UNITED STATES DEPARTMENT OF COMMERCE
OPEN MEETING OF THE
ADVISORY COMMITTEE ON PUBLIC INTEREST
OBLIGATIONS of DIGITAL TELEVISION BROADCASTERS
Monday, March 2, 1998
University of Southern California
Annenberg School for Communication
3200 Watt Way
Los Angeles, California 90089-0281
Morning Session
Go to the transcript of the afternoon session
4 (9:08 a.m.) 5 WELCOME 6 GEOFFREY COWAN, DEAN 7 ANNENBERG SCHOOL FOR COMMUNICATION, USC 8 DEAN COWAN: Good morning. I'm Geoffrey 9 Cowan. I'm the Dean of the Annenberg School for 10 Communication. And on behalf of USC and the 11 Annenberg School, I want to welcome this extremely 12 distinguished group to your first meeting outside of 13 Washington. 14 For 25 years I've been teaching and 15 practicing law and writing about the communication 16 field. And, in my view, the work of this group and 17 the issues that it's considering is the single most 18 important issue that the American government has had 19 to deal with with regard to telecommunications policy 20 in a quarter of a century. So I wish you the best of 21 luck in your deliberations and I'm very, very pleased 22 to have you here. I am looking forward to today's 23 events. 24 Les, thank you. 25 CO-CHAIR MOONVES: Thank you, Jeff. 3 1 As one of the few resident members of Los 2 Angeles, I'd like to welcome the Commission to our 3 fair city. We are proud to host the first meeting 4 outside. And a special thank you to Jeff Cowan and 5 Carolyn Naifeh and the rest of Dean Cowan's staff for 6 their hospitality. 7 Jeff has been after me to come here with 8 this Commission since day one, and the timing 9 couldn't have been better. And all the arrangements 10 have been terrific. And we thank you very much for 11 providing us this great platform. 12 There are four members who will be unable 13 to attend the meeting: Peggy Charren, Barry Diller, 14 Newton Minow, and Richard Masur, who will be joining 15 us this afternoon. 16 Just as a matter of interest, the meeting 17 will be broadcast live over the Internet, thanks to 18 the Annenberg School. In addition, the National 19 Association of Broadcasters will be filming this 20 meeting. 21 A couple other housekeeping things. I'd 22 like to turn the meeting over for one short moment to 23 Harold Crump, who has been involved in what we think 24 is a fairly interesting study on digital television, 25 which he'd like to talk about and something that we 4 1 would like to give to all the membership for your 2 perusal. 3 So, Harold. 4 MR. CRUMP: First of all, I want you to 5 know I'm going to drop a few numbers on you. Don't 6 worry about not being able to keep up with them at 7 the moment. We will have in the mail to you later 8 this week the complete rundown on what I have here. 9 As you know, I work for Hubbard 10 Broadcasting, Incorporated, which is headquartered in 11 Minneapolis, St. Paul. We have 10 television 12 stations to radio stations. Each year we have a 13 management meeting in the month of January. And as 14 would be of great interest to us this year, we 15 commissioned some research by the Frank Magid 16 organization, a nationally recognized group, to look 17 at consumer attitudes and opinions toward digital 18 television. 19 And, as I say, there are a lot of numbers, 20 a lot of graphs in here which you'll have the 21 opportunity to look over, and then at future meetings 22 we can discuss at greater length. But the conclusion 23 that they come to in all of this is that it's going 24 to be a pretty tough sale when it comes to the public 25 buying new sets to have digital, particularly from an 5 1 HDTV standpoint. 2 Jim, when I look at you down there, we all 3 know too that all of these people who were researched 4 across the country had not seen it. So you have to 5 take that into consideration. 6 In addition to that, we also developed some 7 information out of the Consumer Electronics Show 8 which took place, as you know, in Las Vegas in early 9 January. We will share that information with you as 10 well. What that one boils down to is that one of the 11 larger manufacturers, Thompson, made a presentation 12 there. And they gave projections as to what they 13 expect the sales of the total industry to be in 14 digital sets for the first four years, starting in 15 1999. And the total projection for those four years, 16 total, is 3,575,000 sets. 17 To give that some perspective, in a normal 18 year, 1998, '97, 96, when we think about the number 19 of total analog sets that are regularly sold, it 20 normally runs about 24 million per year. So that, I 21 think, you will find of interest. 22 And then we are going to add into that 23 another sheet that comes, again, out of the Consumer 24 Electronics Show that simply has more basic 25 information in it about HDTV, what's going on with 6 1 the digital set manufacturers. And, as I say, this 2 will all be shared with you so that you will have the 3 detail of it before the next meeting. 4 Thank you. 5 CO-CHAIR MOONVES: Once again, a caution. 6 On paper, at least, we have not supposed to have 7 begun our deliberations, so this is one piece of 8 research that I think is of interest to all of us. 9 But, once again, it is one piece of research. Norm 10 will be talking about something later on. I have the 11 same cautionary measure on that. 12 This morning we have two extraordinary 13 panels that I think will be of great help to us. And 14 then this afternoon we will begin our formal 15 deliberation or our informal deliberation, because 16 time is starting to run out. And, on that very 17 subject, let me turn it over to my Co-Chairman, Dr. 18 Ornstein, to talk about time and other issues. 19 CO-CHAIR ORNSTEIN: It appears that we will 20 be getting our extension from the White House. I'm 21 not exactly sure of the dates, probably October 1. 22 Although, what I heard was they hope we would 23 expedite our process, and that would be the outside 24 date of which we could issue some recommendations. 25 But, as we'll discuss some this afternoon, 7 1 the simple process of putting a report together and 2 writing a report and circulating it among the rest of 3 us, means that basically if we don't get started 4 probably by next month with getting the process 5 underway, we would have some difficulty getting it 6 all done by October. So we're going to have to pick 7 up our efforts in terms of moving towards whatever 8 consensus or recommendations we can make. 9 Let me remind you about the next two 10 meeting dates. We checked around with everybody's 11 schedule to see if it was possible to change the next 12 date, and it turned out it simply was not possible. 13 We could not find another date where there was even 14 close to a consensus or a majority of people who 15 could make it, so the next meeting will be April 14th 16 in Washington. 17 And the following meeting will be in 18 Minneapolis on June the 8th. Harold Crump has some 19 information about that. We might have a brief 20 discussion of it later on, although we've got time 21 for that, but very likely it will be at the Marquette 22 Hotel in beautiful downtown Minneapolis. 23 MR. CRUMP: True, true. 24 CO-CHAIR ORNSTEIN: And, I think, actually, 25 Les, we can probably wait for the discussion of what 8 1 we're going to be this afternoon until that time, so 2 we can move on and get our panel underway. 3 CO-CHAIR MOONVES: Good. Absolutely. 4 Let me now turn it over to our moderator of 5 our panel on independent programming and access in 6 the digital age, Jim Yee, Executive Director, 7 Independent Television Services. 8 Jim. 9 MR. YEE: Thank you, Les, and thank you, 10 Norman. 11 Before I begin, I need to also be time 12 conscious because a number of our guest panelists 13 have other commitments here in the city as well as 14 elsewhere in the state, so what I will be doing is to 15 be introducing the four panelists. And then after 16 the presentation there will be hopefully a very -- 17 I'm quite sure it will be -- stimulating Q&A with 18 members of the Commission with their remarks. So I 19 will try to keep -- I asked the guest panelists to 20 speak up to maybe five to seven minutes. And if I 21 have to, I will wave my hand just to help democracy 22 move along. 23 This morning's presentation is titled very 24 broadly, "Independent Program and Access in the 25 Digital Age." And as part of our charge, obviously 9 1 of this Commission, is to help shape public policy. 2 And one of the concerns and one of the ongoing 3 concerns of any commission is to hear from as diverse 4 points of view and members and people who have been 5 working in this broad arena of affecting programming 6 commercially and noncommercially. 7 And I'm very happy to echo the comments of 8 our host, that we are outside Washington to be in the 9 thick of it, so to speak, at least to get I think 10 what can be a broad horizon of perspectives from this 11 morning's guest panel about programming, independent 12 programming; how those issues, such as the public, 13 are not normally, shall we say, driven by commercial 14 motivation but one by needs and creative needs as 15 well as community needs, get it to be addressed; and 16 how can that be, shall we say, replicated, if not 17 more so, in this new age that's coming before us. 18 So, again, I'm glad we're going to have 19 this opportunity. And, also, may I remind our guest 20 panelists that your comments and your supplemental 21 comments will also be on the record, if time does not 22 permit otherwise to engage you more extensively. 23 The order of the presentations will be as 24 such: Kelley Carpenter, Jerry Isenberg, Marian Rees 25 and Herbert Chao Gunther. 10 1 Allow me to quickly do their bios. And if 2 I am short, I apologize. But, again, I want to allow 3 you as much time to engage us and to share your 4 thoughts as freely and as extensively as possible. 5 Kelley Carpenter is a communications 6 specialist whose expertise encompasses both 7 television and magazine. She is now serving on the 8 Board of Directors of the Southern California Indian 9 Center, a nonprofit center which serves one of the 10 nation's largest Indian populations. She began her 11 television career working in "Jeopardy!" both in 12 terms of coordinator and a representative involving 13 talent and representing the program in all facets of 14 its production. 15 She also has worked in and directed public 16 relations for Sony Picture Television in their first 17 cable venture for a number of years. And she is also 18 a noted artist, as well, where her work is seen 19 throughout the country. 20 Obviously she will be speaking, obviously 21 in her representation on the Board of the Southern 22 California Indian Center and their issues and 23 comments about the representation issues around 24 Native American programming, I believe. 25 So let me then go on to Jerry Isenberg. 11 1 I'm going to do all your bios all at once, and if I 2 speak fast it's only because of time. 3 Jerry Isenberg is also a noted veteran and 4 an accomplished producer and programmer working in 5 this business for a number of years. He comes armed, 6 obviously, with an academic background, but he's 7 obviously taken that before he reached the Annenberg 8 School to be working in all facets of production. 9 He's formed a number of companies including the Jozak 10 Company back in the '70s, and then in the '80s he 11 formed I&C Productions, all of which have generated a 12 number of impressive movies and films for television. 13 He's one of the most active producers. He 14 comes well regarded in this town, obviously. And I'm 15 quite sure his comments will be indeed provocative, 16 if not, to say the least. 17 Most recently, and I think at his present 18 point in the reincarnation of a life in this business 19 of reincarnation, he's now, I believe, a full-time 20 member of the faculty at USC here in Cinema- 21 Television as a full professor and as well as their 22 Executive Director of Electronic Media Programming. 23 And I think his vantage point of both working in the 24 field and having the opportunity to think about where 25 we're going, again, would be most welcome. 12 1 Marian Rees, another noted veteran in this 2 business of entertainment and programming. She has 3 worked a number of years in making what I think was 4 some of the most interesting and some of the most 5 thoughtful programming for television. She's 6 produced well over -- forgive me if the numbers are 7 off -- but, many, about a couple of dozen or three 8 dozen of well-noted programs. And she has been an 9 Emmy award winner. They include "Love Is Never 10 Silent, "Decoration Day, "A Son's Promise." And 11 she's most recently involved in a collaboration with 12 some public television money in developing a new set 13 of drama initiatives, which would be most sorely and 14 most welcome for public television. 15 She also has a recent strong record in 16 promoting and advocating to enrich the quality and 17 ethical content of programming in television. She is 18 the Co-Chair of the National Council for Film and 19 Television. She's held the post of president of 20 Women in Film for two consecutive terms. She's been 21 the vice president of the Academy of Television Arts 22 and Science. She's served on various notably boards 23 such as the American Film Institute, Women in Film, 24 the Humanitas Children's Award, and the Center for 25 Population Options and the Producers' Guild of 13 1 America. And she's currently serving on the Steering 2 Committee for the Caucus of Producers, Writers and 3 Directors. 4 Lastly, from Northern California, on the 5 wet side of our state, is Mr. Herb Chao Gunther. 6 He's the Executive Director and President of the 7 Public Media Center. He has extensive experience in 8 the design, implementation, evaluation of marketing 9 as it affects the nonprofit sector in shaping public 10 policy, media campaigns and advocacy that will, in 11 some ways, in one way or another, shape, I think, 12 domestic and international policy around the whole 13 issue of civic empowerment. 14 Many of his clients include: The 15 California Wellness Foundation, Planned Parenthood, 16 Self-help for the Elderly, Catholic Charities, the 17 Department of Labor. He's aware there has been an 18 issue, I would say, that PMC's been there to try to 19 shape, to involve and -- most importantly -- to 20 inform the public to make what I think are very 21 important decisions in our lives. I think his 22 comments today would certainly add to that list of 23 things we need to be concerned about in this era of 24 the new digital television. 25 So, again, my apologizes if my descriptions 14 1 of you are indeed short but, for the record, all of 2 this will be entered for our deliberation. 3 Let's begin with you, Kelley. 4 KELLEY L. CARPENTER, BOARD OF DIRECTORS 5 SOUTHERN CALIFORNIA INDIAN CENTER 6 MS. CARPENTER: Good morning. Thank you 7 for the kind reading of that bio. But I would like 8 to say that rather than working in "Jeopardy!" it was 9 on the show "Jeopardy!", although sometimes it felt 10 like the other. 11 And thank you again for the opportunity to 12 speak to you this morning and address community 13 concerns regarding major broadcast networks. In the 14 interest of time, I have put my comments in a very 15 succinct format and will be reading them to you, and 16 welcome any questions if there should be time for 17 them. So let me begin. 18 While working on the show "Jeopardy!", I 19 witnessed firsthand the immense influence that 20 American television broadcasters have on national and 21 international viewers. Technological developments 22 will only serve to expand the strongest arm of the 23 world's media. They will allow broadcast networks to 24 inspire, educate and galvanize the viewing 25 population, as well as create programming that serves 15 1 and unites individual communities. 2 I have the privilege of working with 3 community development professionals from a variety of 4 nonprofit and grass-roots organizations, all engaged 5 in projects designed to be of benefit. A common 6 concern I hear among these professionals is their 7 lack of access to major broadcast networks. Unless a 8 story arose that was suitable for immediate news 9 coverage, these professionals found quite regularly 10 that their phone calls weren't returned when they 11 tried to submit programming ideas. Although several 12 of these people had worked successfully with 13 community service departments at some of the 14 networks, for the most part they couldn't obtain the 15 coverage on stories that would have appealed to large 16 segments of the population. 17 When faced with closed doors at major 18 networks, these community spokespersons continue down 19 the television food chain until they reach local 20 cable access channels that will consider their 21 suggestions. While some coverage is certainly better 22 than no coverage, these spokespersons are nonetheless 23 frustrated in their attempts to reach large numbers 24 of viewers in their communities. 25 To address this challenge of community 16 1 access to programming, I'd like to suggest the 2 formation of community development panels within 3 networks, which would use and establish not-for- 4 profit criteria to accept, evaluate and produce story 5 ideas submitted by local community organizations. 6 The panels would solicit submissions on a regular 7 basis to offer these groups viable outlets for their 8 ideas, as well as offer viewers the types of human 9 interest stories that promote pride in their 10 communities. 11 Once organizations and service groups learn 12 that broadcasters are initiating this type of 13 programming, they could focus on submitting ideas 14 that could educate and inspire children, motivate 15 elders, eliminate cultural barriers and provide 16 viewers with information that they might not seek out 17 in any other media. 18 The stories could take the form of weekly 19 documentaries compiled into an hour of programming. 20 The key to their success, from a community 21 perspective, ladies and gentlemen, would be the time 22 slots in which they are aired. Airing community 23 stories at 2:00 or 3:00 a.m. doesn't really serve 24 these vital organization because the viewers who can 25 be inspired by or act on the information presented 17 1 are either working the night shift or they're 2 sleeping in preparation for work or school. 3 So perhaps broadcasters who air two hours 4 of daily local news broadcast could limit this news 5 coverage just one day a week, to begin, and air one 6 hour of well produced, compelling community 7 programming and one hour of local news. Advertisers 8 could support the production costs by sponsoring 9 segments within the community hour. If aired during 10 this time, during weekdays, the programming could 11 reach the viewers that would most benefit by it, 12 including children and teenagers. 