www.ntia.doc.gov. So those who want to do so, we
encourage you to do so.
I want to thank Les and CBS for sponsoring
breakfast and lunch, showing, as usual, generosity in all
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respects.
We have one additional element of the report
that is in your packet. David Bollier has drafted a
history of the committee, and unexpurgated history of the
committee -- all of our awards.
Now, let me just talk a little bit about our
work plan and timetable, which is very important here. We
have as our drop-dead date for having a report done,
December 18th. And we worked back from there. When we
finish this meeting, we are going to go back and do
several things. We will take into account everything that
occurs at the meeting itself.
We have received, as you know, from many of the
members, a number of comments -- some of them very
detailed and specific, some of them more general. The
general ones, I assume we will deal with today. Maybe a
few of the specifics, we aren't going to need to deal with
all the specifics. We are going to do our very best to
integrate those comments into the draft.
We will also try to take the different sections,
the first two sections which you have read, on the history
of digital television and the history of public interest
obligations, and integrate them more directly into the
recommendations, so that everything is as consistent and
as unified as we can make it.
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We are going to go back through the
recommendations, probably reorder them, so that they have
somewhat more logical consistency to them. We didn't
worry about that when we put the recommendations together.
We just put them in as we had pulled them together.
We want to give you all as much time as we
possibly can, given this time frame, to submit your
separate statements if you want to. And that means we
will give two weeks from the date of this meeting. So
individual statements, whether they are concurring
statements or dissenting statements or whatever they may
be, have to be in by November 23rd.
And if you have comments or other suggestions
for the overall editing of the report or contributions
that we should take into account when we pull the report
itself together, we are going to have to have those within
the next several days -- by the 13th -- because we have
really got to get moving on that as quickly as we possibly
can.
We are going to try and get this report
transmitted to the Vice President by the 18th of December.
I do want to note that we already have a cover. And Karen
has it. It is a smashing cover. Maybe if we have it
here -- is it here?
MS. EDWARDS: Maybe after lunch.
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MR. ORNSTEIN: After lunch we will show you the
cover. That is very important for our newsstand sales, of
course.
(Laughter.)
MR. ORNSTEIN: And then just one other personal
note. Since our last meeting, I turned 50. So I am now
squarely in CBS's demographics.
(Laughter.)
MR. ORNSTEIN: And more closely tied to Leslie
Moonves. That is a joke, everybody. It is just a joke.
MR. MOONVES: An unfair shot, at 9 o'clock in
the morning.
(Laughter.)
MR. ORNSTEIN: I do want to suggest all of you
watch Marshal Law, which is a wonderful new show on CBS.
MR. MOONVES: Thank you, Norm.
(Laughter.)
MR. ORNSTEIN: If you are 18 to 29 years old
especially, please watch that show.
(Laughter.)
MR. ORNSTEIN: Now, let's move on. And I think
it would seem to me, Les, that maybe we ought to bring up
one of the subjects that Cass had mentioned first. And
that's the information and disclosure. It might be a good
time to consider that. And that's probably where we will
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lead, since it is an obvious place at which to start.
Now, Gigi, do we have --
MS. SOHN: I apologize. I thought that a
messenger service sent over those disclosure forms on
Wednesday or Thursday. But as I opened my package, they
are not here. So copies are being made as we speak.
MS. EDWARDS: Gigi, can you please speak into
the microphone?
MS. SOHN: I am sorry, I thought my voice was
loud enough.
MR. ORNSTEIN: We have a larger public.
MS. SOHN: What I was saying was I thought
that -- there are actually two disclosure forms, one which
was made through consensus between myself and Paul
LaCamera, and the other which was made through consensus
between myself and Julius. I was the most flexible. And
I thought that I had gotten them delivered to NTIA on
Thursday, but apparently that didn't happen. So they are
having copies made now.
So I do not know that you actually want to do
the disclosure now that nobody has got copies in front of
them. That is why I was surprised to hear you talk about
my disclosure forms, when I didn't see them in the packet.
But I do apologize for that mixup.
MR. MOONVES: I was not talking about the form.
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I was talking about the principle.
MS. SOHN: Oh, okay.
MR. MOONVES: I have not seen the forms.
MS. SOHN: All right. Well, then maybe we need
to talk about the principle, Norm.
MR. ORNSTEIN: Yes. Let's have a little
discussion of the general principle, and then we can come
back to the specifics of the forms.
MR. MOONVES: Don't they go hand in hand? Why
don't we wait for the form.
MR. ORNSTEIN: That's fine.
MR. MOONVES: Because I think that's part and
parcel of the problem we have with the principle.
MR. ORNSTEIN: Okay. In that case, then why
don't we talk about education, which is an area, I think,
where we have a broad consensus, although there may be
some specifics. So the floor is open for comments on the
recommendations that we have in the education area.
MS. WHITE: I realize that educational
programming is referenced throughout the document.
However, I think it might be a stronger one if on page
11 --
MR. MOONVES: This is in the recommendations of
the advisory committee?
MS. WHITE: Well, actually, section 1. Section
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1. I just think we could reference educational
programming on page 11, under what kinds of digital
television programming and services to offer. We list --
and this in -- do you see the bold? -- what kinds of DTV
programming and services to offer.
MR. ORNSTEIN: That is really not a section on
substance. That's a section on hardware really.
MS. WHITE: But I am just saying -- and I
realize we reference education throughout -- but it should
be, I think, referenced also in the beginning there.
MR. ORNSTEIN: Paul.
MR. LACAMERA: I was struck by comments -- I
think Frank's paper and Peggy's also -- where there was
what I consider to be appropriate concern raised about
language here that suggests that the Federal Government,
whether it be in the person of the Department of Education
or whatever, is involved in content selection and control.
I really think we need to be cautious about that.
MR. ORNSTEIN: I think there is general
agreement on that. Of course, there are a couple of
paragraphs in there because of the discussion that we had,
led by Jose Luis Ruiz at the last meeting, about getting
the Department of Education very much involved. But I do
not think that having them play a direct role in content
is what is intended. And we will change the wording to
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make sure that that is the case.
MS. SOHN: I will second, or third, that.
I had two other things. First was that I am not
very comfortable just giving public broadcasting money
blindly without having some statement in there to try to
minimize their reliance on what they called enhanced
underwriting, which are practically commercials. This is
something Congressman Tauzin has talked about on a number
of occasions.
I mean I am all for giving -- developing a trust
fund for public broadcasting, but I think the public
broadcasters have to give something back in return. And
that is less reliance on things that I think arguably
could be called commercials. And I do not know if you
have ever seen -- they have like between some of the
shows, like Jonathan Price doing Lexus commercials. That
is what is called enhanced underwriting.
I would like to see some language in there that
says, okay, we are happy to give you the money, but that
means it should be less commercial.
MR. ORNSTEIN: Any reaction?
MR. CRUZ: I think there are a lot of members of
the public broadcasting community in general that share
that concern, that creeping commercialization. I harken
back to what I said early on in our meetings when we first
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began last year, that this is a problem that public
broadcasting finds itself in.
We are in the proverbial catch-22 situation. On
the one hand, there are forces in Congress that want us to
be more entrepreneurial and more creative, and thus drives
us in that direction when they limit the amount of funding
that we get. And so the limitations are there. The last
couple of years, for example, it has been at bare bones
the amount of funding CPB has gotten to in turn then grant
out to PBS and NPR. So that concerns us in that process.
And so I agree with you, Gigi, it is a major
concern within the industry. I think all we are alluding
to in the public broadcasting is really that we would like
to urge this committee to make sure that we, in our final
recommendations, that we urge Congress to, as I indicate
in my letter to you, secure a long-term, stable, adequate
funding for public broadcasting. Because then and only
then, until public broadcasting has that, you are going to
have this half-world, this catch-22 we are in.
And so, in the meantime, I think they are doing
the best with what they can do. But I think the
recommendation is that we urge Congress to come up with a
stable, adequate source of funding for public broadcasting
once and for all. And I think that would eradicate that
major concern you have.
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MR. MASUR: I was going to say that if perhaps
we could incorporate both of these thoughts that it would
set up a cause-and-effect relationship between the fact
that public broadcasting -- give a nod to the fact that
public broadcasting is becoming more and more special
funding oriented or enhanced underwriting oriented, or
whatever euphemism you want to use for this --
commercialized -- and say, in order to prevent that or
minimize that in future, we think a stable funding base --
I was very heartened to see that recommendation in here
about creating a trust fund.
The one question I was going to ask is, do we
want to take it a little bit further and say to take it
out of the political arena would be more than -- I mean
that that's the other reason for this, so that this is not
a football that gets kicked around every year or every two
years, depending on which way Congress is going, but that
it's a stable base that public broadcasting can depend on
and plan and not be beholding to anybody in order to be
able to create programming and delivery it to people.
MR. ORNSTEIN: Newt.
MR. MINOW: I usually agree with Gigi, but this
time I am on the opposite side. At our public television
station in Chicago, we run probably more, quote, enhanced
things than anybody else. We also take less money from
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the Federal Government.
MR. ORNSTEIN: Can you move the microphone
closer? We need enhanced speaking here.
(Laughter.)
MR. MINOW: I started by saying I usually agree
with Gigi, but this time I am on the other side. At our
public television station in Chicago, we run more enhanced
support than anybody else. We also take less money from
the Federal Government than anybody else in the country.
We think that enhances our independence. We don't want to
be dependent on the Federal Government.
And so I respectfully dissent on this one, and
very emphatically so.
MR. ORNSTEIN: Peggy.
MS. CHARREN: I would like to suggest -- not
now, I think we could postpone this a little while until
we go through some other aspects of the report -- but I
would like to suggest a very specific discussion about
funding opportunities for public interest and public
broadcasting programming, so that even I, who sat through
a year and a half of this, or a year, have a better send
of what we are talking about when we talk about where the
money is coming from, keeping in mind that this is a
commission designed to figure out what the payback from
digital broadcasters is to the public.
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And I think that my sense of money connects with
that mission of this organization. But I do not think
this is the time to get specific.
MR. ORNSTEIN: Well, what is the time?
MS. CHARREN: Well, do you want to do it now?
MR. ORNSTEIN: Well, within the framework of
this discussion, if you want to talk about the specifics
of funding, this section would be the time to do it.
MS. CHARREN: Okay. Well, I have some very
specific ideas about that which I put in my report.
MR. ORNSTEIN: Why don't we sort of flesh out
this discussion of enhanced underwriting, and then come to
the specifics.
Charles.
MR. BENTON: I will address the enhanced
underwriting, but did you want to just focus on that one
issue now?
