Meeting Transcript -- Afternoon Session
[Go to the morning session transcript]
1 AFTERNOON SESSION
2 (1:35 p.m.)
3 CO-CHAIR ORNSTEIN: If you could take your
4 seats, please, we're going to get started.
5 I'd like to welcome our panelists for our second
6 session, on perspectives from different elements of the
7 broadcast industry. Let me just turn to Robert Decherd to
8 introduce our panelists.
9 MR. DECHERD: Norm, thank you very much. I
10 appreciate being asked to help organize this panel this
11 afternoon, and I thought I might try to lay some
12 groundwork for this discussion of digital broadcasters'
13 public interest obligations. Some of this I'd like to do
14 from our own company's perspective and hope that my fellow
15 committee members will indulge me, because some of the
16 same ideas have already been presented in some other
17 testimony and documents presented, but in the context of
18 our discussion this morning I think we have here, I know
19 we do, from the commercial broadcast side three companies
20 that represent aligned perspectives, but very different
21 histories and experiences.
22 Our company, for example, began in the
23 broadcasting business in 1922, when we built one of the
24 first AM radio stations in the country, WFAA-AM in Dallas.
25 28 years later we entered the television business when we
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1 acquired a television station in Dallas and signed on as
2 WFAA-TV, which is now an ABC affiliate.
3 Since then, as this consolidation of our
4 businesses has accelerated, we have come to own 17
5 television stations. We reach percent of U.S. households,
6 and the only importance of that is to say that we're not
7 alone in having groups of that size and penetration of
8 that level.
9 For our part, we invest the resources necessary
10 to provide quality local news, public affairs, and
11 community-oriented coverage, and, very importantly, to
12 develop our properties into durable news and information
13 franchises, which will be extremely important in an
14 increasingly competitive broadcast environment.
15 We talked this morning about the compact between
16 the government and licensees. In beginning in the radio
17 business, as many television broadcasters did, we accepted
18 the terms of that social compact as far back as the
19 1920's. In return for the government eschewing any role
20 as an owner, programmer, or censor of broadcast
21 facilities, we and other radio licensees agreed to provide
22 programming responsive to our communities of license.
23 We believe that Belo, along with almost all of
24 the television broadcasting community, has continued to
25 honor this compact with the government, and you will hear
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1 that theme in the testimony this afternoon. The most
2 important aspect of that commitment is that American
3 television viewers have by far the finest broadcasting
4 system in the world today and I believe are by far the
5 best informed electorate.
6 High definition television and the emergency of
7 technology, as Mark reminded us this morning, has a lot to
8 do with why we're here today. For us and I think for most
9 broadcasters, television broadcasters, HDTV is a
10 competitive necessity. That's because if our competitors
11 in cable or satellite or whatever businesses may evolve
12 are going to broadcast signals in HDTV to American homes,
13 we obviously have to match that capability in order to
14 preserve or even expand our news and information
15 franchises.
16 That's why we at least believe that at this
17 juncture television broadcasters should not be distracted
18 by multicasting and the very unpredictable complexities of
19 programming three or four or five additional channels in
20 what is already a more fractionalized television universe.
21 Instead, we think we should concentrate on providing more
22 creative, higher quality programming which addresses many
23 of the issues we discussed this morning. We should do
24 that over our one channel initially, and we should deliver
25 it in the most attractive technical form possible, namely
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1 HDTV.
2 You've heard from various sources that HDTV will
3 come with a large price tag. In our case, with 17
4 television stations, when they are fully operational with
5 HDTV studio and transmission facilities, our total capital
6 investment will exceed $150 million. Now, that's an
7 enormous amount of money for us and I want to say it only
8 by way of underscoring that there is costs associated with
9 the transition for any broadcaster, no matter how large or
10 small that company may be.
11 It also prompts me to address what I think is
12 the single biggest misunderstanding about the television
13 industry's transition from analog to digital television.
14 That is the so-called "great give-away" of an additional
15 channel to television broadcasters. So as a backdrop for
16 the comments you're going to hear from our panel, let me
17 just make a few points.
18 The digital transition is being undertaken by
19 the television industry at the initiative and direction of
20 Congress and the FCC. It's a process that began over 10
21 years ago, as you heard at our first meeting, and it has
22 certainly been supported by and encouraged by
23 broadcasters.
24 Have said that, every television station in the
25 United States could switch right now from analog to
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1 digital transmission using its existing channel, without
2 receiving any additional spectrum from the government.
3 There is no such thing as an analog television channel or
4 a digital television channel. Every television channel
5 has the same physical properties.
6 The FCC's transition period from 1998 to 2006 is
7 designed with one primary purpose in mind -- to make it
8 less burdensome and more economical for the American
9 people, the people that Mark was talking about this
10 morning especially, to purchase digital television sets or
11 digital television converters over an extended period of
12 time. Employing digital technology, every television
13 station could multiplex its existing television channel,
14 splitting the spectrum into three or four or even five
15 channels.
16 The television industry is not, however,
17 receiving from the government any new capacity to
18 multiplex this channel as a result of a loaned second
19 channel. In addition to our investment in capital, all
20 broadcasters are going to spend in this transition, and
21 the result is an investment of billions of dollars to
22 rebuild facilities while at the same time shouldering the
23 significant operating costs of broadcasting on both of
24 these channels. One would be analog and one would be
25 digital.
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1 This format of dual transmission will last for
2 at least eight years. At the end of this period, the
3 loaned channel will be returned to the government and we,
4 like every other television broadcaster, will end up where
5 we were before, with 6 megahertz of spectrum.
6 Now, in spite of the additional capital expense
7 and the expenses of operating two channels during this
8 transition, I know of know broadcaster who is planning any
9 changes in their public interest programming commitments.
10 At our company, for example, we are eager to fulfil those
11 commitments. We feel we've done that over a long period
12 of time. What we are more worried about is the notion
13 that there are additional responsibilities warranted
14 simply because of the digital transition. Said another
15 way, this transition is not a pretext for additional
16 government mandates.
17 Let me turn to public interest programming
18 itself for a moment. We and I think the very large
19 majority of television station licensees are highly
20 attuned to our public interest obligations, and I think
21 it's important to note here the idea of television station
22 licensees. These licenses are issued to individual
23 television stations and, while their ownership is
24 attributed to group owners, they are not issued to our
25 company as a group or to the networks or to any third
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1 party.
2 In today's environment, my belief is that any
3 television broadcaster intending to be in the television
4 business for the long term needs no mandate to provide
5 responsive public interest programming. For us to
6 flourish in the digital age, television broadcasters need
7 to preserve and expand local news and information
8 franchises, not reduce their commitments. This of course
9 includes providing coverage of our political system and
10 especially public affairs programming and debates.
11 Some of you know that in the last election cycle
12 we initiated a program that Paul and we've talked about a
13 great deal, called "It's Your Time." It offered every
14 federal candidate in our stations' ADI's five minutes of
15 free air time unfiltered. We then provided those programs
16 free of charge to our local PBS stations. The result was
17 that on a voluntary basis Belo's viewers received over 12
18 hours of additional air time concerning their
19 Congressional races, and no one mandated that.
20 Indeed, what we believe and I think you'll hear
21 in the discussion this afternoon is that the government
22 and the broadcast industry should focus on ways to
23 encourage voluntary and creative programming initiatives
24 like "It's Your Time."
25 It's also important to note a theme that you
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1 will certainly hear this afternoon and in the future, and
2 that is localism. Localism is the single characteristic
3 distinguishing television broadcasters in the video
4 marketplace. And the most important aspect of localism is
5 programming that is responsive to communities' needs and
6 interests.
7 We estimate that approximately one-third of the
8 typical broadcast week of a Belo television station -- and
9 I suspect this would be true for Harold's or Paul's or
10 Jim's stations as well -- is devoted to non-entertainment
11 programming, which consists of local, state, national news
12 and public affairs, instructional, educational,
13 children's, and religious programming. These programming
14 priorities are not only good service to our communities as
15 a public trustee, they represent very good business.
16 Audiences and investors recognize that this commitment is
17 a major contributor to our success in ratings, the success
18 of any broadcaster in ratings, and also contributes to our
19 financial results.
20 We've heard a lot about technology. We're going
21 to talk more about it in months to come. Needless to say,
22 everyone agrees that the technological barriers separating
23 previously distinct communications businesses, such as
24 computers and television, and even electrical utilities
25 and telephones and television, are disappearing. The
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1 lines are already blurred, and television stations which
2 build strong local franchises with attractive news and
3 community programming are the ones that will thrive. The
4 economic imperative for television broadcasters is to
5 concentrate on building and extending those local
6 franchises, and a key component is public interest
7 programming.
8 The only certain result of imposing additional
9 public interest responsibilities on digital broadcasters
10 will be to burden marginal television station operators,
11 those least able or least inclined to produce expensive
12 competitive news and other non-entertainment programming.
13 Let me now introduce this very distinguished
14 panel and express my personal appreciation for their
15 taking time to be with us today. We have distributed at
16 each of your places hard copies of lengthier testimony
17 which we're submitting as part of this presentation. In
18 order from left to right as we look at our panelists, Don
19 Cornwell, Bob Wright, and Bob Coonrod will present
20 summaries of that testimony, and I would encourage you to
21 read their longer submissions at your leisure.
22 Don Cornwell has served as Chairman of the Board
23 and Chief Executive Officer of Granite Broadcasting
24 Corporation since the company's founding in 1988. Granite
25 is headquartered in New York City and owns and operates 11
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1 television stations of various size in disparate markets.
2 Prior to forming Granite, Mr. Cornwell was a vice
3 president of Goldman Sachs and Company.
4 Bob Wright joined the National Broadcasting
5 Company as President and Chief Executive Officer in 1986.
6 Under his leadership, NBC has become a broad-based global
7 leader in the media business. In addition to 11
8 television stations across the country, Mr. Wright has
9 extended NBC's businesses into cable with MSNBC and CNBC.
10 In multimedia, NBC has launched two new businesses, NBC
11 Interactive and MSNBC Desktop Video.
12 In fairness to Bob, I would hope that we would
13 concentrate on our agenda today and leave discussion of
14 rating systems to more appropriate forums. As you know,
15 he's been out front on that question. Maybe we should
16 direct those questions to Leslie so that we can stay on
17 our agenda.
18 Bob Coonrod was elected President and Chief
19 Executive Officer of the Corporation for Public
20 Broadcasting on October 1st of this year. He served as
21 Executive Vice President of CPB from 1992 until 1997, when
22 he was named Acting President. Prior to his tenure at
23 CPB, Mr. Coonrod served as Deputy Director of the Voice of
24 America and before that as a foreign service officer with
25 the U.S. Information Agency.
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1 Don, welcome.
2 STATEMENT OF W. DON CORNWELL, CEO,
3 GRANITE BROADCASTING
4 MR. CORNWELL: Thank you.
5 I'm assuming that this microphone is working?
6 Thank you.
7 I want to express my appreciate to Chairman
8 Moonves and Chairman Ornstein and members of the committee
9 for the opportunity to appear before you today. I should
10 point out that I'm privileged and honored to be here.
11 This is important work that you're doing.
12 As Robert Decherd pointed out, Granite was
13 founded just 9 years ago and is now the largest minority-
14 controlled owner of major market television stations and
15 also is the eighth largest non-network television station
16 group in the United States. We all have to find something
17 to brag about.
18 Granite operates 11 network-affiliated stations
19 and currently reaches approximately 8 percent of all
20 television households in the country.
21 My testimony today will focus on three issues of
22 concern to this commission: the public interest
23 obligations of television broadcasters in the digital era;
24 political broadcasting; and the implementation of digital
25 broadcasting as it affects a company like ours. I offer
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1 these remarks from the vantage point of being the Chairman
2 and CEO of a publicly owned corporation that owns and
3 operates television stations in widely divergent markets
4 in terms of size and character, from Detroit, which as you
5 know ranks ninth, to Duluth, which is the 134th market.
6 I also believe my remarks about the importance
7 of public service are shared by the vast majority of
8 broadcasters and I feel it important to reinforce that
9 notion.
10 Let me start by saying that I believe that
11 broadcasters are the trustees of a powerful public
12 resource, the airwaves, and as trustees we have a
13 responsibility to use the airwaves in the public interest.
14 In my role as CEO of Granite, I seek to ensure that,
15 through our corporate philosophy and our operations, that
16 we fulfil that commitment every day. Broadcasting in the
17 interest of the viewing public is not only governmentally
18 mandated, but is also good business.
19 Above all, I think it's important to note that
20 broadcast television from our perspective is essentially a
21 local endeavor, and yet that limitation is also our
22 strongest asset. Individual broadcast television stations
23 are received by a geographically limited community of
24 households. For this reason, television broadcasters are
25 ideally positioned to understand and respond to the unique
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1 cultural, educational, informational, and entertainment
2 needs and desires of the communities we serve.
3 Free over-the-air television is under siege from
4 a variety of highly competitive mass media sources, so to
5 survive we have to offer a service of substantial value to
6 our viewers that they cannot obtain elsewhere. In my
7 view, broadcasters have excelled in this endeavor.
8 Each of the broadcast television stations
9 operated by Granite is distinctly community-oriented. The
10 backbone of our local service is the strength of our local
11 daily news operations. For many in our markets, local
12 television news is the primary source of accurate and up
13 to date information about the people, trends, and events
14 in their communities. In response to this need, the
15 majority of Granite's stations broadcast 20 or more hours
16 of news programming per week, almost all of which
17 originates from our stations.
18 In order to reach the widest possible audience,
19 each Granite station also offers closed captioning of most
20 of this new programming. In addition, each Granite
21 station independently produces and broadcasts a regularly
22 schedule of public affairs programs addressing numerous
23 and diverse issues of local and national importance, and
24 in our written testimony we have given you a lot of
25 examples of that, which you can read at your leisure.
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1 Granite's commitment to its various communities
2 of viewers goes far beyond the provision of quality local
3 news and public affairs programming. Through involvement
4 in local charities, community groups, health programs,
5 public education campaigns, and community educational
6 programs, our stations support our communities and in turn
7 encourage our communities to support us. These programs
8 extend the reach of our stations beyond our viewers'
9 television sets and into their daily lives.
10 At Granite we do not dictate from our corporate
11 offices which issues our stations should address in their
12 local programming efforts or how stations should involve
13 themselves in their respective communities. To do so
14 would be fundamentally inconsistent with our emphasis on
15 identifying and serving local needs and interests at the
16 local level. People in our corporate offices in New York
17 simply can't be as attuned to the needs and interests of
18 viewers in Peoria, as an example, as the staff of our
19 Peoria station.
20 Similarly, we believe that, no matter how well
21 intentioned, regulators in the Nation's capital cannot be
22 as attuned to the needs of thousands of individual
23 communities served by broadcast television stations across
24 the Nation as the people who run those stations. Local
25 broadcast television stations understand the needs,
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1 interests and concerns of their viewing communities far
2 better than the Federal Government and local broadcast
3 television stations must offer programming and other
4 services that meet those needs in order to survive. For
5 this reason, we fully believe that broadcasters have all
6 the incentives they need to serve the public interest and
7 that the goal of this committee should be to reinforce the
8 vital importance of the public interest believe
9 obligations of broadcasters in a digital world, without
10 attempting to quantify such obligations.
11 New regulatory mandates, although intended to
12 benefit the public, in my opinion will merely prevent
13 broadcasters from most effectively competing in the mass
14 media marketplace, and in addition it will prevent is from
15 effectively serving our communities.
16 Let me make a few brief remarks about political
17 broadcasting. We feel that requiring broadcasters to
18 provide free air time to political candidates is
19 unwarranted. Although we know there is a bipartisan
20 consensus building that the American system of financing
21 political campaigns needs to be reformed, compelling
22 broadcasters to give free air time to political candidates
23 will not fix the campaign finance system and in our
24 opinion will certainly not lead to a better informed
25 electorate.
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1 At Granite we respond to the parallel demands in
2 our democracy of voters for information and of candidates
3 for access by broadcasting special election coverage,
4 candidate debates, and forums such as town hall meetings
5 and public affairs programs in which candidates have an
6 opportunity to discuss their views on issues of concern to
7 the public.
8 We believe that this type of programming
9 provides the most meaningful form of dialogue and does
10 more to educate the voters and stimulate them, hopefully,
11 to get out and vote than any number of paid spots that
12 present only one candidate's views of an issue or aim
13 potentially to disparage other candidates.
14 I would have to say, as a company that carries a
15 lot of leverage, I should also point out that mandating
16 free time for political advertising would deprive
17 broadcasters of an important source of badly needed
18 revenues as they embark on the total rebuilding of the
19 American television infrastructure, and that turns now to
20 the implementation of digital television.
21 Television broadcasters are now embarking on one
22 of the most comprehensive and expensive privately funded
23 experiments in history. The conversion to digital
24 television transmission and reception involves nothing
25 less than the complete rebuilding of America's terrestrial
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1 television infrastructure within a very compressed time
2 frame and at a cost that is estimated by the National
3 Association of Broadcasters, as one source, to exceed $16
4 billion.
5 For this reason, I must confess that I share
6 Robert Decherd's view and I become distressed when I hear
7 people criticize the government for a give-away with
8 regard to the spectrum or view the allocation of new
9 channels as a justification for new regulation. As the
10 person at Granite who ultimately must approve our
11 stations' capital budgets and justify these budgets to our
12 directors, our lenders, and, most importantly, our
13 stockholders, I can assure the distinguished members of
14 this committee that there is no free ride in the
15 conversion to digital television.
16 Moreover, the costs of this conversion will
17 affect smaller stations disproportionately, because the
18 capital expenditures required to effect the conversion are
19 wholly unrelated to station revenues or the size of the
20 market. This poses, I submit, a grave danger to the
21 concept of equal access to news and information in our
22 smallest communities.
23 For instance, we currently estimate that we will
24 be required to spend as much as $8 million to complete a
25 full digital conversion of our smallest market station,
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1 which serves Duluth, Minnesota. This market is currently
2 served by only three stations and they compete for
3 approximately $15 million in advertising. As a former
4 person who spent a little time on Wall Street, I can tell
5 you those are not very good economics.
6 More fundamentally, I think it's important to
7 note that there is no spectrum give-away because the FCC
8 rules mandate a return of the analog spectrum at the end
9 of the conversion process. When analog broadcasting
10 ceases, television stations in the United States will have
11 the right to use only 6 megahertz of spectrum, just as
12 they do today.
13 I'd like to conclude by saying that I hope you
14 won't interpret my remarks as reluctance on the part of
15 Granite to undertake this massive project. Granite is
16 committed to achieving a truly first class conversion of
17 all of its television stations to a digital format, from
18 Buffalo, New York, to San Jose, California, and all of the
19 markets in between. However, it won't be easy and it
20 certainly won't be cheap. Our current budget estimates
21 per station for our 11 stations run from $3 million to as
22 high as $10 million.
23 Because there is no clear consensus on the
24 services and technologies that will be most desirable to
25 the American public -- some would call that the business
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1 plan -- we at Granite have not made any hard and fast
2 decisions about programming formats on our digital
3 channels. Yet we are excited about the tremendous
4 flexibility and suppleness offered by digital television
5 technology and we look forward to bringing all of the
6 benefits of that technology to our viewers.
7 I thank you again for the opportunity to appear
8 here today and present the views of Granite Broadcasting
9 on this exciting transition to digital broadcasting. I'd
10 be pleased to answer any questions.
11 MR. DECHERD: Don, we're going to handle
12 questions after we've gone through the presentations.
13 Thank you very much.
14 Bob Wright, welcome.
15 STATEMENT OF BOB WRIGHT, PRESIDENT AND CEO, NBC
16 MR. WRIGHT: Thank you, Robert.
17 I appreciate the opportunity to provide NBC's
18 views on the public interest obligations of digital
19 television broadcasters. There is a need for all
20 interested parties to reason together to develop a common
21 understanding of the possibilities and limitations of
22 digital broadcasting as they relate to public interest
23 obligations. I'd like to make two major points on that
24 subject at the beginning here and then go into it in a
25 little detail.
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1 First, I do not believe it is even possible to
2 have a meaningful dialogue about broadcasters' public
3 interest obligations in the digital age until we all go
4 beyond the extremely general discussion which has
5 characterized the debate today. I ask the committee to
6 delve deeply into the business and technological realities
7 of digital broadcasting, attempt to understand what
8 digital broadcasters will actually be doing in this new
9 era, and only thereafter grapple with any specific changes
10 to the public interest obligations.
11 The historic business reality is that each
12 broadcaster will spend millions of dollars to convert from
13 analog to digital, but only one of three business models
14 even holds out any reasonable business prospects in a
15 discussion of changes to public interest obligations. Let
16 me just summarize the three models here.
17 The simulcast model, this is the first one:
18 broadcasters transmitting essentially the same programming
19 simultaneously in analog and digital format. It entails
20 increased cost to the broadcaster with no matching revenue
21 and offers no reasonable basis for changing public
22 interest obligations.