13 Local news departments at the major 14 networks are to be applauded for their trend toward 15 inclusion of upbeat segments at the end of their 16 broadcast. And I might say that L.A. local networks 17 are very strong in this regard. When expanded into 18 documentaries, these segments could have an even 19 greater positive effect, providing a counterpoint to 20 the negative news stories that sometimes dishearten, 21 depress and distress viewers, especially in the case 22 of the community's youth and elderly. 23 The second issue I would like to request 24 that broadcasters address with a community 25 perspective is the issue of employment. 18 1 Broadcast networks bring the world into 2 viewers' homes every day. It follows that these 3 broadcasters are particularly poised to demonstrate 4 that the world can work together under one roof to 5 create successful programming. 6 At a recent awards dinner sponsored by 7 First Americans in the Arts, the Board of Trustees 8 presented Beth Sullivan, creator of "Dr. Quinn, 9 Medicine Woman" with an honorary award for her show's 10 accurate portray of American Indian life. In her 11 gracious acceptance speech, she commented that 12 although her staff practiced due diligence with 13 regards to historical research, she looked forward to 14 the day that American Indians could tell their own 15 stories through the television media as writers and 16 producers. 17 Taken in a larger context, her comments can 18 be applied to talented members of the community from 19 all backgrounds. In preparation for my testimony 20 this morning, I spoke to American Indian, Latino, 21 African-American and Asian-American students and 22 community members who still believe that there's a 23 glass ceiling where they're concerned with regards to 24 landing high-paying creative, production and 25 executive jobs at major broadcast networks. They are 19 1 encouraged by the cultural variety of on-air talent 2 which serves their particular demographics, but 3 wonder if those hiring choices extend to all 4 departments. 5 These students still believe -- and this is 6 their opinion -- that internships at broadcast 7 networks may lead to entry-level or technical 8 positions, but question if they'll open doors in a 9 hiring system that they consider to be based on "who 10 you know." 11 So in conclusion I'd like to add that jobs 12 at broadcast networks are highly coveted, no matter 13 who you are or what your background may be. The 14 advent of new technologies will create an even 15 greater number of jobs to fill as well as a greater 16 potential for diverse programming that will require 17 multicultural voices and talents. 18 If broadcast networks are incorporating 19 hiring policies that draw from a broad, multicultural 20 talent pool, communities would like to know about it. 21 This is yet another area in which broadcasters can 22 exhibit enlightened leadership in an increasingly 23 culturally diverse nation. 24 Thank you, Kelley. 25 MR. YEE: Jerry. 20 1 GERALD I. ISENBERG, CHAIRMAN 2 CAUCUS OF PRODUCERS, WRITERS AND DIRECTORS 3 MR. ISENBERG: Mr. Co-Chairmen, 4 distinguished members of the Commission, it's my 5 pleasure to appear before you today to discuss the 6 television creative community's concerns regarding 7 access and diversity of voices on free television as 8 we move into the digital age. 9 While I'm currently a Professor at the USC 10 School of Cinema-Television, it is as Chairman of the 11 Caucus of Producers, Writers and Directors that I 12 appear before you. The Caucus is an organization of 13 nearly 200 professionals in the television industry 14 elected to membership because of their creative 15 achievements. The primary mission of the Caucus is 16 to protect the creative rights of its members and to 17 work for a creative and financial environment that 18 supports our doing our best work. 19 It is my sad duty to report that the 20 environment for independent creative people in free 21 television has never been worse. Without 22 exaggeration, we are in the final stages of the 23 extermination of the independent creator in 24 television. In what has amounted to a business 25 version of "ethnic cleansing," the proud tradition of 21 1 creators working independently to produce 2 television's finest programming is being 3 systematically destroyed. 4 Twenty years ago, three networks controlled 5 95 percent of the prime-time audience. But the 6 product was, for the most part, produced by seven 7 nonaffiliated major studios; four mid-sized 8 independently-owned companies: Lorimar, Spelling, 9 MTM and Tandem; and a host of even smaller 10 entrepreneurial or talent-owned companies. 11 From "The Waltons" to "Family," from "All 12 in the Family" to the "Mary Tyler Moore Show"; from 13 movies such as "The Autobiography of Miss Jane 14 Pittman" to "The Missiles of October," these and 15 other independently-created and produced 16 entertainment were the hallmark of our medium. 17 Today we are blessed with an enormous 18 diversity of broadcast and cable services, yet we are 19 suffering from a systematic concentration of 20 production distribution activities into the hands of 21 those same people who are the exhibitors. At this 22 moment, approximately 90 percent of the prime-time 23 programming aired by the six national networks is 24 owned by those same six companies. That's 25 ABC/Disney, Fox, NBC/GE, CBS, Warner Brothers, 22 1 Viacom/Paramount or Sony or Universal -- Barry 2 Diller's company. They're the same. 3 These major corporations own and control 4 virtually every major cable service that produces 5 original series or movies. They produce for 6 themselves. They produce for each other. They 7 compete between themselves, yet act to exclude 8 everyone else. They dictate the conditions of access 9 for outsiders. They are a veritable American cartel. 10 So what? You might ask. What does the 11 demise of independent voices have to do with the 12 quality of television shows? Who really loses from 13 lack of diversity? 14 Let me tell you three short stories to 15 answer those questions. Two took place years ago and 16 could not happen today. The other is taking place 17 today and could not have happened 10 years ago. 18 In 1987 my company, Phoenix Entertainment, 19 developed a four-hour miniseries for ABC to star 20 Oprah Winfrey, "The Women of Brewster Place." When 21 it came time to decide whether to order the project, 22 ABC executives were deeply concerned that a 23 miniseries about seven poor African-American women 24 could not attract a sufficient audience. They 25 ordered the project as a three-hour one-night movie, 23 1 despite the calamitous effect the cuts would have on 2 the project. 3 My company discovered a way to afford to 4 shoot the fourth hour using our own money, based on 5 foreign values we believed existed. ABC was 6 incredulous: How could we do this? More to the 7 point, they were very unhappy with us because, of 8 course, ABC then had to reconsider based on the 9 opportunity to view the longer film. 10 After viewing the final film, ABC chose to 11 air the complete version to terrific reviews and 12 ratings that won the week for them and nearly won 13 them the season. We believed in our film. We had 14 the entrepreneurial abilities. We were willing to 15 risk our money. And the viewers won. 16 Ten years earlier, my company was the 17 producer of a two-hour movie for NBC on the life of 18 James Dean, written by Bill Bast, that focused on 19 Bill's relationship with Dean. At the last moment, 20 after the picture was ordered, someone at NBC had 21 second thoughts about some scenes which, while 22 acceptable to standards and practices, might not fit 23 the audience's "vision" of Dean. They ordered us to 24 make wholesale changes that would have emasculated 25 the movie and the truth of Bill Bast's life. We 24 1 refused. NBC threatened cancellation of the order. 2 We held firm and threatened legal action. Facing no 3 choice, they relented. And at the final screening 4 those same executives admitted they were wrong. 5 The picture stands today as maybe the 6 finest biography of one of America's true screen 7 icons. Without our ownership and independence, the 8 project would have been trashed. Again, the viewers 9 won. 10 Finally, today's story. NBC has recently 11 informed certain agents that they are preparing to 12 produce a series of movies for television which have 13 certain economic givens. All the main creative 14 talent will be offered Guild minimums or drastically 15 reduced fees and all the films will be produced and 16 owned by NBC itself. But last September, claiming 17 low ratings, NBC canceled the night of movies, most 18 of them produced by non-NBC entities using top-level 19 talent. Now NBC believes that lower-level talent 20 working for less can produce those ratings. Why? 21 NBC owns and controls all aspects of those programs. 22 Today the audience loses. 23 There are hundreds if not thousands of 24 similar stories. I'm sure the Co-Chair can 25 personally attest to how Lorimar saved the "The 25 1 Waltons" from cancellation in its first year by 2 appealing directly to the public when the network had 3 lost faith. 4 So I hope it is becoming clear. Who 5 suffers from the lack of diversity and concentration 6 of production in the hands of the 7 production/distribution cartel? It is the American 8 viewing public. 9 Finally the question arises: So what can 10 be done about this condition? And let me preface 11 this by noting that in the matter of independent 12 access, our interests and those of the networks, 13 including the network of the Co-Chair, Les Moonves, 14 seem to be in direct conflict. 15 In part, the demise of the independent 16 comedy series supplier can be traced to their 17 inability to compete with the vast wealth and powers 18 of the major companies in attracting the writing 19 and/or acting talent that is in favor with the 20 networks. 21 However, additionally and importantly, 22 independents lack the additional abilities of 23 controlling blockbuster film packages or current 24 on-air series, which act as an inducement to network 25 programmers to "give considerations" at order time, 26 1 scheduling or renewal time. 2 The historic path for independents gaining 3 access in the dramatic series business is through the 4 television movie segment of programming, the 5 "backdoor" entry into the series business. "The 6 Women of Brewster Place" actually received an order 7 for episodes based on that movie's success. But the 8 even more powerful story is how the Co-Chair's own 9 ex-company produced independently a movie called "The 10 Homecoming," which became "The Waltons" and which 11 launched Lorimar as a competitive series supplier. 12 The demise of the independent movie maker 13 is not based on large-scale economics. Historically, 14 the independents have always been more efficient 15 producers, more flexible and entrepreneurial business 16 people. The demise is based simply in the 17 broadcasters' desires to own the product and their 18 abilities to enforce it. 19 The solution? Short of a negotiated 20 settlement or the action of courts in an unfair 21 competition action, the only solution is to 22 re-mandate access through some form of government 23 intervention. Certainly requiring networks to 24 reserve a preponderance of television movies for 25 nonbroadcast or cable owners is practical and without 27 1 major economic consequences to the health of the 2 majors. Additionally, some smaller allowances for 3 series producers must be enacted to help break the 4 stranglehold of the majors. 5 Is this an optimal or even an attractive 6 solution? Not for all of us who believe in free 7 competition. Yet it is in the public interest to 8 have diversity of voices and independent access. And 9 the marketplace has clearly failed to protect both 10 public interests. 11 What we ask of you as you consider the 12 responsibilities of broadcasters, who have been 13 granted additional bandwidth for digital 14 transmission, is to demand diversity of production 15 voices, demand access for creators to do their work 16 in an environment that supports creativity. 17 Thank you. 18 MR. YEE: Thank you. 19 Marian. 20 MARIAN REES, STEERING COMMITTEE OF 21 THE CAUCUS FOR PRODUCERS, WRITERS AND DIRECTORS 22 MS. REES: Co-Chairman Mr. Moonves and Dr. 23 Ornstein and the members present of the Advisory 24 Committee on Public Obligations of Digital Television 25 Broadcasters -- mercifully known as the Gore 28 1 Commission -- my fellow panelists, colleagues and 2 guests, good morning. 3 It is a privilege and a responsibility to 4 share with you in the awesome task you have to 5 soberly consider the enormity of the exploding 6 horizon of digital TV and its perceived impact on the 7 industry we live in and work in together. 8 For us to contribute by way of informing, 9 enlightening and/or guiding your deliberations toward 10 formulating your final report in October 1998, it is 11 a daunting challenge. 12 The only way for me to gain any confidence 13 in why I'm here and/or how I can meaningfully 14 contribute, I must contain my remarks to that which I 15 know only by virtue of my lifelong experience in the 16 television industry. 17 To begin my remarks, it seemed first to 18 talk about the producer, more specifically, the 19 independent producer; even more accurately, as I am 20 defined, an entrepreneurial independent producer. 21 There is a continual speculation about how to define 22 or recognize a producer beyond the title, as in the 23 recent movie "Wag the Dog." The most pejorative 24 image of a producer was brilliantly portrayed by 25 Dustin Hoffman. 29 1 What and who are the independent producers? 2 We like to think the producer is integral to an 3 industry whose core product is crafted out of ideas, 4 ideas that in and of themselves lie dormant until an 5 impassioned producer breathes life into it, protects 6 and gathers about him or her all the resources to 7 realize and deliver it for broadcast. We are a 8 fiercely independent, highly competitive and 9 intensely passionate group. 10 We come from a wide range of diversity, of 11 backgrounds and geographical locations. How did a 12 youngster growing up in a small Iowa town, who first 13 wanted to be a missionary; then shifted her goal to 14 working at the United Nations, a goal she pursued all 15 the way to New York after college at Iowa University, 16 find herself across the continent in a temporary job 17 as a receptionist at NBC to earn her bus fare home, 18 and these years later and thirty-some films produced, 19 find herself sitting before this august body? It's 20 been a wondrous journey. 21 In many ways, television and I grew up 22 together. From receptionist to a producer is a 23 tribute to television itself that one person's vision 24 can be supported and found to be viable in an 25 intensely profit-driven industry. Independent 30 1 producers like Grant Tinker, Norman Lear, Marsy 2 Carsey, Tom Werner, Steve Bochko, Bonny Dore, Jerrys 3 Isenberg and Abrams, Suzanne DePasse, Dorothea 4 Petrie, my partner Anne Hopkins -- all are legend. 5 The roster is growing with the influx of a generation 6 of producers who take the opportunities we have 7 pioneered for granted. And they should. 8 The role of the independent producer is 9 unique. Those of us who have assumed the financial 10 risk of our programming, unattached to a studio or a 11 network as employees, are not as maverick as it may 12 seem. Rather, that independence gave us the ability 13 to move about freely in the marketplace, to find the 14 right home for our idea that could, would assure its 15 integrity. 16 For me, who chose to mortgage her home, her 17 car and insurance to start her own company, to strive 18 for excellence was possible through the balanced 19 environment regulated by the financial interest rules 20 and regulations. An entrepreneurial woman producer 21 was unthinkable before the 1970s, when the Equal 22 Opportunities Act was passed into law. The door of 23 opportunity for us women was opened. A decade later, 24 my risk was minimized by a direct access to a 25 regulated marketplace. 31 1 Let me describe an experience which I hope 2 will illustrate the necessity for freedom of access. 3 "Love Is Never Silent" is now legend as the film that 4 would never get made at the network which broadcast 5 many of my movies through the years. 6 A story of a family: A deaf couple with a 7 hearing daughter. It was inherently a difficult 8 sale. But my commitment to cast actors who were deaf 9 in principal, in the starring roles, was 10 insurmountable. I became inflexibly determined to 11 put a public face to the diversity issue and to 12 defrock the veiled ignorance, the myth that "to be 13 deaf was to be dumb." 14 For prime-time television it was considered 15 a taboo -- fearing that the audience would not watch 16 and advertisers would shun any such film. In this 17 case Hallmark joined in unflappable support of the 18 project, accepting my stance on casting. Despite the 19 significant support from Hallmark, the network held 20 firm in their resistance, stubbornly refusing to 21 approve Phyllis Frelick and equally talented Ed 22 Waterstreet, both gifted deaf actors, to be cast in 23 the leads. The edict came back: Unless we cast 24 Joanne Woodward and Paul Newman in the roles, the 25 movie would never get made. 32 1 Now a side comment, which I said to the 2 executive, consider that I could call Joanne and Mr. 3 Newman and invite them to appear in the movie, did 4 the network realize that in a two-hour movie neither 5 of these gifted actors would speak one word? There 6 was a long pause on the phone. 7 Well, we held firm. And with Hallmark's 8 blessing, I took the film to another network, where 9 it aired to high rating, critically acclaimed and 10 winning the Emmy for the Best Movie of the Year. 11 It is important to note that had I been an 12 employee of the network this movie simply would have 13 never been made. As an independent owning the film, 14 I was free to move the film and have access to 15 another market. 