MR. ORNSTEIN: Well, are there other comments on
that? How do people feel about it? One thing I did not
want to at least leave the suggestion that if there were
not full funding through this mechanism, through a trust
fund, then obviously what you don't want to do is to
hamstring public broadcasting by giving them a few more
crumbs, and then taking away a major source of funding for
them.
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MS. SOHN: Let me clarify. I mean I am no fan
of enhanced underwriting, with or without the extra
funding. Okay. But understanding what I think would
achieve the most consensus, we should say if you get the
funding and therefore are no longer reliant on the Federal
Government, then you should do less enhanced underwriting.
And this is exactly what Congressman Tauzin and
Congressman Markey have in a bill that they introduced in
June.
So you would have what Newt wants, but you would
no longer have to rely on those kind of commercial
interests. So it is one or the other.
MR. ORNSTEIN: That's fair enough. Okay.
MS. CHARREN: Yes. And I agree with that.
MR. ORNSTEIN: So I think we can easily make a
statement in that regard. Okay.
Charles.
MR. BENTON: Well, I just want to talk to two
issues. One is the rationale for this, and secondly are
some comments about the funding, which I think is
absolutely fundamental here.
First, I think Robert Decherd's proposal way
earlier this year, I think in one of our spring meetings,
about the permanent set-aside of one education channel per
market, is a great idea. And we should not lose sight of
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this. And we should not mushy up the word "education" to
kind of include everything. Because education isn't
public affairs and everything. Not that public affairs is
not educational. But I think we need to stick to
preschool, school, post-secondary, and lifelong learning
as education.
And I think if we do focus on that, I think
there is a really compelling rationale for a permanent
retention of at least one new educational channel per
market, not on the loan-back basis. So we are looking
here at the long term. And I think that the report needs
to be a little more clear that we are not just trying to
do more of what PBS is now doing, but we are trying to do
something that PBS is not now doing. Which is really
supporting education programming, especially for schools,
to the extent that it is needed.
So the rationale in the paper that has been
passed out, November 6th, there is a two-paragraph
rationale which I picked largely from Gordon Umbach's
testimony that he made to us. He is Executive Director
and Chief Counsel of the School State Officers. I don't
want to read it, but I think if we can include the
rationale up front, it would be very helpful to signal
what we are talking about when we are speaking about
education.
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We are not throwing in the kitchen sink. We are
focusing on education. And I think we need to do that,
because we want something in addition to what is now being
done, not just more of same.
Now, the second point I want to make is on the
funding front. Perhaps, Mr. Chairman, you might -- you
are much more sophisticated in these matters than I am,
but there have been, as I understand it, certain
compromises made in the budget discussions, so called
scoring of certain revenues for the future, of which
proceeds from the auctions, proceeds from ancillary and
supplementary fees and even -- well, proceeds from the
auctions would include, in effect, the expected proceeds
from the give-back, so that if spectrum is retained,
that's money that, in theory, being taken out of the
budget reductions of the future.
So we need to more imaginative and aggressive
about new funding sources that have not been scored in the
budget. And I put forward in my memo of November 6th,
which I think everyone has a copy of, some additional
ideas which I know will not have unanimous support, but
should be considered. Such as the old suggestion of Henry
Geller, of a 1 percent fee on station licenses when
station licenses are transferred from one owner to
another.
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What the new owner is buying is not equipment
and programs. What they're buying is spectrum. And there
ought to be some kind of public dividend when that
spectrum is shifted from one owner to another. This was
the rationale that Henry Geller mentioned many years ago.
And I think that kind of a fee, or tax, if one wants to
call it that, but that kind of a fee would be a reasonable
kind of fee to support these new education services.
Secondly, I think matching funds from the
community, so that what funds come nationally through the
government via fees or taxes be matched by the community,
so that it would tease out -- this was the great genius of
the National Defense Education Act many, many years ago,
in the matching funds principle, which smokes out all the
innovators locally that wanted to do good things with
categorical funds -- math, science and foreign
languages -- in this case, using telecommunications for
education. So that that would be a second idea, is the
matching of the community.
A third point that I put in here is, again, some
kind of a percentage of gross revenues. The suggestion
has been made that -- and this, I suppose, borders on pay
or play in a sense, but not -- and it is a complicated
issue, and I agree with Peggy, this is something that we
could probably spend the whole day talking about
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funding -- but the third point is the 2 percent notion,
that broadcasters could be relieved of much of their
public service obligations if they would pay 2 percent of
their gross revenues into a fund that would support both
public broadcasting and this enhanced educational channel.
So those are three ideas. There are other
ideas, I am sure, that one could discuss. But those are
three ideas. And I think the funding is the crux here. I
mean the capacity is wonderful. And I am for the
capacity -- setting aside the capacity. And I think
Robert Decherd has got the right general idea. Because we
have got to think for the next 50 years, not just the next
five years here. But the funding is key to make this
work.
MR. ORNSTEIN: Is that Peggy, what you wanted to
say?
MS. CHARREN: Yes, that is what -- at least the
idea of 2 percent of gross revenues, 1 percent of
transactional fees, and relief from everything except
statutory obligations for most of what they do, was what I
was talking about. That is in here, too.
So I go along with that kind of specificity in
talking about funding. And I think that without that,
there just isn't going to be enough money. I mean this
isn't a punishment. This is being realistic about the
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need to have the kind of programming we hope this
opportunity is going to cause to happen. Otherwise I do
not see it happening.
MR. ORNSTEIN: Other comments on this?
MS. SOHN: I will just agree. In the proposals
that I have submitted, even though I have included the
ancillary and supplementary fee income and the auction fee
income in what should be included, it is clear that the
government -- not only Congress, but also the President --
has other ideas for that money. And I think we have to be
specific about other ways that money could be raised.
And I would suggest, again, along the lines of
what Peggy said, either a 2 percent fee on broadcasters'
gross revenues or a 1 percent transaction tax on all
telecommunications transfers. So you're not just hitting
the broadcast industry. But imagine if -- for instance,
the MCI Worldcomm merger was a $37 billion merger, take 1
percent of that and you've got some decent money.
I am just concerned that the sources we now
identify are going to amount to practically zero.
MR. ORNSTEIN: Any other comments?
MR. CRUZ: Mr. Chair, I have got some language
that I will submit to you.
MR. ORNSTEIN: Okay. Before we get to that,
let's finish this discussion of funding. Is that what
27
you're talking about?
MR. CRUZ: It's in reference to the funding
sources.
MR. ORNSTEIN: Oh, okay, Frank.
MR. CRUZ: I think there are a variety of
different areas that we can look at that might not be
included in the process, but I think there are a variety
of different ones. And I have got some wording that I
will submit to you that possibly could be used.
MR. ORNSTEIN: Anybody else?
(No response.)
MR. ORNSTEIN: Let me note that -- I will make a
comment. There is no question that Congress and the
President scored revenues from spectrum auction, from the
analog spectrum auction, for deficit reduction. They no
doubt scored them way too generously and prematurely, but
they did score them.
And they have also said that fees for ancillary
and supplementary services will go to the Treasury. That
may make it more difficult to bring about the kind of
statutory change that would be required to get these
revenues earmarked for what we want them earmarked for.
But I would submit to you that it will be no more
difficult -- maybe less difficult -- than getting them to
go along with things like gross revenue taxes on these
28
kinds of transactions.
So I am not sure I want to accept the logic that
just because these have been scored already, in any event
Congress is going to have to come up with revenue sources.
And, frankly, I am much happier emphasizing the principle
that revenues that come in for the spectrum should be used
for enhancement of the use of the spectrum for the public.
It seems to me that is a very, very appropriate thing for
us to do.
I am only reluctant to get a lot more specific,
because I think it will -- the more specific we get
here -- since Congress is going to have to do it anyhow,
in each of these areas, we've already given a number of
specifics -- the greater the danger that we are going to
raise some problems.
MS. CHARREN: But we have a number of places in
this report where we have options.
MR. ORNSTEIN: Yes.
MS. CHARREN: And some options are -- some
people might think are better than other options.
MR. ORNSTEIN: Yes.
MS. CHARREN: But we have options. It seems to
me to have just the revenue from the spectrum, as the
suggestion, without this other option doesn't make any
sense. I mean one can assume that if you get it from the
29
spectrum, then you don't have to get a lot from the
transfer fees.
But to put one down without putting the other
one down changes the debate, I think after the fact, on
this report.
MR. MOONVES: Peggy, with all due respect, I
must agree with Norm. If you get specific about
percentage of gross revenue, it is going to be so
abhorrent to the broadcasting community. Number two, as
Norm said, we are not Congress. We are making
recommendations. If you want to get that specific for
something that has so many miles to go, it really I think
is self-defeating. That is my thought.
MS. CHARREN: Somehow I thought you might say
that.
(Laughter.)
MR. MOONVES: I am very transparent, Peggy, on
this issue. But I do agree with Norm.
MR. ORNSTEIN: And we do discuss it -- at least
it's discussed very explicitly in the pay or play idea.
But that's not a unilateral tax. That's a tradeoff. And
that's a choice. Which I view in a very different light.
I would have no objection personally, in the end, if
that's -- in fact, I would like to see that be an outcome.
And I would not have any great objection if you found ways
30
to come up with creative taxes to pay for PBS, the
educational channel and all the rest of it.
But, at least at this moment, I am reluctant to
get into raising hot buttons, even in the form of
suggestions that will be a distraction from the basic
thrust of what we are doing.
Yes.
MR. BENTON: Norm, let me just add one other
point and then really reemphasize a previous point that I
made that I feel very strongly about. And, again, maybe
we can discuss this in other parts. Also this idea would
be maybe under the new approaches. I do not know.
The issue of datacasting, we've just come this
morning from a demonstration, PBS demonstration. And the
digital television, as defined by PBS, has been better
pictures, better sound, high-definition television. It
has been multicasting and it has been datacasting. And
they have called it enhanced television, but really it is
essentially datacasting, as we saw it this morning.
There is hardly anything in the report about
datacasting and about the new possibilities for
communication in the public interest through the merger of
television and computers. I think we ought to have,
frankly, a separate section in here on datacasting. I
would not like to see it simply a subset of education.
31
And this also -- the analogy here is, with funding, we
seem to be focusing in the funding and education. Frank
Cruz's paper is talking about PBS as education, and not
public broadcasting back as education. The trust fund, he
wants to throw the trust fund in here.
Look, I am all for the trust fund. I think it
is a great idea. But that is not what we are talking
about in the education section. It is a different idea.