23 The second model, the pay services model: In
24 this model the broadcaster supplements one free over-the-
25 air broadcast service with additional subscription-based
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1 services. This triggers an obligation to pay fees to the
2 government in accordance with the Telecommunications Act
3 of 1996 and is not the basis for changing or charging
4 additional public interest obligations.
5 The third model, only the multiple free over-
6 the-air broadcast services model. In this model the
7 broadcasters are providing as yet undefined additional
8 free services over an indeterminate number of channels
9 during as yet unknown day parts, creating a theoretical
10 basis for possibly sustaining changes to public interest
11 obligations. But during the times that broadcasters are
12 broadcasting high resolution television, no such scenario
13 is possible because the spectrum is totally consumed.
14 Even for those times when a broadcaster is not
15 broadcasting in HDTV, there is no current business
16 scenario that would suggest this approach.
17 It certainly would be unwise and premature to
18 predict changes in the public interest obligations on a
19 business case which may never materialize or be very
20 short-lived.
21 The second point is that any recommendations
22 which the committee may make regarding changes in the
23 public interest obligations should be guided by the
24 principles of breadth, inclusiveness, flexibility, and
25 innovation. For example, if a broadcaster determines to
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1 run a free all-news broadcast service, that should be
2 counted as fulfilling any altered public interest
3 obligation. It is imperative that broadcasters not be
4 hamstrung by new narrow quantitative, one size fits all,
5 public interest obligations.
6 Digital broadcast technology is in its very
7 infancy. It would be extremely unwise to write specific
8 public interest obligations into narrow, inflexible
9 regulatory language without knowing much more about how
10 this marvelous technology will develop and how its
11 potential to serve the public interest might be most
12 wisely tapped. Rather, a broad public interest mandate
13 that encourages innovative and creative approaches that
14 meet the needs of the viewing public should be favored.
15 Robert spoke a little bit, and so did Don, on
16 public interest service and the history of it, and I guess
17 I would mention some from our standpoint. I think the
18 purpose of this is just to refresh our recollection of
19 what we do and many members of this commission do and what
20 is generally done throughout the industry, because it is
21 often lost track of when you're inside the Beltway, where
22 people are advocating a point that has some peculiar
23 impact on a group that they favor and tend to ignore what
24 is already being done throughout the Nation.
25 Service to the community at both the national
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1 and local levels is the very essence of broadcasters'
2 public interest obligations. NBC devotes approximately 65
3 hours of programming during an average week to news,
4 information, qualifying children's programming throughout
5 the stations that we own and operate. The more well-
6 known programs -- the Nightly News, the Today Show,
7 Dateline, and Meet the Press -- are supplemented with
8 numerous local shows that run two and three hours in the
9 early mornings and late at night, in periods in many cases
10 from 4:00 to 7:00 o'clock at night or 5:00 to 7:00 o'clock
11 at night -- an extensive, extensive amount of programming.
12 On a periodic but recurring basis, NBC provides
13 extensive coverage of significant national political
14 events -- the Democratic and Republican Party conventions,
15 presidential debates, State of the Union Message and
16 opposition reply, things that you're all very familiar
17 with.
18 The broadcast networks serve a vital unifying
19 function in times of national crisis, challenge, or
20 disaster -- the Persian War, Oklahoma City bombing, and
21 many, many other events of that ilk.
22 Community-based television stations, our
23 stations, provide local news, weather, traffic, school
24 closing information, giving viewers up to the minute
25 information about conditions in their communities which
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1 affect their daily lives. In times of natural disasters,
2 such as hurricanes, snowstorms, earthquakes, local
3 broadcasters work together with police, fire, and
4 emergency health agencies to provide viewers life-saving
5 information.
6 There also is extensive coverage of political
7 campaigns, races at all levels from local school districts
8 to mayoralty campaigns to governors to Federal elections,
9 an endless number, in larger markets almost an impossible
10 number of elections to cover and provide in our opinion as
11 much coverage as we would actually like in every one of
12 those typical election campaigns.
13 The business realities. The transition from
14 analog to digital transmission is not optional for
15 broadcasters if they want to remain in business. It is
16 mandatory, both as a matter, a legal matter and as a
17 marketplace reality. The broadcast industry must
18 transition from analog to digital if it is going to stay
19 competitive with cable, satellite, and telephone
20 industries, all providing video services digitally.
21 The broadcast industry is devoting enormous
22 financial and human resources to this mandatory transition
23 from analog to digital transmission. Remember that
24 broadcasters' current spectrum is being sold at auction in
25 2002. From there on in, the only spectrum that broadcast
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1 have any real claim to in terms of future ownership is the
2 digital spectrum.
3 Broadcasters and TV set manufacturers have spent
4 more than a half a billion dollars on the research,
5 testing, and development of digital video. NBC itself has
6 expended more than $55 million on the creation of digital
7 studio facilities at our headquarters in New York. Each
8 station will have to spend a minimum of $2 million just to
9 pass a digital signal feed. The cost of conversion to
10 full digital television transmission capability for each
11 station is likely to be closer to $10 million. The cost
12 of training a new generation of broadcast engineers is
13 high and there are ongoing significant technical
14 challenges -- interference problems, tower construction
15 problems, and things of that sort.
16 Now, in the backdrop of this, in comments that I
17 offered to our own board of directors, rather than dodge
18 the issue, I told them quite frankly essentially what I'm
19 going to say to you here: that there are no immediate
20 prospects for broadcasters to realize increased revenues
21 to offset the enormous costs of digital conversion. Quite
22 frankly, as I explained it to them, it's a cost of staying
23 in business. It's a cost of being in business. But I
24 can't provide any near-term credible source of revenue to
25 support it.
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1
2 Free over-the-air digital broadcasting will
3 still be dependent on advertising. There is no guarantee
4 of increased advertising revenue when broadcasters go
5 digital. There are no digital television sets on the
6 market today. Programming costs, essentially sports
7 rights and others, have skyrocketed.
8 Two of the three most realistic business models
9 for digital broadcasting, as I said earlier, really don't
10 lend themselves at all to additional public interest
11 obligations, because they involve no change in programming
12 or economic structure of universally free, available,
13 over-the-air broadcasting. In that first instance, we
14 have simulcasting, which is what most broadcasters will
15 elect to do in the beginning. You're simply providing the
16 very same programming to the hoped-for digital customer
17 and you're hoping that during that period, probably over
18 the next 5 years when there are going to be some sets in
19 use, that that programming is going to look clearer,
20 sharper, and be more attractive to the public. But you're
21 really broadcasting exactly the same programming.
22 When a broadcaster uses digital transmission
23 capability to provide supplementary subscription services,
24 as in the second example, the payment of those fees are
25 already required under the Telecommunications Act. So
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1 there's no give-away, there's no room for additional
2 public interest obligations, because you're actually
3 falling into a whole different section of the
4 Telecommunications Act.
5 The use of digital technology to provide the
6 multiple free over-the-air broadcast services, which is
7 often talked about, is the one foreseeable business model
8 which might justify a realistic appraisal of the
9 appropriateness of changed public interest obligations.
10 However, I point out that programming multiple channels
11 presents a significant business problems. If the
12 programming is that good, you probably can't afford to put
13 it on on a multiple basis to so few homes.
14 If you elect to go to a pay format, then you
15 fall into the Telecommunications Act where you have to go
16 in and apply for specific tariffs. There are very
17 significant issues as to how that would be done. It's not
18 obvious to me that broadcasters could really make a go of
19 supplying converter boxes to homes to monitor the receipt
20 of the programming. I think the ship has sailed on that
21 issue. Cable basically is the service provider of choice
22 when it comes to pay television. They have the equipment,
23 they have the infrastructure.
24 I point out that many people say: Well, won't
25 this be a great idea; you'll introduce pay television. I
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1 don't think so. I think if you look back most recently,
2 the most recent example of that was TeleTV, a combination
3 of several of the strongest and best funded Baby Bells,
4 made up of Nynex, Bell Atlantic, and PacTel at that time,
5 and they took a writeoff of about $500 million on a
6 venture to provide pay television over the air into the
7 home.
8 It simply isn't practical. You're dealing with
9 70 million homes that have cable boxes of one sort or
10 another. I think the ship has sailed on that issue. It's
11 an option, but it's not one in my opinion that's very
12 viable.
13 So we get to the multiple free channels that
14 don't need converter boxes and have no revenue other than
15 advertising. Well, you better have a lot of programming
16 to do that. You better not value that programming too
17 much in the near term, because it's going to be very hard
18 to get enough viewership to justify its use. I think
19 what's going to happen is that broadcasters are going to
20 experiment with that, but they're also going to realize
21 what we have realized, that under no circumstances can you
22 afford to lose the flexibility to broadcast over the
23 entire 6 megahertz that we've been granted.
24 There is a lot of confusion about the formats
25 that are going to be brought into play here, and it was
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1 hoped when this process was begun that we could fit into
2 the spectrum that's being allocated to broadcasters, the 6
3 megahertz of spectrum, that we would be able to fit into
4 that spectrum most, if not all, of the most advanced forms
5 of television which are likely to be marketed over the
6 next 20 or 30 years. Now, that's speculative and it was a
7 good worthy objective, and it may well be correct. But
8 it's not a sure thing.
9 There are already several forms of resolution
10 delivery which require all 6 megahertz of spectrum, and I
11 think a broadcaster -- we'll use ourselves. I don't have
12 to use the hypothetical. There is no circumstances that I
13 could envision under which NBC would want to restrict its
14 ability to use all 6 megahertz.
15 If we were to enter into some scheme where we
16 only used a portion of that and made it impossible for us
17 not to use it all, then we would run the risk of having
18 the industry, "the industry" meaning cable, the PC
19 industry, the television receiver industry, and the
20 broadcast industry, that that industry would determine
21 that one of the very high resolution formats became what
22 viewers really wanted to watch, and we would have to
23 immediately move in that direction or be left out.
24 One thing broadcasters can't afford to do is to
25 be left out visually, because that's all we have. If we
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1 aren't compatible or capable of offering the best or
2 apparently the best video service, then we relegate
3 ourselves to a second class cable product.
4 So I think that flexibility is critical. So
5 while some broadcasters may elect to experiment in the
6 upcoming years with more than one free over-the-air
7 service, I think you'll find that they'll do so only on
8 the basis that they can quickly go to full use of the
9 spectrum if in fact that's where the market's going. And
10 we won't know that for 5 years.
11 We're 5 years too early, quite frankly, for this
12 discussion. Nobody has any sets. There are no viewers.
13 The services are not going to be widely seen for several
14 years, and I think the whole issue here is flexibility.
15 We don't know how that's going to play out. The thing I
16 would argue the most for here is flexibility. However we
17 might view the nature of the views on public interest,
18 anything that is to be implemented which suggests that we
19 reserve specific amounts of spectrum with the theory that
20 there are going to be multiple channels coming over here I
21 think would be a mistake at this point in time. It may
22 turn out in several years that that isn't such a bad
23 thing, but clearly today we don't have anywhere -- we
24 don't have any ability to make that commitment.
25 Additional public interest obligations should
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1 not be limited by a particular subject matter that may be
2 currently popular, such as free political time or more
3 children's programming. New means of fulfilling public
4 interest responsibilities through innovations in digital
5 should be left very open. This is a brand new technology.
6 New services, such as data broadcasting and
7 certain interactive applications, may yield substantial
8 public interest benefits by greatly enhancing the
9 informational and educational value of programming. It
10 would be a mistake to limit artificially the potential of
11 digital technology to serve the public interest by
12 imposing new specific public interest obligations before
13 digital technology has even had an opportunity to evolve.
14 Thank you very much.
15 MR. DECHERD: Bob, thank you.
16 Just as we anticipate the question and answer
17 session, I'd like to point out that Bob has a dinner
18 obligation in New England this evening and can be with us
19 until 3:30, maybe a little bit afterwards. So in terms of
20 sequencing, if this begs any questions, you might want to
21 direct them to Bob earlier on.
22 Bob Coonrod, thank you for being here.
23 STATEMENT OF ROBERT T. COONROD, PRESIDENT
24 AND CEO, CORPORATION FOR PUBLIC BROADCASTING
25 MR. COONROD: Thank you, Robert, and thanks to
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1 the Co-Chairs for inviting us to participate in this
2 discussion.
3 I'm from the Corporation for Public
4 Broadcasting. The Corporation is the primary means by
5 which Federal support for the roughly 1,000 public radio
6 and television stations in this country is provided.
7 We'll be talking now about the television portion of that,
8 the 200 licensees around the country that provide public
9 television services.
10 Much of what I'm about to say echoes what you
11 just heard, but there are some very distinct differences
12 that I would like to identify up front to inform the
13 questions later on. When we're talking about public
14 broadcasting, we're talking about people who are in the
15 public service business. Our mission is public service.
16 Educational programming is a very important part of that
17 service.
18 120 stations currently provide 6 to 8 hours per
19 day of preschool programming, what we call our Ready to
20 Learn service. In addition, there are 23 state networks
21 and a number of individual public television stations
22 around the country that provide daily instructional
23 television. About 600,000 students are registered in
24 higher education courses, college level higher education
25 courses, through the PBS Adult Learning service.
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1 The prospects of digital television for us are
2 very interesting because of the multiple educational
3 services that we are currently providing. But we are
4 often -- the stations are often constrained by the
5 technology that they work with.
6 When it comes to offering free time for
7 political candidates, public broadcasting, sometimes in
8 cooperation with the commercial broadcasters, sometimes on
9 its own, has been a leader in providing that kind of
10 access. Last year during the debate night, there was a
11 national debate that was scheduled for the Republican and
12 Democratic leaders of the House and Senate, and then there
13 were 212 debates for Congressional races that were
14 broadcast around the country. 70 or so public television
15 stations participated in that sort of -- in that kind of
16 endeavor. It gives you some sense of the scope and the
17 commitment of public broadcasters to the public service
18 that we're talking about.
19 So any vision of a digital future must include a
20 strong and vibrant public radio and public television
21 system. Public broadcasters have been leaders in
22 developing closed captioning, video description,
23 descriptive video. Public television was involved with
24 the development of the standards, the grand alliance
25 standards that eventually led to DTV.
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1 We are committed to high definition television.
2 We think that the prime time schedule on PBS is very well
3 suited to the kind of pictures and sound that you can
4 achieve through high definition television.
5 We're also very interested in the possibility of
6 multiplexing or multicasting, because it will provide
7 stations, especially during day parts, an opportunity to
8 provide the multiple educational services that they're now
9 constrained from providing because of the technology. I'd
10 also mention the possibility of data. Additional data
11 streams would offer ways to supplement those educational
12 services. We are experimenting as to how that might be
13 done, but clearly we could be providing much more than
14 simply the video by using the multiple data streams.
15 Now, we are in part supported by Federal funding
16 and we will need assistance to make the transition to
17 digital. Public broadcasters have spent the last year
18 examining the costs and how the structure would work in
19 the digital environment. Our best guess is that we're
20 looking at a total cost of converting public television of
21 about, public television and radio, of about $1.7 billion,
22 and we are going to be asking the Federal Government for
23 45 percent of that total. We will commit to raise the
24 other 55 percent from other sources.
25 What would it be important -- why is it
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1 important for the committee to make sure that it keeps the
2 public broadcasting issues, the public broadcasting
3 concerns, on its agenda as it considers the mandate that
4 it was given by the President and the Vice President?
5 Well, first of all I'd say that the public appreciates the
6 services that public broadcasters provide. You may have
7 seen reference to a recent Roper poll in the New York
8 Times last week. After the national defense, the public
9 rates public radio and public television as two and three
10 in the things that their tax dollars are most worthwhile.
11 You'll note, too, in the written testimony that
12 was provided to you by American public television stations
13 and the public broadcasting service the variety and the
14 exciting variety, I would say, of services, of community
15 services, educational services, that public broadcasters
16 are currently providing around the country. That
17 testimony concludes with a brief paragraph which I will
18 read:
19 "Some would ask why a renewed government
20 commitment to public television is necessary in the
21 digital age, when an unprecedented capability for
22 expansion of commercial channels may be promised. The
23 answer is simple: Only public television has as its core
24 and mission to assure that all Americans have access to
25 high quality educational and cultural services, regardless
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1 of their appeal to the commercial marketplace. With the
2 potential of increasing the number of available channels
3 exponentially, it is imperative that public television's
4 unique noncommercial voice does not become diluted."
5 We've also provided to you a history, a
6 legislative history of public broadcasting, both so that
7 you can see the consistent pattern both from the
8 Congressional side and from the Federal Communications
9 side of the support for the educational, informational
10 services, that the public should have access to those
11 educational and informational services without regard to
12 the technology that is used to deliver them.
13 I would also commend another piece of testimony
14 that we've provided to you. It describes a particular
15 state network, West Virginia, because it's a rural,
16 isolated state, and how in one particular state the
17 education services and the other noncommercial services
18 that the station provides are providing, we believe,
19 extraordinarily effective services to the state. The
20 Executive Director of West Virginia Public Television is
21 Rita Ray, and Rita tells the story of a single mother who
22 was struggling to raise two young children in rural West
23 Virginia. She was, quite simply, overwhelmed by the
24 challenges of parenthood and she felt an increasing
25 desperation that her parenting skills were inadequate.
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1 She had no one to turn to.
2 This young mother writes that one night, with
3 the children put to bed, she lay exhausted in front of the
4 television and happened on a program on her local public
5 broadcasting station that featured a professor from West
6 Virginia University who discussed, of all things, how to
7 handle the common problems parents face in raising
8 children.
9 She was mesmerized. She watched every week
10 after that, and to this day she is thankful to public
11 broadcasting for showing the kind of programming that
12 simply is not available anywhere else. 22 years later,
13 this young mother runs West Virginia public television.
14 Rita Ray was that person, and that is her sort of personal
15 testimony to the value that the public broadcasting has
16 provided over the years.
17 To conclude, I'd like to offer three thoughts on
18 your deliberations. When you look at all of this, I would
19 encourage you to look at public broadcasting's 30-year
20 track record, and whatever guidelines you eventually
21 recommend we think should take into account the fact that
22 public broadcasters already do the things you want done.
23 The more flexibility we have as public broadcasters in
24 carrying out our mission, the better we will be able to
25 execute that mission.
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1 Secondly, the law of unintended consequences is
2 something that we really need to look at here.
3 Prescriptive regulation often leads to consequences that
4 are unintended. That we think will be the thing that will
5 challenge the wisdom of this committee more than anything
6 else as it goes forward.
7 The only sort of specific recommendation is one
8 that you have heard already, and that is community,
9 community, community. In other words, to the extent that
10 we can focus on the needs of the community and how the
11 locally licensed broadcasters can serve those needs we
12 would be providing an important and lasting service to
13 those communities.
14 Digital television offers the prospect of
15 narrowing the gap between the information-rich and the
16 information-poor because it is universally available and
17 because it is available at virtually no cost. That's an
18 important element that you need to consider, we think, as
19 you go forward. But it's also important, as I was reading
20 in preparing for this meeting, to keep in mind I think
21 something that the Vice President said in his opening
22 remarks to you when you had your first meeting:
23 "You must strive to design rules and principles
24 that are flexible enough for a technology that will change
25 very rapidly and is still wildly unpredictable."
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1 Certainly as we've looked at this and as you've
2 heard from the other panelists, we really don't know where
3 this technology is going to go. We don't know for sure
4 how it's going to evolve, and it is very important that
5 the recommendations that you make take that into account.
6 Thank you.
7 MR. DECHERD: Bob, thank you very much. Norm is
8 going to conduct the rest of the meeting. I want to say
9 thank you again to each of you and, as a handoff to Norm,
10 ask each of you to address a question we posed this
11 morning to the other panel, and that is: What is your
12 view of competition in the television and broadcast
13 industry going forward? What are the sources of
14 competition, and what's your speculation about diversity
15 of programming sources in the future? Don?
16 MR. CORNWELL: That's quite a question. I just
17 observe that our essential view within our company is that
18 we exist and compete in a business that is essentially
19 losing share, there are enormous other sources of
20 competition affecting us every day, and that they are
21 virtually unpredictable in terms of their impact on our
22 business.
23 So we have to conduct our business with the
24 assumption that we will be competing for a smaller pie, as
25 opposed to a larger pie. I'm not sure if that's
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1 responsive.
2
3 MR. DECHERD: That's very responsive.
4 Bob or Bob?
5 MR. WRIGHT: Well, that's a question, Robert,
6 that we agonize a lot about. We've had the good fortune
7 of being successful, but it's not without a lot of
8 competition. I follow something that has a lot of meaning
9 to us and I grabbed a copy of it coming down here. This
10 is the list that I look at in the course of a week, and
11 it's a list published by the Nielsen Company that measures
12 television viewing networks as they define them in the
13 country.
14 They now are measuring -- this doesn't
15 necessarily mean every network is in here. These are the
16 ones that have elected to become measured. They have
17 either paid for the right to be measured or they have been
18 selected to be measured. There are now 260 network
19 television services recognized by Nielsen. Many of these
20 are regional, many of these do not go over the whole
21 country. Some of them are time-shifted versions of the
22 same. But there are 260 different measured networks.