16 Throughout my career I have consistently 17 favored and benefitted from an entertainment 18 marketplace that assured the creative process as much 19 flexibility and access as possible. I fear the 20 concentration of ownership we are now experiencing, 21 which has already diminished the fragile nature of 22 the independent producing community. I fear that 23 concentration will be passed on into the digital 24 future, where the broadcasters will have as many as 25 six channels instead of the current one. 33 1 I humbly suggest to this Commission that, 2 as you develop your report on the public policy in 3 the expanded world of digital TV, you will address 4 the value and needs of the true independent 5 production community. I believe that it is important 6 from a public policy standpoint to establish some 7 content-neutral regulatory mechanism to allow that 8 community to gain access to the digital television 9 airwaves during prime time. 10 The challenges to the digital world is to 11 cherish, nurture and provide access to those 12 producers, especially those that are burgeoning all 13 over the country in our colleges and universities, 14 already absorbed and comfortable in the tumultuous 15 world of communications technology. Those aspiring 16 producers will be the ones to flourish in the digital 17 future only if -- and I am here on suggest two things 18 -- one, secure the opportunity to provide more 19 programming that will reach different and diverse 20 viewers; and, two, assure the creative community that 21 you want substantial ideas that help people 22 understand what's happening in their lives, that 23 those ideas have access. 24 These public policy deliberations on the 25 obligations of digital broadcasting, to quote Vice 34 1 President Gore, may be the last chance to assure that 2 the public interest be served. 3 Hopefully wise men and women like 4 yourselves who help shape public policy will 5 formulate First Amendment-sensitive government 6 policies that will balance the explosion of 7 opportunities for the broadcasters by a significant 8 commitment to the public interest. I do believe that 9 such a commitment would ensure the independent 10 spectrum the vital prime-time access to the digital 11 spectrum. 12 In Vice President Gore's closing remarks to 13 this Commission at its inaugural meeting he stated, I 14 quote, "Beyond free enterprise, we must also 15 acknowledge that broadcasting is not a right, but a 16 privilege, one that confers great responsibilities," 17 close quote. 18 I can assure you that a vigorous 19 independent production community would stand ready to 20 share those great responsibilities if given the 21 opportunity, if provided the access. 22 Thank you. 23 MR. YEE: Thank you, Marian. 24 Mr. Gunther. 25 MR. GUNTHER: I think when Jim first 35 1 invited me to come to address the Gore Commission, I 2 thought it had something to do with violence on 3 television. Unhappily, I found out it was simply 4 named after the Vice President. 5 I don't come here representing the 6 independent production community. I think I'm here 7 for several reasons. Gigi, from Media Access 8 Project, will remember the Public Media Center. It's 9 the organization that has its name on the landmark 10 case that established the Fairness Doctrine. It was 11 a court decision, Public Media Center versus KATY, 12 that first established the practical definition of 13 the Fairness Doctrine as applied to providing balance 14 on television spots of a political nature. 15 You're in California. You probably are not 16 aware that there is something going on here that is 17 analogous to what you have been asked to address as a 18 Commission, which is this transition in technology. 19 We have in California underway, unbeknownst to most 20 of the citizenry, a comparable transition in 21 technology in the deregulation of electricity, a 22 massive shift in the paradigm around which 23 electricity is produced and distributed. It's 24 happening first in California and slowly it will 25 trickle across the rest of the country. And it is a 36 1 massive shift in that paradigm. It is not unlike 2 what you all are looking at in terms of the 3 introduction of digital technology to television, 4 broadcast television. 5 It would be worth looking at the experience 6 in California very briefly. A hundred million 7 dollars has been spent by the utilities trying to get 8 people excited about the transition to a deregulated 9 marketplace -- a hundred million dollars -- which has 10 resulted in 29,000 people in California out of a 11 potential 11 million ratebase expressing an interest 12 in changing their electric providers. 13 There has been a rather dramatic reaction 14 from the public as they've learned the cost of 15 deregulation. Forty-five cents of every dollar they 16 pay their utilities for the next five years is being 17 diverted to pay off the three incumbent monopoly 18 utilities for their stranded nuclear assets. People 19 weren't aware that this was happening. When they saw 20 it on their bills beginning in January, the folks in 21 Sacramento began to hear about it. 22 You need to be aware of that process 23 because there is a comparable surprise the public is 24 going to express when they find that there has been 25 this tremendous transfer of public assets into the 37 1 hands of people who really haven't demonstrated 2 anything that would leave the public with a lot of 3 confidence, that you know or you deserve an 4 opportunity to program the public resources that are 5 being put into your hands, or to meet the public 6 interest obligations that historically you have a 7 dramatic poor track record in achieving. 8 In California we have the initiative 9 process. And already there is an initiative being 10 qualified for the November ballot, and polls 11 currently indicate that 80 percent of Californians 12 who are likely to vote will pass an initiative that 13 will essentially undermine deregulation as the 14 legislators have defined it and take away the 15 wholesale give-away to the incumbent monopoly 16 utilities. 17 Now if we had a national initiative or 18 referendum, I suggest that likewise, if the public 19 were to find out the terms of this transfer of public 20 assets and how little we're getting, that that 21 initiative would have probably a vast majority of 22 opposition as well. 23 The entire process of this Commission is 24 interesting. I would have preferred a process where 25 we heard the ideas from you as to what you, in fact, 38 1 proposed to do with this gift from the public, 2 instead of us coming before you to recite the 3 problems of trusting you to do what's best; of 4 trusting you to meet the public interest obligations 5 that you have, by and large, failed to meet -- the 6 history of modern broadcasting. 7 Obviously the issues are much broader, much 8 wider than how the independent film production 9 community has been affected. Entire communities have 10 been left out. Entire ideas, ideologies have gone 11 unrepresented in what has been essentially a dominant 12 commercial paradigm, television as a sales tool in 13 that alone. 14 I think you can trace most of the social 15 pathologies in our cultural probably to the dominance 16 of a technology that has been used for nothing else 17 than to sell things with very little room for 18 anything else. Those of you who have resisted that 19 process should be proud that you've resisted. Those 20 of you who have been part of that process, I 21 certainly think this is the time to examine your 22 commitment to what your role as public trustees need 23 to be. 24 As I said, look at the deregulation 25 experience in California. It had very little public 39 1 participation. It is, by definition, an illegitimate 2 political process: Very little public width, very 3 little depth and very little width in terms of public 4 participation. 5 And I certainly hope the public has an 6 opportunity to learn about from you your news 7 operations, where any comment, any news story 8 coverage of digital television and this gift of 9 public resources to the principal economic interests 10 that have dominated this market has gone, by and 11 large, unreported. There has been very little public 12 information. 13 And despite your best efforts to involve 14 the community in these hearings and to have 15 individuals like ourselves on this panel come and 16 talk to you, the fact is most of America has no idea 17 that this is going on. They will wake up one morning 18 to find out that you have amassed even more 19 resources. And given the rather poor track record of 20 the past, I don't think you're going to have happy 21 campers then. 22 As I said, if there were a national 23 referendum, this would not pass. 24 You know I think it was Senator Dole who, 25 in fact, used the term "corporate welfare" as calling 40 1 the give-away here. And interesting because Mr. Dole 2 obviously, as one of the Republican tribal leaders, 3 is enamored of a market paradigm and would like to 4 see the marketplace work with real competition of 5 interest. And I think I would concur with former 6 Senator Dole. 7 You know it really is incumbent on the 8 industry to set and achieve higher standards of 9 public access, diversity of viewpoints, all the 10 things that even sound funny for me to mention, 11 because it feels like it's an alien language to use. 12 I think the dominance of commercial purposes, 13 television, as I said, has got to be an underlying 14 cause for the deterioration of democratic values in 15 our society. 16 The fact that we have such poor voter 17 turnout, the fact that you all have been asked to 18 look at the role of money in politics and how 19 television can speak to that problem begs the 20 question of the role of television itself in having 21 distorted our Constitution, our culture -- our 22 political culture certainly -- and flattened 23 everything into a commercial marketplace where there 24 is little room for anything else, including higher 25 purposes. 41 1 I think we would look to you for a 2 restatement, a reformulation of a public interest 3 standard. I hope the Gore Commission certainly tells 4 us why the commercial broadcast industry deserves 5 this gift from the public and how you plan on being 6 accountable to the American people in terms of what 7 you do with this gift of the spectrum; and that you 8 define some process by which the public can actually 9 signal its participation and its unhappiness with 10 your failure to do anything more creative and more 11 responsive than you've done in the past. 12 I think that a higher standard, something 13 that goes beyond the use of commercial television 14 entirely for the purposes of buying and selling would 15 be a good place to start. 16 The kinds of models that you ought to look 17 at, I mean probably the best example, most compelling 18 example of the pernicious influence of commercial 19 television on other access opportunities, beginning 20 with public television, is how commercial public 21 television has become. There isn't a public 22 broadcaster that doesn't talk in terms of audience, 23 doesn't talk in terms of ratings for their programs 24 when, in fact, in the enabling legislation for public 25 broadcasting we very specifically said that public 42 1 broadcasting was going to be exempt from the 2 pressures of finding an audience, exempt from the 3 pressures that commercial television imposes upon 4 itself. 5 And public broadcasting is a thin mirror 6 these days of commercial television. And certainly 7 to the extent that you all as a Commission can 8 address the shortcomings of public broadcasting as 9 sort of a pale imitation of commercial television, we 10 might then see public broadcasting as a genuine 11 alternative as well. 12 With that, let me end my comments. 13 MR. YEE: Thank you, Herb. 14 I don't know where to begin. We have heard 15 quite a range of commentary of both history concerns 16 and challenge. And I can only speak for myself as a 17 member of this Commission, that coming out to meet 18 with the public, in this case here in Los Angeles, in 19 California, affords us an opportunity to be reminded 20 as well as to engage ourselves more broadly, and I 21 think we will endeavor to do that. 22 CO-CHAIR MOONVES: Jim, I would like to 23 make a comment, if I may. 24 First of all, Mr. Gunther, I've never been 25 compared to Jeffrey Dahmer or Charles Manson before 43 1 as much as I have today, so thank you very much for 2 making every broadcaster the most despicable, 3 disreputable human being on the face of the planet. 4 MR. GUNTHER: It wasn't meant personally. 5 CO-CHAIR MOONVES: You know what, there is 6 more to broadcasting than how you present it. 7 I have to address the two people on my 8 right who are close friends and colleagues and both 9 people whom I have worked with very closely on a 10 number of projects. Ms. Rees and I won an Emmy award 11 together. 12 I think this panel, and I was not aware 13 that this panel, called Independent Programming and 14 Access in the Digital Age, should have been properly 15 titled, "Let's bash the networks." I feel it is 16 necessary, since no one was added to this panel on 17 the part of the broadcasters or producers, who may 18 have had a more satisfactory experience as a producer 19 with a broadcast, so I feel it's incumbent upon me to 20 sort of remove my role as Co-Chairman of this 21 Commission and make some statements to this panel 22 about what exists today in the television industry. 23 The industry has evolved to a very 24 different place than it was before. Granted, the 25 independent production companies: the MTMs, the 44 1 Lorimars, the Tandems have disappeared. They are 2 gone. Once upon a time I was president of a company 3 called Lorimar. Subsequent to that, the economics of 4 the system have changed. 5 Granted, as Mr. Isenberg said, the 6 concentration of the power of what is on the 7 commercial broadcast systems today is in the major 8 companies. However, the independent producer has not 9 lost his power. Instead, he is being paid millions 10 and millions and millions of dollars by the studios 11 to become exclusive to that particular studio. 12 David Kelley who creates a show like 13 "Chicago Hope" or "Ally McBeal" or "The Practice" is 14 paid by Twentieth Century Fox many million dollars of 15 dollars to be at that studio. Has he lost his 16 independence? I would say no. 17 The people who created "Seinfeld" are part 18 of Castle Rock which is part of Warner Brothers. 19 Have they lost their creative ability? I would say, 20 once again, no. They are still independent. The 21 economic system has changed. 22 I think the speeches that Mr. Isenberg and 23 Ms. Rees made would have been more appropriate, and I 24 think some of them may have been pulled out of the 25 files when we were dealing with the changes in the 45 1 financial interest rules, which enabled the networks 2 to own their own product. Yes, there are very ugly 3 stories, and we've lived them. But the ugly stories 4 to which both these people referred existed 30 years 5 ago, as well, with network interference, with network 6 problems. And they will continue on many years from 7 now. 8 So I would argue that the independent 9 producer has not disappeared. In fact, he has had to 10 change where he gets his money and what happens 11 within the system, because now he's being paid a 12 guaranty in front by the studio, which means whether 13 or not he succeeds or not he will be paid a sizable 14 sum of money. And I think you will deal with the 15 fact that if you analyze the number of producers in 16 the world today on commercial television, you'll find 17 the economics for them are greatly increased. 18 So having said that, I will turn it back to 19 you, sir. 20 MR. YEE: Thank you. 21 I'm trying to figure out what the next 22 steps are because we have some time to engage in 23 questions and answer and commentary, as Les has done. 24 I'd like to open this up to the members of the 25 Commission to perhaps respond, inquire to our four 46 1 guest panelists, because I know time is of an issue. 2 I'm sure the content of your remarks will indeed come 3 back in our deliberations, most surely. But because 4 of time, I wish to open up the Q&A to the members of 5 this Commission as well. 6 Karen. 7 MS. PELTZ STRAUSS: Thank you for coming 8 here today. First of all, I want to thank you for 9 "Love Is Never Silent." I'm with the National 10 Association of the Deaf, and we appreciate the use of 11 deaf actors. 12 But, beyond that, you mentioned the need 13 for a content-neutral regulatory mechanism to enable 14 independent producers to have access to the networks. 15 Although Ms. Carpenter did talk about one 16 means of accomplishing this, for example, one hour of 17 community programming each week, I'd like to know if 18 any of the rest of you have any concrete proposals 19 for how you would achieve this. Specifically, how 20 you would make room within the existing commercial 21 paradigm, as you call it, for this independent 22 programming. 23 MR. GUNTHER: Yes. We had an experiment. 24 Unfortunately, it never reached its potential. It 25 was called local access time. We had three hours 47 1 which all local television stations were to program 2 for local community purposes, news programming, which 3 unfortunately became the catalyst for the independent 4 syndication market. 5 It wasn't the concept when the FCC went 6 with the rulemaking procedure of creating local 7 access time, three hours every night, with the 8 restriction that it not be network programming, that 9 it not be, that it be anything other than "Jeopardy!" 10 or game shows, which is what those three hours 11 became, not children's programming, not news 12 programming. 13 There isn't one major market where 14 successfully during those three hours in the brief 15 period when local access time had its opportunity 16 that any market, any commercial television station in 17 any market delivered on the potential of local access 18 time. It certainly is an appropriate moment to 19 revitalize that concept. And perhaps with the 20 lessons learned from the past, making sure that 21 syndicated programming doesn't then fill the 22 definition of what's to go in local access time. 23 MR. ISENBERG: I'm Jerry Isenberg. We 24 suggested that specific forms of program, which were 25 television movies, for example, that a specific 48 1 set-aside of some percentage for nonowned producers 2 is a simple solution. 3 I think the comment the Chair offered, that 4 we may have dusted off some speeches from the 5 financial interest states is somewhat specious. And, 6 I'm sorry, I don't like it. That's not what we're 7 suggesting, we go back to that complex and wide a 8 band. 9 We understand that the economic 10 circumstances have changed, but the complete 11 surrender to owned, the merged together of the 12 producing elements in the broadcast elements into one 13 combined, vertical entity, which was unthinkable, 14 basically institutionalizes creativity into business 15 plans. And you can go back to 2,000 years ago and 16 you will find that the greatest creativities, the 17 great brilliance of art was designed independently. 