We are talking about supporting education, lifelong
learning, and not the PBS trust fund. It is a different
discussion.
So I mean not that I am opposed, Frank, to what
you are saying, but I think we need to be much clearer
about the funding for public broadcasting in general,
which I am absolutely in favor of, and enhanced funding,
so we don't have to have the WTTW example of pushing the
limits on commercials that are competing with the
commercial television, which I resent, living in Chicago.
I do not like it. I have been opposed to it for a long
time.
I have written letters. I call the stations. I
am sick and tired of Marty Robinson. God damn it, get off
the air, Marty. After every single -- I will tell you --
after every single -- I am really serious about this --
every single documentary, there's a beg-a-thon coming out
32
to send in 15 bucks. I am God damn sick and tired of it.
Really. I mean. So that's enough already.
But it is in tradeoff for the poverty of
funding. So I am for the public television trust fund,
but the education thing here ought to be kept separate.
And therefore maybe separate sections on funding and
datacasting would be in order. That's my point.
MR. ORNSTEIN: I do think we need to be more
sensitive to the potential for datacasting than we have
been. And certainly it was our intention, as we talked
about educational channels, that that did not just mean
broadcasting of programs, but very much the creative use
of datacasting in dedicated ways.
One of the suggestions that we had in fact
kicked around -- you'll recall at the meeting in which we
heard from educational community representatives, we had
talked about the possibility of using off hours, the early
morning/late night graveyard shift hours, for transmission
of data over commercial channels to educational
institutions if necessary. And it is probably worth
mentioning again.
I suspect, frankly, that if we managed to get
the other things done, there is going to be enough room on
that highway for sending every bit of data that you could
ever possibly imagine and it might not even be necessary.
33
But saying something more about datacasting makes sense.
MR. CRUZ: Norm, just to add to Charles'
concerns here. In the letter that I submitted, I
addressed both of those issues in a separate capacity. I
addressed the trust fund for public broadcasting in one
area and the section channel keeping the analog also in
that terminology there. So you may take a look at that.
And it is there. And it does call for separate sources of
funding.
MR. ORNSTEIN: We are now being handed out these
check-off forms on information, which I hope you will look
at as we go along. And we can bring that up a little bit
later on.
It might be worth -- are there any other areas
within the educational arena or recommendation that people
want to bring up?
MR. GLASER: Well, do you consider the
datacasting issue part of education?
MR. ORNSTEIN: No, it is much broader.
MR. GLASER: Okay. Well, I will defer my
comments to that until we turn to address that. I pretty
much agree with Charles' point. And I don't want that to
slip by. But I will wait until we get past education and
talk about it in general.
MR. ORNSTEIN: Okay. Well, yes, we need to be
34
sure that we have a specific discussion on data before we
are done here.
We should at least spend a few minutes making
sure that we have an understanding on this process that we
have recommended for the educational channels going to
different entities. And what Frank Cruz suggests in his
letter, which is that there ought to be a much stronger,
direct and automatic role for public broadcasting
stations, is something that at least ought to be raised.
Although we have had communications from others, and many
at the last meeting wanted to give a lesser role for
public television stations.
So let's open up the floor for comments there,
and see if there is any way we want to change the
recommendation we have.
MR. CRUZ: This is a comment on the letter that
I submitted. The concern that we have is really the fact
that I think that there is a strong belief by the public
broadcasting community -- and that entails all of the
different entities involved under the umbrella of public
broadcasting -- that we feel that we have a very good
track record and a good past history of -- a proven track
record of dealing with educational programming. That is
our mission. That is our mandate.
And what we are basically saying is that we have
35
that track record, that past history, and that public
broadcasting should get the first option and the first
opportunity to take hold of this educational channel
should it be made available as we are recommending. And I
think that we feel that we are in a better position
historically, with the years of what we have been doing,
so that if there is this second channel, the analog,
basically the bottom line being that we feel that public
broadcasting is best prepared to do it and to take full
advantage of it and develop it for the American public.
So it makes sense, in that sense, that public
broadcasting be allowed to put its experience, its
expertise to use through this educational channel. And
that is basically the gist of that paragraph that I
suggest making the recommendations on.
MR. ORNSTEIN: James.
MR. YEE: While it is true that public
television has a relatively long history in managing these
nonprofit stations, I do question the assumption -- or any
assumption -- that it should automatically to the present
public TV station community, only because I think while we
have before us is an opportunity to bring in other
players, other experienced parties who I think have a long
history of interest to be more involved in servicing their
community. And I do think we should give some due
36
consideration and merit to the contribution of
independents, of the educators, of civic groups and public
access parties who have long been -- shall we say -- had a
choppy history of interaction with their public TV
stations.
So I do think if we are going to make it
available to them, maybe we should open it up to a more
level playing field in terms of its application, rather
than just to be going to the same players. And I think we
should talk about that a little bit more.
MR. GLASER: Norm, I agree with James' comments.
In Washington State, I serve on the board of a cable
channel that's a State C-SPAN, called TVW, that provides
gavel-to-gavel coverage of State government and has a set
of other educational programs. And I think what's come
out of the peg process in cable, while imperfect, is a
grid of city by city and State by State educationally
oriented and public information oriented services. And I
think any language that suggests the inherent primacy of
one group with regard to this educational infrastructure
that we are seeking to set aside I think would understate
the real value of the diversity of what has been created.
MR. ORNSTEIN: What we tried to do in the
recommendations -- and tell me all if you think we did
this adequately -- was, in this case, was two things. The
37
first was to give some primacy to public broadcasting, but
not make it anywhere close to automatic. And really make
clear that they get a first cut at bidding for these
channels, but they're going to have to come up with a plan
that's an acceptable one. And it wouldn't be -- even if
they are chosen -- it would not be in perpetuity.
The second is -- I think this is very
important -- that if we are going to dedicate a channel to
education, it is not simply public television squared.
That we are talking about something that is different from
what is now broadcast on public television stations. And
that people putting together these plans are going to have
to make it very clear that they are not just going to run
Nova 67 different ways or times, but rather use the
innovative technology here in different ways and in ways
that are very distinct from what's now on public
television.
And that ought to be crystal clear. That I
think reflects our consensus generally. And if it is not,
let me know and we will firm it up.
MR. GLASER: Let me just add, to be clear. I
think PBS nationally has done a great leadership job in
thinking about digital television and how it can be used
pedagogically and in other positive ways. I think your
notion of having that sort of ongoing stimulus of having
38
lots of people trying to do stuff, recognizing the fact
that PBS has done a great job, is terrific.
My point was simply to reaffirm James' point
about the diversity of what's already going on out there.
MR. ORNSTEIN: Yes, Charles.
MR. BENTON: This morning, Irwin Duggan talked
about education culture and citizenship. The three words
I've been using since our very first meeting is children,
community, democracy. It's interesting that he chooses
culture to focus on. And we've been talking about
community.
I think one of the opportunities here is to
address Chairman Tauzin's concern about the overlapping
stations in public broadcasting in various markets. If
there was an incentive for these overlapping and often
competing noncommercial entities to collaborate and work
together on education, this would give them a positive
incentive rather than trying to phase out or de-fund one
of them, and get into all those kind of draconian choices
of one over another.
So the opportunity here for collaboration, not
just between the stations and their nonprofit
infrastructure -- public schools, public libraries, public
health care, et cetera, at the community level -- but also
interstation, to serve the education needs in their
39
community, and focused on community. What I like very
much is the CPB model of the community collaboratives,
which is being pushed by CPB now and makes a lot of sense.
But I thoroughly support the way this is
written. I think the idea of turning this over to any
particular vested interest in broadcasting would be a
mistake -- understanding also PBS's historic role here.
And I am not -- but I think the way this is -- I support
this exactly the way you have put it forward.
MR. ORNSTEIN: Okay.
Richard.
MR. MASUR: I just want to second what Robert
just said. I think it is very clear exactly the way you
laid it out, and captures what I was hoping for -- that
public broadcasting would be given an opportunity, maybe a
leg up, in competing for this, but that it would
definitely be an open competition, including the
commercial sector competing for this educational task. So
I think the language is clear there.
MR. ORNSTEIN: Karen.
MS. STRAUSS: I also think that it strikes the
proper balance between the existing stations and some new
stations that may want to apply. But I do not think that
it does the latter of what you propose, which is to
reference the use of new technologies in the digital age.
40
And I think that supplementary language -- the
only reference here to what the new channel would do as
compared to old channels is a statement that talks about
how the new channel would be devoted to education in some
way that's different from existing public television
stations. But there is no mention, for example, of
datacasting and other new technologies. I think that
would be helpful.
MR. ORNSTEIN: Yes, we will definitely do that.
Well, I am prepared to move to our next area,
unless there are some other concerns within the
educational fund that people want to bring up. We can
come back, of course.
MS. CHARREN: Where was this? On page 4. Where
it says that the public interest purpose of a channel for
public interest purposes under multiplexing. I would like
to suggest that that channel -- is this where we do this,
the noncommercial? Where are we?
MR. ORNSTEIN: No. We are still on the
education section. We have not turned there.
MS. CHARREN: The reason that I suggest that is
for educational purposes. But I will wait.
MR. ORNSTEIN: Yes, let's wait. Let's, at least
for the moment, consider these within the framework. We
can bring that up in the multiplexing spot.
41
MS. CHARREN: Okay.
MR. ORNSTEIN: Should we do information? I mean
we have these things now. They are fairly easy to get
through. What would be your preference?
MR. MOONVES: Sure.
MR. ORNSTEIN: Let's talk about what is
recommendation five that we have, which is the disclosure
of public interest activities by broadcasters. We had our
subcommittee pull together a couple of options here. And
maybe Gigi, at least to start, could go through these
options. And then Paul might want to comment.
MS. SOHN: Sure. Let me just discuss very, very
briefly the rationale behind having a mandatory disclosure
requirement. Now, let me first explain that broadcasters
already do have to maintain what we call issue programs
lists in their public files that basically lists, under
headings that they provide, programming that they perceive
to be in the public interest.
And I had a little field trip in preparation for
my meetings on this subcommittee. And the variation, I
might say, on these issues programs lists were great.
Some of the larger stations had very, very massive
documents, with headings like "substance abuse" and
"crime," very sort of broad headings, and then would have
a one paragraph description, usually taken from a press
42
release, of the show.
Other stations -- well, one station that I
visited told me they don't do any local programming, so
therefore they didn't have any issues programs list.
Which was kind of interesting, because it is required by
the FCC. And what they did have from the year before was
basically they kept press releases of the shows. There
was one health show, and it had -- it listed all the
things they talked about on the show.