23 Every day I get a list of 40 of the most popular
24 networks. Now, these are non-broadcast networks. I
25 should have prefaced that. These are all cable networks.
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1 They're available on satellite and they're available on
2 cable television systems.
3 Just to refresh you, cable passes by about 90
4 percent of the homes in this country and they feed, they
5 are actually subscribed to by, something over 70 percent.
6 Direct TV is theoretically available to 100 percent of the
7 homes and has a penetration of, I guess between the two
8 services, of about 6 million today. Well, if you add the
9 older dishes it's probably about 8 million.
10 Nielsen publishes a list of the 40 most popular
11 services that are on cable and DBS and they rate them
12 every day. In other words, they're rated every morning I
13 get a list of these services. I think the answer to the
14 question is that there is an inevitability here that we
15 are going to see more and more fragmentation of the
16 audience. Many of these services are very narrowly cast,
17 as you have to be to be successful in this world.
18 So I think we're in a very, very fragmented
19 world, and broadcasters have to continue to reach out, to
20 try to reach as large a portion of the communities they
21 serve as possible. And I think more and more we are in
22 the information -- we're always in the entertainment
23 business. We're in the information and news business on a
24 primary basis. They'll all be hard niches for us to hold
25 onto in the world going forward.
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1 These are all subscriber-supported services.
2 They receive advertising and they receive subscriber
3 support, which you need in cable. Broadcasters, of
4 course, only have advertiser support.
5 MR. COONROD: In public television the national
6 audience, the audience for broadcast television, is
7 holding. It's going up slightly. But clearly the
8 competition is coming from the non-broadcast areas, and
9 not just cable and direct satellite, but also increasingly
10 services that are available over the Internet, and that's
11 certainly something that everyone is looking at.
12 MR. DECHERD: Thank you.
13 Norm.
14 CO-CHAIR ORNSTEIN: We will open up to our panel
15 as a whole. Let me suggest just one small variation of
16 the format from this morning, which is, to keep our
17 discussion focused, if you have a question that's a direct
18 follow-on to something that has just happened, if you can
19 -- you probably can't reach your cards -- lift a couple of
20 fingers, so that we can keep ourselves focused since we
21 have a very short amount of time.
22 Newt.
23 MR. MINOW: For Bob Wright: Bob, in your decade
24 at NBC you very wisely diversified. You're in cable as
25 well as over-the-air broadcasting. Do you think the same
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1 public interest obligations, whatever they are, should
2 apply to both cable and over-the-air broadcasting?
3 MR. WRIGHT: In some form, yes. There's no
4 reason, there really is no -- the distinction is
5 artificial. They're all licensed. Every cable system is
6 a licensed service. It's a government-licensed service.
7 It's licensed generally locally, but it's regulated under
8 Congressional mandate, the same as broadcasting. So that
9 the distinctions are more historical than they are real.
10 There's no fundamental reason why a discussion
11 like this should just be on the basis of broadcasting. As
12 a matter of fact, to make a point more clearly, if this is
13 a Willie Sutton issue, you know, if the issue is to find
14 the bank with the money as the one you're going to rob,
15 then you're seeing -- you're only dealing with part of the
16 audience when you're talking to us.
17 There is a very large and quickly growing part
18 of the audience that's not sitting at the table, which is
19 represented by the cable television industry and its
20 services. So whatever your conclusions are, I would think
21 that you'd want to get the maximum impact. If you're
22 going to get the maximum impact, you've got to get to the
23 services that reach all the viewers.
24 We have recently gone through a long period with
25 children's television. I personally found that to be very
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1 distressing, not because children's television isn't
2 important, but because it was untimely. We have lost our
3 lock on children's audiences some time ago. That trend
4 line was obvious 10 years ago, and there are simply a
5 number of cable services that do nothing but children's
6 programming and they're very popular, and they should be
7 very popular. And they have mixed programming. Some of
8 it's very good and some of it's not.
9 But the point of it is that when we look back,
10 even today -- I just looked back coming down here -- the
11 fall programming that the networks are offering, which is
12 now under the guide of the FCC regulations in terms of
13 formatting and timing and so forth, there's -- and I
14 compare it to 1993 when we began this debate -- that
15 programming is more or less -- everything isn't perfectly
16 identical. The audience has slipped about 42 percent
17 between 1993 and today. And basic cable, which has the
18 largest audience of children's programming, is up 70
19 percent.
20 I don't think that's -- that's just a reality.
21 It isn't right or it isn't wrong. It's just a reality.
22 Whole new networks are coming on with children's
23 programming.
24 So I ask you to consider. You have to look at
25 the totality of what people that are watching television
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1 are looking at, how they get it, if you want these
2 conversations, I think, to be as effective as you hope
3 they will be.
4 CO-CHAIR ORNSTEIN: Peggy.
5 MS. CHARREN: I hesitate to really get into how
6 I feel about those last comments, because I don't want
7 this process to re-argue a debate that consumed the last
8 30 years. We don't have that much time here.
9 I'm sort of breath-struck by the fact that you
10 brought up children's television. I really thought there
11 wouldn't be even an opportunity to even mention it to you,
12 because it was sort of not quite what we were doing here
13 specifically. But since you came on it that way, I think
14 I have to say that the only reason that you have to deal
15 with the Children's Television Act, Bob, is that over 30
16 years it was obvious to a lot of people that children's
17 television issues weren't getting solved except when
18 Washington opened its mouth, and the issues I'm talking
19 about are not sex and violence, but choice and diversity,
20 which is the only way I think you can define the public
21 interest, enough choices. The same is true with adults, I
22 think.
23 And in the seventies, after the FCC opened its
24 mouth very carefully under another Chairman than the one
25 that just left, there were some very interesting things
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1 happening in children's television. And when Ronald
2 Reagan got elected, and that was the famous "they're just
3 a toaster with pictures" -- I was in the Waldorf when that
4 happened -- 20 people in CBS' news department who were
5 working just on children's television got fired almost in
6 one week. They called me and said: Can you save our
7 jobs?
8 So that what this has taught a lot of people is
9 that when Washington talks people in broadcasting circles
10 listen. If they had been more public interest-oriented
11 when it came to children in the first place, they never
12 would have had the Children's Television Act now.
13 Maybe that's enough to say. But if there's any
14 experience that convinced me that this is a reasonable
15 panel to at least consider the issues that digital will
16 bring up, this is the time to do it. That doesn't mean
17 that we can't be flexible. That doesn't mean that we say
18 you have to do this versus that.
19 But this is very much like the issues in 1934,
20 when broadcasting in this country was sort of created as
21 an institution, and we didn't know how television was
22 going to work. We didn't know that it was going to be a
23 kind of license to print money. But we said: You have a
24 public interest obligation.
25 If it weren't for those seven words in the
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1 Communications Act, which broadcasters think of sometimes,
2 I think -- I don't mean all broadcasters, just some
3 broadcasters -- as the seven dirty words -- "to serve the
4 public interest, convenience, and necessity" -- then I
5 wouldn't have had anything to hang this whole campaign on
6 and we would still be at the point where what works in the
7 marketplace works for children, to say nothing of the fact
8 that children who don't have cable don't have any of the
9 nice things that you just talked about at the end.
10 And the whole purpose of the Communications Act
11 is to guarantee that with the license, that license to
12 serve all children, and all adults too, comes an
13 obligation. And I do not think that the broadcast
14 industry has proved that it's ready to do that kind of
15 thing without some comment from the government.
16 I wasn't going to do that at all in this
17 proceeding, but I felt I had to after those comments.
18 CO-CHAIR ORNSTEIN: Do you want to reconsider
19 those remarks, Bob?
20 MR. WRIGHT: No, but I would ask you: Don't
21 forget; if you want to seriously engage in this process,
22 you have to familiarize yourself with current viewing
23 patterns, who's watching, how do they watch it, how
24 popular are certain networks and shows, how do they get
25 into the home.
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1 I mean, it's very important to deal with that,
2 with that issue, to have an effective dialogue.
3 CO-CHAIR ORNSTEIN: Cass.
4 MR. SUNSTEIN: These were very informative and
5 excellent presentations, and I'm thinking how to bring it
6 into contact with this morning's panel, which was mostly
7 about the relationship between broadcasting and democracy.
8 Now, there's some evidence that local news has an
9 increasingly high percentage of coverage of gruesome
10 events -- in Chicago that's very popular -- and discussion
11 of the real world events that underlay the prime time
12 movie that preceded the news. And there's also data
13 suggesting that national news is increasingly dominated by
14 sensationalistic accusations, sound bites, and in the
15 context of political campaigns horse race issues rather
16 than substantive discussion, like who's ahead and who's
17 behind, rather than what people are actually saying.
18 This is really a question for Bob Wright. His
19 presentation I thought was really quite wonderful. But
20 let's assume that something like the account just given is
21 true, that is that local news is dominated increasingly by
22 this kind of material and national news is fulfilling the
23 aspiration of journalists, who went to school to be
24 journalists in news. If something like this is true and
25 something should be done about it -- let's assume both of
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1 those -- what could be done about it?
2 MR. WRIGHT: I guess you're going to have to
3 wrestle with that one by yourself, because I can't make
4 those assumptions. I mean, those are hypotheticals that
5 create -- that put yourself in a situation where
6 everything is a problem and drastic change is necessary.
7 I think one of the things that broadcasters have
8 been good at and will have to be very good at to survive
9 is to adapt. We have to adapt to the larger world of how
10 people receive information, news and information. We have
11 to adapt to their views of what they expect video to be
12 versus print or versus other forms of receiving news and
13 information. We can't really be behind on that. We have
14 to be current.
15 And we have to know how to reach different kinds
16 of audiences. Broadcasting by its nature goes into every
17 home, so we have to deal with people that have higher
18 education, people that have very limited education, people
19 that are living in ghettoes, and people that are living in
20 very affluent neighborhoods, people who are extremely
21 literate in news issues, and other people who aren't and
22 we wish were a little more interested.
23 So yes, we have to homogenize a lot. We have to
24 offer it in a way which is going to entice as many people
25 as possible to become involved. And that itself I think
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1 creates a problem in the sense of trying to critically
2 analyze it.
3 But that's what we do. That's what we do with
4 entertainment and news and sports. We offer a product
5 that is basically designed to be attractive to as many
6 people as possible in ever growing more and more diverse
7 communities.
8 I give you an example. I could do New York,
9 which is very easy, but I'll give you one that's even more
10 pointed. In Los Angeles, in the city of Los Angeles,
11 television viewers inside the city, the population is
12 reaching near 40 percent Hispanic. Now, we reach greater
13 -- our signal goes way beyond Los Angeles, even though Los
14 Angeles is very large, and it goes into largely white
15 communities on the outside.
16 So we have great differences of audience. We
17 don't want to alienate those Hispanic viewers. They range
18 from people that don't speak English well to people that
19 are very, very bilingual. And yet we're still trying to
20 reach people out in the suburbs.
21 So our news product, the information, which is
22 the most popular in Los Angeles, I'm happy to say, for
23 this moment -- these things change -- it's a real
24 challenge, how to put those programs out every day, those
25 hours of programs, in such a way that somebody in the
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1 center city of Los Angeles would be interested and
2 hopefully informed and somebody out in the suburbs that
3 says, well, I can't deal with that, I have no interest in
4 it -- you try and do that balance. I think that causes a
5 lot of the -- well, some of the apprehension that you're
6 expressing in your hypotheticals.
7 CO-CHAIR ORNSTEIN: Bill, then Bob.
8 MR. DUHAMEL: I just wanted to follow up on that
9 with the multicasting possibilities of digital, because
10 I've heard where they're talking about possibly on a
11 newscast isolating it geographically, but it also could be
12 on an ethnic basis, as you mentioned in L.A.
13 MR. WRIGHT: Yes.
14 MR. DUHAMEL: Or else you could get into maybe
15 where you start trying to cover the same story, but in
16 different levels. I'd assume there would be some
17 possibilities that could come from this that would expand
18 broadcasters' options available.
19 MR. WRIGHT: Yes. What I was trying to say in
20 my earlier remarks, though -- and this is where it sounds
21 like we're not sure, and the answer is we aren't sure.
22 The whole idea for advanced television originally was to
23 make sure -- it was a Congressional initiative that dates
24 back to 1985, when there was a view that somehow America
25 was losing its ability to have the best television.
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1 When we got into it, the issue was to make sure
2 that broadcasting in this country was offering the highest
3 quality picture that was economically possible to be put
4 out, and that's how we got into advanced television.
5 Digital came along and became an integral part of it.
6 But the difficulty or the awkwardness here is
7 that digital has got so much capability that the
8 resolution levels are potentially so high, that the upper
9 resolution levels, HDTV and so forth, will chew up all of
10 the spectrum available. We don't know if people are
11 really going to buy sets designed primarily for that
12 viewing. In some respects we hope they will.
13 At this juncture it seems likely we're going to
14 see an ever-escalating need to apply spectrum for the
15 single picture. Now, the Corporation for Public
16 Broadcasting has looked at it and said: Listen, we're
17 going to try during the day to offer multiple, multiple
18 channels of programming, and possibly at night or other
19 we'll offer the full, we'll occupy the whole screen, in
20 which case during that whole screen process there is no
21 opportunity to do what you're talking about.
22 So I think we're going to experiment in that
23 area. But I caution you that I couldn't make a
24 commitment, I wouldn't commit to anything, whether it's
25 entertainment or news, that we would do four channels of
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1 programming going forward, because it may turn out to be
2 that our future is in one channel of programming and it's
3 driven by the marketplace which says that the high quality
4 pictures are very, very popular and you'd better be there.
5 That's one of the issues that you can't pin down today.
6 CO-CHAIR ORNSTEIN: We've tapped into veins of
7 some interest with this one, so let me. There are a
8 couple follow-ons here. Let me start with Rob Glaser --
9 was yours a follow-on to this, Karen?
10 MS. PELTZ STRAUSS: This was something earlier.
11 CO-CHAIR ORNSTEIN: We'll come back to that if
12 we can, and I'll turn to Gigi after Rob.
13 MR. GLASER: The question I have relates to your
14 comments about not wanting to incur any -- I think you
15 said, most of the time you said not incur any new
16 obligations to the public interest, and at times you said
17 not have any impediments at all. Would your view be
18 different or modified of there was some weighing criterion
19 to establish a set of requirements on any digital
20 broadcast, whether using spectrum or going through a
21 coaxial cable or through satellite delivery?
22 In other words, is the issue having consistent
23 rules for any transmission method as long as those rules
24 were sufficiently flexible to enable the kind of
25 innovation that we all believe and hope is going to happen
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1 in the next several years? Or is it different than that?
2 MR. WRIGHT: I think the answer to that is yes.
3 But I think the point I was trying to make is, if you want
4 to deal with the impact of digital television in this
5 country and try to look for guidelines, then you ought to
6 try to capture all the delivery mechanisms and the way
7 it's going to be received. That was the second. We only
8 represent, we only represent part of that.
9 But the other point I was making earlier is, if
10 it turns out that all digital is, or not all it is, but
11 that it goes primarily, it's the same service we have
12 today, offered in a much more exciting format, one
13 service, there in theory is no need for additional --
14 there is no occasion to create additional obligations,
15 because the obligations we already have are the same.
16 They go into this -- it's the same service. That was the
17 first point.
18 MR. GLASER: And the follow-up for that is:
19 Stipulating the point that in a world where consumers want
20 the greatest possible signal quality you'll want to use as
21 much of that 6 megahertz as possible for a great signal,
22 surely under almost any scenario when it's a digital
23 system, when there's all kinds of opportunities for
24 interactivity and ties to the various interactive or web
25 offers you have, it would seem to be there will be
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1 additional services and features. It might be in a single
2 channel paradigm.
3 So there's no scenario I can envision --
4 MR. WRIGHT: I think that's correct.
5 MR. GLASER: Okay. I just want to make sure we
6 agree that there will be new services. It's just it's far
7 too early to say what the channel paradigm will be.
8 MR. WRIGHT: But the services, when you use the
9 word "services" in this debate, it sounds like economic
10 services. Services may just be providing more data
11 support for video.
12 I give you an example even today. For those of
13 you that watch sports, if you look back at sports on
14 network television 10 years ago, you would have seen a
15 screen largely filled with the sport, baseball or football
16 or basketball. That's all you would have seen. You look
17 today and we have lots of other things on that screen
18 today. We have the local station identification, we have
19 the network identification, we may have scoreboards up on
20 the side. We may have -- we may have electronic tickers
21 showing the scores in other games and so forth.
22 If you want to go one step further and go to
23 ESPN2, you'll see that the actual screen, the picture, is
24 reduced to only about half of the size of the screen, and
25 it's filled with other, what I'll call services, which is
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1 other kinds of data -- games coming in regionally,
2 overnight information, and so forth.
3 For those of you that ever watch Bloomberg
4 Television, a competing service of ours, they've taken
5 that to the point where the picture in the screen is only
6 a tiny portion of the screen and the whole rest of it is
7 filled with data, which is changing in front of you all
8 the time. Now, that isn't for everybody.
9 But those are services that in the digital
10 world, they'll be easier to do. My guess is that we will
11 all be doing a lot of that, which is throwing a lot of
12 other information, hopefully trying to be a producer, if
13 you will, for people who, rather than sending them to
14 their PC to go to the web to figure out, to get some data,
15 we're going to try to get smart people to think fast
16 enough to be able to provide that, anticipate what people
17 would want and provide it on the screen.
18 That will be more informative. If we didn't
19 know what happened in the last 10 years, though, and I
20 think if we ran into somebody's home and we just showed
21 them that, they would be frightened by it. But we've
22 gradually moved into a data supplementing video service,
23 and I think more and more that is going to happen.
24 CO-CHAIR ORNSTEIN: Let me just suggest, Bob or
25 Don, if you have anything to add to these responses, just
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1 chime in.
2 Gigi.
3 MS. SOHN: I just, I nearly jumped out of my
4 seat at this impression that the government, the FCC and
5 Congress, forced broadcasters to transfer to digital. Mr.
6 Wright, you're wrong. If you have read -- and I suggest
7 this to everybody, to read the first couple chapters of
8 Joel Brinkley's book, "Defining Vision."
9 The reason that we are in this debate is because
10 broadcasters wanted to keep the adjacent channels out of
11 the hands of land-mobile operators, and they asked.
12 Broadcasters petitioned the FCC in 1987 to have the use of
13 these channels for high definition television. That's the
14 history. And nothing, absolutely nothing in the
15 Telecommunications Act of 1996, requires the FCC to give
16 these channels to the broadcasters. Congress did not
17 require it, the FCC did not require it. The broadcasters
18 asked for it. So let's get past that right now.
19 I've got two questions on cost I'd like to ask
20 of Mr. Wright, but if that's not appropriate now --
21 CO-CHAIR ORNSTEIN: We'll hold other questions
22 for now.
23 MS. SOHN: Okay.
24 MR. WRIGHT: I don't think that's an accurate
25 statement, but I'm not so sure debating at this point is
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1 helpful to the committee.
2 CO-CHAIR ORNSTEIN: Okay.
3 Charles, did you have -- was this a follow-up?
4 MR. BENTON: No.
5 CO-CHAIR ORNSTEIN: All right. Then let me turn
6 to Karen.
7 MS. PELTZ STRAUSS: This question is for Mr.
8 Cornwell. In your testimony, your oral and your written
9 testimony, you said that you don't believe that the
10 Nation's regulators are in a position to dictate to the
11 local stations how to serve the local communities. This
12 morning one of the subjects they came up with was bringing
13 back the ascertainment requirements.
14 How do your stations currently ascertain these
15 needs, since you say that you are addressing them, and
16 would you be in favor of bringing back those requirements?
17 MR. CORNWELL: I'm not sure if I have an answer,
18 quite frankly, to the latter question, which is would I be
19 in favor of bringing them back. I guess I'm not really in
20 favor of lots of additional requirements, and I guess you
21 can understand why I have that viewpoint.
22 But with regard to the first question, which I
23 think is the more important one, which is how do we
24 ascertain, I think we really do it in the old-fashioned
25 way that broadcasters have done for many years, which is
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1 that we get out and we get to know our community and we
2 make sure that we know the community leaders from all
3 walks of life.
4 We even have a requirement in our company, and
5 we're a relatively small company, a relatively new
6 company, but we insist that corporate officials also
7 occasionally visit our communities of service, so that we
8 too can get to know what's going on in the communities and
9 what people are thinking about.
10 So the process is really not different than the
11 way it would have been done when there was a requirement
12 to do it.
13 MS. PELTZ STRAUSS: If I could just throw in one
14 or two quick captioning questions, I work for the National
15 Association for the Deaf and I just have two quick
16 captioning questions, one for Mr. Cornwell and one for Mr.
17 Coonrod.
18 Also in your testimony, you mentioned that you
19 broadcast candidates' debates, and I wondered about the
20 commitment to captioning those debates and, similarly, to
21 a commitment -- in your testimony you spoke, Mr. Coonrod,
22 of public television serving the needs of the K through 12
23 population. And I'm wondering if you can comment on
24 captioning instructional television.