18 It was created independently. It did not come out of 19 a business plan. It did not fit the model of CBS' 20 need for ratings. And that's what's lost. 21 CO-CHAIR MOONVES: But some of the were 22 paid by the Court, weren't they? 23 MR. ISENBERG: The money. 24 CO-CHAIR MOONVES: They were under 25 contract? 49 1 MR. ISENBERG: Yes, they were. 2 MS. PELTZ STRAUSS: Just one quick 3 follow-up question. You talk about a specific 4 set-aside. Is that basically what you're asking our 5 Commission to do and do you have any proposed 6 percentages? 7 MR. ISENBERG: I would rather not offer a 8 proposed percentage, because that's -- I mean the 9 percentage I'd like to offer is a hundred percent. 10 That's a great one, and we'll go down from there. 11 I think it varies. I think the television 12 movie business, which is where I want to focus 13 because it's an historic entry point in the dramatic 14 series business. There's no real economic need for 15 the broadcasters to own television movies. They 16 could literally cut their license fees and let 17 independents do it, and economically it doesn't mean 18 anything to them. It's nice. It makes them a little 19 bit more money. 20 When you get into the series business, 21 you're beginning to get into macroeconomics that are 22 different. And I think the percentage of set-aside 23 in the series business would be somewhat less. 24 It's interesting to note that all news and 25 public information is network owned. All the 50 1 networks have a policy that in prime time all their 2 news shows or all their information shows are network 3 owned. There is no -- zero -- place in broadcasting 4 for someone other than the network news department to 5 develop a news show. 6 MR. YEE: Thank you. 7 In this order I have: Jose Ruiz, Norman 8 and Charles and then Paul. 9 MR. RUIZ: First I'd like to thank the 10 panelists for taking time out of their day to come 11 and share with us their expertise. 12 We spent a lot of time on the technology 13 and the capacity of the technology. And now I think 14 we're moving more into a content issue. And I've 15 heard things like community development committees, 16 employment, independent access, diversity of 17 production services. I've heard about programming 18 like "The Waltons," "Love Is Never Silent," "Children 19 of a Lessor God." 20 You as producers in producing that type of 21 programming, which is programming to me that shows 22 the human side, the American experience side of us, 23 what are the difficulties and could it have been 24 casted to be a Native American family, an Asian 25 family, a Latino family, in one case, an 51 1 African-American family, why don't we see more 2 programming on the human experience, the American 3 experience that deals with other groups? 4 MS. REES: I'm going to risk to answer that 5 question, but I first have to respond to Les and to 6 all of you. 7 I think the purpose that brought me here 8 today was not to carp about the past, Les. I mean 9 it's really the future that is your concern. And I 10 won't be producing for digital TV, I'm quite sure. 11 I'm hoping to get to Santa Barbara with Jerry. But I 12 am always compelled by the idea. And if I were to 13 say anything, this is not a self-serving appearance 14 that I make before you today, it is not, it would be 15 to hopefully urge you to keep in your deliberations a 16 mindset of that future, and that there is a ground 17 swell of very diverse and talented and eager young 18 people who want access. And I think that's what 19 we're talking about. 20 I think it's very difficult to answer you 21 directly, Jose, in the current -- except for you. I 22 have to come back and congratulate you for the Ann 23 Margaret series. It's a real wonderful step outside 24 of the status quo, Les. I really, really do, 25 sincerely. But there are the constraints of the 52 1 commercialization of television as a sales tool. 2 And I can't give a lecture on the dynamics 3 of a very intricate system of cost per minute or cost 4 per second, as it's coming down to. I do understand 5 that dynamic. I do know that I've been challenged 6 every time. Well, I don't think that idea will 7 garner an audience. 8 How can we deliberate that in that six-band 9 spectrum that there will be, through your 10 deliberations, an embrace of the idea that ideas are 11 the product, but they are consumed. And I feel 12 strongly that that focused, concentrated sense on the 13 bottom line, it is a profit industry -- I understand 14 that -- but it seems imperative that in the face of 15 our growing diversity and its intense eagerness to 16 participate in a multicultural nation that's the 17 future. 18 It's been denied right now because, in many 19 respects -- my opinion, I am not an authority, I 20 experience it through the desire that I want to do a 21 story. I tried very desperately to sell the Carl 22 Gorman story. And for those of you who have read any 23 of the newspapers, Carl Gorman recently passed. An 24 extraordinary leader in the Native American 25 community. An extraordinary man. A dedicated hero, 53 1 soft-spoken, an artist. Nobody wanted to hear that 2 story. Nobody wanted to be interested in that story. 3 I went everywhere. 4 And until recently, I mean Latino stories 5 have been very difficult. You know that. But they 6 do buy. They are consumers. Somebody has to lift 7 the level of expectation of television. And I don't 8 know how you will pass your deliberations on, but if 9 there's any way in the spectrum, which I kind of 10 think of as the rainbow in the sky -- I mean look at 11 the hues that can be there. We don't want it black 12 and white. That's not a rainbow. But even a band, 13 one spectrum, almost like a Sundance, where those who 14 have ideas and can find ways to do them that don't 15 cost $40 million, let them have access. 16 I just keep coming back to that: Provide 17 the opportunity. There are Asians, Latinos -- there 18 are Americans coming out of our educational systems 19 that are ready to tell their story from their point 20 of view, from their perspective and from their voice. 21 It is essential to me that our future be protected 22 from this narrowing of ideas to a perceived audience, 23 to a perceived profitability. 24 There's room for it all. Just protect some 25 room. 54 1 MR. YEE: Do you wish to respond? 2 MS. CARPENTER: Yes, I'd like to respond to 3 that. 4 I'd like to say that I think this panel, 5 this Committee is very exciting and that you're 6 listening, at least, to the genuine hunger for access 7 by community members and by multiculturally talented 8 writers, producers, et cetera. 9 And to answer the question of stories for 10 different groups and why we don't see more of them, I 11 think with a number of factors over the past several 12 years, a lot of cultural pride is emerging in the 13 different varied communities. And people that might 14 have felt discouraged in the past are now realizing 15 they do have a voice, and they will become more 16 insistent, and they will not give up and they will 17 knock on more doors for hiring, for producing, et 18 cetera. 19 And the wonderful thing about this 20 insistence is that you're now providing the access to 21 it. So it's almost a great synchronicity, I think. 22 And I think that you have that responsibility, and I 23 think you're taking it seriously. So I think you 24 will see more stories because the pride is there and 25 the access will be there, and those two combined -- 55 1 obviously I have a positive viewpoint on this -- but 2 I think it will be successful. I don't think it will 3 happen over night because things take longer in 4 development, as you know. But I think in a couple of 5 years it will become more standard fare, and I think 6 access is the first key. 7 CO-CHAIR ORNSTEIN: I want to thank you all 8 for coming and for your passion. I must tell you I'm 9 a little disappointed in the panel overall. I had 10 expected we would have some other things discussed. 11 Our mandate is in significant part to look 12 at what makes the digital age different from the 13 analog age, an age in which we're going to see a 14 veritable explosion of outlets for broadcasters and 15 different ways of approaching things. 16 And I had expected we would have some 17 discussion of what plans were being made or, if there 18 were any, for filling all of these different outlets 19 and not just to focus on the notion that because we 20 have this new grant of spectrum that we should use 21 our leverage to kind of bludgeon people to move from 22 an oligopolistic setting to something more. 23 Let me frame a question then in the 24 following way. We're moving into an era where we are 25 going to have very possibly, we don't know exactly, 56 1 but we're going to see broadcasters -- and remember 2 that the networks here, we consider only because they 3 own stations. Our focus is not networks; it's 4 stations -- but where stations are going to have the 5 capacity at times to put on six or eight different 6 programs at the same time or channels at the same 7 time, transmitting data, sometimes transmitting 8 broadcasts. It's also, of course, in an era where 9 there will be an explosion of other outlets of 10 programming. 11 So presumably the whole marketplace is 12 going to change in some fashion. The demand for 13 programming, for something to fill those channels and 14 to attract viewers is going to be different and much 15 greater. Isn't it likely under those circumstances 16 that a small set of outlets, which after all was 17 three networks, now it's four or five or six, and 18 we're seeing some of the greatest creativity emerging 19 on some of those other networks, UPN or even Fox in 20 some cases, where they're having outlets for programs 21 like "Ally McBeal" or that new UPN show -- what's 22 the -- 23 CO-CHAIR MOONVES: "Dawson's Creek." 24 CO-CHAIR ORNSTEIN: -- "Dawson's Creek," 25 that certainly have some very positive elements to 57 1 them; that when you move to a situation where at 2 least at different times of the day where there's now 3 one stream of programming, there may be five or six, 4 it's going to be impossible for a small group of 5 oligopolists to basically maintain a stranglehold on 6 what's going on. And the demand and, in fact, the 7 leverage of those who come up with creativity and 8 programs and options will be much greater. And the 9 opportunity to fill niches will be greater as well. 10 MR. ISENBERG: Let me say, number one, as 11 regards stations in the major marketplaces, virtually 12 all the VHF stations are owned by networks. That is 13 the way networks get formed, by owning the stations 14 in their own major cities. The government has 15 basically allowed them to expand the coverage, so 16 CBS, NBC, ABC/Disney have expanded their ownership. 17 Secondly, as regards plans of kinds of 18 programming in the digital age, I think everybody, at 19 least in my School of Cinema-Television, we talk 20 about it a lot. We talk about lots of interactive 21 forms. And I think there's going to be a great 22 blossoming in the forms of programming through the 23 digital age. I don't think you have to worry about 24 it. It's coming. The creativeness of our 25 communities will give it to you. 58 1 As far as the naive assumption that 2 sixplexing the spectrum is going to bring out a vast 3 expansion of opportunities for independents, if you 4 went back 15 years and you looked at cable and you 5 said, "We're about to go from a three-network economy 6 to a fifty-network economy. Wow. It's going to be 7 great for independents"; it didn't happen. So I 8 don't see any reason we should assume it's going to 9 happen when you sixplex it. Most of the major cable 10 services are owned by the same companies. 11 The dream of cable is that we will get out 12 of broadcast system which destroys programming to 13 minorities. I mean my history over 30 years in this 14 industry is when you walk into a network and you 15 propose something that is specific to an ethnic 16 section, the programmer will turn, "Yeah, but how do 17 we cross over?" 18 It was that problem with "The Women of 19 Brewster Place." There's a million stories like 20 this. And that is the nature of the broadcast 21 medium. In theory, cable gets past that because 22 you're going to get into Black Entertainment 23 Television, blah-blah-blah. 24 But still the issue has always been: If 25 the public is deserving of excellence, does 59 1 excellence come from large corporations or can and is 2 -- yes, to some extent, it does, by the way. It 3 isn't that large corporations can't produce 4 excellence. They do. I mean there's too much good 5 television right now, especially in the dramatic 6 form. And the dramatic form is because of the power 7 of the Dick Wolfs and the Steve Bochkos who, frankly, 8 no network with a brain will mess with. But that's 9 great for the established, $10 million player. It 10 isn't an answer to excellence throughout. 11 MR. BENTON: So it sounds like you should 12 be testifying in front of the Antitrust Division and 13 not us. 14 MR. ISENBERG: In all probability, that's 15 going to end up there if we could get enough people 16 who not afraid of being blackballed together. You 17 know the problem of putting antitrust case together 18 in this industry is, if you put your name on it, you 19 probably are out of the industry. So we need a whole 20 bunch of people at my age and independents to do 21 this. 22 MR. YEE: If I could -- 23 CO-CHAIR MOONVES: Just consider yourself 24 out of the industry already. 25 (Laughter.) 60 1 MR. ISENBERG: At least as a dependency. 2 I've dropped the co-dependency issue. There was no 3 co-dependency. 4 MR. YEE: In the remaining time of my 5 moderation, I need to move this along. 6 Herb, 20 seconds, then I need to get to the 7 other Commission members. 8 MR. GUNTHER: Yes. My rather mild 9 observations should not be taken as anything other 10 than just rather mild observations. I think my 11 critique of the failure of the broadcast industry to 12 meet the public interest standards from before 13 certainly leaves one with no sense of optimism, that 14 in the digital age we're going to see a higher 15 standard met. 16 And certainly this is not intended to do 17 network bashing. And I'm rather puzzled and 18 concerned that what is, in fact, sitting right next 19 to you, Mr. Benton -- the Benton Foundation certainly 20 provides a much more articulate and specific critique 21 of the broadcast industry and has over the last 25 22 years. And Mr. Benton on the panel, I'm sure you 23 respect his views and respect his perspective. But I 24 certainly have not said anything other than what the 25 Benton Foundation itself has tried to raise, the 61 1 issues it's tried to raise about this. 2 The fact is regulation has benefitted the 3 regulated. It has not benefitted communities. And 4 the conversation here about independent production 5 and public access, public access is about creating in 6 your imagination some new ways that the public can 7 use a technology for some of the loftier purposes 8 that have to do with the survival of the democratic 9 values in our society besides entertainment, 10 distraction and trivia. And my thesis is simply that 11 you should be telling us what your plans are. 12 And as for the Fairness Doctrine, which we 13 know no longer is in force, certainly my view 14 expressed today here, the views of the panel itself, 15 this Commission represents, by and large, the 16 dominant view of the industry. I mean hardly to 17 consider me other than a voice in the wilderness when 18 it comes to raising some of these issues. I'm simply 19 saying that the legitimacy of this process turns on 20 broader public awareness of the process, 21 participation. 22 And if the public were part of this 23 process, you will find that they do not understand 24 the concept of regulation benefitting the regulated, 25 a gift of, what, 20 to $50 billion worth of spectrum 62 1 to a small group of very powerful economic interests. 2 Put yourself in the shoes of the public, what is 3 going on with this transfer of public resources. 4 It's like giving away all of our national parks to a 5 few developers. You'd be concerned, too. 6 These are not wild-eyed, ideologically- 7 tainted concerns, but simply good old American values 8 here. You know, we're not getting the good deal. 9 And you guys should be telling us what you're giving 10 us for this exchange because, the fact is, we're not 11 getting much. 12 MR. YEE: In this order: Charles, Paul, 13 Karen and, lastly, Gigi. 14 CO-CHAIR ORNSTEIN: I'm not sure how much 15 time we're going to have to complete this, Jim. 16 MR. YEE: I know. I'm just -- okay. 17 MR. BENTON: Thanks for those comments, 18 Herb. 19 I want to address the issues of structure 20 and money, because two years ago the new regulatory 21 framework of the Telecommunications Act brought 22 telephones, cable and broadcasting into one 23 regulatory framework. The reason for this was more 24 competition, in theory, and to try to deal in a 25 structural way with the concentration of control in 63 1 these three mega-industries. 2 I think the last years have shown that we 3 have not only not created much more competition, but 4 the concentration of control seems to be growing. 5 And so my first question, and then I'll make my 6 second point and then stop, is: Had you thought 7 about alternative structures? Channel 4 in England 8 is often cited as one great and very successful 9 public/private combination model that we might be 10 thinking about here in this country. There are 11 certainly other models. 12 But the structural issue of access for 13 independence is then combined with the second point, 14 which is money. I have spent my entire career, 15 outside of our foundation work, in the area of 16 educational media. And I find it absolutely 17 appalling that this great country is spending 18 approximately $5 million in new instructional 19 television programming per year. It is outrageous. 20 In contrast with England which has a $50 million 21 budget. A country that's one-fourth our size. 22 We're spending no money. There's no money 23 available. So when we're trying to move from the 24 paradigm of television for selling because delivering 25 audiences to advertisers is what commercial 64 1 television is about, and that will not fundamentally 2 change. But the panel has an opportunity to rectify 3 at least in a small way the balance between the 4 commercially-dominated system and the noncommercial 5 interests that are represented now very weakly and 6 feebly by public television in this country, that is, 7 in comparison to commercial television. 