The point that I am trying to make is that --
MR. MOONVES: What kind of station was this?
Can you disclose that?
MS. SOHN: No. I do not think that's fair to
say.
MR. MOONVES: Why not? I mean if it's an
independent station, on channel 74, it is very different
than --
MS. SOHN: I do not think that makes a
difference, Les. They all get -- and actually, I think
these forms will make it easier for them, and not more
difficult. And it would make it more uniform and simpler.
So I guess the point is that I think these forms
will improve the process. And I do not really think it
makes a difference. You get a free government license.
It is a very, very simple duty to do your issues programs
43
list. All you have to do is, you know, say two sentences
about the public interest programming you did and the
local programming you did. It is not a big deal.
MR. DUHAMEL: Can I clarify something to you?
MS. SOHN: Sure.
MR. DUHAMEL: Are we talking about digital
stations or are we talking about all stations now?
MS. SOHN: Well, we are talking about digital.
We are talking about digital.
MR. DUHAMEL: This is not applying to all the
current stations today? These are only for the digital
channels? That is what you are proposing.
MS. SOHN: Well, it is going to be one license,
Bill. It is one license. Right. It's for the licensee.
MR. DUHAMEL: But this is still when you go
digital; that's what we're talking about?
MS. SOHN: Well, Bill, we can talk about
phase-ins. And I have been very, very -- you know, I have
been very, very positive about talking about the phase-in
of public interest obligations. Yes, probably during the
transition, this would apply to both the digital and the
analog. Yes, it probably would.
But I am very, very open to talking about
phasing in these obligations so you don't have a double
obligation for a long time. But the fact of the matter is
44
the FCC is viewing these licenses as one. So I look at
this as the obligation upon the licensee, not upon --
MR. DUHAMEL: When they go digital?
MS. SOHN: Yes, when they go digital. Yes.
Absolutely. When they go digital, right.
MR. DUHAMEL: Okay. I almost get the impression
that this is like let's do this tomorrow.
MS. SOHN: Well, that's not necessarily the
impression. Yes, it may have to apply when you are doing
both. I am not saying it would not apply when you are
doing an analog and a digital signal. But I am not saying
this has to be done tomorrow, no. Do you understand what
I'm saying? It may apply to both the analog and the
digital signal, yes.
MR. CRUMP: Excuse me for jumping in. But there
is a huge area here between a number of us undoubtedly. I
thought that the direction and the direction we were given
by the administration when we were created as a committee
was whatever recommendations came out to be done was when
we went to digital, not during some sort of phase-in, but
when we became digital stations. Do I have a
misunderstanding here?
MS. SOHN: I guess that's really a separate
discussion.
MR. CRUMP: It is a pretty basic discussion.
45
MR. ORNSTEIN: Our recommendations are for
digital television broadcasts.
MS. SOHN: Right. They're for digital
television broadcasters. But, Harold, what I'm saying is
it is a little bit facile to say, well, it's just going to
apply to the digital station. Because the fact of the
matter is, the way the FCC is perceiving, okay, licensees,
digital TV licenses, is it really being one license,
analog or digital. Analog and digital together is one
license.
MR. MOONVES: But, Gigi, the phase-in is
important.
MS. SOHN: It is absolutely important.
MR. MOONVES: I mean it is an important
distinction that needs to be made.
MS. SOHN: Yes. And that is an important
distinction. I am very open to talk about a phase-in.
But I think you are detracting from what I am trying to
talk about.
Now, let's just talk about the disclosure and
talk about the principle of disclosure. You want to talk
about phase-in, you want to talk about whether it applies
to the digital signals as opposed to the analog signals?
I think it should apply to the license, and the license is
going to contain both. But we can have that discussion
46
later.
I would rather talk about the core principle,
and then we can talk about phase-ins. I am very open to
talking about that. Okay. I'm not that set against that.
And in fact, some of my colleagues on the left think I'm
too liberal on phase-ins. Okay. But let's put that aside
for now. Okay.
What we have now is two forms. Okay. Form one
was done -- Paul and I agreed upon it. And the principle
underlying form one is that there is no mandatory
minimums. Okay. This was part of the problem. Julius
Janokowsky, who is representing Mr. Diller, and I were
under the assumption that there was an agreement on
mandatory minimums. Paul did not agree with that. So we
decided to do it this way.
Two separate forms. The first form assumes no
minimums. The second form does assume minimums. That's
the one which Julius and I came to an agreement on. I do
not care. I think both of them work.
They are very, very simple. You fill in the
number of hours that you typically air in specified
categories -- easy, clear categories that have some
meaning. You list a representative sample. Not 900 like,
you know -- this would actually shorten the requirements.
I mean I went to one station and I got a bucket
47
load of paper. It's worthless. The rationale is that
with eight-year license terms, okay, the public has to
have a way of holding broadcasters accountable for what
they do. I'm not talking about filing this with the FCC
or making this part of a license renewal form. Okay.
Make that very, very clear.
I am talking about this would go in your public
file, just like your issues programs list. But it would
be very clear. It would have numbers on it so people get
an understanding instead of getting a stack of papers or
nothing at all.
The second form, which I did with Julius, more
reflects I believe -- and Mr. Diller could speak for
himself -- what Mr. Diller favors is a simple yes or no
check-off certification. For instance, under "public
affairs," the license has aired blank hours -- and he
would like that to be determined by the advisory
committee -- per week of programming addressing national
or local public affairs? Yes/no.
The licensee has aired programming addressing
national or local affairs during the past three months
that exceeds the weekly minimum? Yes/no.
And then write a representative sample of those
programs.
Quite simple. They're each three pages long.
48
Bill, it's half of what I submitted in June. And it took
a lot of sweat and tears. And I hope my colleagues that
worked with me on this will support me on this. I think
it is much more simple, much more standard, and actually
will help a smaller station as opposed to harm them.
MR. ORNSTEIN: Paul, did you want to add
anything?
MR. LACAMERA: No. My only point would be that
I did not have difficulty in crafting an agreement with
Gigi's and Barry's representative on the different items,
the different sections. In fact, I feel that those are
representative and important.
I continue to have an issue with detailing or
having to count or aggregate the number of hours. I think
that can be a specious exercise. But Gigi felt very
strongly about it and that was part of the compromise.
MS. SOHN: And we also said "at least." I mean
we did not want to have somebody going with a calculator
and adding it up. That is something actually that Julius
felt very strongly about. And that is why we said "at
least." So you have an idea that they're doing a certain
amount.
I think maybe I have no perspective left after a
year of doing this and 10 years of working at Media Access
Project. But I think these are very flexible and they are
49
very simple. And they give the public an idea of what
their broadcaster is and is not doing.
MR. ORNSTEIN: Let me just reiterate what I
think our intent was here. The notion of providing
information to the larger public as a major way of, in a
democratic society, having a kind of give and take that
enhances the public interest, was the first core and basic
principle here. Getting information out to people in a
form they can understand and use and in a timely fashion
obviously also became very important.
We originally discussed this recommendation
within the context of a voluntary standards of conduct,
but wanted to make it a distinct one. They can go hand in
hand, but they are not necessarily linked. If you don't
have a code, at least you can have information. And the
goal of the subcommittee was to put together forms,
suggested forms, for whatever entities pull these
together -- the FCC presumably, working with stations --
that would not be terribly onerous on the stations but
would also provide the right kind of information.
So it is in that context we ought to consider
these things. And I will reiterate that we can have a
discussion about phase-ins here and there, but our
recommendations, at least as a committee, are directed at
digital television broadcasting. If people want to go
50
beyond these recommendations and fight about whether they
are so compelling and useful to the public that they ought
to be implemented tomorrow, go ahead and have that fight.
Our recommendations are about digital television
broadcasting
Yes, Richard.
MR. MASUR: I just wanted to say, about midway
through this process there was a presentation made by the
NAB on how much work that local stations actually did do
in these areas. And they presented a lot of information.
And I was very struck by it. Robert Decherd also talked
about how much public interest broadcasting was done in
local stations.
And I would think that a form like this would be
extremely useful in communicating that and in creating an
atmosphere whereby there would be peer pressure on other
stations to live up to a mark without putting an undue
burden on them. And I think broadcasters could see this
as a very positive thing, especially the ones who are
actually doing their job at this point. And those that
aren't I think should be encouraged to.
So I support this.
MR. ORNSTEIN: Any other comments?
MR. DUHAMEL: I have a problem. This goes back
to something I mentioned before. You are excluding news.
51
And I told you the story before, that we have, for 30
years --
MR. ORNSTEIN: Newscasts is the first thing
here, Bill.
MR. DUHAMEL: No. I am trying to tell you that
for 30 years we have had a noon half-hour program, and it
was a public affairs program. The audience was virtually
nil. We made that a news program, with two five-minute
interviews, public affairs interviews, and the audience
went up five times.
And the thing is, you know, this idea of you are
creating the ghetto again of the public affairs program is
off here separate and you have a group of people sitting
around a coffee table, and there is no audience. And in
the small markets we don't have a lot of resources. We
try to develop quality news programs and we try to embed
political discourse and public affairs in those news
shows.
And all of a sudden you're saying, well, that's
not right. You got to go put this ghetto off here on the
side because we're quantifying this and we're trying to
get this. And you're not allowing for this integration.
Because what we're really trying to do is reach an
audience. I mean it is no good to have a program that
nobody watches.
52
MR. ORNSTEIN: Bill, explain to me, if you look
at these forms, the first question is about newscasts.
The second question is about public affairs. How would
your programming fail to get captured in this form?
MR. DUHAMEL: Okay.
MR. ORNSTEIN: Look on the first page.
MR. DUHAMEL: Which one?
MR. ORNSTEIN: Either one. They are both the
same.
MR. DUHAMEL: Let's go to seven. Look at seven,
on the first page. This is form one, I guess. The
licensee has aired minutes of programming. Well, see, six
and seven, we're talking about political discourse.
Now, we're doing these in news programming. But
these aren't separate programs. Otherwise you're going to
get double counting.
MR. ORNSTEIN: So you will get double counting
going on, I am sure, in some cases, because of course
there is an overlap between news and public affairs and
election-related programming. But there is nothing here
that would --
MR. DUHAMEL: Number 12 says not listed
elsewhere in this report.
MS. SOHN: That's local programming not listed
elsewhere in this report.
53
MR. DUHAMEL: But they are talking about locally
originated programming. I mean our news is local.
MS. SOHN: Then you list it under local news.
MR. ORNSTEIN: Then you have already listed it.