25 MR. CORNWELL: I'll talk about the captioning of
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1 the debates question. We with our stations, they all
2 closed caption. Only two of our stations at this point
3 are closed captioning in a live sense, which as you know
4 is more expensive. We have that commitment internally to
5 move towards being a 100 percent live closed captioning
6 over time, but it will take a little longer for us to get
7 to that perspective or to that point.
8 I'm not sure, to be honest with you, whether we
9 closed caption debates or not. I wish I could answer the
10 question, but I don't know the answer. I would suspect
11 that in our Austin station, just because of some
12 technology they have and the way they approach things,
13 that they do. But I don't know the answer in other
14 markets.
15 MR. COONROD: In the K-12 area, that's one of
16 the areas where the additional data, the additional data
17 capability, would come in very useful to this sort of
18 thing. Since most of these courses are text-based,
19 they're syllabus-based, it would be possible to provide
20 some version of closed captioning along with the program
21 itself, and that's certainly something that the
22 broadcasters are looking at.
23 I just might add one thing on the ascertainment
24 issue. One of the ways that public broadcasting has done
25 it traditionally is that all noncommercial educational
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1 licensees who qualify for support from CPB must maintain a
2 community advisory board, and it is said in the law what
3 the community advisory board does. It basically is a way
4 that the community can comment on the programming that is
5 on the public radio or television station, and that's a
6 direct means of getting community input.
7 CO-CHAIR ORNSTEIN: Is this a follow-on?
8 MR. CRUMP: Yes.
9 CO-CHAIR ORNSTEIN: Okay, please.
10 MR. CRUMP: I would like to add a little bit
11 more to this ascertainment situation, too, to Don's
12 answer, in that during the lunch break Jim Goodmon and I
13 were talking about this same subject and pointing out to
14 each other that, for instance in the Twin Cities market,
15 we still as a market do community ascertainment. Once
16 every quarter all of the stations come together. We do it
17 for an entire day. We invite community leaders in.
18 And in our other markets where we have Hubbard
19 stations, either the stations or the markets do that, and
20 we have continued to do this all the way along from the
21 time that supposedly the obligation was abolished. We
22 just never have stopped because we think this is the way
23 to find out what the interest level is on various subjects
24 within the community.
25 I think this is pretty widespread.
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1 CO-CHAIR ORNSTEIN: Okay, Charles.
2 MR. BENTON: Sort of following on Peggy's
3 comments, I'd like to take just a minute on broadcasting
4 and education. I think it's clear that education
5 represents a great opportunity for broadcasting that has
6 by and large not been addressed. My old friend Nick
7 Johnson said that all films are educational; you may not
8 like what they're teaching, but they're educational.
9 But in the sense of broadcasting for school and
10 for life-long learning and for daytime -- I'm not talking
11 prime time; I'm talking daytime -- with the opportunity of
12 the new channels that are there, and essentially the
13 collapse of audiovisual materials produced specifically
14 for education, which I know of very well, having spent
15 much of my life in that arena, caused by the down-pricing
16 of home video and the avalanche of the $60 billion
17 business that is upon us for home video, there is a great
18 opportunity here for meeting educational needs.
19 In the U.K. the budget for broadcasting for
20 schools, not home education, not the university, not
21 anything like that, but for schools, is $50 million.
22 Here's a country that's one-fourth our size. That's both
23 BBC and Channel 4, commercial television, $50 million. If
24 we spend $10 million in this country on schools
25 programming, that's probably more than we are spending.
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1 So we have a huge resource problem and a big gap.
2 PBS, while they talk a lot about education, from
3 the standpoint of programming specifically produced for
4 in-school use, they're doing almost none of it. That
5 doesn't address Sesame Street and all the wonderful other
6 things that they're doing.
7 But I'd like to hear from each of the panelists
8 because there are some opportunities here. The commercial
9 networks used to do Sunrise Semester, 6:00 o'clock in the
10 morning, the opportunity for English as a second language
11 programming for the tens of millions of people that don't
12 and can't speak English but will watch television, and the
13 opportunities for schools programming which PBS simply has
14 by and large ignored.
15 I'd like to just -- I'm not trying to be
16 confrontational here, but I would like to have some
17 constructive and creative response to the challenge to
18 broadcasting in a digital age that's provided by education
19 and the needs of education, the needs of education both in
20 school and life-long.
21 MR. CORNWELL: I'll leap in, with temerity. I
22 would say that to some degree your question for me
23 captures one of the difficulties here, and Bob and others
24 have talked about it. That's that in a digital
25 environment where we will have multiple channels, arguably
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1 people will have digital receivers, but at this point in
2 time people don't have those receivers. So, given the
3 business model that we have, what we can do with regard to
4 educational programming tends to be using our television
5 stations as leverage to try to enhance the notion that
6 it's important.
7 Now, what we've tried to do as a company -- and
8 it's just something that is of interest to us; there's no
9 particular -- we're not patting ourselves on the back for
10 doing it. But as we have observed the growth of the
11 Internet and the fact that the PC is becoming ubiquitous
12 and is at least available to some children, if not all,
13 we've attempted to use the Internet and the power of our
14 television stations to -- and I'm sorry, Bob, but we do
15 drive people in a sense away from television occasionally
16 -- to go to our web sites, where we provide such things as
17 homework, home pages, and other ways in which younger
18 people, children, can help themselves in their educational
19 endeavors.
20 But we're not in the educational programming
21 business at this point.
22 MR. COONROD: A couple of comments. One of them
23 I think is sort of the general one about the revenue
24 models. It's very difficult. We're doing a lot of this
25 right now, coming up with -- we're noncommercial
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1 broadcasters -- coming up with revenue models that work in
2 this area, which is not to say that we won't come up with
3 them. But that is a challenge and that's part of what we
4 need to explore.
5 So it isn't easy to come up with revenue models
6 for education that can work. That said, there are a
7 number of things that I think you'll be seeing soon from
8 PBS that will be going directly along the lines that
9 you're suggesting. These are going to be unveiled first
10 on PBS services, but then they would be available in a
11 multicast environment for broadcast.
12 Part of it will come from the Annenberg-CPB
13 projects we're putting together, the Annenberg-CPB
14 channel. But PBS is also putting together, for lack of a
15 better word, an E channel, an education channel, and a
16 life-long learning channel. Those kinds of things are
17 currently in development.
18 In addition to that, I would refer you to the
19 commitment that public broadcasters, both at the national
20 level and at the local level, are making using the
21 Internet and the joint cooperative project that was
22 announced earlier this week between PBS, IBM, and CBS
23 Sports to use the Olympics as a means of teaching science
24 and physics in schools over the Internet, but the video
25 would be supplied by CBS Sports, the technology would be
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1 supplied by IBM, and the mediating of all of that would be
2 done by PBS.
3 So there are some rather exciting initiatives
4 under way right now.
5 MR. WRIGHT: I don't have a great answer to
6 that, either. You describe a real issue, but I think we
7 are in the middle of a lot of technological change. If I
8 had to guess, I'd say that you're going to have an awful
9 lot of educational product coming through the Internet
10 over the next few years.
11 Today it's at the high end. It's at the
12 university level or at least it's at the out of school
13 level of training. If you look to the front page of the
14 MSN network, you'll see there's something different all
15 the time. It's the University of Phoenix, one of the
16 great virtual schools, offering a full line of college-
17 accredited programs. And we're going to see a lot of
18 that.
19 How long is it going to talk to get down to the
20 lower grades and to have -- you'll have full motion video
21 on the Internet within a couple of years, depending upon
22 the capacity. Most schools are wired with cable, so they
23 have in theory the right transmission capacity with the
24 cable modem, and I think that's probably what you're going
25 to see. You're going to see downloading of educational
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1 video coming from Internet services to schools that are by
2 and large cabled today, and they're going to take that off
3 there, store it, reuse it, either in a hard form or in a
4 taped form.
5 We're not there yet, but I think that's probably
6 what's going to happen, and it'll happen very quickly when
7 it finally does, because once you open the capacity you
8 can pump through so much. But it still isn't there today.
9 MR. BENTON: Just one final thought here. I
10 agree about the Internet and I understand that's another
11 delivery mechanism and I appreciate that, and I know Rob
12 is working on that very hard and others as well. But
13 there's no substitute for making new programs and making
14 new programs costs money. So we can't just say, well, the
15 Internet will take care of it. It will not take care of
16 this.
17 In terms of, I think, the example, Bob, about
18 the Olympics, that's very interesting. That's real and
19 that is something concrete. But we need 100 examples like
20 that, not just one. And we're not talking about a
21 national curriculum. We're talking about putting some
22 resources into educational programming, and that means
23 talent and using the unique powers of film and video,
24 moving pictures with color and sound.
25 There are things that that medium can do best,
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1 better than textbooks, better than other, better than
2 software. Let's use the full powers of the medium for
3 educational purposes, not simply for entertainment.
4 CO-CHAIR ORNSTEIN: Jose.
5 MR. RUIZ: This is along the earlier lines of
6 the panel this morning. This morning we heard about how,
7 without some kind of political finance reform that
8 included the commercial broadcasters' involvement, that we
9 would have a decay of our current political system. We
10 also heard that without better public affairs programming
11 at the local level we would a cease to any discourse in
12 civics. And I want to make sure I understand where we're
13 at on this.
14 For the commercial broadcast, as far as giving
15 away any time for campaigns, you object to that; is that
16 what I understood?
17 MR. WRIGHT: I don't think it's feasible. It's
18 not feasible at all, and I'll explain it in the simplest
19 terms. Our markets tend to be large, but in a year there
20 are literally hundreds, of not thousands, of political
21 campaigns going, from the public school level all the way
22 through to senatorial campaigns.
23 Today, as you know, we have obligations to
24 provide equal access to people who are running for office,
25 and that's a very hard obligation to maintain. We don't
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1 shy away from it, but we're trying to make sure that if
2 you give access to one person you give it to others. Just
3 trying to know, from our own ascertainment and our own
4 selfish motives of wanting to reach communities, we have
5 to provide information on those campaigns that we think
6 are of the highest interest.
7 It would just not be feasible under any
8 circumstances for us to just provide free advertising for
9 all candidates. So what happens is you say, okay, we
10 won't do it for all; we'll just do it for some. Well,
11 right now we have a discounted service just for Federal
12 races. Well, you know, that sounds good when you're in
13 Washington, but when I go back to New York or I go to Los
14 Angeles that means that the governor of New York is not in
15 that, that means that the supervisor of the town of
16 Hempstead, the county executive of Nassau County, which
17 has got two and a half million people, is not in there.
18 You start making that cut about who's important
19 enough to subsidize or who should get it for free and who
20 should pay for it, I just think it's an impossible
21 situation. It's not one that we can really deal with and,
22 fortunately or unfortunately, it ends up in the hands of
23 Congress as a Congressional issue.
24 But it's a very, very -- our issue is to try to
25 cover, provide coverage that we think the audiences are
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1 interested in, and I don't know how we could ever deal
2 with free time for all candidates. It just would be so
3 impractical.
4 CO-CHAIR ORNSTEIN: Bob, let me follow up just
5 with a couple of questions. What you're suggesting, then,
6 is that your objection is not a philosophical one, it's
7 just a practical one, that it's unworkable?
8 MR. WRIGHT: I don't philosophically object to
9 having exposure of candidates. We do that. That's the
10 bulk of our news programming during campaign periods. But
11 what I would object to is a philosophical approach that
12 says that all candidates get free air time just devoted to
13 themselves. We would never be able to deal with that
14 issue.
15 CO-CHAIR ORNSTEIN: If you had a practical way
16 of providing time that might work, say through the
17 parties, where they would make the allocation and you'd
18 have very limited, it would be a limited amount, you
19 wouldn't have to provide it to everybody, and the parties
20 would make those decisions, if you could do that in a
21 practical way, are you suggesting then you wouldn't object
22 to that?
23 MR. WRIGHT: You know, it's always the details.
24 I don't know. All I know is that for everybody that you
25 provide help for, there are another hundred who are
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1 standing out there saying: Well, why not me? And those
2 are hard issues. Those are issues when all this is over
3 we face when we go home.
4 CO-CHAIR ORNSTEIN: Let me ask you all --
5 actually, let me focus on Don and Bob Wright for this
6 question as well.
7 MR. RUIZ: Norm --
8 CO-CHAIR ORNSTEIN: I'm sorry, go ahead.
9 MR. RUIZ: Just a second point. I want to make
10 sure I understand. On local public affairs programming or
11 public affairs programming, is it my understanding that
12 you feel you're already doing the job and you don't mind
13 doing it? You just don't want to be mandated to do it; is
14 that my understanding?
15 MR. WRIGHT: Something like that. We do a lot
16 of that, and we don't object to being directed to doing
17 things like that. But what happens is these issues
18 usually get bogged down into so much detail. That's what
19 we object to. We do it. We do it anyway. We do it
20 because it's what we do, and we're going to continue to do
21 it. Whether you have rules and regulations on that or
22 not, we're going to continue to do it.
23 So I guess I can't object to something unless I
24 know what it is. But we do it anyway and we will be doing
25 it.
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1 MR. RUIZ: So you are objecting to it because
2 you feel you already do it. You don't want to be legally
3 bound to it, is what I'm trying to understand.
4 MR. WRIGHT: You get down to the question of you
5 go from generality to specifics, and that's where the
6 problems usually start to come in. Who is it? How often?
7 What about this group, what about that group? We've done
8 this group twice; do you have to do that group six times?
9 That's where the problems start to come in.
10 We have to have some judgmental issues in this
11 as to how to do this in a way that's practical and
12 workable, that we can communicate to people in the
13 community.
14 MR. RUIZ: But it's total trust and faith that
15 we're asked to deal with this?
16 MR. WRIGHT: But when we do it it's on tape and
17 it's on record. Our constituents are not hesitant to come
18 in and point out to us when they don't think we've done
19 very well, or they're not hesitant to come in and tell us
20 where they don't feel they've had access which they feel
21 is important.
22 We deal with complaints all the time and people
23 coming in telling us frankly, with no uncertain terms, how
24 they feel they've been treated or not treated.
25 MR. RUIZ: But without regulation, what is their
205
1 recourse?
2 MR. WRIGHT: Well, that's part of the license
3 process. We have to file complaints, we have to file
4 information on complaints. People that have objections
5 about our service have all kinds of methods that are
6 mandated by the Commission to lodge those complaints.
7 It's a very open process.
8 MR. RUIZ: So you're objecting to any new add-
9 on?
10 MR. WRIGHT: Right, yes.
11 CO-CHAIR ORNSTEIN: I want a quick follow-up on
12 the campaign issue. Harold, I think?
13 MR. CRUMP: No.
14 CO-CHAIR ORNSTEIN: We have a couple follow-
15 ups. We have Frank and we have Robert, and then we'll
16 turn to some of these other issues.
17 The follow-up on the campaign issue is, we had
18 some considerable discussion this morning about the lowest
19 unit rate, which you mentioned, Bob, which has often been
20 viewed in the past by broadcasters as a tremendous onus,
21 both in terms of the loss of money and administrative
22 burden. Several years ago the National Association of
23 Broadcasters had representatives testify in front of
24 Congress that if lowest unit rate were repealed they would
25 be willing to provide one minute of free time in return
206
1 for every two minutes of paid political advertising time.
2 How do you gentlemen feel generally about the
3 lowest unit rate? Would it be worth something
4 considerable to have it repealed? And does that sort of
5 offer which was made by the NAB itself appeal to you?
6 MR. CORNWELL: Let me think about that question
7 a little bit.
8 I would say that at the working level of
9 managers they hate the lowest unit rate. They find it to
10 be very cumbersome and administratively burdensome. So I
11 suppose that if you were going to take a vote of our
12 managers, they would all want to find some way to get rid
13 of it, and they probably would make that trade that the
14 NAB suggested.
15 MR. WRIGHT: I don't know, Norm. Possibly. I
16 mean, I don't feel that -- I'm not particularly opposed to
17 the current situation. We've lived with it, we've learned
18 how to deal with it. It's complicated. Unfortunately, I
19 think many broadcasters objected, but in certain states
20 it's really the subject of a lot of litigation and it
21 creates potential liabilities for broadcasters.
22 There is a body of the bar, of which I am a
23 member, that has earned considerable fees from this. So
24 there is sort of a side business of going around suing
25 broadcasters on whether they have given the lowest unit
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1 rate. It's an enormously difficult system to keep track
2 of.
3 I think, if I go to my local hat, our managers
4 would say: Gee, if you could get me out of that one, just
5 so I don't have the issue of the tabulation, I would be
6 happy to trade something for it. I don't know if that's a
7 good answer.
8 CO-CHAIR ORNSTEIN: That's helpful.
9 Frank.
10 MR. CRUZ: Thanks, Norm.
11 Let me ask the three of you, but perhaps, Mr.
12 Wright can address it first. If giving away free air time
13 to political candidates is a very cumbersome and difficult
14 thing for you to do because of the complexities of the
15 markets and the different needs, and that you have oodles
16 of candidates, if you will, asking for time and that it
17 would be hard to manage, have you given any thought, aside
18 from the unit rate reduction and other factors, have you
19 given any thought to the idea, what would happen if you
20 were liberated from that responsibility completely and the
21 commercial broadcasters didn't have to do that and you let
22 public broadcasting do it; however, you were to kick in a
23 fund so that public broadcasting would be supported, but
24 no political candidates would appear at all on the
25 commercial stations and people would say, you've got to
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1 watch them only on public broadcasting?
2 MR. WRIGHT: I would be opposed to that, and the
3 reason I would be opposed is a lot of that is what we do,
4 and a lot of the reason that people watch us. You can't
5 say you're a news reporting service if you can't report on
6 elections and politics and if you can't constantly have
7 candidates and elected officials on your air explaining
8 their policies and practices.
9 MR. CRUZ: Through ads, commercial time?
10 MR. WRIGHT: No, through our reporting. We're
11 reporting -- I was getting to the issue. We have to be in
12 the reporting of politics, its consequences, its
13 personalities, and its people. You know, that's what we
14 do.
15 I thought you were suggesting just don't do
16 that, let all of that happen on PBS. You must meant the
17 advertising?
18 MR. CRUZ: The ads, the soft money and others
19 that the Vice President told us when we first gathered
20 here as a commission, that he asked us to look hard at
21 what he called the steeplechase after money, time after
22 time, election after election, and that we heard about
23 extensively this morning.
24 I meant liberating the commercial side of any
25 advertising, not covering news or public affairs. That's
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1 another matter.
2 MR. WRIGHT: I don't know. Perhaps I would be -
3 - I think the candidates wouldn't be, though, because the
4 candidates are going to want to be -- they're going to
5 want to place their advertising in programs or on stations
6 that have demographic coverage which they feel is
7 attractive to them or have shows that have an audience
8 that they feel is attractive to them. So you're going to
9 be restricting their rights to position themselves. I
10 think they probably would not support that, would be my
11 guess, regardless of whether we wanted to do that or not.
12 CO-CHAIR ORNSTEIN: Newt, you had a follow-up?
13 MR. MINOW: When Congress passed the
14 Communications Act more than 63 years ago, it took care of
15 one class of citizens, politicians, with the equal time
16 element. It did the same thing with the lowest unit rate.
17 Nobody else has that, only politicians. Based on that
18 record and the current debate on campaign finance reform,
19 it seems unlikely that Congress, unless it's pushed, is
20 going to do much about this.
21 What if it were -- maybe it's dreamy to think
22 that the industry and this committee could come up with a
23 challenge to Congress with a reform involving free time
24 and say, put up or shut up? Would the industry be willing
25 to do that?
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1 MR. WRIGHT: Newt, I'm sorry. To put up or shut
2 up in what respect?
3 MR. MINOW: With some basic reform proposal
4 involving free time.
5 MR. WRIGHT: Well, quite frankly, I don't think
6 this is an issue that we can -- this is such a complicated
7 issue and it's all going to be governed by Congressional
8 action, and I just don't see how we can really be the
9 driver one way or the other on this one.
10 MR. MINOW: Congress is not going to be the
11 driver.
12 MR. WRIGHT: No, but it's in their bailiwick,
13 though.
14 CO-CHAIR ORNSTEIN: Paul, you've been waiting
15 for a while.
16 MR. LA CAMERA: I'm going to drift back a bit to
17 broader public service matters with Don and Bob. As was
18 suggested, this morning we spent some time in the past,
19 romanticizing it a bit, but some very good things were
20 said and discussed. And even before your testimony, I'm
21 well aware of both of your station groups and the good
22 work that they do, including WRC here, which I've always
23 admired from afar.
24 But in the past 10 to 15 years it has been the
25 competition that's emerged, that Robert suggested. There
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1 have been the competitive forces, Bob, that you've
2 discussed. There's been the consolidation that we all
3 know about. There's been the emergence of local news and
4 the importance of that franchise to local stations and the
5 promotion coming up with that.
6 From all that, are local stations today from
7 your perspective less good corporate citizens than they
8 were 10 or 15 years ago?