8 So the money, the issue of money. How do 9 we get money to support independent creative 10 production of information, education and cultural 11 programming, including more and better programming 12 for children? Where does the money come from? That 13 is the central -- so I think there's a structural 14 issue and there's a money issue. And unless we deal 15 with the structural issues and the money issues we're 16 not going to make progress, we'll just be making 17 speeches. And hopefully, as we move from getting 18 testimony and getting down to business, to try to 19 create something, we can deal with these 20 fundamentals. And I'd love to have your reactions 21 and advice on the structural challenges before us and 22 the money challenges before us. 23 MR. GUNTHER: Well, the parameters for this 24 have already been set, I mean, unfortunately. 25 Otherwise we'd be talking about license fees. We'd 65 1 be talking about bidding on the spectrum. We'd be 2 actually getting the market value for the transfer of 3 assets. And obviously the revenue from that could be 4 dedicated to the purposes that you just mentioned. 5 But, in fact, those assumptions have already been 6 addressed in the reform. We're not getting licenses, 7 license fees. We're not getting a bid on the 8 auctions or, rather, we're not auctioning off the 9 spectrum. 10 So the traditional mechanisms have already 11 been given up, and so it becomes a voluntary thing. 12 And we're going to appeal to the social 13 responsibility of those who are going to benefit 14 massively from this new arrangement and from this 15 give-away, to ask them entirely on a voluntary basis, 16 as good citizens, to put something back in the system 17 on the dubious wisdom that it benefits all of us to 18 have a strong vital democracy sustained by a 19 broadcasting system that nurtures those values and 20 gives communities an opportunity to hear themselves, 21 to hear the diversity and above and beyond 22 entertainment programming as well. 23 MR. YEE: I must exercise the role of 24 moderator here due to time, but also I think the 25 commentary I will look for from Paul, Lois and Gigi 66 1 will continue after our break. But because of time, 2 and I know two of you have some severe time 3 constraints, but also ourselves, I'd just like to say 4 thank you. 5 I think we've been reminded by the 6 challenge provoked by history and hopefully by the 7 challenge of our future. So I must say thank you. 8 Any additional comments and thoughts you have, any 9 communication with you, also can be welcomed at a 10 later time. So I will bring this to a close. 11 Before I do, to the Co-Chairs, I also want 12 to thank Jose Luiz, Frank Blythe, Gigi Sohn and 13 Michael Gardner from NAPI who helped in assembling 14 this distinguished panel. So from me back to the 15 Co-Chairs. 16 CO-CHAIR MOONVES: Thank you to the panel. 17 PANEL MEMBERS: Thank you. 18 (Brief recess taken from 10:38 a.m. to 10:52 19 a.m.) 20 CO-CHAIR ORNSTEIN: Why don't we get 21 underway with our next panel. 22 I wanted to mention one thing to you, to 23 the members of the panel. In your packets you have a 24 paper which was submitted to us by the Aspen 25 Institute Working Group on Digital Broadcasting and 67 1 the Public Interest. 2 The Aspen Institute's Communications in 3 Society Program, under Charlie Firestone, who is 4 actually here today with his deputy, Amy Garmer, has 5 set up a working group just consisting of a range of 6 people from the industry and elsewhere and all across 7 the spectrum to periodically get together and do a 8 little work that may help us in our deliberations. 9 And they prepared what is basically a 10 framework paper offering some models of public 11 interest obligations with pros and cons. A brief 12 paper that Angela Campbell of the Georgetown 13 University Law Center put together that I hope we'll 14 use, at least in part, to structure some of our 15 afternoon sessions as we start this afternoon to get 16 into where we might go ultimately with this. So, 17 keep that in mind. 18 And let me turn to Cass Sunstein to 19 moderate this panel on political broadcasting. 20 MR. SUNSTEIN: It's a pleasure to introduce 21 this very distinguished panel, very distinguished and 22 very balanced panel. 23 I will just introduce the three panelists 24 very briefly, in the order in which they will speak. 25 Tracy Westen is a Professor at both USC and 68 1 UCLA, specializing in communications. He specializes 2 in communications law and policy. And he has also 3 worked for both the FCC and the FTC. 4 Cameron DeVore is a very distinguished 5 advocate for advertising companies and others before 6 the Supreme Court and other tribunals who will be 7 presenting a legal argument -- our first legal 8 argument, I think, in a while -- on behalf of the 9 National Association of Broadcasters. 10 The third speaker will be Paul Taylor from 11 whom we've heard before, a well-known journalist who 12 worked for the Washington Post and the founder and 13 director of The Free TV for Straight Talk Coalition. 14 Thank you. And we'll begin with Tracy 15 Westen. 16 TRACY A. WESTEN, PRESIDENT 17 CENTER FOR GOVERNMENTAL STUDIES 18 MR. WESTEN: Thank you. 19 I want to start by thanking you for the 20 time you're spending on this issue. 21 This process may seem, at times, to you, to 22 be a thankless one; all controversy and no rewards. 23 And on top of that I understand you have to 24 pay your own way out here. So what I wanted to say 25 is I think you're addressing an extraordinarily 69 1 important issue and you're to be congratulated for 2 that. 3 I'll try to keep my comments brief to leave 4 time for discussion. But I want to make a few 5 preliminary observations. 6 First, I think the advent of digital 7 television gives us more. It gives us more channels, 8 more capacity, more flexibility. But more than that, 9 it gives us, I think, the chance to rethink its role 10 in American Democracy. And I think that's, perhaps, 11 its most important contribution. 12 Secondly, although I personally believe 13 that some free broadcast time for political 14 candidates is absolutely essential, I think it would 15 be bad policy and impractical as well to hand it out 16 willy-nilly to all candidates or to hand it out with 17 no concern for formatting, cost burdens on licensees, 18 or the risk of boring the public to death. 19 Finally, although I believe the FCC has the 20 legal power to mandate free time under its current 21 jurisdiction -- and under the First Amendment -- I 22 think there are clear advantages to a broadcast- 23 industry-adopted solutions, including greater 24 flexibility, the ability to experiment with more 25 interesting program formats, variety between the 70 1 states, variety among different elections. So I'll 2 come back to this point. 3 But to the extent the broadcast industry is 4 able to devise an innovative, creative solution, I 5 think it would be to everyone's benefit. In short, I 6 think the issues here are quite difficult and not 7 easily subject to an ideological litmus test. 8 I think what we need is a mix of 9 practicality and vision. And, as I look at the 10 composition of this panel, I think it's ideally 11 suited to that task. You represent a very broad 12 range of public and private interests and you're 13 confronting very difficult and important problems. 14 And if this group can't do it, it's hard to imagine 15 who can. So I applaud your dedication to this 16 effort. And I wish you well. 17 I'd like to make seven brief points. 18 First, I believe that some free broadcast time for 19 political candidates is absolutely essential if we're 20 to improve the integrity of our elections. 21 And I think this for two reasons: First, 22 we need to improve the information the public has in 23 the electoral context so they can make intelligent 24 decisions, which are the foundation of our democracy. 25 Secondly, I think we need to make it 71 1 possible for all candidates to participate in 2 elections, to present their ideas and not only to 3 present their ideas if they have access to 4 considerable wealth, which seems to be the developing 5 pattern. 6 James Madison once said, "A popular 7 government without popular information or the means 8 of acquiring it is but a prologue to a farce or a 9 tragedy or perhaps both." 10 Madison and Jefferson understood the vital 11 connection between democracy and information. They 12 knew that placing actual political power into the 13 hands of ordinary citizens -- a very radical 14 experiment in governance -- would be doomed unless 15 citizens had access to the information on which to 16 base an intelligent vote. 17 Recent polls have shown that those 18 Americans who know the least about government are the 19 most likely to be mistrustful of it and that levels 20 of mistrust and cynicism have increased sharply in 21 the last decade, paradoxically, although television 22 is the most powerful and effective means -- to use 23 Madison's word, "means" -- of delivering information 24 ever invented. 25 And although most people cite it as their 72 1 principal or only source of information, public 2 ignorance about candidates and governance seems to be 3 high and even increasing. Television's ability to 4 inform the electorate has been unrealized, in part, 5 because its costs are growing beyond the reach of 6 many candidates and because the price candidates pay 7 to raise that money, in my view, is distorting the 8 political system. 9 In 1956, for example, the amount of money 10 spent by all federal, state and local candidates for 11 office in the United States was about 155 million. 12 Twenty years later, in 1976, total candidate spending 13 had increased 250 percent, to about 540 million. In 14 the last 20 years, however, from 1976 to '96, that 15 amount has shot up 2,600 percent to the sum in 1996 16 of 4.2 billion. 17 In California, by analogy, in the last 40 18 years, campaign spending for legislative office has 19 gone up 5,000 percent. That's a 250-percent increase 20 every two-year election cycle for the past 40 years. 21 In short, television has an extraordinary 22 capacity to inform the voters, but many candidates 23 simply lack the money to purchase it or, in their 24 efforts to acquire it, create the appearance of 25 impartiality in their actual votes. 73 1 The second point is that even though free 2 time would significantly ease campaign finance 3 pressures, I think it's important even in its own 4 right without considering campaign finance reform. 5 Neither this Commission nor the FCC has the mandate 6 or the power to solve campaign finance problems -- 7 it's extraordinarily difficult as we've seen from 8 events in the Senate in the last week -- even though 9 free broadcast time, in my view, would certainly 10 help. But free broadcast time would address a number 11 of other important issues as well. 12 It would help challengers compete. It 13 would give them some access to present their ideas to 14 the public. And, currently, many challengers lack 15 the fundraising power of incumbents. 16 It would enhance the overall dialogue in 17 the campaign. It would help voters understand the 18 issues. It would provide balance for candidates who 19 might get swamped by very personally wealthy 20 candidates, a phenomenon we've seen many times in 21 California. And, in fact, Senator Feinstein dropped 22 out of the race for governor in part because she did 23 not want to take on a wealthier millionaire, is 24 basically what it amounted to. 25 Free time would create a minimum level 74 1 playing field, a level floor, so that all have an 2 opportunity to present their ideas. And it would 3 also allow -- I think, if we do it creatively -- to 4 create the opportunity for some innovative formats. 5 And I'll talk more about that in a minute. So this 6 Commission does not have to wait for campaign finance 7 reforms to make a major contribution to an informed 8 electorate. 9 Third, free time, I think, should include 10 format restrictions. It should not be a simple blank 11 check. And these format restrictions should be 12 carefully thought out, I think, with the creative 13 energy and thought of the broadcast industry to 14 encourage a better, more improved debate. 15 Simply giving candidates free time to 16 engage in more 30-second negative ads won't 17 substantially improve public information and I don't 18 think will have the support of the public. 19 TV news coverage, good as it can be, is 20 probably by itself insufficient, because candidates 21 need some opportunity to present their own views in 22 their own words. So, in my view, candidates should 23 be given specific, limited quantities of time. And I 24 would suggest both short spots as well as longer 25 opportunities -- two minutes, maybe 15 minutes or 75 1 even 30 minutes for presidential candidates -- so 2 that they have the opportunity to address significant 3 issues. 4 I would also consider format restrictions 5 such as the following: Requiring candidates to 6 appear in at least 75 percent of their time, which 7 the research shows that if candidates appear in their 8 own ads there tends to be considerable less negative 9 advertising and negative attacks. 10 One alternative format might be, for 11 example, showing a person on the street asking a 12 question for 30 seconds, and then for 45 seconds each 13 of two candidates rebut. So you have a little two- 14 minute package that is, in essence, a mini debate. 15 Perhaps running all the spots in a day or 16 even one week on a particular topic, such as 17 education, considering "roadblocks" so spots appear 18 at the same time across the dial. 19 I'm not arguing any one of those. But I'm 20 simply saying there's an opportunity here for 21 experimentation and creativity in ways that will 22 engage the audiences interest. 23 The fourth point is that I think 24 discussions of free time should not be limited to the 25 Beltway. In other words, they should apply to 76 1 candidates at all levels, if possible, not just 2 president, but congressional and state candidates and 3 even local candidates where applicable. And I think 4 that's the important qualification. 5 Obviously we have to prevent broadcasters 6 from being swamped by requests for free time. But 7 let me suggest a way of possibly doing that. For 8 president, for example, we might set aside, for each 9 of the two major party candidates in the general 10 election, up to two and a half hours for them to 11 control. 12 Of that two and a half hours, there might 13 be two half-hour programs, leaving an hour and a half 14 for, let's say, two-minute spots. 15 So what that would create is, for each of 16 the presidential candidates, two half-hour 17 opportunities to address issues in depth to the 18 entire nation. And then they would be given in the 19 60 days before the election 45 two-minute spots. 20 For U.S. Senate and Congress, the national 21 political parties might be given a grant of about two 22 hours of time on each broadcast station per state. 23 And let them divide up the time as they see fit. 24 They have a number of congressional candidates, a 25 number of senatorial candidates. Some will be in 77 1 safe seats; some will not be controversial; some will 2 be very important, hot races. This gives a ceiling 3 on the time but allows them to divide it up as they 4 see fit. 5 For state and local candidates, again, the 6 same concept. Give the state political parties two 7 hours to divide up as they see fit. And what this 8 would amount to, for instance, state and local party, 9 is about two minutes a day for the 60 days before the 10 election. For U.S. Senate and Congress, again, two 11 minutes a day for the 60 days before the election. 12 In total, although it sounds like a lot, it 13 would give candidates at the federal, state and local 14 levels a total of 13 minutes a day for the 60 days 15 before the election which, in my view, is a 16 controllable, but a reasonable amount of time. 17 The fifth point involves digital and analog 18 TV. In my view -- and, obviously, you'll be 19 discussing this one -- I think the fee broadcast time 20 in limited amounts should be given on both digital 21 and analog television for the principal reason that 22 if we relegate it or confine it only to digital 23 television, then it will create certainly for many 24 years to come a kind of ghetto in which a very small 25 number of people -- and, presumably, the people who 78 1 have the money to buy digital television sets -- will 2 be the only observers. 3 At the same time the advent of the digital 4 spectrum might create interesting opportunities to 5 give local and state candidates, who otherwise would 6 not be able to afford the time, some access 7 particularly in urban areas on subchannels or regular 8 definition television channels. 9 The high definition signal allows a 10 broadcaster or licensee to carve up that spectrum in 11 different ways, perhaps generating more than one 12 channel, two, three, based on compression 13 technologies. And there may be ways of giving 14 candidates access to that newly-created spectrum in 15 ways it would be not be unduly burdensome on 16 licensees and at the same time give them an option. 17 The sixth point is that in my view 18 reasonable amounts of free time and reasonable format 19 restrictions will not violate the broadcast 20 licensee's First Amendment interests. 21 The Supreme Court has said in both Red Lion 22 and CBS versus FCC that requiring broadcaster to 23 share their channels with others, particularly 24 candidates for office, does not violate the First 25 Amendment. And I don't mean to get into a technical 79 1 First Amendment discussion, but let me draw one 2 analogy. 3 This room is an interference-based medium. 4 We cannot all talk at once -- well, we can but, if we 5 do, nobody will be able to understand anything. So 6 there have to be rules to decide who speaks even in 7 this particular forum. 8 And Mr. Yee, when he started the discussion 9 earlier, said something very interesting. He said, 10 "I'm going to raise my hand after five or seven 11 minutes so that democracy can move along." Very 12 interesting and accurate observation. In other 13 words, he was threatening to censor panelists if they 14 spoke too long in order to preserve democracy in this 15 particular forum. 16 If I appear in front of the United States 17 Supreme Court, and I'm told I only have a half an 18 hour to present my argument, I can't say, "Well, I 19 need at least three hours to present my argument. 20 And you're violating my First Amendment rights. And 21 if you don't give me three hours, I'm going to sue 22 you." Obviously, I'd lose that argument. We have to 23 have time restrictions or channel-sharing 24 restrictions in any interference-based medium such as 25 speech and such as broadcasting. 