And if you had other programming that was local that
wasn't listed in the news or the public affairs category,
that's where you would list that.
MR. DUHAMEL: Okay. Well, then basically we
would say there is zero. Is that what you are saying?
MS. SOHN: Yes. You might have to say it is
zero.
MR. DUHAMEL: That's because we put our
resources into these.
MS. SOHN: That's fine. But then maybe your
news number is huge.
MR. ORNSTEIN: That's fine. Then it's captured
under "news." And if you're not doing other local
programming other than news, you're giving an accurate
representation of what you've done.
MR. MOONVES: Unfortunately we just got these
forms. I do not think anybody has had an opportunity to
study them. I am racing through this thing. I do not
even know what's in this damn report. So let's slow down
for one minute.
MS. SOHN: I do apologize that I did not get
54
this to you earlier.
MR. MOONVES: Okay. Let's slow down for one
minute, because I do not know what's here and what's not
here. Okay. We were just handed a piece of paper that
you want everybody's -- you know, there are a couple of
things. A, this is tied to minimum requirements. There
is no way to separate -- I think it is very difficult to
separate the two issues.
B, I must state for the record Mr. Decherd is
very passionate about it. He will not be here till this
afternoon. He should be given an opportunity to discuss
this and other matters. I must state that. I know Barry
is not going to be here this afternoon, so Norm wanted to
deal with some of it this morning so we could get Barry's
input. However, some of these issues must be held till
this afternoon.
As I said, I have not had an opportunity to look
at this to know if there is an opportunity for the
broadcaster to point out that certain things may be not
covered by this -- and I do not know -- are covered in
other parts of their broadcasting, i.e., within a news
report, a special local situation that is performing a
public service. You know, a checklist to me, at times --
and, once again, if you give me 10 more minutes, I'll have
a better opinion of it -- gets scary because the
55
broadcaster will not have an opportunity to fully express
all the things that he is doing by a checklist versus
making a case for himself.
I am in favor of disclosure. I am in favor of a
station saying what they are doing. It is how it is done
that I cannot fully form an opinion on.
MS. SOHN: Yes. I think if you look at this it
will resolve some of your issues.
MR. ORNSTEIN: Yes. We will return so that you
have a chance to study these forms certainly to that. And
we certainly want to give Mr. Decherd an opportunity to
make his point of view clear.
Let me note that, in the communication with us,
what he has basically said is he doesn't think there
should be any requirement for disclosure, that all
stations, just because of the market, will feel great
incentive to disclose all of this to the public. So that
should be out on the record. That's what basically very
clearly he said.
MR. DILLER: Isn't the intent -- I mean you have
worked on this until obviously you are cross-eyed -- but I
mean isn't the intent of it to provide for communication
and flexibility?
MS. SOHN: Absolutely.
MR. DILLER: So that in fact whatever a
56
broadcaster does, whether there are minimum standards or
not -- one hopes there are, but that "or" can come in at
whatever time it is best inserted -- but since the concept
is flexibility, you will conform this to anybody's ideas
to be certain that what you report gives you the most
flexibility to tell who and what you are and what you do
and what areas you may do more things in and what areas
you don't do because you think there's no point in doing
them, et cetera.
MS. SOHN: That's exactly right.
MR. DILLER: Isn't that your intent?
MS. SOHN: That's my intent.
MR. DILLER: So then you will achieve it.
(Laughter.)
MS. SOHN: There you go. I can't respond to
that.
(Laughter.)
MR. ORNSTEIN: Newt.
MR. MINOW: Senator Dirksen used to say: Always
stand on principle. Your first principle is flexibility.
(Laughter.)
MR. ORNSTEIN: Yes, but look where he is today.
(Laughter.)
MR. ORNSTEIN: Jim, did you have a comment?
MR. GOODMAN: I just wanted to point out that in
57
the minimum standards we have a section called
accountability. And the only thing I wanted to add is the
notion of maybe access to the public file, getting this
report online, that sort of thing. But if you look in the
accountability section of the minimum standards -- and we
also speak, Richard, to having a form, some sort of form,
in which, like, the NAB could very easily produce the same
kind of report they produced before.
MR. ORNSTEIN: I do want to emphasize that at
least it's not my intent to tie disclosure of information
either to a code of conduct or a set of standards of
conduct or to minimum standards. These things can all
work together, but they stand alone. And whether we have
any of those other things done, there's no reason why
there can't be disclosure of information and no reason, I
think, why it can't be done in a fashion that is not
onerous, deeply onerous, to broadcasters, and get on with
it.
MR. MOONVES: I think I was referring to the
fact that Mr. Goodman's report included minimum
standards -- by the way, it included an awful lot of
things -- that were all tied together. So that's why I
was referring to that.
MR. ORNSTEIN: Okay. But our recommendation on
disclosure is not tied.
58
MR. MOONVES: It is a separate area.
MR. ORNSTEIN: It is a stand-alone
recommendation.
MS. SOHN: But understand that the form to which
Mr. Diller's advocate and I talked was tied to minimum
standards, because he believes strongly in minimum
standards.
MR. DILLER: I agree.
MR. ORNSTEIN: So we have one of those that does
that?
MS. SOHN: Yes, that F-2. And F-1 is not tied
to minimum standards.
MR. DILLER: Except not so subtlely.
MR. LACAMERA: Norm, F-1 is simply intended to
be a variation of what stations presumably are doing now,
sometimes in an exhaustive fashion, by breaking down their
local initiatives into these designated categories and
providing a representative sampling of what they do in
each area. Again, the issue becomes going through the
exercise, the additional -- and can be a burdensome
exercise -- of moving beyond representative to the whole,
of having to add up minutes and hours and whatever. I
still think that's very questionable.
But as far as form one, I think actually it can
be more revealing to interested members of the public and
59
can serve as a better self-audit for the stations
themselves. And then, I think in the end, it can be less
burdensome and more meaningful to those who have to
undertake this quarterly document.
The F-2, again, is an understandable checklist.
And, again, it came from Barry's office, with very strong
feelings that if there were mandatory minimums, this is
the more appropriate direction to go to.
So there is a clear delineation between these
two samples.
MR. MOONVES: Gigi, I would think linking the
two is a very dangerous thing to do. So I would hope that
we wouldn't.
MS. SOHN: Well, again, I was just trying to
forge compromise.
MR. MOONVES: I understand. And we appreciate
the hard work that you did.
MR. ORNSTEIN: Yes. Well, we will -- unless our
consensus evaporates, which I do not think it will -- we
will include both, obviously with an explanation of what
they represent, in the report, in the appendix. And we
will make clear that these things can be linked together,
but they don't have to be. That there is no reason why
you can't have disclosure even if you have nothing else
done.
60
MR. DILLER: If you just decide to adopt the
minimum standards you only need one form.
MR. ORNSTEIN: Yes.
MS. SOHN: And, Norm, let me just also make
clear that this is in lieu of the issues programs list. I
do not think the issues programs list works very well. So
I am not talking about doing issues programs lists and
this on top of it.
MR. DUHAMEL: There is one question. All of a
sudden now we are talking about five minutes of political
discourse 30 days before the primary. That's new. Before
it was always just the general election. This says
primary or general election. This is six. It is six in
F-1.
MR. LACAMERA: That was always intended to be
general election.
MR. ORNSTEIN: We will change that.
MS. SOHN: That probably just didn't get taken
out of the draft.
MR. MOONVES: It is pretty significant.
MR. DUHAMEL: A lot of times primaries, there is
no opposition.
MS. SOHN: That is coming out.
MR. ORNSTEIN: Any other comments, Richard?
(No response.)
61
MR. ORNSTEIN: Yes, Frank.
MR. BLYTHE: Well, I for one have always been of
the mind set that some accountability is in order for us
to see where broadcasters are going in this -- not so much
in digital age, but how they are serving their
communities. And we have seen a lot of fine examples of
that over the years. And I said when I first -- I think
what I said in our first meeting, having a broadcast
license is akin to having a driving license. It is a
privilege, not a right. And everybody has to act
responsibly to the public in having either one.
I for one see these forms as a step in the right
direction toward some area of accountability, albeit not
tied into anything in general at this point. But I think
this goes back to the area where it puts broadcasters in
some light of shedding on their communities what they are
doing in their local areas -- particularly in their local
areas -- as well as some of the national areas there, too.
I have not had a chance to read them over
thoroughly, but I think there are some words in there that
need some maybe reinforcing or moderating. But I think
the forms are going in the right direction right now.
MR. ORNSTEIN: Well, let's, at the break or
otherwise, go over the forms a little bit more carefully.
It does not take very long. They are not real lengthy.
62
And we will come back to it and revisit it if there is a
desire to do so. We will certainly revisit it when
Mr. Decherd is here, to get his perspective.
If there are no other comments here, we can move
along. And maybe we will consider data and multicasting.
MS. SOHN: Do we now have a consensus this
should be mandatory?
MR. MOONVES: No.
MS. SOHN: Not this, the form, but the principle
that there should be mandatory disclosure? That is what I
am asking. Not the forms.
MR. DUHAMEL: I thought we were going to do that
this afternoon when Robert was here.
MR. ORNSTEIN: Well, we will as well, get his
perspective. But it certainly does not hurt to ask the
question now, whether people don't believe that there
should be any -- whether people believe there should be or
should not be mandatory disclosure of information about
this kind of programming.
MR. MOONVES: I must respectfully say I am not
voting on anything right now, to see where this entire
document turns out. So I am not committing.
MS. CHARREN: I suggest -- it sounds to me like
there is a moderate consensus. I do not know what some
people think, but most people who have opened their
63
mouths.
MR. ORNSTEIN: I must say I have just been
assuming that people are not saying I am against this,
that this is an opportunity -- we are not going to vote --
but we moved past the education one, and it seemed to me,
because there was not a person who raised an objection, or
objections that were raised about specifics, we tried to
address.
MS. CHARREN: Wait a minute. Is the money
included in your comments?
MR. MOONVES: The money is gone.
MS. CHARREN: The money is gone. That's what I
am worried about.
MR. ORNSTEIN: There may be objection about a
specific element of it. The question is whether the
general thrust of the recommendation, the principle, meets
a consensus.
MR. DUHAMEL: I have one problem, you are
talking about the people's little program directory, and
you mentioned gays and lesbians. I'm telling you, I had
the Bishop send letters because I carried the dirty
program, "Nothing Sacred." I had a boycott. I had people
praying rosaries out in front of my place.
MR. MOONVES: What are you referring to?
MS. CHARREN: Where is that?
64
MR. DUHAMEL: It's number 10, F-1.
MR. MOONVES: I missed this.