9 MR. WRIGHT: Well, from my perspective, no, I
10 don't think so at all. As a matter of fact, I think this
11 is an area of substantial flux right now and the pendulum
12 is going more and more towards local-local than it has, if
13 it has ever strayed from that.
14 I think this goes almost to the question
15 somebody asked about ascertainment. 20 years ago -- and
16 you know this as well as anybody here -- 20 years ago
17 ascertainment was a bit of a check and balance on whether
18 broadcasters, who had little if no competition, were
19 really serving communities where they were making what we
20 perceived to be a lot of money, and they could kind of
21 reach plenty of people and so they didn't have to really
22 bother dealing with a lot of specific parts of the
23 community.
24 I think today broadcasters don't have that
25 luxury. If you want to be successful in this business and
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1 survive with 260 channels, you'd better be reaching
2 communities, the discrete communities within your
3 community. And with more and more communities, especially
4 in the larger cities, we are now running around like mad.
5 We don't call it ascertainment in the traditional sense.
6 We're running around in every community we can find to
7 find out what's important to people, what is it going to
8 take for them to watch, what are they interested in, what
9 aren't they interested in.
10 I think you're going to see a reoccurrence of
11 local programming. You I happen to know, because I know
12 that station well, you have one of the more successful
13 local programs in the Nation that's not a news program
14 specifically. It's a program on every night. I think
15 you're going to see more of that, because we're all
16 desperate to figure out how to connect ourselves with our
17 communities, and that means you have to deal with the
18 diversity in the community.
19 I think that means you're going to go in there
20 and you're going to find out what is going on in that
21 Hispanic section, can we connect, is there a way for us,
22 is it our shows, is it our newscasts, is it public
23 affairs? What is it? Is it entertainment events, is it
24 sports events?
25 I think that pendulum is going in that direction
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1 very quickly right now.
2 MR. RUIZ: Can I just follow up?
3 CO-CHAIR ORNSTEIN: We have some follow-ups on
4 this specific point. Okay, Robert's been waiting here,
5 too. Okay, Don, go ahead.
6 MR. CORNWELL: I just wanted to say I couldn't
7 agree more with what Bob said. I really think that in a
8 sense it goes back to this gentleman's question about
9 public affairs programming. The ascertainment process,
10 which is one of those things that happened before I came
11 into this industry, quite frankly, and was on the rule
12 books at that time, is now really, one might describe it
13 as, market research.
14 We have even found with our public affairs
15 programming -- and I can cite a specific example in our
16 San Jose station -- where, because community groups made
17 it clear to us that they were not happy with what we were
18 doing in public affairs programming, we changed it. I
19 just think that that's what broadcasters are faced with
20 today.
21 So that I really think as a necessity to survive
22 in the future broadcasters have to be better. But I
23 wasn't around 10 or 15 years ago, so I can't compare.
24 CO-CHAIR ORNSTEIN: Thank you.
25 Jose.
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1 MR. RUIZ: My dilemma in all of this, I think,
2 is that I came into television because of community
3 pressure, and I started in the public affairs area and I
4 saw how the prime time access 7:30 to 8:00 was lost and
5 replaced by the local broadcaster, by syndicated game
6 shows. That is heavy revenue and we're never going to get
7 it back.
8 I saw how after-school specials were eventually
9 lost, that time slot, to Oprah and others. We'll never
10 get that back. I saw how early morning children's
11 programming on the networks was lost to Good Morning
12 America and the AM Show, et cetera, et cetera. Those are
13 now big revenue streams. They'll never return to service.
14 I think time through that schedule is becoming
15 more and more at a premium, and you're trying to squeeze
16 more out of every time slot.
17 The thing that never happened in the early
18 seventies was that nobody ever tried to commercialize
19 public affairs programming, primarily because they didn't
20 believe that -- the first groups were African Americans -
21 - that people wanted to do business, that there were
22 advertisers that wanted to reach that population.
23 Latinos, the same thing. Asians, women. Ironically, even
24 women's programming; nobody at those stations said, hey,
25 I'm sure there are advertisers who want to reach that
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1 population and we could commercialize that, we could make
2 a revenue stream out of this.
3 So eventually those local stations were glad to
4 get rid of it. What I see on my local stations, including
5 KNBC, is that they produce a very good half-hour news, and
6 then for the most part, 90 percent of it or 95 percent,
7 it's repeated four, five, six, seven, eight times during
8 the day.
9 CO-CHAIR ORNSTEIN: Peggy.
10 MS. CHARREN: Just a question. This morning we
11 talked about how some stations, most of them represented
12 here or at least the stations of people represented here,
13 do serve the public interest, that stations perform
14 differently. How would especially you, Bob, and you, Don,
15 feel about a requirement for those stations that don't
16 serve the localism as a concept, which supposedly came
17 with the license, a requirement for some minimum, because
18 there are some stations in this country that don't do
19 anything at all versus some stations that are really very
20 service-oriented?
21 MR. WRIGHT: I have no objection to that. I
22 think I have no objection to that.
23 MR. CORNWELL: I'd say the same. I would
24 observe that I'm always uncomfortable with telling others
25 how to run their stations and so that is an issue. We've
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1 always felt, quite frankly, that serving the public is in
2 our best business interest, however. So we almost like
3 the fact that some don't.
4 MR. WRIGHT: One of the issues here -- I'd only
5 suggest this because it's a way. When we're trying to
6 make investments, we're trying to think about where this
7 is going to be 4 or 5 years from now or 3 years from now,
8 rather than tomorrow. I've tried to offer some comments
9 here about trend lines that I see, as opposed to
10 necessarily exactly where we are at this moment.
11 Going back, you were just talking about some of
12 those day parts. I'd say that the trend line in access,
13 for instance, most stations aren't making money on access.
14 They pay so much money for these popular shows, they don't
15 make any money. I think you're going to find a trend line
16 developing there; this is going to revert back to local,
17 local types of shows. Not on all the other day parts
18 necessarily, but clearly on that one.
19 I think that there are trends here. The FCC in
20 some respects has actually been ahead of this, and maybe
21 criticized for it. I was upset that Home Shopping Network
22 doesn't have any, doesn't seem to have any public interest
23 obligations. But then they went to a hearing, and I
24 wasn't there, but I got back. And basically the
25 Commission's view was -- and you go back and you read it
217
1 and you say, well, I can't really find fault. They said:
2 Well, providing shopping services to people in their homes
3 is a public service. It may not be for everybody and it
4 may not be -- it may not be what everybody thinks of it,
5 but it's a service. It's beneficial. There are lots of
6 people who are in homes who have written us or called or
7 said that really this is an important part of their life,
8 for their interest.
9 And the Commission said, if every station did
10 that then it wouldn't make any sense. But since we have X
11 number of stations, we don't think that having some doing
12 that is --
13 MS. CHARREN: But do you think that --
14 MR. WRIGHT: That's part of the issue, though.
15 MS. CHARREN: Everything's complicated, but do
16 you think that's the community, serving the community
17 local interests? I mean, I hear what you're saying.
18 MR. WRIGHT: Well, I was on the other side of
19 this one, so I'm kind of with you here.
20 MS. CHARREN: I understand that, Bob. But
21 community is different from public interest. Some people
22 define the public interest as what the public is
23 interested in. That's really not the point I was trying
24 to make.
25 MR. WRIGHT: I think there's an inevitability
218
1 here in broadcasting, that these cable services, the 260
2 today -- it'll be 272 or something -- they offer basically
3 packaged entertainment and not packaged sports, but local
4 or regional sports. Many of these programs were programs
5 that were unique when they were on broadcast and their
6 formats now aren't unique any more. They look very much
7 alike.
8 It's one of the reasons why our programs don't
9 do as well as you would like, because you've seen it, been
10 there, heard that, or whatever. I think that broadcasters
11 are having to reach now for different, for
12 differentiation. And it isn't going to be just different
13 actors or performers.
14 That's why I believe the trend line is going to
15 be for broadcasters who can do this, as opposed to cable
16 services, which are nationally or regionally delivered.
17 They're going to go into local and regional communities to
18 try to find exciting and interesting beneficial things to
19 offer people. That isn't there today demonstrably.
20 I'm saying -- if you had asked me the question,
21 how do broadcasters really survive -- turn the tables on
22 me and say: Well, you've got 260 channels, you guys have
23 no subscriber revenue, you only have advertising, so how's
24 this going to work 5 or 10 years from now -- and the
25 futurists, I mean the true futurists, the Internet
219
1 futurists, think we're all dead. There are lots of them
2 that have written a lot of good books that'll say that
3 broadcasting doesn't belong after the year 2000, it's
4 over; we don't need it; we have the Internet.
5 And I think the answer to that is that many of
6 us are either stumbling into or being pulled into or
7 forced into or are discovering is that you better do a lot
8 of things that are local, and you better reach out into
9 that community. It isn't exactly a mainstream thought
10 right this minute, but I think that's where we're going.
11 CO-CHAIR ORNSTEIN: We had Cass who wanted to
12 make a quick intervention. Then Robert has been waiting,
13 and then we'll turn to Gigi for some of the cost
14 questions.
15 MR. SUNSTEIN: A very quick point. In Europe
16 it's customary to draw a distinction between the public
17 interest and what interests the public in the context of
18 talking about sensationalistic stories about movie stars
19 and so forth. And these may be two different concepts.
20 What it would be very good to have some help on -- I think
21 the trend line today has been toward ways of helping
22 broadcasters in an era of tremendous competitive pressures
23 to find ways to promote the public interest rather than
24 just what interests the public, in a way that doesn't cut
25 into competition.
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1 And to repeat some version of Mark Fowler's
2 suggestion that competitive pressures are adequate, that
3 may be the best we can do. But it would be better if we
4 can do something that aspires a little higher.
5 MR. DECHERD: I want to respect Bob's timetable.
6 Do you want to ask a question?
7 MS. SOHN: I do, yes.
8 MR. DECHERD: I have a general comment.
9 MS. SOHN: I want to get to the cost, because
10 there's a lot of numbers being thrown around, and to the
11 realities of the business that Mr. Wright talked about.
12 This is either for Mr. Cornwell or Mr. Wright. My
13 understanding is that the costs of conversion -- and
14 there's a lot of numbers being thrown around, but really
15 people don't know how much it's going to cost. We heard
16 this morning that the technology is changing so rapidly it
17 may cost a lot less in 2 years or 5 years than it does
18 today.
19 But isn't the cost of conversion going to be
20 over a number of years? Bob said that the spectrum's
21 going to have to be given back in the year 2006, but, as
22 we learned in the first meeting, because of the budget
23 bill that timetable could be extended for quite some time.
24 So nobody's putting up the millions of dollars
25 right up front, right? They're going to be paying it over
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1 a number of years.
2 MR. WRIGHT: Well, that's not accurate. There
3 are some -- sort of the first-line tool kit for digital
4 requires you to buy an antenna that has got to go on a
5 tower, and that is roughly a half a million dollars.
6 There's just no way to avoid that. If you don't have one
7 of those things, you have to go out and buy one.
8 You may have to lease a position on a tower from
9 somebody. If you're fortunate enough to own your own
10 tower and it's modern enough or strong enough, you're
11 probably okay. Most people are going to have to make some
12 economic combination. But the worst case is you have to
13 go to a new tower. That can be either build one yourself
14 or share it with somebody else. That can be an investment
15 of up to $4 or $5 million, shared in some form or another.
16 You have to do that now, because it takes time to get
17 these things done.
18 If you are simply going to a commercial site,
19 you're going to have to pay rent, which could be quite
20 substantial to get this thing up there. That's an
21 immediate cost. You have to buy -- you have to put in
22 digital equipment in your station which is probably in the
23 neighborhood of a couple, $300,000 right off the bat, to
24 be able to bring a signal in and to bring a signal out.
25 As soon as you want to get into the situation of
222
1 doing any production at all, you're going to have to start
2 getting onto the line of equipment. That's the one you
3 probably can defer a little bit. But you defer at your
4 own risk, because if digital starts to be attractive and
5 you're not -- if your local newses aren't in it or you're
6 not able to do that, then you're going to run that.
7 You're going to have to decide whether that's a risk you
8 want to run.
9 But I would say -- and then all of your portable
10 equipment, all of your, if you do news and information,
11 all that equipment is obsolete in that game. So in a big
12 city the cost could be well in excess of $10 million, like
13 New York. It could be $20 million if we turned all of our
14 news equipment into digital format. That'll happen.
15 That's over time.
16 But there is an up-front cost which we estimate
17 in our stations is about $2 million per station just to
18 get going on the timetables that we're on. Most of our
19 stations click in in '98 or '99. So that's out of pocket.
20 But I said it's expensive and it is expensive,
21 and I also told you that I told our board, you can't get
22 that money back now. I'm not complaining about that. I'm
23 not saying that that's unfair or that the government
24 forced me to do it and I hate it. I'm saying it's a cost
25 of doing business, of protecting what we have, to allow us
223
1 to get to the type of technology that is absolutely
2 necessary for us to have to survive.
3 But I don't want it to be confused with there is
4 a moneymaking scheme here, that somehow or other in a year
5 and a half we're going to make a lot of money and it's not
6 going to cost anything. You're going to have to make the
7 investment and you're going to have to hope that over
8 time, that you're going to have revenues coming in which
9 are going to amortize that investment.
10 For smaller stations, as Don said, it's very
11 difficult.
12 MS. SOHN: So there some tax benefits, though,
13 if you can amortize it over time?
14 MR. WRIGHT: Well, not for cash. You still have
15 to borrow the money today and pay the interest. If you're
16 borrowing it, you get some tax deductibility on it, but
17 you've got to go out -- if you don't have a balance sheet
18 that banks are willing to lend under, you're going to pay
19 some pretty high rates for that.
20 There are a lot of people, a lot of our
21 affiliates -- we have 214 NBC affiliates and we only own
22 11, so all the others are owned by other people. A lot of
23 these smaller companies are raising their hands to us and
24 they're saying: Hey, lend us the money. What can we do?
25 How can we? We can't -- our balance sheet won't accept
224
1 this because I can't show the bankers any revenue coming.
2 Send us the letter, Bob, that points out to them, that
3 corrects their misunderstanding about revenue, show them
4 how the revenue's coming in.
5 I write them back and I said: I can't do that.
6 You don't have it. You're not going to have any revenue.
7 So they come in and say: Well then, lend us the money.
8 That all has to get sorted out. We'll all
9 survive that issue, but it's not -- it's just not a walk
10 in the park.
11 MS. SOHN: Just one more quick follow-up. I
12 guess I'm less concerned about GE than I am about maybe
13 Mr. Cornwell's station or maybe Mr. Duhamel's station.
14 But my sense is is that if you're a network affiliate --
15 and some of our materials reflect that -- the network will
16 help in some of the transition costs. Is that correct?
17 MR. WRIGHT: Well, that's yet to be determined.
18 We become a bank like other banks. My point is that if
19 it's that easy people don't ask us to borrow money from
20 us. They borrow it from somebody else and they don't ask.
21 So this is a rare occurrence, which tells me that some of
22 these people legitimately are strained, or they wouldn't
23 be asking.
24 MR. CORNWELL: Gigi, that was my point earlier
25 in my remarks when I said that I thought this was an issue
225
1 of equal access potentially in small markets, because
2 we're a big enough company -- I mean, I cry poor about
3 balance sheet and what have you, but we will be able to
4 afford to do this. If our station continued to be owned
5 by the gentleman whom we bought it from, I'm not sure what
6 he would do, because this is a very difficult dilemma, to
7 make that kind of an investment. And even if I've
8 overstated the amount, which I said was $8 million
9 potentially, if you pulled it down, even if it was $3
10 million, it's still an awful lot of money for a market
11 that size.
12 MR. WRIGHT: Just one thing. Digital is
13 important for broadcasters, but it does serve a lot of
14 other issues. If you don't have -- and I made these
15 arguments when we were into the issue of why should
16 broadcasters, should they be lent this channel to develop
17 digital as opposed to just staying analog, in which case
18 you're basically out of business over time.
19 The point was that broadcasters by and large
20 have many popular programs that appear in people's homes,
21 most of whom receive it by cable, and broadcasting is the
22 only thing free in that package. And if you cease the
23 broadcasting business -- and broadcasting reaches
24 relatively 100 percent of the population and cable reaches
25 70, and if you cease broadcasting you're turning off --
226
1 basically, it's like universal telephone service. You're
2 turning off a service that does have a reach of the entire
3 country, and it provides meaningful, entertaining, not
4 always the perfect format for everybody, but basically
5 entertaining things for people in their homes. And it's
6 free and it's part of that cable service.
7 If you shut that down and you stop that, then
8 basically you're turning the whole country into pay
9 television delivery service, and you're doing it sort of
10 accidentally. And I said at least, if you're going to do
11 it, do it on purpose. Don't wake up one day and say you
12 did it accidentally.
13 The Congress went the other way and said: No,
14 we're not going to do that. You guys go in here, develop
15 a modern service, be competitive. We know it's going to
16 take some time. If you're willing to make the investment
17 to do it over that period of time, we'll lend you the
18 spectrum to do it. And that's the trade. The trade is we
19 have to make that investment, and it's going to take some
20 time.
21 CO-CHAIR ORNSTEIN: Bob, I know you have to
22 leave. I'd like to follow up that particular issue and
23 also one other related thing in your statement, where you
24 offered your models and this notion of the trade,
25 suggesting that if indeed we went from one analog channel
227
1 to one HDTV channel that it was a wash and therefore no
2 additional obligations would accrue.
3 Some would suggest that the simple process of
4 keeping competitors from even being able to bid for this
5 particularly valuable part of the spectrum is worth a
6 considerable benefit, and that it isn't, even if you do go
7 one for one, it's not an even trade. How would you
8 respond to that?
9 MR. WRIGHT: Well, I'd say all we're doing is
10 staying in business. The opposite is sort of the Fidel
11 Castro approach, where you say: Well, gee, you have a
12 nice looking business over there; we think we're going to
13 sell your business to somebody else. You say: Wait a
14 second; we've been in this business a long time. Yeah, I
15 know, but we can make a lot of money if we just kind of
16 sold your business to somebody else.
17 That raises a whole bunch of other issues. So
18 all we're doing here is, we can't today go to digital
19 because there are no people with digital televisions, so
20 you have to do it somewhere else other than on this
21 service. So you're simply trying to migrate this national
22 free service from one set to another, and you can't do it
23 until people have the sets.
24 That's all that's going on here. There isn't
25 any other, there isn't any other sleight of hand. So I
228
1 don't know why that would generate additional obligations.
2 CO-CHAIR ORNSTEIN: Then you basically suggested
3 that you felt that the future would lie predominantly in
4 high definition television. Certainly the buzz from the
5 industry is exactly the opposite. It started with what
6 Preston Patton suggests, and then he stepped back from it
7 a little bit. But what I hear is, privately, great
8 skepticism that high definition television will dominate
9 in a lot of places.
10 There are certainly those who are moving ahead
11 in that direction smartly and terrifically well, like Jim
12 Goodmon. But others are saying: Well, really, we
13 probably won't be able to do that at all. What makes you
14 think that the model will be overwhelmingly HDTV?
15 MR. WRIGHT: Well, what I really said was that
16 higher resolution forms of picture are clearly going to be
17 coming faster and faster. I think a lot of people
18 probably will experiment over the next several years, when
19 there are very few sets out there and there isn't any high
20 resolution programming. They'll experiment with more
21 traditional resolution, three and four. I don't think
22 that will last.
23 I think by the time when you really get digital
24 television out there -- and cable will go. HBO has
25 announced they will go high definition or high resolution,
229
1 if you will, because high definition has a one-format kind
2 of a view and high resolution means all kinds of different
3 levels that eat up a lot of spectrum.
4 I think it's just an inevitable process, and I
5 think a broadcaster can sit back only so long. In the
6 next few years it almost doesn't make any difference what
7 we do, because there aren't any sets there. But when it
8 does make a difference, then I think the highest quality
9 picture, if it's really distinctive and if consumers
10 really go for it, will win. And it won't make any
11 difference how much we loved our three or four different
12 channels. If that's what people want, the better one,
13 we're not going to be in second place.
14 MR. DECHERD: Norm, I am 13 minutes into my
15 goodwill bank with Bob Wright. His team is looking very
16 anxious over here.
17 MR. WRIGHT: I want the record to note that I'm
18 going to a college board of trustees dinner, so I'm trying
19 my educational part of this.
20 (Laughter.)
21 CO-CHAIR ORNSTEIN: Bob, we rate your testimony
22 PG. There was no sex, no violence.
23 (Laughter.)
24 CO-CHAIR ORNSTEIN: Well, maybe PG-13, not
25 suitable for young children. But thank you.
230
1 MR. DECHERD: Bob, thank you.
2 MR. WRIGHT: Thank you. I'm sorry, if you could
3 excuse me.
4 CO-CHAIR ORNSTEIN: I wanted to ask Don Cornwell
5 a follow-on question in the same way. In your testimony
6 you said: "Many experts contend that the government will
7 realize more revenues from the auction of the analog
8 spectrum than it would have realized from the auction of
9 the spectrum set aside for digital transmissions."