80 1 For the FCC, for example, to say, "We will 2 give a license to a broadcast station for seven 3 years, minus one day. And for that one day we will 4 turn on, let's say, government or public interest 5 transmitters and let all political candidates use 6 them on a first-come, first-serve, content-neutral 7 basis," would that violate the First Amendment rights 8 of the licensees? Would the licensees say, "I have a 9 First Amendment right to get that last day"? I 10 think, clearly, not. 11 In an interference-based medium, the 12 government can adopt rules, just as the Chair has, to 13 share the time. And it does not violate the First 14 Amendment rights of broadcasters operating in an 15 interference-based medium to be asked to share that 16 time. 17 So I think asking licensees to provide a 18 small amount of time, 13 minutes a day for the two 19 months before the election, is a reasonable form of 20 channel sharing because it also enhances the First 21 Amendment speech rights of the candidates and the 22 access of audiences to their views. 23 My last point is that we should try to 24 minimize, wherever possible, the costs and burdens on 25 the broadcast industry. And I'd like to suggest some 81 1 ways in which that might be considered. Obviously, 2 costs of free time could be offset against free 3 spectrum. That's one model that's been presented to 4 you. But I think there are other ways of reducing 5 costs on licensees. 6 First, lowest unit rate might be repealed 7 for candidates who receive free time. In other 8 words, if they want to buy any time beyond their free 9 time, they should pay full market rates. 10 315, equal time obligations could be 11 suspended in elections in which candidates are 12 receiving free time, thereby minimizing 13 administrative and legal burdens on licensees. 14 Tax deductions, I think, could be 15 considered for the costs of free time offered, at 16 market rate. 17 Must-carry rules on cable television for 18 digital signals might be considered, in part, as an 19 offset. In other words, cable systems ought to be 20 required to carry digital signals as well and that be 21 deemed as part of the overall package. 22 For state and local candidates for whom 23 prime time or even television time is inefficient, 24 since their districts are small and only include a 25 portion of a broadcast licensee's coverage we might 82 1 think of creative alternatives such as, for example, 2 giving them the opportunity to broadcast their 3 messages at 3:00 a.m. in the morning, but also asking 4 broadcasters to promote the existence of those 5 programs to voters who have VCRs and are willing to 6 set them ahead of time to pick up that message. 7 In addition, the broadcast industry might 8 devise alternative schemes and test them in different 9 states. For some reason public policy seems to shy 10 away from what scientists like, which is 11 experimentation. And I'd be interested in seeing 12 different formats tried in different states on an 13 experimental basis to find out what works, what 14 engages the audience. 15 In conclusion, I think I would say only 16 that, obviously, free time solutions are politically 17 quite difficult. They're controversial. But, again, 18 to quote James Madison, he said, "Knowledge will 19 forever govern ignorance. And the people who mean to 20 be their own governors must arm themselves with the 21 power which knowledge gives." 22 Together -- and I think, together this 23 Commission and the American public has the power 24 significantly to advance the interests of electoral 25 democracy if we exercise the creativity and the 83 1 willpower to do it. I think what is at stake here 2 fundamentally is the continuation of a democratic 3 form of government based on information. 4 For better or worse, many of you in the 5 broadcast industry have, through your time and talent 6 and entrepreneurial efforts, created an 7 extraordinarily powerful medium which, we may not 8 have anticipated at the time, but now has a 9 substantial impact on the conduct of American 10 government. 11 So, I think, together, the challenge is: 12 Can we figure out a way to improve this system of 13 government and, at the same time, keep the burdens on 14 the broadcast industry minimal. 15 Thank you. 16 MR. SUNSTEIN: Thank you very much, Tracy, 17 for that. And also for keeping, so tightly, within 18 your 15 minutes in accordance with the substance of 19 your legal argument. 20 We will now hear from Cameron DeVore. 21 P. CAMERON DeVORE, SENIOR PARTNER 22 DAVIS WRIGHT TREMAINE LLP 23 MR. DeVORE: Thanks, Cass. 24 I must say I got derailed listening to 25 Tracy. I had this image of my speaking up to Chief 84 1 Justice Rehnquist in the Court and suggesting that, 2 really, even though the time was up, that my 3 fundamental rights required that I have an 4 opportunity to continue my argument to the Court. 5 I think I would not like to be the one to 6 try that on the Chief Justice who, like Mussolini, 7 likes to make the trains run on time during oral 8 argument. But it's an intriguing idea. 9 Well, here we are I think nose-to-nose with 10 the question of and I think the intractable 11 constitutional issue of whether the free air time 12 proposal will pass muster under the First Amendment. 13 The last time I debated this with some of you was 14 last March in the Annenberg Forum in Washington, 15 D.C., March 11. Lots has changed since then. At 16 that point Senator McCain was the keynoter. 17 Certainly free air time was a fundamental and 18 critical part of McCain-Feingold. 19 Since that time that has dropped from 20 McCain-Feingold. And, of course, McCain-Feingold, at 21 least for this term of Congress and regrettably for 22 perhaps longer disappeared from Congress' scope. 23 And I suppose we're now left with a 24 consideration of free air time, to some extent, as a 25 kind of a vestige or a remaining isolated proposal 85 1 out of that package. 2 President Clinton, I noticed -- I was at a 3 meeting out of the country, or out of the continental 4 part of the United States early in the week -- I 5 noticed a statement that apparently he made I guess 6 on Thursday asking again the FCC to act to adopt free 7 air time, as he put it, to renew our democracy. 8 Of course, your Committee will in due 9 course decide what the public interest duties of 10 broadcasters are in this digital era. That's your 11 job. And it's a great one and one that we are all 12 watching with great interest. 13 But focusing on free air time, which is our 14 job in this segment of your deliberations, I think, 15 as the last vestige of campaign finance reform, now 16 not in the hands of the elected congress, but in the 17 hands of the appointed Commission, the FCC. And if I 18 read the Commissioners properly in their public 19 statements, I guess if it were adopted it would be by 20 a three-to-two vote of that Commission. 21 I guess you all have to decide how many 22 public-policy angels can rest on the head of the 23 free-air-time pin. But I suppose, as a part of that 24 process, you're going to have to consider the 25 constitutionality of the effort. 86 1 When Paul and Walter Cronkite and others 2 embarked on their crusade with the networks to cajole 3 and leverage voluntary time for federal candidates, I 4 think their efforts enjoyed wide support, not just in 5 the Beltway, but nationally and among broadcasters. 6 And some of what they got from the networks and the 7 broadcasters was perhaps grudging, but they got a 8 fair amount. And I think that the consciousness, 9 certainly, of the broadcasters were raised to really 10 focus on their structure of providing time for 11 candidates and how it was done. 12 But I think we now have to, as I say, get 13 down to the constitutional fundamentals. I filed a 14 paper with you all last week, which I think is 15 somewhere in your materials, expressing my views on 16 behalf of NAB and adding my voice I think to the, I 17 believe, constitutionally impeccable analyses of 18 Professor Rodney Smolla, whose paper has also been 19 filed with you by the Media Institute, and Lillian 20 BeVier of the American Economics Institute. I've 21 attached that to my paper. 22 I think Lillian, who many of you know, has 23 provided the absolute text analyzing this. It is a 24 public policy changing analysis, which I commit to 25 your careful review. 87 1 I also have at least a secondhand 2 endorsement, at least, of the Governing First 3 Amendment Principles by Professor Burt Neuborne at 4 NYU. 5 That spectrum of First Amendment scholars 6 ranging on other issues, at least from the liberal to 7 the libertarian, all concur that the central meaning 8 of the First Amendment is offended by the free air 9 time proposal. I think the long search for a 10 constitutionally-respectable rationale for the 11 concept has failed. And I hope that the Committee 12 will reach that conclusion after its deliberations. 13 In fact, it's really been surprising to me 14 that free air time has enjoyed as long a run as it 15 has without much apparent constitutional concern by 16 its sponsors. 17 The times that I've discussed this during 18 the year, both in Washington, D.C. in March and after 19 that, I think that the arguments have been viewed -- 20 to use Tracy's word -- as a "technicality," as sort 21 of an annoying technicality, and brushed aside. 22 I think seeking counter authorities, the 23 most often cited is Red Lion or FCC v. CBS. And Red 24 Lion is supposed to heal all constitutional wounds. 25 And then the public trustee, public ownership trope 88 1 is used as well. Broadcasters, in effect, are sort 2 of virtual trespassers on the public way. And 3 nothing can stand in the way of wise regulatory 4 mandates to the broadcasters. 5 In fact, given their status as sort of 6 squatters on the public way, to use Professor 7 BeVier's words, "They should not look a gift horse in 8 the mouth. Look what they got. And we're not asking 9 much of them." 10 I think those arguments really don't work. 11 And my paper I leave with you, but let me summarize 12 it in a couple of critical ways. 13 What's happening here? What we have is, if 14 free air time is adopted by the FCC, or any other 15 governmental body, or the Congress, it's a mandate to 16 broadcasters to publish and broadcast federally 17 selected and defined core political speech. That's 18 whether or not you accept Tracy's notion that a great 19 deal of regulation should go on as to how it's put 20 together, how many minutes, what you get, who can 21 appear on the camera and who not. Each one of those 22 things is a First Amendment hot button. But in any 23 event, let's assume it's just a bald mandate that 24 there be free air time. 25 It runs afoul of the two very central First 89 1 Amendment concepts about which there really can be no 2 debate. Either one of which would require what us 3 constitutional types call a "strict scrutiny review," 4 meaning that you have to have not just a compelling 5 interest -- and you can always debate that -- but a 6 meaning it has to be the least restrictive way of 7 dealing with the great goals that you purport to deal 8 with. That's where this all flounders, regardless of 9 which constitutional test is applied. 10 The first of these great constitutional 11 issues is that the First Amendment really prevents 12 and provides a wall against government compelling 13 journalists, the media, to print, broadcast certain 14 things, for them to require that this be done. 15 The big case is, of course, a print case, 16 Tornello, the Miami Herald case. And that said the 17 state of Florida could not permissibly pass a statute 18 requiring replies by people who'd been "pinked" in 19 the pages of the Miami Herald or any other newspaper 20 in Florida. It was by Justice Berger. It was a 21 unanimous Court. It's a principle that really has 22 established, in the hierarchy of protection of the 23 media, the highest bright line of strict scrutiny to 24 the print media. 25 The Hurley case, Justice Souter's opinion 90 1 of four -- now almost four years ago -- three and a 2 half years ago. There was a parade in Boston where a 3 gay group wanted to be included in this 4 Irish-American parade, and they were denied the right 5 to do so. 6 Justice Souter for the Court, again for a 7 unanimous Court, held that if you organized the 8 parade, you call the tune and select the marchers. 9 That wall of editorial freedom is virtually 10 absolute. And if there is not a Red Lion excuse for 11 not applying it to the broadcast media, it applies to 12 the broadcast media as well -- and will. 13 The second problem is one of government 14 requiring content to be broadcast or whatever. And 15 here this isn't just a print issue. When government 16 selects content, then we have the same strict 17 scrutiny issue. This isn't just a matter of meddling 18 with editorial freedom. It's a matter of 19 impermissible government preference for a kind of 20 speech based on its content. 21 There's a lot of cases here. The Turner 22 cases are really -- Turner 1, from 1994 and Turner 2, 23 from last year, deal with this, I think, in great 24 detail about what the limits are. FCC versus League 25 of Women Voters, Consolidated Edison, Pacific Gas & 91 1 Electric, Texas v. Johnson, Flag Burning, that stuff 2 is -- -- for the lawyers in the group -- that is 3 contained in the analysis that I have. 4 Now the key challenge for supporters of 5 free air time is how to escape from the strict 6 scrutiny trap which their mandate -- this kind of 7 mandate -- would inevitably fail. There are four 8 ways that that is tried. 9 One is to say, "Well, this isn't really 10 content regulation. This is, after all, it may be -- 11 it's certainly viewpoint neutral. We're not saying 12 that only Democrats or only Republicans" -- and I 13 missed this in Tracy's comments -- "only Ross Perot's 14 party would have some time in this concept." This is 15 just saying candidates, whatever their ilk, however 16 they're defined. 17 Professor BeVier, I think, deals 18 marvelously in her piece about how you cannot escape 19 from the fact that this is content regulation. I 20 commit that to you. But certainly even if you avoid 21 all the detail of what Tracy was talking about and 22 really get into the nitty-gritty of how this time is 23 to be used and by whom and whose faces and all of 24 that come on, it cannot avoid being considered 25 regulation of content. 92 1 And even if intermediate scrutiny applied 2 -- in other words, even if you dropped off the train 3 and you didn't apply the fullest strict scrutiny, 4 you'd drop back to something called -- and this is -- 5 I'm sorry to do this to you, but somebody needs to do 6 it -- you drop back to something called "intermediate 7 scrutiny," the so-called O'Brien test, the draft- 8 card-burning case test. Even under intermediate 9 scrutiny, this concept would not pass muster. 10 You certainly would have substantial 11 reasons. Cleaning up the swamp of America's campaign 12 system is certainly a high and valuable goal. But, 13 in order to meet the second part of the test, there 14 has to be direct and material advancement of that by 15 this. In other words, you're going to have to prove 16 that this concept is going to do all that nice stuff 17 that you assume that it will. And, most importantly, 18 you're going to have to prove that there are not 19 other ways of achieving this which do not have the 20 same impact on speech. And there are lots of those. 21 I mean there are those that would provide 22 federal funding of candidates. There could -- and 23 this is all under Buckley v. Valeo -- there could be 24 further limitations on campaign contributions. There 25 are lots of ways. Soft money, I think, could be 93 1 wiped off the slate in spite of what Senator 2 McConnell may think. 3 And I think that there are lots of 4 alternatives that simply would not impinge on speech. 5 And the Constitution requires you've got to do that 6 stuff first before you can get into content 7 regulation. 8 Now the nature of broadcasting is another 9 out, another way to escape from this. Herein of CBS 10 versus FCC and Red Lion. Let's start with CBS versus 11 FCC. Tracy said it. It's a case that upholds 12 reasonable access of candidates to broadcast 13 facilities. Sounds good. Except that what it's 14 about are those portions of the act which require the 15 broadcasters, if, in fact, they are going to allow 16 access to their broadcast facilities of candidates at 17 all -- they don't have to do that -- if they're going 18 to do that, then they have to provide access to paid 19 time by candidates to get on there and have their 20 views expressed. That's all that it holds. That's 21 all that it's about. 22 The key cases in this area have long been 23 -- for a long, long time, not long after Red Lion -- 24 CBS versus Democratic National Committee, FCC versus 25 League of Women Voters. They are the last, the 94 1 Supreme Court's keywords on this. And both cases 2 require narrow tailoring. Both require that you 3 cannot have means that intrude on the journalistic 4 integrity of broadcasters, meaning broadcasters -- 5 not print media -- we're right in the broadcast 6 industry in those cases -- make it very clear. And I 7 think free air time simply cannot meet part two of 8 that test. 9 Then comes Red Lion. Now Red Lion has been 10 the catch all. Red Lion covers all. And if you read 11 the Congressional Research Services analysis of this, 12 it's sort of like a fly in amber trapped in 1969. 13 And there it stands and it's still the authority. 14 Well, I suppose, like a lot of other 15 Supreme Court cases, Plessy v. Ferguson comes to 16 mind, it's still on the books. It hasn't been 17 overruled. But the basis for Red Lion is history, 18 the scarcity concept. 19 And listening to the discussion here this 20 morning of the proliferation, not just through 21 digital means, but everything else, the available 22 electronic media that are out there, everything is 23 changed. And the whole concept of Red Lion, based on 24 that scarcity of the spectrum is simply not with us 25 anymore. Whether it's spectrum compression, whether 95 1 it's satellites, whether it's the Internet, we can 2 talk about it all. 3 And the concern the Supreme Court expressed 4 about the Internet and the protective nature of -- 5 it's protection of it in the ACLU case last year, I 6 think, is symptomatic. 7 So I think the basis for Red Lion is simply 8 gone. It's not here anymore. And the case simply -- 9 in a case like one challenging the free air time 10 rules, Red Lion would be brushed aside by the Court 11 as any kind of a rationale for upholding this. 12 And even if Red Lion lives, people forget 13 what Red Lion is about. It was about the Fairness 14 Doctrine. It was about approving the Fairness 15 Doctrine at that time -- which, of course, is not 16 with us anymore. But that's what it was about. 