MS. CHARREN: Where?
MR. LACAMERA: It is just a sampling of
underserved.
MR. DUHAMEL: Oh, it is. But I will tell, if it
is specific, they are going to be down there.
MR. LACAMERA: I run an ABC station, too, in
Boston, which is the most Catholic, with a capital C,
market in the Nation. And in all the years I've done
programming and management I've never had such a
groundswell as I had against "Nothing Sacred" before it
aired and after it's initial episode. They were wrong.
And most people realized that once they saw the -- as the
program developed.
MR. DUHAMEL: The Bishop didn't back off in
Rapid City.
MR. DILLER: But it is a good idea, why don't
you do the programming and then not tell anybody. That
would solve everything.
(Laughter.)
MR. DILLER: As you say, a consensus is
developing. I mean Mr. Decherd will speak to the issue, I
guess, of disclosure. I just would really like to hear
any other argument that there might be put forth, where
65
you say you do not think that a broadcaster should
disclose, in whatever reasonable way would be managed, to
disclose the programming that they do that might be in the
public interest. I mean I really would like to hear the
negative to this.
I mean truly the negative. And I do not want to
speak the words before they come. If the negative is you
don't need to do it because every broadcaster will want
to, that is very interesting. I want to hear it brought
forward.
MR. LACAMERA: Barry, I think one of the issues
is -- and Bill has articulated this very well over
previous meetings -- and that is for the very small
broadcaster, this could become a burdensome administrative
and clerical quarterly undertaking.
MR. DILLER: Could it really though? I mean
isn't it designed to --
MR. LACAMERA: Well, that's what we try to do,
moving it from what now is the exhaustive reporting of
community problems and responsive programs to what now is
representative.
MR. DILLER: I mean how can three pages --
MR. LACAMERA: And I think the issue of counting
up the minutes can be burdensome for the smaller
broadcaster. And I remain very concerned about that.
66
MS. SCOTT: But, Paul, aren't they now --
everybody running on computer -- you just add another chip
in there and it tells you?
MR. LACAMERA: You have to differentiate your
program, pull things out of newscasts. It is not easy for
a small broadcaster.
MR. DUHAMEL: They don't have an extra staff
person. That comes out of somebody's hide.
MS. CHARREN: But that's not the principle.
That's a specific part of the recommendation.
MS. STRAUSS: I guess there's one possibility,
that we could exempt very small broadcasters for undue
burden purposes.
MS. CHARREN: I do not think that's a good idea.
MS. STRAUSS: I do not think it's a good idea,
but if it's a matter of getting consensus.
I mean I guess I'm confused by your comments,
Les. Because I understand that you're very concerned
about the mandatory minimum standards, but putting that
aside, wouldn't you agree that there is a public interest
role in achieving disclosure of the programming that's in
the public interest?
MR. MOONVES: Yes.
MS. STRAUSS: And can't we at least reach a
consensus on that?
67
MR. MOONVES: Yes.
MR. DILLER: Perfectly said.
MR. MOONVES: That there should be public
disclosure. I'm not sure if this is the form or if this
is right.
MR. ORNSTEIN: That's fine. We can come back to
the forms.
MR. DILLER: It can't be that after the work
that was done by Gigi, Julius, et cetera, that in fact
with the additional comments that anybody would make, that
you couldn't -- given that it is designed as a short
form -- that you couldn't accommodate everybody's little
bell and whistle, but still keep it --
MR. MOONVES: That may be very possible.
MR. DILLER: -- truly simplistic. No, Gigi?
MS. SOHN: No, I'm not saying I am really
comfortable with the notion. I mean disclosure -- this
form or no form -- is the most basic. You know, I'm very
troubled by the idea that just because somebody is a small
broadcaster -- and there ain't many of them left, okay --
that they should have no obligations at all.
MR. DUHAMEL: About a third of the industry.
MS. SOHN: Okay. Well, I would like to see how
you define it, Bill. But I do not know want to talk about
that right now. Because I don't want to differentiate.
68
Okay.
The point is that they all have government
granted licenses. And this is the basic, basic, basic.
And nobody should be absolved.
MS. STRAUSS: Well, I want to withdraw that.
Because I think we have reached consensus without that.
MS. SOHN: Okay.
MR. ORNSTEIN: Just so that I will not be
accused of unfairly paraphrasing Mr. Decherd, let me just
read the appropriate section of his comment to us.
MR. MOONVES: Let him speak when he gets here.
MS. CHARREN: Yes, he is coming. He is coming.
MR. ORNSTEIN: Okay. That's fine.
MR. GOODMAN: All of us are going to be leaving.
We can't not cover something. I mean we need to move.
MS. STRAUSS: I think we need to move on,
because we are not getting any further with this form
right now.
MR. DILLER: We need to resolve it.
MS. CHARREN: I agree with Barry.
MR. MINOW: By definition, it is hard to be in
the broadcasting industry and keep secret your
programming.
MR. DILLER: I do not know about that. There
are those who do, you know.
69
MS. CHARREN: You know, you can look at this the
other way. I mean this is saying to the public, we are
serving you. And I am sure there are going to be
broadcasters who position it this way and benefit from the
idea that we are doing this, that and the other thing.
Not only the best broadcasters who do it, but even some
that don't do enough, will be able to say we serve the
public.
I think that this is such a basic idea in a
democracy that the idea that you don't do it makes us look
creepy.
MR. ORNSTEIN: We may quibble over the specifics
of forms, although we must remember that we aren't going
to write the forms anyhow, we are offering reasonable
suggestions here. And there may be some who don't think
that they are reasonable. But we can get to that later.
If this is right on point, then otherwise we
will move along to the next issue.
MR. BENTON: Yes, just a last quick thought. In
addition to this being a valuable tool for accountability
to the public and to be used by the public in evaluating
broadcasters' performance, I think this also is a very
good self-evaluation tool of the broadcaster himself. I
think going through this list of areas and knowing that
these are the areas of concern on which accountability
70
must be public is a very useful exercise.
So this is not just good for the public, but it
is good for the broadcasters.
MS. CHARREN: That is what I just said.
MR. LACAMERA: Norm.
MR. ORNSTEIN: Yes, Paul.
MR. LACAMERA: Again, that affirms what I have
said in several meetings about the self-audit component of
it. I do think it is of great value. But, again, I
remain concerned about having to quantify minutes, hours
and whatever, and what the value of that and the burden of
that would be. Do you and other committee members have a
sense of the importance of that or the relevance of having
to do that.
MR. ORNSTEIN: I understand the burden, Paul.
My own judgment is that if the public is going to get any
sense or ability or way to grasp exactly what's happening,
you're going to have to have some quantified numbers. And
if you look back at how -- when the NAB did its own survey
of broadcasters, to try and show what they had done in
terms of the public interest, they quantified. They
quantified in terms of minutes and hours. And then they
tried to get, you know, commercial data.
MR. LACAMERA: Well, that's because they were
dealing with an aggregate. They were dealing with 1,600
71
stations, or whatever. We're dealing with a single entity
here. The representative programmer should document what
you have done.
MR. ORNSTEIN: Sure. They did it for a reason.
And the reason was, of course, that they wanted to let the
public know what they were doing. And if they had just
said, we are doing a lot, it wouldn't have been as
significant or convincing as quantifying it. So I think
there is ample reason to quantify, understanding that you
want to minimize the burden of quantification if you can.
MS. SOHN: Well, I thought that part of our
compromise was that if we are not going to list every
single segment and every single thing you do, okay, if
we're just going to have a representative sample, then the
public needs to have some sort of number to see what you
do in the aggregate. I thought that was kind of the part
of our compromise.
MR. LACAMERA: Gigi, I'm using this form to try
to win some more ground.
(Laughter.)
MS. SOHN: All right.
MR. BENTON: Let me just point out, one thing
about quantification is that, by definition, half of the
stations are going to be below average. That is just a
fact. So no matter what numbers you come up with,
72
somebody can always come back and say, look at that, that
station is below average.
MS. CHARREN: They can say that anyway.
MR. BENTON: But I mean, as soon as you
quantify, just no matter what numbers you have, you're
always going -- half of them are going to be below
average.
MR. ORNSTEIN: Our goal is the same as Garrison
Keilor's, Bill, that everybody will be above average. So
don't worry.
(Laughter.)
MR. MASUR: Yes, precisely. I think part of the
value of this -- and I go back to what I said earlier,
which I probably didn't say as clearly as I meant to --
which was when the NAB did this study, apparently it was
not an undue burden for stations to fill out the NAB forms
in order to make a case that the NAB and the NAB stations
were actually contributing to the public interest.
I think it could be seen as a very positive
thing for stations that are doing well, and for stations
that are improving it will be a positive thing. It will
only be a negative thing for stations that are comparing
negatively to themselves. Which, frankly, is something
the public should know and the stations should know.
MR. ORNSTEIN: Harold, one last comment. Then
73
we need to move on.
MR. CRUMP: I have, as usual, a little different
perspective on this. But I like this. And the reason I
do is because I do not feel that we broadcasters have ever
gotten the credit from the public or a number of you
around this table for what we do.
And the fact that we would have a form here that
would help us arrive at the totals of this, to me, is not
bad, it's good. Because it will be enlightening, I
believe, to the public to find that most broadcasters do
indeed not only take the public service requirement very
honestly and very sincerely and go forward with it, but
they're going to find out some pleasant surprises.
MR. ORNSTEIN: All right, we will move on to
multiplexing. And we will at least begin the discussion,
and then take a brief break in a short while, to catch our
breath. The floor is open for comments on our
recommendations on the multiplexing of multicasting, the
terms we use interchangeably and I hope appropriately.
Peggy, you had one suggestion there?
MS. CHARREN: This is page 4. The first
paragraph on page 4. The sentence that says they could
dedicate one of their multicast channels to public
interest purposes, which would have to include a
commitment to provide robust programming and access for
74
local voices.
I think that if the broadcasters can have that
as commercial programming -- in other words, what they do
now on their stations -- that they will say that
everything that they do is robust programming, just like
they have been saying for the 30 years that I have been
listening to them, and that the only way to guarantee that
that really is programming in the public interest is to
have it noncommercial. I know that sounds like something
unusual for a commercial broadcaster. But I think,
otherwise, we are talking about their channels being
whatever they want it to be.
Because the definition of robust programming
seems to apply to just about anything they put on the air.
And if they cannot make any money on it and they have to
do it, I think they will pay attention to the public
interest. They have an opportunity to do something else
with that channel, which they may not be terribly
interested in, and there are some other alternatives for
that.