10 So in effect, if you follow the logic from that,
11 you've traded something of more value for something of
12 less value. How do you justify that to your shareholders?
13 MR. CORNWELL: I'm not sure I can respond
14 specifically to that, just simply to say that I think what
15 we all believe here on this panel, based on the comments
16 that have been made, is that we really don't know how
17 these business models will unfold in the future. And I
18 think that our basic belief is that once we've made this
19 transition from the channel allocations that we currently
20 have to new channel allocations, and assuming that there
21 is penetration of markets with digital television sets,
22 then we will have a business and that business will look
23 either in a multicasting form or, as Bob talked about,
24 high resolution or high definition or what have you.
25 Then the other spectrum that we currently have
231
1 goes back to the FCC. Since there clearly is now an end
2 date in sight, our belief has been that you will find more
3 potential bidders, which tends to raise the prices, and in
4 fight you might even potentially find some broadcasters in
5 their markets who would bid because, as I recall the
6 legislation, I believe it allows that. So that would add
7 one additional, in effect, demand for that spectrum in the
8 market, which would raise the price.
9 So I'm not sure I can respond to the first part
10 of the question, which is how do I justify it to my
11 shareholders.
12 CO-CHAIR ORNSTEIN: But I mean, if in fact
13 that's the case, it would suggest that broadcasters would
14 have been extremely reluctant to make this trade because
15 they'd be trading something that they know is of value and
16 seems to be worth even more down the road for something
17 that's worth less.
18 But that of course wasn't the phenomenon out
19 there. So why did it work the way that it did?
20 MR. CORNWELL: I'm not sure that I understand
21 the question. Say that again?
22 CO-CHAIR ORNSTEIN: If the marketplace is such
23 that what you have, the analog channel, is in fact more
24 valuable than the digital channel, broadcasters wouldn't
25 have wanted to make this one for one trade. They would
232
1 have demanded something else in return.
2 MR. CORNWELL: I don't think the broadcasters
3 have said that one is more valuable than the other. If
4 that's what I said, then I misspoke.
5 MR. COONROD: It's not the value of the 6
6 megahertz. In other words, if the FCC is able to repack
7 and auction a larger block of spectrum, that larger block
8 of spectrum will be more valuable than individual blocks
9 of 6 megahertz, because there's more flexibility. So it
10 becomes more valuable when it's repacked.
11 MR. DUHAMEL: Norm, I think the thing they're
12 getting to is my stockholders ask me: Why are our AM
13 stations getting the heck beat out of them? And I said:
14 15 years ago the AM audience in Rapid City was two-thirds
15 of people listened to AM, a third to FM; now it's like 20
16 percent. I said: The AM is doing very well with the AM
17 audience; they're just dying.
18 That's what scares us. If we don't go to
19 digital, we're going to be left with AM and black and
20 white television. It's not that any of us is running out
21 and saying: Please, can we spend $10 million. It's just
22 we don't have any choice, or we're gone.
23 MR. RUIZ: Bob, I wasn't clear. Are you saying
24 that if it had more megahertz instead of 6?
25 MR. COONROD: No. In other words, if you can
233
1 auction a larger block, that has more value than a series
2 of individual blocks of 6 megahertz each. In other words,
3 18 megahertz as a block is more valuable than three 6
4 megahertz blocks. That's just because it gives you the -
5 -
6 MR. GOODMON: You get the contiguous block.
7 MR. COONROD: Yes.
8 CO-CHAIR ORNSTEIN: We have three comments here,
9 Karen and Robert and then Frank, and then I think we'll
10 wrap.
11 MS. PELTZ STRAUSS: You can't just say that
12 we're migrating from one free service in one format to
13 another. The fact is that there are different
14 technological capabilities in this new service. So it's
15 not only -- I see our function as not only a question of
16 whether we're going to be creating new obligations. We're
17 going to be creating also different obligations. I mean,
18 it's different services. It's different channel streams.
19 I don't think that we should lose sight of that.
20 CO-CHAIR MOONVES: The only problem is that, as
21 everybody has said, this panel would be better off being
22 in existence 3 years from now so we can tell what the
23 economic models are no what the technological models are.
24 We're forced to make recommendations in the blind in a lot
25 of ways.
234
1 MS. PELTZ STRAUSS: To a certain extent I think
2 you're right, some of our recommendations may be
3 premature. We may have to reconvene in three years. But
4 at least it's a start.
5 CO-CHAIR MOONVES: No thanks. I won't be here.
6 (Laughter.)
7 MR. GLASER: If I might on that point, I would
8 just like to say that I'm not so sure that a meeting 3
9 years from now, having some successor group meeting 3
10 years from now, is not a good idea. But I also think that
11 the foundation that we lay now is tremendously important
12 to set the right framework.
13 If you know you live in a zone where there's a
14 high earthquake capacity, it doesn't mean you don't build
15 a building; it means you build it to good earthquake code.
16 And I think --
17 MS. PELTZ STRAUSS: I agree with that as well.
18 MR. GLASER: I think that it seems to me that
19 we've teased out some of the dimensions of what could
20 happen. That's one of the reasons I asked Bob Wright the
21 question about in a world where everyone plays by a set of
22 digital rules, how do you feel about that? And I guess
23 I'm interested in directing this back to our panel here.
24 The question I've had -- PBS has been among the
25 most energetic advocates of the idea of multiplexing. Do
235
1 you see a commercial model, not to say a profit model
2 because that's not your charter, but a commercial model in
3 terms of audience, that allows you all to get more share
4 in aggregate or mind share than you get in a channel-
5 locked broadcast world? And if so, what does that mean in
6 terms of the economics as you go into that multicasting?
7 MR. COONROD: Well, the second part of it is the
8 part that we're struggling with right now. The revenue
9 models are very fuzzy, in part because of what we said
10 earlier: There are no TV sets. Nobody can actually do
11 it, so it's all speculative.
12 But, recognizing that we're in a speculative
13 realm here, a number of public television stations provide
14 instructional television services. They generate revenue
15 from those services. They generate revenue that they're
16 able to use for expenditures. Those same stations cannot
17 now carry a ready-to-learn service that they could raise
18 money around, because they're constrained by the single
19 channel.
20 If they could multiplex, they could begin, they
21 could begin to also provide a ready-to-learn service,
22 which would be for the pre-school audience. We know that
23 programming for pre-school audiences is something that
24 public television stations can raise money around, so they
25 could develop yet another stream of revenue.
236
1 Now, that programming is already available. It
2 is already being distributed. So the marginal cost of
3 adding that additional program stream is minimal and there
4 is some possibility of generating additional revenue.
5 Once you go beyond the traditional services and
6 you try to look at new service models, then it becomes
7 even more speculative. But there are current services now
8 where the technology constraints the station from
9 providing them simultaneously.
10 MR. GLASER: That's very interesting.
11 CO-CHAIR ORNSTEIN: Rob?
12 MR. DECHERD: Norm, I want to let the members
13 stay with the other panelists, but if I may just pick up
14 on a couple of questions that have been posed and then
15 make the comment that I was going to make earlier in
16 response to Jose and Newton's questions.
17 First, Karen posed the question just a minute
18 ago about this being different and it's not an exchange of
19 channel for channel. But I think it's useful to look at
20 it from our perspective in this sense. If overnight the
21 U.S. could achieve the penetration of high definition
22 acceptable or receptive monitors, we could go with our
23 current channel. So the question would be from a public
24 policy standpoint, is there something different tomorrow
25 from today if we're using only 6 megahertz of spectrum and
237
1 probably on day one doing what Bob Wright said, and that
2 is broadcasting in a way that uses that whole spectrum.
3 So I think it's the length of this transition
4 and it's the skepticism about our intentions that
5 complicates this a great deal.
6 As Norm knows and I mentioned at our last
7 meeting, I testified at the McCain hearing where Preston
8 Patton and David Smith were brought to task. And I said
9 then, and I feel more strongly today, that the views of
10 the people at this table, including Don and Bob and Bob,
11 do represent the plans and the intentions of the vast
12 majority of broadcasters.
13 We got in trouble because a year ago, when the
14 FCC chose not to adopt a single high definition standard,
15 it opened up this very theoretical debate about how we
16 would use the spectrum that's being loaned and whether you
17 go 1080I or 720P. And of course Rob's industry is very
18 much engaged in this discussion.
19 I think that that whole distinction is about to
20 be marginalized. I think the technology is moving so fast
21 that that's not going to be an issue and we're going to be
22 back to the basic issue of what's the content. And the
23 content is going to be in the highest form technically
24 feasible, because that's where the competitive arena will
25 be defined. How it evolves over time is where we're all
238
1 stuck here, trying to define what will happen 3, 5, and
2 however many years out.
3 So with those caveats and, Gigi, to your
4 question: We're going to spend, I'll guarantee you, write
5 checks for $50 million in the next 3 years. That's our
6 capital budget. We have major requirements, and this is
7 not a charade. We're going to do it. Don's going to do
8 it. Bob Wright's going to do it. Jim Goodmon's done most
9 of it.
10 And we know, because we work with our colleagues
11 all the time, that they are all now making very specific
12 plans to spend enormous amounts of money in relation to
13 their normal capital budgets.
14 Rob said a minute ago that we're building a
15 foundation here for our deliberations, and that's to me
16 the greatest value of this panel. What I would observe
17 is, apropos of Jose's question, which I believe, without
18 paraphrasing too much, was do you think you're doing
19 enough public service and are you doing it well enough and
20 should it be mandated?
21 Two observations. One is we are going to have
22 to deal as a committee with two very different
23 philosophical perspectives. One is government playing a
24 major role in these matters and government playing a
25 lesser role.
239
1 The second point which has come up here today
2 especially and I think we'll talk more about in future
3 meetings is the degree to which we're going to make
4 recommendations to address the so-called "bad
5 broadcasters." I would only ask that everyone be very
6 open-minded and, if you will, make a leap of faith until
7 evidence is presented to the contrary that we are not the
8 exception seated at this table.
9 I think there's an impression that Jim Goodmon
10 and Harold Crump and Bill and I are some angelic band
11 that's been recruited to hoodwink everybody. But we live
12 in this world and we know what the majority of
13 broadcasters think and are planning to do, and
14 unfortunately the discourse in Washington for a long time
15 has created an inherent skepticism about what we say
16 through our industry organizations. I think it is
17 unfairly focused on the networks and we, the individual
18 station owners, need to step up and be a part of this
19 discussion to gain your trust that we do represent the
20 large majority, that we're not the exception. And Don
21 Cornwell is a perfect example of that.
22 CO-CHAIR ORNSTEIN: Yes, Frank.
23 MR. CRUZ: Norm, just a couple of risks here.
24 At the risk of asking for a 30-second sound bite and at
25 the risk of asking you to speculate -- I know speculation
240
1 is dangerous -- but move forward the clock to about 4 or 5
2 years from now. And I realize the producers, the
3 manufacturers, aren't here. But what will the average
4 family be looking at at home? High density TV's,
5 converters, boxes, mixtures thereof, all of the above,
6 none?
7 MR. CORNWELL: Everybody's got their own.
8 Everyone has their own opinion on that, so you're only
9 going to get just this person's opinion. And if you
10 limited it to a 4 or 5-year horizon, I personally think
11 that if the question is how quickly will digital
12 television take hold, I'm not convinced that it's going to
13 take hold that fast.
14 That's my own personal view of the world. That
15 doesn't mean that they'll be looking at exactly the same
16 thing as they look at today, because we are obviously an
17 evolving industry and there's always changes that take
18 place over time.
19 I think Peggy has left, but I just wanted to
20 observe that the Children's Television Act is an example
21 of a regulatory mandate that has in effect created, I
22 think, and will continue to create more change in
23 television. So I don't know what 4 or 5 years looks like
24 from now, but I don't think that digital television sets
25 are going to be in the majority of the homes in 4 or 5
241
1 years.
2 MR. CRUZ: Bob?
3 MR. COONROD: I think that's right, that digital
4 television sets won't be in the majority of the homes in 4
5 or 5 years. But we played out a number of the scenarios
6 and there's no one obvious scenario. But the one that I
7 personally think is going to evolve is that the wide
8 screen, high definition set is going to be the heart
9 around which the family gathers and watches television. I
10 think that's the trend that will ultimately be the one
11 that works. It's going to take longer than 4 or 5 years.
12 CO-CHAIR ORNSTEIN: We have a comment from Rob
13 Glaser and then we'll thank our panelists. And let me
14 suggest that rather than -- we're running now about 15
15 minutes late. If people agree, we will not take our
16 break. We had it this morning almost before we got under
17 way. I want to move into our public dialogue.
18 Rob.
19 MR. GLASER: Yes, just a quick question and,
20 since I'm the last person this morning, I want to thank
21 you all for the incredibly thoughtful and thorough
22 analysis and candor.
23 Just as we're trying to forecast or have a view
24 of what the first couple years will look like, one thesis,
25 coming from people associated with the Internet or the
242
1 computer industry, is that in the first couple of years,
2 when these TV's are expensive, the existing installed base
3 of PC's could become a significant percentage, given that
4 30-plus percent of households have PC's already, not as a
5 long-term strategy for television, but as a transitional
6 strategy.
7 What's your assessment of that, and if so what
8 do you think the implications are in terms of ramp rate or
9 transitional economics or programming strategies?
10 MR. COONROD: The thing that, particularly in
11 light of that Intel --
12 MR. GLASER: Intel backing off and deciding,
13 yes, it's fine.
14 MR. COONROD: Yes. The thing that would concern
15 me is something that we talked about before, and that is
16 the information-rich and the information-poor. It really
17 would widen that gap, and that's something that we would
18 want to look at ways to narrow. That would be the
19 concern.
20 MR. CORNWELL: I don't have anything to add.
21 CO-CHAIR ORNSTEIN: Thank you both very much,
22 and we can move on.
23 (Applause.)
24 CO-CHAIR MOONVES: This is now the time for
25 public comments, questions, responses.
243
1 Step up to the microphone, please. Will you
2 please tell us your name and if you represent an
3 organization first.
4 MS. KAYSON: Yes. Is this working?
5 CO-CHAIR MOONVES: Yes. Bring it down a little
6 bit.
7 MS. KAYSON: Is that working? Can you hear me?
8 CO-CHAIR MOONVES: Yes.
9 MS. KAYSON: I won't scream then.
10 My name is Sarah Kayson. I'm the Director for
11 Public Policy at the National Council on Alcoholism and
12 Drug Dependence and, having sat through a good part of the
13 day today, I realize you all don't have enough issues to
14 deal with, so I'm going to add one more, I hope.
15 As you study the public interest obligations of
16 broadcasters who will receive digital licenses, NCADD
17 strongly urges you to recommend that they be required to
18 air a significant amount of counter-advertisements that
19 provide information and challenge the messages that young
20 people receive about alcohol on television and radio.
21 This idea is not without precedent. In the
22 1960's the Federal Communications Commission, concerned
23 about the public health implications of ads that promoted
24 smoking, ordered broadcasters to air cigarette counter-
25 ads. This decision was made under the public interest
244
1 standard requirements of broadcast licensees.
2 The health implications for young people
3 relating to alcohol are as serious today as tobacco was 30
4 years ago because, intentionally or not, people under the
5 legal drinking age see and hear alcohol ads on television
6 and radio and they absorb that information. Broadcasters
7 profit from these advertisements for a product that is a
8 factor in the three leading causes of death among 15 to
9 24-year-olds and is a leading cause of kids dropping out
10 of high school and college.
11 The ads on television and radio portray alcohol
12 as an elixir for social success and approval. However,
13 alcohol is a factor in numerous potentially life-altering
14 situations for young people, which include but is not
15 limited to: unintended sexual encounters that can result
16 in sexually transmitted diseases, including AIDS;
17 unplanned pregnancies; criminal activities; family
18 disruption; alcohol poisoning that can result in death, as
19 it has at least twice so far this school year; accidental
20 falls such as those that fractured the skull of one
21 undergraduate in Wisconsin and killed a sophomore at
22 Virginia Tech just last month; and of course drunk driving
23 crashes that kill and maim thousands every year.
24 The broadcasters' public interest obligation in
25 today's analog world as well as the future's digital age
245
1 must help protect young people from messages that
2 glamorize and normalize a product that is illegal and
3 harmful for them to use.
4 Earlier this year, 22 organizations joined NCADD
5 and the Mothers Against Drunk Driving and petitioned the
6 FCC to require broadcasters to air counter-ads so young
7 people will be able to challenge the myths that are sold
8 to them over the airwaves. Another 250 organizations
9 petitioned the FCC to issue a notice of inquiry to examine
10 how the broadcast media are used to advertise alcohol and
11 the effects those ads have on young people. As Chairman
12 Cunard has stated, this is about the kids.
13 When Vice President Gore was in the Senate, he
14 recognized advertisers' responsibility to balance the
15 information provided to consumers and potential consumers
16 of alcohol. He introduced legislation that would have
17 required rotating health and safety messages on all print
18 and broadcast alcohol advertisements.
19 As you prepare your recommendations for him, we
20 hope you will recognize the broadcasters' responsibility
21 and public interest obligations regarding alcohol and
22 include counter-ads that will help protect the health and
23 well-being of America's youth.
24 I'd be happy to provide more information,
25 including the counter-ad proposal if you're interested.
246
1 Actually, I'll probably do it anyway. And I'd be happy to
2 answer any questions that you might have. Thank you.
3 CO-CHAIR MOONVES: Thank you. We look forward
4 to seeing that material. Thank you.
5 MR. DINGEMAN: Good afternoon. My name is Jim
6 Dingeman. I'm from the Coalition for Missing and Abducted
7 Children in New York City. I come here to speak about the
8 issue of missing children and the public interest
9 obligations of broadcasters, not only in the digital
10 world, but today.
11 As many of you know, there are about 2 million
12 missing kids a year in the United States in all the
13 various categories. About 35 to 4500 of them are stranger
14 abductions, of which about 300 result in homicides. There
15 are about 354,000 parental kidnappings, 455,000 runaways,
16 and the list goes on.
17 One of the problems that we as victim parents
18 have is the sensationalized response that the media tends
19 to take. It's, in fairness, not to say that that should
20 be generalized. We know that people here represent media
21 organizations that treat this issue seriously and
22 sensitively and try to do as much as they can to publicize
23 missing kinds.
24 But we feel that the marketplace cannot
25 completely solve this situation. There has to be
247
1 mandatory requirements implemented that require all
2 broadcasting institutions to show on a daily basis the
3 faces of missing children. I would ask any of you, if
4 your grandchildren, nieces, nephews, or children were
5 abducted, would you want to wait until 6 or 7 months down
6 the road, and you may or may not get a slot on the Maury
7 Povich Show or Sally Jesse Rafael Show, and essentially be
8 used as a sensationalized measure to exploit the anguish
9 that you're going through to boost Nielsen ratings of a
10 broadcasting institution?
11 So I have left a paper here concerning this. We
12 are taking this proposal, along with others that have to
13 do with other aspects of this issue, to Capitol Hill.
14 We've been meeting with the Telecommunications Committee.
15 We're going to go to the FCC.
16 But we want you all to seriously think about
17 modifying and expanding this, because we're talking about
18 immediate situations. If a child is abducted by a
19 stranger abductor, you're talking about the risk that a
20 child could be killed within 24 to 48 hours, let alone
21 when you're dealing with the wider issue of runaway kids
22 and parental kidnappings you're talking about
23 statistically high incidence of physical abuse, sexual
24 abuse, emotional abuse, et cetera.
25 And nobody -- I'm sure anybody here would not
248
1 want to have this kind of miserable and anguishing
2 experience happen to any of them themselves or their loved
3 ones. So we're really talking about a serious public
4 interest obligation on the media, on broadcasting
5 institutions, so that these kids can be recovered and not
6 exposed to these dangers.
7 I thank you.
8 CO-CHAIR MOONVES: Yes, Jose.
9 MR. RUIZ: It would be helpful for us if you
10 were to tell us how you heard about this hearing. And
11 anybody else who comes up, too, I'd like to know how are
12 they getting the notice.
13 MR. DINGEMAN: How I heard about this hearing?
14 I myself have been a member of a local board of an NPR
15 station, so I sort of follow communications issues in
16 general, and I think that more people should be aware of
17 this because you're really talking about very, very
18 important issues for the future.
19 I think you should be having these meetings
20 around the United States in all sorts of communities. It
21 just can't be in Washington, in a very inaccessible
22 building to get to. This has to be open to the mass
23 public because you're talking about issues that really are
24 things that the public have really no grasp of at this
25 point and really require a true democratic airing to get a
249
1 sense of the potentials and the complexities of this
2 issue. That I'm sure you all know and are aware of is
3 something you should do.
4 CO-CHAIR MOONVES: Jim, do you have a specific
5 proposal for broadcasting? You say individual
6 broadcasting units or whatever?
7 MR. DINGEMAN: Well, I know that the Home
8 Shopping Network does it a few times a year. But what I'm
9 talking about specifically is that there are systems in
10 place -- the National Crime Information Center, NCIC
11 system that the FBI has, the III identification system,
12 they record the faces of children. This is a mandatory
13 law. When a child is missing they have to be recorded.