17 And it was a very narrow decision. It -- 18 people are fond of cherry-picking, you know, 19 one-liners from Red Lion. But if you look at what 20 the case concerned, it was a doctrine that required 21 broadcasters not to exclude voices. But here, in 22 this situation, with free air time, the views of 23 these candidates, whatever you think, are widely 24 available. They have lots of ways to get on. 25 Sometimes they don't respond to the invitations of 96 1 local broadcasters to debate, at least the incumbents 2 don't. There's lots of available ways for these 3 voices to be heard. 4 And also, fundamentally, if you look at Red 5 Lion, free air time is just plain unrelated, and its 6 attempt to cure the woes of the campaign system is 7 simply unrelated to any claim of any remaining 8 scarcity of voices. 9 There's other things that have been argued. 10 The quid pro quo concept, I think Professor Smolla's 11 piece. I commit to you, on that. There really is no 12 nexus between the curing of the campaign system in 13 the country and the regulation of frequencies. 14 I mean I do agree that no one could argue 15 at all that the FCC is on shaky constitutional 16 grounds. Certainly the interference on the spectrum 17 remains a critical nexus of the entire broadcast 18 regulatory structure. But that structure is one 19 that's based on allowing the broadcasters to choose 20 their content. When the licenses are renewed there 21 is a review of whether or not they have done that. 22 And I think as was said in the Democratic 23 National Committee case, the Congress has wisely 24 stayed away from being too specific in what it is 25 that even with that periodic review would require. 97 1 I sort of took Cass on a little bit in my 2 paper, because I suggested another argument that 3 might be made would be the notion of sort of the 4 First Amendment having a flip-side, that it really 5 enables the Congress and the regulators to provide 6 for speech which would provide a level playing field, 7 which would provide a way for all voices to be heard. 8 It's a concept that I disagree with 9 fundamentally. And I certainly know that Professors 10 Neuborne and BeVier and Smolla and a lot of other 11 First Amendment scholars disagree with. It's a very 12 interesting, thought-provoking concept. But it's one 13 that has no real-case support. 14 And I think if Red Lion is no longer a 15 viable authority, it's not something that really has 16 -- it's a debating point, but not something which you 17 can talk about as a matter of supported 18 constitutional jurisprudence. 19 So, here I am, raining on your parade, 20 today, or the parades of those who feel so strongly 21 about this. But I think I have the feeling, having 22 gone through a lot of discussion and debate on this 23 in the last year, that it's important for you all to 24 hear that at least there's a body of constitutional, 25 scholarly opinion in this country which is not off in 98 1 one corner, which thinks that the free-air-time 2 emperor is not wearing any constitutional clothes. 3 MR. SUNSTEIN: Thank you, Mr. DeVore. 4 I'd like to mention that you've gone 5 substantially over your time. And I thought that as 6 moderator, I was prevented from holding you to your 7 time. It was an excellent presentation. 8 MR. DeVORE: Thanks, Cass. 9 MR. SUNSTEIN: Paul. 10 PAUL TAYLOR, EXECUTIVE DIRECTOR 11 THE FREE TV FOR STRAIGHT TALK COALITION 12 MR. TAYLOR: Thank you, Cass. 13 I will try to go substantially under my 14 time because I hope the value here is going to be a 15 discussion. And I also did have one crack at this a 16 month or two ago. 17 Let me just start my comments, very 18 briefly, by bringing -- I assume everybody is up to 19 date. But a lot has happened on this issue in the 20 last month or two. We had the President talking 21 about the public trustee standard in the State of the 22 Union and urging the FCC to move forward on a 23 rulemaking on the end of January. 24 The very next day, as you all know, the 25 Chairman of the FCC, apparently backed by two other 99 1 votes, said he would like to move forward. And this 2 has triggered a real tug-of-war, a jurisdictional 3 tug-of-war, where Congress has said, in effect, "Over 4 our dead bodies." And there are riders on various 5 appropriations bills to try to block the FCC from 6 moving forward. 7 So a classic, sort of intergovernmental 8 tug-of-war is going on. In the meantime, we have had 9 some sort of denouement on this year's version of 10 campaign finance reform. Came to the floor of the 11 Senate last week no longer including free air time. 12 That had been dropped off last fall. But the bill 13 itself didn't make it through. 14 And it looks as though -- although it got a 15 majority of votes, it was eight votes short of the 16 filibuster-proof majority it needed. So it looks 17 like that issue, at least in this Congress, is dead. 18 And when Cam says, "Now there's some effort 19 to treat free air time as a component of this, as a 20 last vestige," I would turn that figure of speech 21 around and suggest that what it can be, in the real 22 world of politics, is not a last vestige, but an 23 important first step. 24 Those of us who care about this issue 25 believe that free air time works best in the context 100 1 of a broader campaign finance reform fix of some 2 kind. We all understand how difficult that is. We 3 have ample and fresh evidence of that today. 4 It seems to me there still is an argument 5 for moving forward. It's a good idea on its own. It 6 doesn't solve every problem, but it works on its own. 7 And it is a better idea tactically in this 8 circumstance, because this is a Congress -- as most 9 Congresses -- that doesn't want to take on campaign 10 finance reform, that is well served by the current 11 system no matter how embarrassing it becomes, how 12 much it becomes the subject of a year's worth of 13 hearings. It is a system that got all 535 men and 14 women in Congress, it got them there, and helps keep 15 them there. And they understand that. 16 And that's why, again at the level of 17 tactics, it does become important to search for 18 solutions that can kind of change that dynamic a 19 little bit. And, I think, in some ways, that's part 20 of the spirit in which this body was appointed. 21 What I would like to do in just a couple of 22 minutes is to separate out two models. The phrase 23 "free air time" is put out there. And it seems to me 24 there are really two different models that we are 25 discussing that ought to be teased apart. 101 1 One of them is free air time, that under 2 some government mandate, broadcasters would be 3 required to give to candidates or to parties in some 4 system that would achieve many of the objectives 5 Tracy was talking about in terms of making races more 6 competitive, reducing the role of money, giving 7 people more access to the system, et cetera, all very 8 worthy goals. 9 The broadcast industry, under the public 10 trustee standard, must turn this over. And the 11 candidates have editorial control. Perhaps you would 12 tinker with how much editorial control. Perhaps you 13 would put a format restriction on whether the 14 candidates must be on screen. But basically it would 15 be understood to be their time. 16 I think that's extremely valuable. And 17 that's the sort of thing that would, obviously, have 18 to be mandated. 19 There is another model for this which is 20 that the broadcast industry itself, perhaps through 21 self-regulation, might consider ways to improve 22 coverage of political campaigns. One of the things 23 so distressing to those of us who care a lot about 24 elections is when the election season rolls around, 25 the dominant dynamic of the conversation is the 102 1 crossfire of advertising. 2 That's certainly the dominant dynamic for 3 the greatest number of citizens. That's how people 4 experience politics. They see the 30-second ads, 5 often with just one eye and one ear as they're doing 6 something else. But it overwhelms almost everything 7 else in our political culture. And I think a lot of 8 us feel that a lot of this deep cynicism that people 9 feel, the deep disengagement people feel comes 10 because this is such a powerful form of 11 communication. 12 It seems to me that without Uncle Sam 13 moving in and wagging its finger at you and saying, 14 "You must do better," -- because, I think, that does 15 get on very precious First Amendment grounds -- would 16 there not be value in the industry planting its own 17 flag and saying, "What are ways we can do to build 18 alternate models for this conversation to happen on 19 television?" Debates that we would sponsor. 20 Interview programs that we would sponsor. News 21 coverage that would be directed more towards the 22 coverage of politics and government. Again, I don't 23 mean to be waving the public trustee standard at you. 24 There is a -- and I don't want to hit you 25 over the head, because I know that you folks get hit 103 1 over the head a lot. I lived in a newsroom for 25 2 years where, I think, we were less exposed in 3 broadcast. But I understand when people come in and 4 tell you that you're not doing your job and you've 5 got to serve this interest or that. I know that it 6 tends to get people's backs up. But let me make one 7 citation that I think is important. 8 There is a study that was just released by 9 a consortium of universities, led by the University 10 of Miami. It was done by eight other universities, I 11 believe, including USC here at Annenberg. And it was 12 a content analysis of local news programs in eight 13 U.S. television markets. This was done over four 14 different times over the last year. 15 And the fundamental finding is: "According 16 to the content analysis" -- which, by the way, was 17 carried out by former news executives and news 18 producers -- "coverage of government affairs, once a 19 mainstay of local television news, now occupies just 20 15 percent of the news during an average program." 21 That's 15 percent of the news they've 22 already separated out the time that goes to weather 23 and sports and other things. That's a pretty small 24 number. 25 And if you go to the big markets in that 104 1 survey, L.A., for example, that's down to five 2 percent. Five percent of the news whole in the local 3 news programming is given over to government and 4 politics. That is one of the reasons why this 5 discourse dominated by these attack ads is so 6 powerful. 7 It seems to me the response of the 8 industry, when I raise this with programmers, is, 9 "You know, we give the public what it wants. We 10 submit to a vote every day of the American public. 11 What could be more democratic than that? We have to 12 be ratings driven. We have to be in business to make 13 money." 14 I respect all of that. And that's 15 absolutely right. 16 What it seems to me has been missing here 17 from this equation is the kind of creativity and 18 inventiveness that television is so good at in its 19 entertainment programming, so good at it in other 20 forms of public affairs programming. Look what you 21 have done with the weather. The weather seems like 22 sort of a mundane subject. But it's not a mundane 23 subject this year in California, in particular, but 24 you have brought a lot of creativity to presenting 25 weather which, on its face, doesn't seem like the 105 1 world's most fascinating topic. 2 A lot of creativity to covering traffic. 3 It seems to me if one signal from this 4 group is, "Let's take our brainpower -- we know our 5 medium better than anybody else. Let's invent forums 6 that get candidates on the air, that get their ideas 7 exposed to the broadest number of citizens, test it 8 against one another, test it against journalistic 9 scrutiny," I think we're a whole lot better off. 10 And while, I think, in the real world, it's 11 going to be difficult for the broadcasters on this 12 panel to give any signal that they can live with a 13 mandated system of free time -- I understand your 14 objections. I wish it was otherwise. We have an 15 honest difference of opinion here -- but if you do 16 send some signals through the industry, because I 17 think this is a well-respected and would be a widely- 18 followed group, that, "We want to move in this 19 direction. We want to do it ourselves. Here is some 20 goals. Here are some standards. Here is some self- 21 regulation," I think it would be a very powerful 22 step. 23 Thank you, very much. 24 MR. SUNSTEIN: Thank you, Paul. That was, 25 indeed, under your 15 minutes. And also very 106 1 constructive. 2 And, thank you, all of the panelists, for 3 really wonderful presentations. 4 The floor is open. 5 Gigi. 6 MS. SOHN: Thank you very much. 7 Cam and I have battled on several 8 occasions. And I really respect him a great deal. 9 And, Tracy and Paul, I think you did a terrific job. 10 I just want to make two, I guess, 11 substantive points and one procedural point. 12 Cam, I'm really glad you mentioned that Red 13 Lion hasn't been overturned because, fortunately or 14 unfortunately, depending on your point of view, it is 15 still the law of the land. But the point I wanted to 16 make about Red Lion is it -- and this is where you're 17 wrong, Cam -- it wasn't about the fairness doctrine. 18 It was about the constitutionality of the personal 19 attack and political editorial rules which, without 20 getting into the minutiae -- and if anybody wants to 21 ask me about it -- was about mandating free time. 22 Because both the political editorial rules and the 23 personal attack rules require broadcasters and 24 certain events to give free time to either candidates 25 or other folks. So I just want to make that point. 107 1 That's point number one. 2 Point number two is I wanted to address 3 your two First Amendment touchstones that you talked 4 about, about preventing compelling speech and also 5 government requiring content. They really are one of 6 a piece. And, I guess, my point with respect to 7 those is that FCC, in numerous -- numerous -- areas, 8 both compels speech and requires content. I'll give 9 you some examples. Children's programming, violence, 10 indecency, sponsorship by identification, news 11 distortion. 12 So this is not unheard of. And I don't 13 agree with the FCC doing some of that stuff. But the 14 fact of the matter is is that just by reciting the 15 First Amendment doesn't mean that the FCC hasn't used 16 its powers and constitutionally used its powers to 17 regulate content and compel access. 18 And the perfect example, frankly, is the 19 Reasonable Access, Section 31287 provision that was 20 upheld in CBS versus FCC and Equal Opportunities. 21 That's all compelled speech. And it's all -- so far 22 nobody has challenged it as unconstitutional -- or 23 nobody's won, let's put it that way. 24 And that leads me to my, sort of, overall 25 procedural point, is that we're not the Supreme Court 108 1 here. There are serious constitutional questions. 2 Don't get me wrong on -- I respect -- I really 3 respect, you know, your opinions and the other 4 scholars that you've named. And I'm not saying we 5 should ignore the constitutional implications. But I 6 just don't think it is for this body to decide 7 whether certain things, especially if it's a very 8 close call, whether they're constitutional or not. 9 It is for us to decide what the public 10 interest obligations are with the constitutional 11 issues in the background. But I don't think that we 12 should sit here, as a Supreme Court -- especially 13 when I just reeled off another of things which either 14 the Supreme Court has upheld or has chosen not to 15 address or -- well, I'll just leave it at that. 16 So that's my procedural point, is that I 17 think we have to recognize what kind of body we are 18 in comparison to the FCC, which can also make these 19 constitutional decisions, and the Supreme Court. 20 MR. SUNSTEIN: Yes. 21 MR. DeVORE: Gigi. Yes, we have squared 22 off, always in a friendly and respectful way. And 23 I've enjoyed it and I will continue to enjoy it. 24 As far as Red Lion, yes. I was using kind 25 of a shorthand in saying "fairness" -- it's the 109 1 personal attack. But, whatever, it was something 2 that came out of what was on -- what the broadcasters 3 had chosen to put on air. And that was the basis for 4 the rule. This comes, I think, from a different 5 universe. 6 As surely there are things that compel 7 speech. And, certainly, the Supreme Court, for 8 example, if you're dealing with kids and indecency, 9 you've got both Pacifica and you've got Denver Area 10 of two years ago, two Supreme Court decisions. In 11 that specific area, where the Court has said, "Um, 12 yes. That is something that we will uphold: 13 Indecency being put in the hands, in an uncontrolled 14 way, of children." And I think that's one where the 15 Supreme Court is not going to waiver from that. 16 I don't think we're talking about that 17 here. And if you'll pardon me -- I don't know. 18 Maybe I'm the only one old enough to know who Tom 19 Lehrer is, but I hope some of you remember Tom Lehrer 20 and his wonderful songs. 21 But your comment about, "This Commission or 22 this Committee shouldn't worry too much about the 23 First Amendment side; let's get on with it," reminds 24 me, I regret to say, of his Werner Von Braun song, 25 right? No. "We Just shoot them and where they come 110 1 down is not our department," said Werner Von Braun. 2 Now I hope that this Committee, in 3 considering this, will not turn away from a 4 consideration of the constitutional issues. Because, 5 I think, to make it somebody else's problem is going 6 to -- is "ain't fair" and is going to lead to a 7 process that I think is going to be very frustrating 8 and difficult for everyone. 9 MS. SOHN: Yes. I just want to clarify. 10 It's not what I said. In fact, I said we should take 11 into account the constitutional issues. 12 What I said is, especially in places where 13 the Supreme Court has already spoken, okay, I don't 14 think that we have the right or the duty to overturn 15 what they've said. 16 MR. SUNSTEIN: Rob Glaser. 17 MR. GLASER: Well, thanks a lot. If I 18 wasn't already cautious about venturing into any 19 constitutional areas, Gigi has reminded me why I need 20 to be very, very cautious. And I thank you for that. 21 Actually, I do want to follow up on what 22 was sort of a lot of part of your point and to Mr. 23 DeVore and the other panelists. 