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.)
              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?
              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
              MR. SUNSTEIN:  Thank you very much.  I wanted to

    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
              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

    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.

              Thank you.
              MR. ORNSTEIN:  Okay.  Les, for an opening
              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

    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.

              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

    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

    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.
              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  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

              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.

              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
              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.

              MR. ORNSTEIN:  After lunch we will show you the
    cover.  That is very important for our newsstand sales, of
              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.
              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.
              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.
              MR. ORNSTEIN:  If you are 18 to 29 years old
    especially, please watch that show.
              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

    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. 

    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

    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

    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

    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.

              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

    the Federal Government.
              MR. ORNSTEIN:  Can you move the microphone
    closer?  We need enhanced speaking here.
              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.

              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.
              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

              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
              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.
              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

    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

              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

              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

    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
              MR. ORNSTEIN:  Is that Peggy, what you wanted to
              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

    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

    you're talking about?
              MR. CRUZ:  It's in reference to the funding
              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

    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

    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
              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

    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.
              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. 

    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
              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
              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

    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. 

    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
              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

    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

    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

    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
              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

    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
              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

    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
              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

    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.
              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.

               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.

              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

    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
              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

    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

    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
              MR. CRUMP:  It is a pretty basic discussion.

              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
              MR. MOONVES:  But, Gigi, the phase-in is
              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

              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

    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
              Quite simple.  They're each three pages long. 

    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
              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
              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

    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

    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
              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. 

    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
              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.

              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
              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.

              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
              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

    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

    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

    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.
              MS. SOHN:  There you go.  I can't respond to
              MR. ORNSTEIN:  Newt.
              MR. MINOW:  Senator Dirksen used to say:  Always
    stand on principle.  Your first principle is flexibility.
              MR. ORNSTEIN:  Yes, but look where he is today.
              MR. ORNSTEIN:  Jim, did you have a comment?
              MR. GOODMAN:  I just wanted to point out that in

    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
              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.

              MR. MOONVES:  It is a separate area.
              MR. ORNSTEIN:  It is a stand-alone
              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
              MR. DILLER:  I agree.
              MR. ORNSTEIN:  So we have one of those that does
              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

    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

              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
              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.)

              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. 

    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

              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
              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?

              MR. DUHAMEL:  It's number 10, F-1.
              MR. MOONVES:  I missed this.
              MS. CHARREN:  Where?
              MR. LACAMERA:  It is just a sampling of
              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.
              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

    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
              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
              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.

              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?

              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. 

              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
              MR. DILLER:  I do not know about that.  There
    are those who do, you know.

              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
              I think that this is such a basic idea in a
    democracy that the idea that you don't do it makes us look
              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

    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

    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.
              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,

    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
              MR. ORNSTEIN:  Our goal is the same as Garrison
    Keilor's, Bill, that everybody will be above average.  So
    don't worry.
              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

    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

    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
              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.

              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

    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
              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
              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

    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.

              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
              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
              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? 

    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.
              MR. GLASER:  I agree.  And, Richard, that is a
    serious point.  I do not mean to punt on it.  But I think

    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

              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
              I know that's a discussion for this afternoon,
    but I wanted to inject it here on this point of
              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

    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
              So I am not with this.  I mean if it is free,
    over-the-air television, one channel, three, two, then no
              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

    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

    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

    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
              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.

              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
              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

    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

    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,
              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

    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

    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

    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
              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

    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
              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

    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
              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
              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

    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

    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
              MR. DILLER:  I do not think it takes away from
              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
              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.


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