14 I'm not going to bring up the issue of how local
15 law enforcement throughout the country tends to ignore
16 this. That's a separate issue altogether.
17 But a system that could exist is one that is
18 centralized and decentralized, working with the missing
19 children's clearinghouses throughout the states -- every
20 state in the United States has such an entity -- and the
21 National Center in Washington, the FBI. There could be a
22 system set up where there could be a loose coordination, a
23 coordination worked out so that some sort of triage system
24 could be set up, obviously.
25 Obviously, as I say, stranger abductions are the
250
1 number one requirement, where a kid's life is in danger
2 immediately. But this is already being done, by the way,
3 voluntarily by ABC local news in New York City. They are
4 flashing, albeit for only 2 to 3 seconds, which doesn't
5 really help the person to see the kid -- you know, he's a
6 boomp, boomp; so maybe they've lost a couple hundred
7 dollars in revenue there.
8 But nevertheless, we're talking about something
9 that has to be -- we're talking about something that has
10 to be beyond the considerations of purely fiscal
11 requirements. This is something, when you're dealing with
12 kids and the safety of kids, we have to get beyond the
13 issues of whether it is something that revenue will be
14 lost or not lost. I realize that that perhaps is
15 unpopular to some. But again I say to you, what would you
16 do if your kid was in that situation? I doubt you would
17 be too -- you'd want the cavalry to come out from all
18 directions.
19 CO-CHAIR MOONVES: Thank you, Jim. We'd be
20 happy to look at anything you submit to us.
21 MR. DINGEMAN: Thank you.
22 CO-CHAIR MOONVES: Good afternoon.
23 Yes.
24 MS. DUVA: Good afternoon. My name is Maureen
25 Duva. I am the founder of Parent, which is an
251
1 international organization supporting the advocacy for
2 parents whose children have been internationally
3 kidnapped.
4 My daughter was kidnapped 5 years ago. I had no
5 media attention until 3 years later. I have made about
6 seven trips to the Middle East and just came back from
7 Lebanon.
8 There are tens of thousands of parents like
9 myself. This is not an issue that has really hit the
10 mainstream of our culture yet, and yet it is a worldwide
11 problem. We have international treaties addressing this.
12 It is a Federal felony in the United States and it is
13 child abuse.
14 When children are kidnapped by a parent or a
15 relative, don't think they are not in danger. These
16 children are found dead, these children are found
17 neglected. My daughter was abandoned 2 years ago. We
18 still haven't found her. We just know she was abandoned.
19 We need media exposure. Just like Mr. Dingeman
20 said, if the broadcasters would show the faces of these
21 children before they're ever taken out of the country, a
22 teacher, a pre-school worker, a neighbor may recognize
23 them. In these cases, oftentimes that's the only way
24 they're found.
25 The numbers are so high in family abduction
252
1 cases, 354,000 plus a year. There is no way law
2 enforcement can handle it. In fact, they don't even do
3 anything but record it.
4 My message to you is please consider Mr.
5 Dingeman's request and mine and all the other parents.
6 Put our kids faces on TV.
7 MR. RUIZ: How did you hear about this?
8 MS. DUVA: I heard about this meeting through a
9 mass E-mail from COMAC inviting all the organizations and
10 parents to come down. We've been lobbying for a long time
11 quiet. We're just parents, but we're starting to make
12 some noise.
13 CO-CHAIR MOONVES: Thank you for coming down.
14 Yes.
15 MR. KAUT: I'm actually a reporter. I just
16 wanted to ask a question about the issue if possible. Is
17 that okay? My name is Dave Kaut with the Bureau of
18 National Affairs.
19 I was interested in what Mr. Diller had to say
20 about linking the free time proposal with campaign
21 finance. He obviously believes there is some linkage
22 there. Mr. Taylor thinks you should go ahead and push
23 something with free time anyway.
24 I understand that broadcasters are skeptical and
25 maybe some even opposed to some of the free time ideas,
253
1 but I would just like to hear more, if any of the
2 broadcasters would like to say anything, about why there
3 should be a linkage. I'm not sure I really understand
4 what that linkage is. Why couldn't you move forward with
5 a free time proposal if you can come up with a good one
6 that you can accept?
7 CO-CHAIR MOONVES: I'd rather not comment.
8 MR. DECHERD: We've done that.
9 MR. KAUT: I don't mean on the voluntary level.
10 I mean on something that gets kind of a broader --
11 CO-CHAIR MOONVES: Once again, I think this is
12 the second meeting of the panel and we don't want to start
13 drawing conclusions. We're throwing out a lot of ideas
14 now and I for one don't think we should comment
15 specifically on that. It obviously will come up quite a
16 bit a little bit later.
17 CO-CHAIR ORNSTEIN: On March 2nd we'll have a
18 whole day devoted to this and related larger issues, at
19 which I think we'll probably get more explicit.
20 CO-CHAIR MOONVES: And you'll here a lot more
21 opinions then, I'm sure.
22 Anyone else?
23 (No response.)
24 CO-CHAIR MOONVES: Shall we talk about future
25 calendar, Norman?
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1 CO-CHAIR ORNSTEIN: Yes, we need to talk about
2 future calendar, and then we need to have some final
3 remarks, I think.
4 I think our most driving need at the moment is
5 to talk about our meeting on January 16th. We are going
6 to have, of course, we'll have a morning panel that Rob
7 Glaser will put together. And Rob is going to, I think,
8 frame it in a fashion similar to what we've done with
9 these two panels.
10 The question we have to address immediately is,
11 if we take the rest of the day and focus it around issues
12 of education and children, how do we want to frame that,
13 the rest of that session? Peggy?
14 MS. CHARREN: Just a question. If we do frame
15 it around education, is that where we're going to do
16 public broadcasting, or are we going to have a separate
17 time, a separate day or something, for how public
18 broadcasting might differ?
19 CO-CHAIR ORNSTEIN: Well, that's an open --
20 MS. CHARREN: Does it fit there? I mean, we did
21 public broadcasting here in a panel.
22 CO-CHAIR ORNSTEIN: Yes.
23 CO-CHAIR MOONVES: Jose, do you have a comment?
24 MR. RUIZ: Yes. Just speaking for myself, and I
25 know some others feel the same way -- maybe they'll speak
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1 about it as well -- I would hope that public broadcasting
2 would be included in this whole process and not be a
3 sidebar. It is a network, it is a business. The business
4 is education, although its nonprofit.
5 CO-CHAIR MOONVES: I agree with you, and I don't
6 think there's too many people who would disagree with you
7 on it.
8 MS. CHARREN: So education is how this new
9 structure will provide education maybe across the board?
10 CO-CHAIR ORNSTEIN: Across the board, yes.
11 CO-CHAIR MOONVES: I think we can deal with the
12 FCC, the 3-hour rule, if that is working, do we want to
13 change.
14 MS. CHARREN: That's what I meant.
15 CO-CHAIR MOONVES: And everything dealing with
16 the children and education issues.
17 MS. CHARREN: Okay.
18 CO-CHAIR MOONVES: Can I going back --
19 MS. CHARREN: And adults. Not just children,
20 but education.
21 CO-CHAIR ORNSTEIN: No, no, education broadly.
22 CO-CHAIR MOONVES: I said children and
23 education.
24 MS. CHARREN: Sorry.
25 CO-CHAIR MOONVES: You dealt more with Rob about
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1 what this panel's going to be. We had two terrific panels
2 today and I was very pleased with them. We had a lot of
3 comments. We also had over 2 hours worth of discussion
4 among the group.
5 Are we going to need that same sort of
6 discussion about technology when it doesn't, I don't
7 think, have quite the controversy, let's say, that the two
8 panels today did? Are we going to need three and a half
9 hours to deal with technology, is my question, or can we
10 get more into next month's meeting as well?
11 CO-CHAIR ORNSTEIN: Well, my guess is we
12 probably don't want to extend beyond those two subjects.
13 I think we'll have lots to talk about with education and
14 children, unless you have another suggestion. I'm not
15 sure. Until Rob gets a little further along, I doubt that
16 we're going to need that much time, although there are a
17 lot of questions about that will take us at least a little
18 bit further down the road towards understanding what the
19 future might -- what different alternative futures might
20 be.
21 I'm not sure what he's going to do at this
22 point, to know how much time. What else would you want to
23 fill in there?
24 CO-CHAIR MOONVES: I was just saying, the idea
25 of three and a half hours of technology scares the heck
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1 out of me.
2 MR. DUHAMEL: One of the things that bothered me
3 this morning -- and I'd asked and we ran out of time, so I
4 didn't get a chance to respond to Andy. But first of all,
5 I disagree wholeheartedly that the cost of digital
6 conversion has gone down. I mean, the fact that you're
7 selling millions and millions of computers and you can buy
8 one for $1,000, when you're talking about 1500 potential
9 buyers of digital television, we haven't talked about
10 anything close to that. GE picked that up and said that.
11 I heard this morning what I thought was First
12 Amendment rights and all of a sudden it became First
13 Amendment duties. And I would like to see a panel, a
14 broad diverse covering of the First Amendment, because I
15 think the Red Lion case, which is 30 years old, based on a
16 scarcity argument, may not be the appropriate model that
17 we should be talking about. And I think we ought to
18 examine this whole idea of the constitutional principles,
19 the court cases, the First Amendment as it relates to
20 broadcasting, and get a diverse, broad panel on this.
21 I just think that what we heard this morning was
22 -- really, that Red Lion kept coming back and back. He
23 must have mentioned it 15 times.
24 MS. SOHN: It's the law.
25 MR. DUHAMEL: So I'd like at least, next time or
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1 at some point, to have it on the agenda.
2 CO-CHAIR MOONVES: Well, the truth of the matter
3 is these two panels, we kept them apart for a reason in
4 that we wanted it to become informational because,
5 frankly, I think Bob Wright and Andy could have gone at it
6 all afternoon if we wanted to. There's a lot to what
7 you're saying. I think we veered away from that in terms
8 of gathering information.
9 Yes, Peggy.
10 MS. CHARREN: As someone who loves talking about
11 First Amendment issues, I feel, though, that that is the
12 same as talking about public broadcasting, that every one
13 of our panels has to deal with constitutional concerns. I
14 mean, that's sort of what we're doing here.
15 CO-CHAIR MOONVES: And we're getting different
16 interpretations of that.
17 MS. CHARREN: Right, and it's appropriate to get
18 different interpretations.
19 MR. DUHAMEL: But that's why I think we ought to
20 get some experts in to talk about this, to lay it out.
21 MS. CHARREN: I think that can put us -- I think
22 we have some experts.
23 MR. DUHAMEL: We do.
24 MS. SOHN: We discussed it at the first meeting
25 as well.
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1 CO-CHAIR ORNSTEIN: We had a fairly extensive
2 discussion of the scarcity model and the First Amendment.
3 MS. SOHN: And it's not the only model, I think
4 we agreed on that.
5 CO-CHAIR ORNSTEIN: We clearly are going to have
6 to address it in our report, and these are very
7 interesting and important questions. At this point I'd be
8 reluctant to have another session or panel on that
9 specifically. Let's get further along and then see what
10 loose ends we really need to clean up.
11 MR. DUHAMEL: That was one side, but that Red
12 Lion case was just over and over.
13 MS. SOHN: It's still good law.
14 CO-CHAIR MOONVES: Well, once again, we could
15 discuss that for a few hours.
16 Yes, Cass.
17 MR. SUNSTEIN: Let's just stipulate that the
18 first panel made some contentious claims about law that
19 ought not to be taken as necessarily true.
20 MS. CHARREN: So did the second.
21 MR. SUNSTEIN: Then let's figure out what we can
22 do on policy issues.
23 CO-CHAIR MOONVES: No, the second didn't quote
24 any Supreme Court cases.
25 MR. SUNSTEIN: Then let's figure out what we
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1 think would make best policy sense, and then maybe after
2 we've done that, we've made some progress on what makes
3 best sense, then we can think of what legal constraints
4 there are on what we think makes policy sense. And if
5 there's something that's obviously unconstitutional, we'll
6 have people in the room who can announce that.
7 CO-CHAIR MOONVES: Good. I think that's a good
8 solution. I think we should leave it at the fact that
9 both groups were presented today with a point of view,
10 different interpretations of things, and that was fine.
11 They were very different, Gigi and Bob and Norman and I
12 discussed how to do it and we didn't want to make it --
13 yes, there were things that we all disagreed with with
14 what everybody said, and that wasn't what it was about as
15 much as gathering some information from different points
16 of view, and I think we achieved a lot of that.
17 James.
18 MR. YEE: It's been interesting just to kind of
19 get this data downloading from all the various points of
20 view. My concern is this. As a committee, I think we
21 need time among ourselves probably in terms of absorbing
22 and deliberating. We always seem to be responding to the
23 panel and that's fine. And I'm just wondering, is a day
24 enough? And also, where do you see as the for us to
25 begin, not just responding, but to get into some form of
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1 deliberation, trying to find consensus and points of
2 differences so we can find common ground?
3 I'm not so sure we're all on opposite sites as
4 we're trying to apply some kind of general principle of
5 consensus eventually. It concerns me to rush through a
6 day, and I understand the time constraints. But I'm just
7 a little concerned about that, because it's a lot to
8 absorb, and then we are gone for a month and then things
9 happen in between.
10 How are we as committee members going to be kept
11 apprised of your developments as a body?
12 MS. CHARREN: Apprised of what?
13 MR. YEE: I mean, I guess we're looking at the
14 agenda, but it seems to me how are we going to be
15 deliberating all these issues and try and come to
16 conclusions of our own, versus just what people are
17 telling us? That's part of my concern.
18 CO-CHAIR ORNSTEIN: I think what we're aiming
19 toward, James, is that we're going to have a couple of
20 additional sessions where we are mostly absorbing, we're
21 both absorbing points of view and learning something about
22 the moving targets that we've got here. We're learning
23 something about existing obligations and other things that
24 might be out there.
25 One of the things I hope we will learn a little
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1 bit more about in the next panel is, we're talking about
2 all of these new ways -- for example, one of the things
3 Karen had mentioned, not just closed captioning but video,
4 bringing video in. If we can learn a little bit more
5 about what possibilities exist in digital as opposed to
6 analog technology, it'll give us a handle on how we can
7 translate existing obligations into a new world.
8 It's going to take us a while, I think, to pull
9 that together. I would hope that as we go along that it
10 isn't just a static, members talking to witnesses and them
11 responding, but we'll get a little bit more give and take.
12 But we're aiming towards, as we move towards June and we
13 start to focus on where we might go, that turning much
14 more to a dialogue among ourselves.
15 And we should all be thinking about -- clearly
16 we're trying to find common ground here. We've got
17 positions staked out that are useful to us. They are not
18 the final word on either side, I think, for the members of
19 our panel. Whatever any of us are saying, we all
20 recognize there are positions that are going to be staked
21 out here.
22 My hope is one of the statements that Bob Wright
23 made: We've got to be flexible. Flexibility in this
24 process should be our watchword in my judgment. Our best
25 hope of achieving a consensus here is to recognize that,
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1 because we've got a technology that is changing every
2 minute, it alters our goal. It means that we have to look
3 at existing obligations as we move to the next year in a
4 very different way.
5 It can't be a static process. We can't just say
6 X hours of this are going to be required, because we don't
7 even know what streams of information will be going out
8 there. We need as we go through this process to be
9 thinking about what models we can develop that build in
10 that flexibility, that might cut across the lines,
11 dividing lines we've had, in ways that -- view this as an
12 opportunity along with this challenge, and we will be just
13 fine.
14 Remember, too, we have a web site and most of us
15 have E-mail. We should be communicating through that and
16 among ourselves as we go along. This is not a process
17 that is limited for us simply to the meetings that take
18 place every 4 to 6 weeks.
19 CO-CHAIR MOONVES: Also, James, don't assume
20 that we have been talking. We probably spoke three times
21 since the last meeting, and it was more about form than
22 substance. There's nothing going on up there.
23 Karen.
24 MS. PELTZ STRAUSS: Apropos of what you just
25 said, Norm, I just wanted to clarify one thing. The March
264
1 2nd meeting, was that supposed to be dedicated to talking
2 about some of the issues that we talked about this
3 morning? Because it may make sense, it makes sense to me,
4 to flip the April 14th and the March 2nd meeting.
5 We've already introduced some of these issues
6 already. It sounds like the March 2nd meeting was going
7 to be one in which we engaged in a more full discussion
8 among the committee on possibly some resolutions and some
9 consensus on what we think on this issue. The 14th
10 meeting it seems like was still a background meeting, more
11 along the lines of what we did today and what we're doing
12 next week.
13 Shouldn't we get all the issues on the table
14 first and then start engaging in deeper discussion about
15 the subjects?
16 MR. BENTON: Just picking up on this excellent
17 point of Karen's, maybe the technology panel could go much
18 better with the emergency broadcasting and closed
19 captioning. These are technology-related. So I think the
20 other -- plus the technology might be the next meeting,
21 and then we could really get down to the education and
22 children, the political democracy, and hopefully community
23 as well.
24 CO-CHAIR ORNSTEIN: Well, the only concern I
25 have about that is that, as each week goes by, we learn
265
1 about more areas or possibilities that we need to
2 consider, but we have to think about whether we want to
3 consider them. So I've thought about that meeting taking
4 place in April, believing that in fact the next couple are
5 going to be along the same lines. I mean, we'll have a
6 discussion; we're not going to come to any conclusions.
7 MS. PELTZ STRAUSS: But I don't think there's
8 any question that we're going to be talking about the role
9 of the broadcasters in terms of political access. We've
10 established that that is going to be one of the subject
11 matters that we're going to be talking about. So what do
12 you see as the purpose of the March 2nd meeting?
13 Do you know what I'm saying?
14 CO-CHAIR ORNSTEIN: Yes. I saw that as having a
15 much fuller discussion about mechanics and where we might
16 go or how we might achieve a broader consensus, along
17 with, not just the specifics of free TV time, but this
18 larger issue of the public marketplace and the discourse
19 and the diversity of the discourse in the public
20 marketplace.
21 MS. PELTZ STRAUSS: And that's what I'm saying.
22 CO-CHAIR ORNSTEIN: I'm happy to move that.
23 MS. PELTZ STRAUSS: You just talked about
24 reaching a consensus and I think that we definitely need a
25 meeting on that. But shouldn't that be with the other
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1 meetings in which we're talking about a consensus?
2 CO-CHAIR ORNSTEIN: It certainly would be fine,
3 as far as I'm concerned, to flip-flop those.
4 MS. CHARREN: When is the next meeting?
5 CO-CHAIR ORNSTEIN: The next meeting coming up,
6 we'll start with the discussion of technology. And I
7 think all of these other issues are going to take a full
8 day as we think about all of them. So it makes sense to
9 discuss education, which also logically flows from that,
10 at this next meeting.
11 MR. CRUMP: Would you go through the layout of
12 the meetings again? What I wrote down is nothing that
13 you're saying. I started out with education.
14 CO-CHAIR ORNSTEIN: Yes.
15 MR. CRUMP: And then I went to political.
16 CO-CHAIR ORNSTEIN: Yes, and now we're talking
17 about --
18 CO-CHAIR MOONVES: Flipping number two and
19 number three.
20 CO-CHAIR ORNSTEIN: We're talking about the next
21 meeting starting with technology, then dealing with
22 education. And then, instead of having the following one
23 deal with the political marketplace questions, we would
24 move to the sets of issues, including emergencies, closed
25 captioning, public service announcements, the kind of
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1 other issues, the grab bag issues.
2 MR. SUNSTEIN: One thing I found very helpful
3 actually was the thing that Norm had worked out with Paul,
4 I guess it was, just a proposal for a flexible, low-cost
5 way of handling free media time. It's not clear that's a
6 good proposal, but it's a suggestion for a proposal. It
7 might be good to circulate some proposals, because one
8 thing I liked about having the free media time thing
9 second was that it would be a particular issue to focus on
10 and then have various different approaches and maybe
11 converge on one, rather than having a bunch of issues
12 going by our heads so fast we were swimming.
13 I'm not sure how to handle that exactly, but
14 that proposal has a possibility. Maybe we can build other
15 possibilities off that one.
16 CO-CHAIR MOONVES: With all due respect, I think
17 I agree with Cass, only because I think wrestling with the
18 political free time issue is the hardest task that this
19 committee will have to deal with. And I think the longer
20 period of time that we get these issues out on the table
21 and various suggestions, the better off we will be.
22 MS. PELTZ STRAUSS: It's up to you.
23 CO-CHAIR MOONVES: No, it isn't. It's up to us.
24 Yes.
25 MS. SOHN: I was just going to say, I think it's
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1 going to be very difficult in a one-day session to discuss
2 the free time stuff. We could have devoted the entire 2
3 hours just to that, and the democracy, citizen access,
4 community service, I really think that's a day in itself,
5 or at least a half a day.