But I think, otherwise, we are setting up a
choice that doesn't contribute to the public interest at
all. And of all the things that I -- all the problems I
have with this report, this one and where the money comes
from are the two that I am very serious about.
75
MS. STRAUSS: I have a question about this
section. I just want to clarify something. The two-year
moratorium, does that apply to this fee or in-kind
arrangement? Or does that apply to multicasting? It was
not clear.
MR. ORNSTEIN: Okay. We will have to make it
clearer. The idea here is that before any kind of fee
arrangement is imposed or any kind of in-kind contribution
is imposed, once digital becomes a reality, there will be
a two-year moratorium to give broadcasters an opportunity
to experiment with whatever combinations of
high-definition television, multicasted channels they can
find, to see what works in the marketplace. So that we
don't place a very substantial deterrent effect from the
start in experimentation.
Because the clear intent, I think, of Congress
was to -- not to prevent multicasted channels -- there
clearly was a discussion as this moved forward that the
reason for not auctioning off the spectrum -- one of the
main thrusts of all of this for having an exchange -- was
it was a one-to-one exchange. But they were leaving open
the possibility of many other things emerging from this.
So we are trying to have two years to let a
thousand flowers bloom, see what works. And then, if what
works out in the commercial marketplace indeed is in many
76
cases multiple, commercially driven, over-the-air
channels -- and to address one other issue that was raised
by a couple of people -- this does not apply to the
noncommercial, the public broadcasting channels who might
multiple, as Irvin Duggan suggested, in a noncommercial
way, PBS for kids, lifelong learning or whatever it may
be.
But if you are out there in that marketplace and
you are finding that you can generate revenues from
multiple channels, then after two years, then you begin to
implement or address a fee in-kind arrangement. That's
the idea.
MR. DUHAMEL: Personally, in the smaller
markets -- and I may sound like a broken record -- the two
years isn't enough time. Because I will bet in the very
small markets -- and I am talking the 100-plus, which is a
third of the stations -- they are going to be passing
through the network. They are not going to be
experimenting.
I mean when I started out the very first day, I
said, about 50 percent of -- the cost of this is about 50
percent of the value of the stations. This is not
something we are going to go out and do tomorrow. We have
got to phase this in.
And our initial plan is to phase in to pass
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through the network initially. Which means we will be
just passing digital through. We will put the transmitter
and the antenna on and that's about it. We are not going
to be able to do local. And we will be adding that.
But I am telling you that we are not going to do
any experimenting the first two years. The first two
years is called survival. We are looking, at our little
company, something on the order of $12 million to $15
million. That is a lot of money down there in Rapid City,
a market of 174.
And I am not unique. I am telling you they are
out there, in Wyoming, in North Dakota, in Montana, they
are out there. And they have all got the same problem.
MR. ORNSTEIN: I am not sure, Bill, that the
experimentation necessarily refers to locally produced
programming that you run on multiple channels. It may
very well be that in your local market you will experiment
to see whether an all-sports channel or an all-news
channel -- which may be coming from the network or what
you may pick up in some other venue -- is something that
you will use during the day or at other times, maybe even
in prime time, to supplement what is going on.
And this will give you ample time to see if that
in fact is commercially feasible. That is the kind of
thing we are talking about.
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MS. SOHN: Norm, I would not be uncomfortable
with a longer phase-in for stations in markets, you know,
in some of the smaller markets. I do not think that's
unreasonable.
MR. ORNSTEIN: Fine.
MS. SOHN: I mean you are going to be converting
later, but I would not be uncomfortable with having a
longer phase-in for, you know, say, in markets, whatever,
150-plus, or 100-plus.
MR. DUHAMEL: It's 100-plus.
MS. SOHN: That includes you, right, you are
175?
MR. DUHAMEL: Yes.
MR. GLASER: I think there is a scalable,
generalized way to handle this. Which is, it seems to me,
that there are fixed capital costs associated with digital
broadcasting that will go down over time and that because
of legislative or FTC mandates, broadcasters are getting
in the game perhaps earlier in that price reduction curve
than they otherwise would because we have a public policy
desire to prime the pump.
So why not describe any of the payments that are
due, or fees or however you want to describe them, as only
beginning once the additional capital costs associated
with initial digital broadcasting have been paid back?
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And that's something that has the property that you
obviously have to calculate it in all kinds of complicated
ways that I am sure are beyond the scope of the committee.
But it seems to me that if what we are talking
about here -- and we ran this a couple of times, going
back from when Bob Wright addressed the committee -- that
there are high fixed costs associated with doing this.
Let's recognize that. And let's realize that if there is
a bounty to be shared, the proper time to share that is
after the capital has been paid back. And whether that's
two years in the case of big broadcasters in big cities or
longer in the case of smaller markets, I think we can come
up with a fairly scalable method for doing that.
MR. ORNSTEIN: Richard.
MR. MASUR: Well, speaking as someone from an
industry in which no one ever makes a profit and pays back
anything, I have to say that it is not a very attractive
idea from where I sit. Unless you were able to be able to
define specifically the outlay that was involved and put a
specific tag to that, I would be very much --
MR. GLASER: We should have a copy of "Fatal
Attraction" included with the report.
(Laughter.)
MR. GLASER: I agree. And, Richard, that is a
serious point. I do not mean to punt on it. But I think
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there are many other industries, let's say, where you can
do net points and have it not be, as Eddie Murphy once
called it, chump points.
MR. ORNSTEIN: Yes, Shelby.
MS. SCOTT: I certainly would not be opposed to
giving the smaller markets more time. But they already
have more time. I mean, let's face it, television
imitates television better than any other imitation of the
world. Maybe that's its problem. But they will have
already seen what's going on in the larger markets,
because larger markets have to be on the air sooner.
So some of that experimentation -- and hopefully
some of it works -- they will have already seen. I am not
against giving them a longer time, but remember, they
already have a longer time to get there. So some of the
more costly experimentation will have already happened.
MR. CRUZ: Or, Norm, it could also be -- just to
echo Shelby's concerns there -- it could also be that
there may be some opportunities here, with this
multicasting, of leasing and partnering out some of these
extra channels. And I know we are going to discuss it
this afternoon, but I think that there is a wonderful
opportunity there for women and minority entrepreneurs, if
there is a possible potential for that, to pop out of
that.
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And I think the bounty that you talk about, I
think the potential is there with this. And I think I
would like to see some wording in that particular section
there, that when they are considering the multiplexing
possibilities, that is a hell of an opportunity for us to
at least encourage Congress and the FCC and others to say
the time is now where you can consider that as a possible
source for women and minority entrepreneurship
opportunities.
I know that's a discussion for this afternoon,
but I wanted to inject it here on this point of
multicasting.
MR. CRUMP: I have a question for Bill. Bill,
would it make sense to you, when we read this -- and I am
going to read the little phrase -- once digital television
becomes a reality, apply a two-year moratorium? The way
things are set up at the moment, if I understand them
correctly, it will be in each market, when you've got an
85 percent penetration. Now, we are talking about an 85
percent penetration of the market. If you don't have the
85 percent at that stage, you're not going in, you're not
digital, and you haven't gone.
And so markets, the larger markets, are going to
hit that number far ahead of you, and you're going to be
behind them. If we are accepting what I have said as the
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situation, wouldn't that ease your pain a great deal?
MR. DUHAMEL: Well, except for I think the 85
percent is when you give the analog channel back.
MR. ORNSTEIN: I am not sure we want to define
the time it becomes a reality as reaching the 85 percent
penetration rate.
Yes, Jim. And then Charles.
MR. GOODMAN: I continue to support the notion
that as long as the programming that broadcasters provide
is free and over the air, one channel or three or
whatever, there should be no fees. But that if we get
into the business of pay television, then there should be
fees. I am not quite sure how we got to if we decide to
multicast, then if there is more revenue, there should be
fees.
So I am not with this. I mean if it is free,
over-the-air television, one channel, three, two, then no
fees.
MR. LACAMERA: That has actually been the
expression of Congress.
MR. GOODMAN: Because this consensus is
different from that.
MR. ORNSTEIN: We have a different consensus.
Congress did in fact set up an explicit fee structure for
ancillary and supplementary programming, pay programming
83
of that sort. They did not set up a fee structure for
multicasting, but it was a very clear discussion, first,
at the time -- surrounding the time at which the
Telecommunications Act took place.
The rationale for not auctioning off the
structure was that this was going to be a one-for-one
exchange. And when, after the Telecom Act had passed, a
broadcaster suggested that he wasn't going to do HDTV at
all, but in fact would just do multiplex channels, you saw
the reaction from Congress. And that reaction was this
violates our understanding, and we will exact very
substantial penalties if you persist in this course.
So what we are trying to do here is moving past
the debate over the auction of the spectrum, to set up
consumers in which I thought we had lots of discussions of
this, we were trying to make the distinction that if
indeed this isn't a one-for-one exchange, but it is a
one-for-several exchange, and it's an exchange which
involves a great enhancement of what you're doing, you're
getting this slice of the spectrum, public spectrum, for
free, that we would create consumers under which there
would be an additional requirement made.
And generally, as we worked through the logic of
that, from the testimony of Bob Wright and others on
forward, we had had pretty much an agreement that that was
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a reasonable, logical direction in which to move.
MR. DILLER: If you have a system which is
valid, that gets spectrum in return for free broadcasting,
with public interest responsibilities minimally or
otherwise put forth, if you do that times three or four or
five, what relevance is it?
The only issue is whether you get additional, so
to speak, revenue, subscription revenue or pay revenue --
i.e., go outside the free broadcast system. But if you
stay inside the free broadcast system, why would you try
and muddy those waters? What's the point of that? If
you're inside the free broadcasting system and you have
this covenant in terms of the license, et cetera, it
should be irrelevant how many slices you can make of it.
MR. MINOW: I think that's right. I want to
associate myself with that. If the concept is you get a
free license in exchange for certain obligations, you
ought to stick with that and be consistent.
MS. STRAUSS: It seems that this will somehow be
contingent on whether we adopt minimum standards then.
MR. DILLER: It probably is. But the point is
that you don't say to a broadcaster, you can only make so
much money. But if you make more money, then the license
is, so to speak, less free. So what difference does it
make if you multicast and preserve all of the same
85
restrictions, qualities, responsibilities as you do on
your, so to speak, analog license?
MR. GOODMAN: And our suggestion in the minimum
standards is those standards apply to one or two.
MR. DILLER: Which is why -- I mean if you want
to use the word "linkage" or "de-linkage" -- it is all
linked. But I do not see how you can make a bifurcation
of it inside multicasting that's at variance with the
whole system that the things rests on. It seems to me
weird.