6 I just don't see how you could do both of them
7 at once. Clearly there was a lot of interest in the
8 notion of how broadcasting can improve democracy and how
9 we can theoretically give the mike back to communities
10 that are not often -- that are underserved.
11 MS. PELTZ STRAUSS: I don't think we're talking
12 about making it a half a day. We were just talking about
13 whether we were going to switch it with April 14th or not.
14 MS. SOHN: I know that, I know that. This is a
15 different question.
16 CO-CHAIR ORNSTEIN: I guess my inclination would
17 be to follow the schedule that we talked about and see
18 where we end up.
19 Why don't we do this. We've reached, I think, a
20 consensus on what our next meeting should be like. We
21 still have to discuss the format for the second half of
22 that, whether we want to designate one or two of our
23 members to put a panel together, whether we want to do it
24 more among ourselves. We need to get to that.
25 But what we should probably do is then assess at
269
1 the end of the second meeting exactly what we'd want to do
2 with the third meeting. That will leave us ample time to
3 pull it together. We don't have to set in stone the
4 schedule that we're going to follow. We do know the
5 general guidelines of what we'll do in the couple of
6 meetings that will follow.
7 Then from that point forward as we go along we
8 clearly want to, as Cass said, consider models that may
9 even be applicable in a broader way to what we're doing as
10 we apply them to a narrower fashion. But all of us should
11 keep in mind that we're trying to move towards some set of
12 recommendations that we're nowhere near agreeing to yet,
13 and we haven't even formulated them yet. But we're going
14 to have to move in that direction.
15 At some point, let me add, we are also going to
16 have to grapple with a very difficult question, which is,
17 if we are going to move to a flexible model, we have to in
18 some sense quantify or specify what obligations are worth
19 and how we're going to convert them. That's tricky
20 business, and we can see from today that there will be
21 some real disagreements about that.
22 I don't know whether we do that in a separate
23 session. I hope not, because I think it would be probably
24 Washington -- it might be counterproductive. But we've
25 got to all keep that in mind, too.
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1 MR. CRUZ: Norm, from my own personal
2 perspective -- and if I'm, Glaser, stepping into your
3 area, please let me know. But I think it would be very
4 meaningful if the technology session really honed in on
5 not a lot of the futuristic stuff, but what we can expect
6 to see during the next 4 or 5 years, to clarify some of
7 the concerns that people have that it's too far away, that
8 it's not predictable.
9 I hope there are some manufacturers, some
10 computer firms and so forth, that can at least bring in
11 the picture, which now to some appears to be 15, 20 years
12 out there, down to the next 3 or 4 or 5 years. That will
13 be helpful.
14 MR. GLASER: I haven't talked to Jim yet, but I
15 hope that what WRL has done will be a major component of
16 what we discuss in the context of taking some very
17 futuristic things and really making them work in practice,
18 which there are a few practitioners that can help us
19 understand in both the most straightforward form of the
20 technology discussion, which is literally what's going on
21 in DTV, as well as two or three other categories, which is
22 what's going on in today's shifting technologies that are
23 sort of other predecessor pathways into the same outcome.
24 But I think that's a good point, and certainly
25 it's our intent, just from the brief conversations I've
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1 had with Les and some of the other folks here, to do
2 something that is not just a pyrotechnics show, but that
3 very pragmatically points out what's knowable and,
4 frankly, what's not knowable in the relevant time frame.
5 CO-CHAIR ORNSTEIN: I must say, what floated to
6 me from today were some very concrete questions that are
7 very directly relevant to us. We had this discussion of
8 Web TV. Having some sense of what kind of convergence
9 we're going to get in all of these different technologies,
10 if there will be a convergence, even a rough sense, will
11 be very important.
12 The compression technology that people have been
13 talking about, is it likely that we're not going to be
14 talking about the potential of 6 channels, but the
15 potential of 12 channels within the next few years, or
16 more? And with that, which I don't understand, if that is
17 the case, does that mean that you could actually run two
18 HDTV channels at the same time, not just one, in that 6
19 megahertz of space, or that you could run 4 pretty high
20 quality channels, much higher than what we would otherwise
21 have, and 12 that are just like what we would get with
22 normal?
23 We need to have some handle on that because that
24 has enormous bearing on what we will do. That's where to
25 me the technology becomes very directly relevant.
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1 MS. CHARREN: I feel that the education process
2 here is very important to us, and I think it's working
3 very well and I'd like to suggest that, with the education
4 part of our next meeting, that we in some way between now
5 and then set up at least two people to come talk to us
6 about the possibilities, because I think that just for us
7 to chat without focus won't be as productive. I've found
8 this format very productive.
9 CO-CHAIR ORNSTEIN: So we should discuss, should
10 we designate somebody to pull together a panel in the same
11 fashion that we had here as the kind of framework for that
12 discussion? Does that fit, or is there a better way of
13 doing it?
14 MR. BENTON: Well, if Peggy will volunteer I'll
15 co-volunteer, because we can do children and education.
16 These are different things. Children are quite different
17 from education.
18 CO-CHAIR ORNSTEIN: Well, we also have a PTA
19 representative here that knows a little something about
20 education.
21 MR. BENTON: Maybe the three of us can work on
22 it together.
23 MS. CHARREN: Well, do you like that?
24 MR. BENTON: Peggy can be the leader.
25 CO-CHAIR MOONVES: That's fine. I think that
273
1 panel fine. I would just urge when we're dealing with
2 educational stuff, let's deal with what's practical. NBC
3 and Paul are not going to go out and do two million
4 cassettes for the school system.
5 MS. CHARREN: I don't want to be on the panel.
6 CO-CHAIR MOONVES: Why not?
7 MS. CHARREN: I want to put it together.
8 CO-CHAIR MOONVES: We want you to put it
9 together. You don't have to be on it.
10 MS. CHARREN: I was talking about educating me,
11 not about education generally.
12 CO-CHAIR MOONVES: I know, but who knows
13 children's television better than you?
14 MS. CHARREN: But that isn't what I meant the
15 education was doing.
16 CO-CHAIR MOONVES: Don't you think that the FCC
17 situation with children's television should be discussed?
18 MS. CHARREN: Oh, I certainly would be happy to
19 --
20 CO-CHAIR MOONVES: That should be part of that
21 panel certainly. Is what we're doing right now good, is
22 it bad? Is it working? Should it be changed?
23 MS. CHARREN: All right, I'll do some.
24 MR. LA CAMERA: Under the larger umbrella of
25 children and family, were we asked to look at the rating
274
1 system also?
2 CO-CHAIR ORNSTEIN: No.
3 CO-CHAIR MOONVES: No.
4 CO-CHAIR ORNSTEIN: That is outside our purview,
5 and I think we will keep it outside our purview.
6 CO-CHAIR MOONVES: Gladly.
7 MR. RUIZ: Are we talking -- did we settle on
8 the March 2nd meeting for education?
9 CO-CHAIR ORNSTEIN: No. The January 16th
10 meeting, the afternoon.
11 MR. RUIZ: You'd leave it the way it was?
12 CO-CHAIR ORNSTEIN: Yes.
13 MR. RUIZ: And then technology that afternoon?
14 CO-CHAIR ORNSTEIN: Technology in the morning
15 and then we will follow with education and children.
16 MR. RUIZ: One of the problems is that we are
17 missing, I think, wonderful opportunities. For example,
18 in the area of education you're also talking a lot about
19 what Bob Coonrod mentioned, which is all the potential
20 distance learning and rural service and stuff like that.
21 MR. BENTON: The Children's Television Act, that
22 we can do in a half day, the children's television. But
23 that's not education; that's a whole different thing.
24 MR. RUIZ: Excuse me, excuse me. I think that's
25 a wonderful opportunity to go to a site that really has
275
1 always sought to use the technology, so we can get the
2 fit, and also have it open to the public there, also the
3 workers, the people who are doing it and everything else.
4 So we have to get out of here, and I think there may be
5 facilities, something like that, very close to here that
6 wouldn't really break our backs to go to.
7 CO-CHAIR MOONVES: I think we have to focus on
8 what we are set up to do. I'm not quite understanding
9 what you're saying about that in regard to this committee.
10 Now, when you say go visit a site --
11 MR. RUIZ: Not physically a field trip. Have it
12 at a place, our next hearing. What's the matter with a
13 university that is already starting to deal with this?
14 MS. SOHN: In the Washington area?
15 MR. RUIZ: In the Washington area, Maryland,
16 Virginia. There are other places. It would give us an
17 opportunity to get out of here and I think maybe have the
18 people who are actually dealing with the issue there in
19 the audience.
20 CO-CHAIR MOONVES: What issue are we talking
21 about? I'm still --
22 MR. RUIZ: I'm talking about education and
23 technology. I'm sorry.
24 CO-CHAIR MOONVES: What does that mean,
25 education and technology? I don't quite understand. And
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1 is that under what we are supposed to be doing here? I'm
2 not sure. Can we get some help?
3 CO-CHAIR ORNSTEIN: Certainly the larger
4 questions of education, which include the function that
5 television can provide for learning in the classroom, for
6 distance learning, telecourses and the like, those are big
7 and important questions. Frankly, I think I'd rather have
8 the discussion at the next meeting flow into those than
9 more specifically on children's television.
10 The children's television, it seems to me we
11 have an act in place and our biggest question there is
12 going to be how we take the existing model and apply it,
13 build flexibility in for the future. That's almost
14 something we can keep --
15 MS. CHARREN: I agree with that 100 percent.
16 MR. BENTON: Those are two things right off.
17 MS. CHARREN: And I feel that what's happened
18 with the Children's Television Act has already happened.
19 It's very easy to read about. It's in articles in
20 newspapers. I can give you all kinds of stuff to submit
21 on that.
22 That is not -- as much as that's part of my
23 growing up, that's not really what I thought this
24 education section should be dealing with, because that's
25 not the digital future of education in technology. And
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1 that's where I'd like this to focus. So I agree with you,
2 Norm.
3 CO-CHAIR ORNSTEIN: That I think makes sense.
4 Maybe what I would suggest is that if you, perhaps drawing
5 on the resources that we have here and others, could come
6 up with some suggestions for people who know something
7 about these issues and can address them.
8 MS. CHARREN: Why don't I get together with Bob.
9 CO-CHAIR ORNSTEIN: Yes. Is that okay with you?
10 CO-CHAIR MOONVES: Okay. I'm still not quite
11 sure what it is we're looking at, but I'm fine. I'll know
12 it when I see it.
13 Robert?
14 MR. DECHERD: I'd like to make --
15 MR. BENTON: I was just going to say the other
16 point here in terms of the free time, I think to try to
17 lump broadcasting and localism\community with broadcasting
18 and politics, I think that's just trying to bite off more
19 than we can chew. The community, being responsive to the
20 community, the ascertainment, all the stuff we were
21 talking about this morning, that's really different from
22 political candidates and broadcasting and politics. I'm
23 not saying there's no connection, but those are different
24 things.
25 We need a day to talk about localism and
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1 broadcasters, local broadcasters being responsive to
2 community needs and all the opportunities there are for
3 building broadcasting as a very competitive institution
4 and meeting community needs. That is a separate
5 discussion, I think, from broadcasting and politics.
6 CO-CHAIR MOONVES: I'm very concerned about how
7 many different issues we are going to be able to deal with
8 in the time we have allotted to us. That's what I'm
9 concerned about. There are a lot of special interest
10 groups. There are a lot of different issues that people
11 have, that are all very valid.
12 I'm just wondering about being too spread out.
13 MR. CRUMP: Which brings us all back again to,
14 you guys need to get us an extension, which hasn't been
15 done yet.
16 CO-CHAIR MOONVES: Yes, that we have to do.
17 That we know. But it sounds like we're talking about we'd
18 need a 2-year extension.
19 CO-CHAIR ORNSTEIN: Yes. It's not clear that a
20 day as opposed to a half a day on some of these subjects
21 will necessarily enlighten us more. We will just stay
22 flexible. If it turns out we can't, that we are so far
23 from covering the essential things that we need to
24 schedule extra meetings, we'll schedule extra meetings.
25 MS. CHARREN: We may want to start in the
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1 afternoon one day and continue the next day.
2 CO-CHAIR ORNSTEIN: We will reserve the
3 flexibility of extending, as we did the first time,
4 meetings to a day and a half.
5 MR. BENTON: Yes.
6 CO-CHAIR ORNSTEIN: Robert, you had something?
7 MR. DECHERD: Norman, I'd like to make a
8 suggestion about the technology pattern, but really this
9 in my mind applies to all the subjects here. I think it
10 would be very useful if, when we select the members of the
11 technology panel, if Rob could somehow induce a
12 decisionmaker to appear as opposed to a technologist. By
13 that I mean the difference between someone from
14 Microsoft's labs coming and talking about Web TV in
15 technical terms and Bill Gates or Steve Ballmer sitting
16 here and saying, here's what we're going to do.
17 The reason this was compelling today, I think,
18 is the buck stops with Bob Wright on Don Cornwell and Bob
19 Coonrod when ultimately the people who control the
20 business plans are the ones who are going to have to be
21 motivated to do whatever we do, and we can only learn from
22 them where content's really heavy.
23 MR. GLASER: Bob, I would imagine we want both,
24 but we want to make sure we don't get just theorists.
25 MR. DECHERD: Right.
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1 MR. GLASER: That's a fine point. And on your
2 model, if you can get Bob Wright, I ought to be able to
3 get -- I don't know those guys. We'll do our best.
4 (Laughter.)
5 MR. DECHERD: Anybody you want to.
6 CO-CHAIR ORNSTEIN: We'll settle for nothing
7 less than Bill Gates.
8 MR. DECHERD: They're not shy and retiring.
9 MR. GLASER: They've been trying to stay away
10 from Washington, D.C., is my understanding.
11 CO-CHAIR ORNSTEIN: Well, now I think they're a
12 little more sensitive to the need to spend a little time
13 in Washington.
14 We'll schedule the Justice Department proceeding
15 around the same time.
16 (Laughter.)
17 CO-CHAIR MOONVES: That was Norm Ornstein,
18 ladies and gentlemen.
19 (Laughter.)
20 MR. GOODMON: Let me mention a couple of things,
21 three things. I'm trying to get to the end, and in the
22 end we're going to have a report. And I think all of us
23 are interested in, we have certain ideas about what ought
24 to be in this report. How is that going to -- let's say
25 ascertainment: I think there should be formalized
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1 ascertainment and it should be in our report. When does
2 that -- when do I get a chance to do that or put it in the
3 report? I don't know what I think about ascertainment,
4 but I'm just trying to think of something that was brought
5 up today.
6 CO-CHAIR MOONVES: Very good point.
7 MR. GOODMON: In the end we're going to have to
8 have something.
9 CO-CHAIR MOONVES: Right, that's correct.
10 MR. GOODMON: My experience with commissions or
11 committees of this type is they spend an awful lot of time
12 gathering information and hearing different ideas and
13 spend the last 30 minutes working on the five different
14 options that we've heard of. I'm not suggesting you are
15 going to do that. I'm just bringing it up and saying that
16 in a lot of these areas I think many of us are ready to
17 say what we think or what we think should happen or how it
18 should go.
19 So I'm just interested in what that process is
20 going to be, one.
21 Two, you know, I'm supposed to not like these
22 public interest group people and think that we're on
23 different sides of the table here or something, and the
24 truth is I see an awful lot of commonality between the
25 morning group and the afternoon group. And I'm
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1 encouraged. I'm a half-full, not half-empty.
2 MR. GLASER: You're being brainwashed.
3 MR. GOODMON: Yeah, okay. I've heard a lot of
4 stuff that makes a lot of sense this morning and I heard a
5 lot of stuff that makes a lot of sense this afternoon. So
6 I'm not by definition here to fight.
7 Third -- wait a minute. Let me do this. Third,
8 self-regulation is an important notion and I hope it's in
9 here somewhere. We gave everybody a copy of the old NAB
10 Code last time, and I just think that's an interesting
11 topic. I think that was a very successful notion. I
12 don't know how to get that in here.
13 CO-CHAIR MOONVES: Jim, regarding your first
14 point, which I think is very essential, that's what I'm
15 talking about about how long we're going to spread out or
16 how many different issues we are going to deal with and
17 discuss until we finally get into the decisionmaking
18 process. And I would like to leave a number of meetings
19 for us to be able to discuss it and get into what this
20 thing's going to be about, so we don't have 11 meetings of
21 things and then try to throw it together in one meeting,
22 which is going to be very hard to do.
23 I think that's something we've got to come up
24 with, is how widespread the issues can be, because there
25 are a lot of issues we have to deal with.
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1 MS. CHARREN: Who's going to write the first
2 draft?
3 MS. PELTZ STRAUSS: That's my concern, too,
4 because I've also been on these committees and it's
5 exactly my experience that at the eleventh hour you're
6 trying to put everything together. I guess that was one
7 of the reasons that I was concerned about first presenting
8 the issues on the table as late as April, approximately 6
9 months after we began.
10 One thing that we may want to do is make the
11 presentations next time shorter and include more things.
12 My presentation, I can get somebody in here to talk about
13 video description, I can talk about captioning; I can do
14 the whole thing in half an hour.
15 Some of these issues just have to be put on the
16 table. Do we really need whole days for each of these
17 subject matters? I don't think so, not to at least
18 generally educate the group about what's on the table.
19 CO-CHAIR ORNSTEIN: We should definitely stay
20 flexible in terms of what we do here. I think we all need
21 to be action-oriented, and we all need to start with the
22 notion that the goal here is to come up with a set of
23 recommendations and a consensus.
24 I think the difficulty that we have, Jim, is
25 that we could vote now on some of these specific areas of
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1 public interest and perhaps get a consensus or at least
2 get a very substantial vote. That's not going to lead us
3 to a solution in terms of the overall model that we're
4 going to have to develop here for a different technology.
5 It's going to take us a while, and some of those areas
6 where we will have an agreement, we don't need to worry
7 about them because we'll have that agreement.
8 What I'm expecting and hoping is that when we
9 get around to, as we move from April towards June, we are
10 really going to start to focus very specifically on the
11 larger and the smaller issues that will have to go into a
12 report.
13 How we put the report together we will have to
14 decide ourselves, how we do the drafting. That I don't
15 think will be terribly difficult. We'll clearly have to
16 come up with a process where we circulate the drafts among
17 ourselves as well.
18 But this has to be an organic process, at least
19 for a while. That doesn't mean that we have to have every
20 subject. That's why the notion of because it's so
21 important it's got to take a full day, I think is not the
22 way we need to go. As we go along -- the issues today
23 were broader issues. We did focus on some narrow ones.
24 We're learning a lot about ourselves and where we are all
25 standing in this, as we're learning about the larger
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1 issues, and it's going to take us a while to figure out
2 how we operationalize this into some specifics.
3 Again, let me emphasize that our deliberations
4 are not just what we do here. Each of us will be talking
5 individually with others in our group, and I hope that we
6 will begin to work through in our own minds, not that we
7 will have solutions emerge outside of this public arena at
8 all, but we find -- I think even I found our lunches,
9 where we're just talking informally about what we heard in
10 the morning, has proven to be very, very useful at raising
11 ideas about what we can do.
12 So we will have a better sense of where we're
13 heading as a group, I think, by the time we get to the
14 March meeting.
15 CO-CHAIR MOONVES: I think I want to go back to
16 something Karen said, and I think I agree with you 10
17 percent. I think today was a very important day in that
18 it laid out the broad general issues from the two major
19 points of view. I think the rest of the issues can be
20 done in a shorter amount of time, without quite as much
21 discussion, and then we can get into deliberations. So I
22 think literally to spread it out as long as we're doing is
23 probably a mistake, I really do, and we have to limit,
24 once again.
25 May I add, we're not going to be able to deal
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1 with 20 different issues or we'll never get anywhere.
2 MS. PELTZ STRAUSS: Well, maybe we can talk
3 afterwards, but I'm ready January, March, whenever you
4 want me. And I would imagine that the other people also
5 would be ready. So, whatever you decide to do, I think
6 that we can probably get a lot done in one meeting.
7 CO-CHAIR ORNSTEIN: Okay. Well, let's sum up.
8 Basically, Rob is going to put together his panel. He has
9 some direction from various among us about what kinds of
10 people, and we will work with him to make sure that that
11 works in a fashion that advances our cause.
12 Then Peggy is going to consult with some of the
13 rest of our members and others about the education issues
14 from distance learning to what comes on public television
15 to reaching the classrooms to telecourses and other things
16 that are relevant for us as we look at it.
17 MS. CHARREN: I can introduce the panel.
18 CO-CHAIR ORNSTEIN: Yes, and introducing the
19 panel. And that's what we'll do the next time. We will
20 formalize the next time exactly how we handle the session
21 that follows and see if we want to tighten it up or
22 shorten it or throw more things in.
23 Does that make sense?
24 MR. DUHAMEL: Is the March session the
25 political?
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1 CO-CHAIR ORNSTEIN: Well, probably, and we'll
2 determine the venue for the future meetings in January.
3 January will be somewhere in the Washington area. We'll
4 see what works in that regard.
5 (Whereupon, at 4:53 p.m., the committee was
6 adjourned.)