MR. BENTON: I think Cass Sunstein, on the
bottom of his second page of his letter, addressing the
multicasting point, his point number nine really gives the
regulatory flexibility that Bill I think is calling for
here, in which he is saying, of course, any regulatory
requirement should be designed to ensure they do not
create excessive incentives not to engage in multiplexing
in the first instance. Thus, the requirements that would
accompany multiplexing must be attentive to the risk that
they would have unintended harmful consequences, such as
discouraging multiplexing at all.
I think this really says it very well. And he
is suggesting, to put this -- at the end of the first
paragraph on page four -- that gives the flexibility that
I think in spirit we all agree with.
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MS. SOHN: I guess I view it a bit differently.
The wonderful thing about multiplexing is that it adds
opportunities and possibilities for more public interest
programming and for voices possibly that couldn't
otherwise be heard. And one of the things I was going to
suggest, and I have already suggested in the past, is that
one of the menu items -- that if you do multiplex B,
leasing out one of your multiplexed channels to a
nonaffiliated programmer -- unfortunately I do not think
you can say minority, I do not think that would be -- I
think you'd have problems with that constitutionally -- to
a programmer who doesn't have any other broadcast
interests.
I just think that the possibility for
multiplexing -- I do not look at it necessarily -- I do
not look at it as a punishment for broadcasters. I look
at it as an opportunity for other voices. And I think
that if a broadcaster does multiply his revenue -- and it
will multiply the revenue, because you'll have multiple
advertising revenue if it's not subscription supported,
there should be --
MR. DILLER: You don't really know.
MS. SOHN: Well, you don't know. And that's the
whole point. I mean that's the whole point of the
phase-in. And I am very much in favor of having the FCC
87
review these public interest obligations. I do not think
they should be set in stone.
And it makes our task very, very difficult, as
many have said before, because we are trying to do things
for the unpredictable future. But I do think the FCC
should look at these. But I do think that the possibility
for invigorating civic discourse and increasing service to
underserved communities and local communities that could
be provided by multicasting should not be -- we should not
set aside.
And I do not think it's enough, frankly, to just
say, okay, we will multiply the minimum public interest
obligations. I think there have to be more flexible
ideas. I mean I like the idea of setting aside a channel
as opposed to just having -- multiplying two hours of
public affairs times three or four. I like that.
Maybe there is another way we can fold the
flexibility in there. And I like the menu concept,
because it lets a broadcaster choose.
MR. GLASER: And to make matters more
complicated, the whole question of must-carry, if there is
a question of sort of a bargain or a deal, as it were, a
package, as the NTTA points out, they decided not to even
try to participate in this panel. But I do not see how we
can address multiplexing without addressing the question
88
of whether in the 70 percent of the households that get
their over-the-air through cable whether these multiplex
channels are carried or not.
Because if they indeed are carried, then I think
you get to the issue that Gigi described, which is do we
have enough diversity of carriage. In other words, the
FCC doesn't award the same broadcaster two or three
current NTSC channels in the same market. A given entity
only gets one.
On the other hand, if the cable company isn't
forced to carry more than one of the channels, describing
these multiplex channels as being equivalent to the
primary channel would be illusory. So I think that it is
a jigsaw puzzle. But I think speaking about whether we
are operating in a must-carry for all multiplex channel
regimes or not is an important input into what we think
should happen with these other channels.
MR. BENTON: Let alone datacasting.
MR. GLASER: Well, I didn't want to get into
that. It gets even more complicated with datacasting,
absolutely.
MR. ORNSTEIN: Let me address the weird part,
Barry, at least. Going back, my preference, individually,
would have been that -- and that of a whole lot of people
from across the political spectrum -- would have been that
89
we just auction off this portion of the spectrum and let
the market operate. Bob Dole believes that. Free
marketeers believe that. A whole lot of people in the
regulation oriented public interest community believe
that, as well.
Congress, in its wisdom -- and I use that term
loosely as I always do -- decided not to do so. And a
very explicit part of the rationale -- at least it wasn't
linked together in the law, but it was clearly out there
and it was one pushed very hard by the industry -- was
this is no giveaway at all. This is nothing but an
exchange. We're going to give you one very high-quality
station in return for one lousy-quality station.
And then the question arises, if that in fact
was the exchange, what are the public interest obligations
here? And we have a lot of people suggesting that there
shouldn't be any additional obligations. And we are
trying to grapple with ways of working within that kind of
a framework.
And it certainly seems to me not weird but
reasonably logical that you can have a menu of things.
Maybe the best way to go, it may be, would be to have very
significant mandatory standards applied to all the
channels whether they are multiple channels or not.
On the other hand, even to suggest that applying
90
the same public affairs standards to, if you multiplex, an
all-movie channel, an all-sports channel, and a regular
main channel that does a menu of things, you know, might
not work as well. But what we got from our broadcast
community was, give us a lot of flexibility here as we
move forward.
This is an opportunity to provide some
flexibility, and also to fit within that rationale,
including a rationale that is embraced by people like
Tauzin and others.
MR. DILLER: Yes, but the problem is that I
think you really do muddy waters that you have got to keep
clean. And I think that the problem here of course is
that if you knew what you were going to use the spectrum
for -- I mean use it in the sense of whether or not high
definition is going to develop or whether in fact a better
service is multicasting -- which of course no one knows.
MR. ORNSTEIN: Yes.
MR. DILLER: I mean since you don't know it,
isn't the purpose that underlies this, and the problem of
course in auctioning it, is that since you don't know, and
we all believe that it's a good thing to have free
over-the-air broadcasting survive, that in fact the only
way to do it would be to say, take the spectrum, if it's
going to be one signal, deliver that high def; if it's
91
going to be multicast signals, keep a very hard separation
between free over-the-air broadcasting as we know it and
pay services or data services. Draw the line there.
So long as you do all of that -- and I would
argue that you have to put underneath it strong minimum
standards for public interest responsibility -- that if
you do that, then the system ought to hold any change in
that, any change -- to auction the spectrum and find out
that you have endangered free over-the-air broadcasts, or
muddy the waters and say, well, if you multicast and you
don't also have public interest responsibilities, but yet
you pay X and Y of the salami as it gets cut for those
other services, anything that you do with that is going to
endanger the system that everybody says you want to
protect.
And therefore I think that it's very dangerous
to even go a hair split towards making those changes,
providing of course you do have clear and I think minimum
standards of public interest responsibilities in return
for free licenses.
MS. CHARREN: Would that mean that given that
broadcasters say they are operating legally now, which
means that on all their stations they are paying attention
to the public interest obligation that came with the
license -- right -- would that mean that if they had four
92
or five channels that the level of public service that we
get now is the level we are going to get in a multiplexed
system? In other words, the amount of programming in the
public interest, the kind of programming in the public
interest.
What will make happen the opportunity of digital
television to be another kind of delivery service?
MR. DILLER: Well, I couldn't answer that except
to say that I of course advocate minimum standards for
broadcasters which I think move themselves over to
multicasting or anything else they do in a service
different or chopped from their single current service. I
do not know what system will result from that.
MS. CHARREN: But it seems to me there are very
few incentives, then, to do anything differently from what
they are doing now. I mean assuming -- forget the pay
services --
MR. DILLER: Well, I think most broadcasters do
generously program with responsible public interest
components of their schedule. So I am interested in
having that survive. And if it gets multiplexed, great.
MS. CHARREN: Well, I feel that just as if
public broadcasting has two channels in a community --
which Boston is lucky enough to have -- that it gives the
opportunity for public broadcasting to do something really
93
different in serving the public with the second channel.
What I worry is if commercial television has two channels,
or three, that they are going to do what they do. Which
doesn't really provide, it seems to me, a lot of options
for underserved audiences. And you can understand that.
They have one channel.
How do you get them to the point of thinking of
three channels as a difference in kind instead of just
amount?
MR. DILLER: Well, I do not know. I go back to
what I said. I do not know that you get them to think in
any -- I mean I do not know that they begin to tap dance
rather than soft shoe, or whatever it is that they do.
But I think if you have minimum standards, then that is a
good thing if that is replicated. I think it is a good
thing for public broadcasting to do the same thing.
In other words, I start with the idea that the
system currently by most broadcasters is solid and good
for free over-the-air broadcasting. And it doesn't do
everything, but it does a lot of very good things. And it
does a lot of things relative to public interest
responsibilities.
MS. CHARREN: And I go to, if you have five
platforms or four extra platforms for speech, then it
makes sense, in that kind of a marketplace, to take one
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and give it to noncommercial uses of serving the public,
where it doesn't make sense to do that now with an analog
channel. And it doesn't make sense to do it if the whole
service was high definition. I agree that that is a
service all by itself.
MR. DILLER: Well, it depends on how much
spectrum we are going to have and how much room there is
on the spectrum obviously.
MR. ORNSTEIN: I am going to make one small
comment and then, if there are no others, we will take a
break, and then we can come back to this.
There is one coherent model that you have
outlined. And it is an inclusive model. And it is
certainly one way to go. And that would be stiff minimum
standards applied across every channel that is used,
covering all these different areas of the public interest.
And then you don't need some of these other things. That
is certainly a reasonable and coherent model.
MR. DILLER: It is the only course.
MR. ORNSTEIN: Which some here would vehemently
oppose. And in the real world, it is going to take some
great battling to get there. Looking at the real world --
MR. DILLER: I would only say this one thing,
and then I will shut up about this. If you don't have
that, then they should auction the spectrum off. If they
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don't have that, then there is no purpose in having free
over-the-air broadcasting survive. Let it all be a pay
world, and the hell with the underserved by percentage of
the U.S. coverage, much less by percentage of diversity,
et cetera, et cetera.
MR. ORNSTEIN: Well, I would suggest to you that
there is another option, or there are other models that
may not be as neat and clean, but that may work. And they
can involve minimum standards, but they also involve a set
of modules in different ways. And the disadvantage of the
approach that you are advocating is that it takes away
flexibility.
MR. DILLER: I do not think it takes away from
flexibility.
MR. ORNSTEIN: And there are other ways of
building in flexibility that can fill some vacuums here.
And I do not think we have to necessarily look at mutually
exclusive or all-inclusive models. And we can come back
to this. But why don't we, since it is 11 o'clock --
MR. MINOW: You can't have half pay and half
free.
MR. DILLER: Absolutely. Or one-quarter and
three-quarters, or seven-eighths.
MR. ORNSTEIN: Think outside the box, Newt.
Let's come back in 15 minutes.
(Recess.)
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