24 The argument about whether or not certain 25 categories of reforms are constitutional or not is 111 1 very important. But if it were to turn out that 2 there was an implementation issue only associated 3 with this, couldn't we get to that? 4 In other words, wouldn't it be possible for 5 the government to say, "Hey, here is some spectrum. 6 We are willing to give it to you, if in exchange for 7 your receipt of that spectrum you voluntarily agree 8 to a certain set of rules with regard to access to 9 some of the programming time, let's say for campaign 10 finance reform." 11 If that were the case, i.e., it were a 12 contract between the recipients of the spectrum and 13 the government, wouldn't that completely obviate the 14 free speech issues? 15 MR. DeVORE: In other words, can you waive 16 your First Amendment rights? I guess the answer to 17 that has got to be yes. 18 But, I think, again, without going off into 19 the area of constitutional conditions and so forth 20 which is one of those other areas that First 21 Amendment lawyers like to talk about, take a look at 22 Rod Smolla's piece, which goes through that, I think, 23 in some detail and points out that the usual 24 rationale for saying, "Well, you're getting a lot so 25 we can ask something of you," really does not apply 112 1 in the area of governmentally mandated content of 2 speech. 3 If, instead, you're talking about a regime 4 where, without pointing a gun at the broadcasters' 5 heads and saying, "We're going to take something away 6 unless you do this," there can be something like what 7 Paul was talking about in a free-ranging discussion 8 of what can be worked out and what might be worked 9 out voluntarily by the industry, I think a lot of 10 that has happened. 11 And I mean, Robert Decherd, I don't mean to 12 point at you, but I think Valeo did a lot of that in 13 response to what Paul and Walter were talking about. 14 There's a lot of room for that volunteerism. 15 But, I think, if you try to turn it into a 16 quid pro quo without even getting into the discussion 17 about what the value of the digital frequencies are 18 -- reasonable minds are differing all over the map 19 about that -- I think the notion of unconstitutional 20 conditions, you really run afoul of that, to 21 shorthand this -- if you'll forgive me -- when you 22 get into the quid pro quo area. 23 MR. GLASER: Well, but, I guess, you -- 24 MR. DeVORE: When you're dealing with 25 volunteerism, you can do that. 113 1 MR. GLASER: But if it's a voluntary thing 2 that actually has the legislative teeth associated 3 with it, i.e., you get this set of spectrum or you 4 get this set of spectrum as a loan for a set of 5 years, plus a much broader set of rights to broadcast 6 in terms of multichannel and in terms of data feeds, 7 in terms of all kinds of other things, that just 8 seems like it's the equivalent of spectrum auction 9 where the currency that you're giving back is in 10 dollars, but the currency you're giving back is 11 access to some elements of that spectrum under 12 certain sets of circumstances. 13 So, I guess, if you cast this as an 14 economic issue rather than a constitutional law 15 issue, isn't that -- well, perhaps, not necessarily 16 something that the NAB would want, given that there 17 might be a view that some of those issues were 18 already determined economically, it just seems like 19 it's pretty clean. 20 And what I hear you saying is, "It is 21 clean. You might have a personal public policy view 22 to characterize the volunteerism in a more ad hoc way 23 than a legislative way." But that does take away 24 from the constitutional issues, if I'm hearing you 25 correctly; does it not? 114 1 MR. DeVORE: I guess I would say this: In 2 constitutional issues, you can't view it as horse 3 trading. You've got to look at this as something 4 where you really are asking, in whatever ways you can 5 do, a voluntary system that the broadcasters would 6 agree to. 7 But if there is a gun or if there is a 8 statement that, "Unless you do this, we will do 9 that," then the unconstitutional condition doctrine, 10 which is very -- I won't go into cases, but I'll be 11 happy to do that with Gigi or Norm or Cass or anyone 12 else, it just won't work. 13 And it's a hard thing to grasp, but it 14 isn't just, "Let's just sit down and we'll give you 15 this if you'll do that." 16 Anyone can waive First Amendment rights. I 17 mean the tobacco industry has, at least in a part of 18 this, this thing that's going on, is talking about 19 waiving their constitutional rights to advertise. 20 Certainly, people can do that. But I haven't heard 21 the broadcasters say so far they're willing to do 22 that. 23 MR. GLASER: Okay. Thanks. 24 MR. SUNSTEIN: We have Jose and then Les 25 and then Norm. 115 1 Jose? 2 MR. RUIZ: Yes. I want to thank the 3 panelists, first of all, for being here. 4 This is basically addressed to maybe I 5 guess Paul and Tracy. 6 You gave us a lot of different scenarios, 7 Tracy especially. It is my understanding that the 8 concern right now is of campaign spending. And I 9 thought, Tracy, you were going to get to that as you 10 started giving us statistics on how that has excelled 11 so much over the years. 12 I didn't get an understanding from either 13 of you on how any of those formulas, without limited 14 campaign spending by the broadcaster would affect 15 this. 16 If they still have the ability to buy time 17 and we're going to give them additional time, what 18 are we accomplishing? 19 MR. WESTEN: The point I would make is 20 this: -- I think you're right, by the way -- If you 21 give candidates free time, on one level it simply 22 enables them to raise as much money as before and 23 spend it on other things. So free time will not 24 solve our campaign finance problems. 25 Campaign finance problems, on the other 116 1 hand, have created a need for free access because the 2 only way many candidates can now compete in the 3 marketplace is by raising extraordinary amounts of 4 money. 5 So by creating free access for candidates, 6 it at least let's all of them to get in on a minimum 7 basis. At least it lets challengers, third-party 8 candidates, other majority party candidates in 9 reapportioned districts to get in, reach the 10 attention of the public and say, "Here's what I 11 think." That creates a floor. 12 It will not solve the campaign finance 13 problems because the very wealthy candidates or the 14 candidates with access to funds will simply use the 15 free time and then raise as much money and spend it 16 on other things. But at least it allows everyone to 17 get in the door. And it lets the press cover their 18 ideas. It gives them some minimal exposure. 19 So my point is this will not solve campaign 20 finance problems. Ultimately, we need, in my view, a 21 total campaign finance solution here. But it will, 22 nonetheless, make a significant contribution to the 23 debate. And that, I think, is the critical point. 24 This is not a new issue. Voter's Time was 25 a publication Newt Minow involved in almost 30 years 117 1 ago. I think it was published in 1969, before 2 Watergate, before a lot of these problems surfaced. 3 And it called for free time for presidential 4 candidates and expressed the fear that without that, 5 the vitality of our democratic form of government 6 would suffer. 7 So what I'm saying is that this form of 8 time is necessary for the governmental process. It 9 won't solve campaign finance problems, but the need 10 for it has been made more intense because of campaign 11 finance problems. 12 MR. TAYLOR: Can I just say very briefly, 13 political scientists who study elections will tell 14 you all money is not equal. First dollars are more 15 important than last dollars. 16 Having the seed resources to get a message 17 out is what tends to get you in the mix and allows 18 you to become competitive. And that's good for 19 democracy. So while, again, it doesn't solve every 20 problem, it does serve that purpose. 21 Secondly, if you go a couple of miles up 22 the coast here into a special election in 23 California's Twenty-Second District in Santa Barbara 24 -- the run-off election is next week -- a lot of TV 25 advertising is going on in that election. The 118 1 biggest spender is neither the democrat nor the 2 republican. The biggest spender is the National 3 Right to Life Committee, America Family First and 4 America's Term Limits Movement. 5 This is an important change in the culture 6 of campaigning, in the culture of campaigns where 7 lots of voices are using the electoral megaphone to 8 get their own messages out. Very, very difficult to 9 control this or stop this. Maybe you don't even want 10 to stop it. But you do want to create a regime where 11 the candidates don't get drowned out in their own 12 campaigns. That's what happening. And this is a 13 partial response to that. 14 MR. RUIZ: Can I say something? 15 MR. SUNSTEIN: Sure. 16 MR. RUIZ: It seems to me, though, that to 17 address the three points and the Constitution and 18 everything else, that limited spending is as 19 reasonable if not more, because then it isn't the 20 most wealthy that's going to win the race. It does 21 create access. It does protect the broadcaster. 22 But why can't we just limit the amount you 23 can spend, and then they have to find other means? 24 I mean one of the problems I have in one of 25 Tracy's analysis is that if you give the money to a 119 1 party, they may chose to give the money to one 2 candidate in a race, but the other party may not give 3 any money to his opposition. So they're out dry. 4 They're not getting any access from it. 5 But if they have limited spending, at least 6 they know what to raise for that and it forces them 7 to spend the money in other areas and, hopefully, 8 addressing the public issues. 9 MR. SUNSTEIN: A crisp answer, if you 10 would. We have a lot -- 11 MR. WESTEN: Very briefly. 12 I've written a number of books calling for 13 expenditure ceilings. So I agree that expenditure 14 ceilings are a long-term, important solution. But my 15 basic point to this group is you don't need to 16 address campaign finance reform. God forbid, that's 17 a big enough and difficult enough issue. You've got 18 a big enough issue on your plate as it is. 19 And my basic point is that there are 20 important reasons for considering free time apart 21 from campaign finance issues. 22 Yes. If you want to get into those, yes, 23 expenditure ceilings, others, will be part of the 24 package. 25 But I think we need to raise the floor to 120 1 make sure that all candidates have some minimal 2 ability to get their ideas in front of the public. 3 The growth of spending in campaigns has 4 made that more difficult. And, therefore, this, I 5 think, is an information solution. It's not a 6 campaign finance -- 7 MR. SUNSTEIN: Les. 8 CO-CHAIR MOONVES: Part of the same issue 9 -- and, Paul, it's something we addressed last time 10 you appeared before. 11 And, Cam, I'd love to have you comment as 12 well as you, Tracy. 13 You are a broadcaster. And last time I 14 asked you the same question, Paul: Shouldn't 15 campaign finance reform -- shouldn't free time for 16 candidates be tied to other things that are involved 17 with changing it? 18 To use your example, Dianne Feinstein did 19 drop out because she didn't want to face with Al 20 Checchi what she had to with Huffington. So, let's 21 say we give Checchi's opponents two minutes a day for 22 60 days. It's not going to stop Checchi from 23 spending his $30 million on top of that. 24 When you mention whether this is a great 25 first step versus the last vestige, which I think is 121 1 a good way of defining what our situation is, as a 2 broadcaster what do you say when you are asked to 3 give and you're the only one that's asked to give? 4 That's what broadcasters and I think that's 5 what the NAB is facing. And that's what we on the 6 panel, who are trying to do the right thing here, are 7 faced with. 8 MR. TAYLOR: Well, this flops into the 9 argument about whether there's an appropriate quid 10 pro quo arrangement to the award of the new digital 11 spectrum. And I think it goes to the some of the 12 questions Rob Glaser was asking. 13 I believe there is an appropriate quid pro 14 quo. I think the quid pro quo has been in law and in 15 policy for 64 years, since the FCC. It's a social 16 compact. The broadcasters get something. The public 17 gets something in return. I think it served the 18 country enormously well. And the spirit in which 19 this body was created was to say, "As we move into 20 this new technology let's update that compact and 21 those arrangements." And it seems to me it is the 22 right time to think about free air time as part of 23 that. 24 So why are the broadcasters being singled 25 out? Because the broadcasters, as recently as the 122 1 Telecommunications Act of 1996, the Turner decision 2 must carry last year, the broadcasters continue in 3 our regime of regulation of policy in our society to 4 be granted special privileges. And from that comes 5 special responsibilities. 6 That would be the basic answer. And, 7 again, to go back to my sense, tactically one of the 8 reasons Congress -- Congress has a lot of reasons not 9 to want to do campaign finance reform. One of them 10 is they don't want to go after free air time. They 11 don't like it because they know their challengers are 12 going to get it. And they don't like it because 13 having a good relationship with the news director 14 back home is one of the most important things in the 15 firmament of what a member of Congress cares about. 16 So to the extent that the signal from the 17 industry is, "Don't tread on us," that signal is 18 heard loud and clear in Congress. 19 If you were to send a somewhat different 20 signal, which is, "Let's try to construct a regime, 21 and maybe it involves getting rid of lowest unit rate 22 which doesn't work very well for a policy reason and 23 get somewhere else," it's not going to -- you know, I 24 do believe that would be a first step and a prod to 25 Congress and a very helpful prod. 123 1 MR. SUNSTEIN: Norm. 2 MR. WESTEN: I would just add quickly that 3 I think other media ought to be included. And I 4 would apply these -- I didn't get into it. But I 5 would apply my same recommendations, for instance, to 6 cable television or microwave or satellite. And I 7 think that could constitutionally be done as well. 8 Cable is required to set aside whole 9 channels for public educational, governmental access. 10 I think some of that capacity could be used for 11 political access as well. For example, if we wanted 12 to recarpet up. 13 I think, in many races, candidates really 14 are better off using print, direct mail. It's more 15 efficient. It's more direct. And, I think, public 16 financing's subsidies of that are things that ought 17 to be included in the entire packet. So I don't 18 think broadcasters should be singled out at all. 19 It's just that it is the medium of choice 20 for candidates. If they have the money they will 21 always want to buy broadcasting because it is clearly 22 the most effective medium. 23 You've done too good a job, basically, is 24 what it comes down to. You've done an extraordinary 25 job. You've created the audiences. And that's where 124 1 they are. And every candidate wants to reach them. 2 MR. SUNSTEIN: Norm. 3 MR. DeVORE: Just quickly. 4 MR. SUNSTEIN: Oh, wait. Okay. Quickly. 5 And then we'll go to Norm. Poor Norm. 6 MR. DeVORE: Well, just in response to Les. 7 Certainly, I think, the feeling is that it 8 really is loaded on the broadcasters. And I think 9 that if you look at CBS v. FCC, the balance that the 10 Court approved there under the reasonable access 11 notion was one that was a very careful balance. And 12 the Court was very clear about the fact that they did 13 not believe that this got into content. And that was 14 something that shouldn't be done. 15 And, again, I think most recent word on 16 this in Turner, Justice Kennedy said, "In particular, 17 the FCC's oversight responsibilities" -- this is 18 addressing the quid pro quo point, Paul -- "do not 19 grant it the power to ordain any particular type of 20 programming that must be offered by broadcast 21 stations." 22 I mean, it's a fairly direct statement, I 23 think, by not a Court 30 years ago, but by a Court 24 now. 25 MR. SUNSTEIN: We have Norm and then Frank 125 1 and then James Goodmon. 2 Norm. 3 CO-CHAIR ORNSTEIN: Thanks, Cass. 4 I want to thank you all. And, Paul, I'm 5 glad you mentioned exploring voluntary ways. We're 6 going to, obviously, look at a whole range of things. 7 But, certainly, ways of trying to work out 8 partnerships with broadcasters, including something 9 that we discussed briefly, returning to a code of 10 conduct that might include some explicit 11 recommendations, is one that I think we'll explore 12 very carefully. Things that could come from 13 broadcasters as well. 14 Cam, I want to ask you a few questions just 15 to explore more deeply what you've been talking 16 about. I'm not even a country lawyer. So it's as 17 the risk of taking on a distinguished constitutional 18 scholar. 19 MR. DeVORE: You sound like one of those 20 southerners who starts -- 21 CO-CHAIR ORNSTEIN: Yes. 22 MR. DeVORE: -- with that kind of corn-pone 23 approach -- 24 CO-CHAIR ORNSTEIN: Not even Sam Irvin 25 here. 126 1 MR. DeVORE: -- before he zaps the 2 opposition. 3 CO-CHAIR ORNSTEIN: So I just have a couple 4 of areas I want to explore for a minute. 5 Do you believe that lowest unit rate is 6 unconstitutional? 7 MR. DeVORE: It's not been tested. It's 8 been there a long time. 9 CO-CHAIR ORNSTEIN: Has it ever been 10 challenged by broadcasters as unconstitutional? 11 MR. DeVORE: It's not been challenged. 12 Yes. They have not -- not ever law that's on the 13 books, Norm, as you know, that is subject to 14 constitutional challenge has been challenged. 15 But I just don't think that lowest unit 16 rate provides any kind of a precedent for what would 17 want to consider here. 18 CO-CHAIR ORNSTEIN: No, but do you believe 19 it's unconstitutional? 20 MR. DeVORE: I think I'd be skeptical about 21 it. 22 CO-CHAIR ORNSTEIN: Okay. 23 MR. DeVORE: If we really knuckled down 24 under the law and the constitutional law as it is 25 developed since that became a part of the broadcast 127 1 code. 2 CO-CHAIR ORNSTEIN: Would then half of 3 lowest unit rate be unconstitutional? 4 MR. DeVORE: A little bit pregnant, Norm. 5 We'd have to talk about this and figure out just what 6 it's worth. But I mean these hypotheticals, I think, 7 don't have a lot to do with what's before you -- 8 CO-CHAIR ORNSTEIN: Okay. But let me ask 9 you this: Ed Fritz, Eddie Fritz, the head of the 10 NAB, has said over and over and over again that 11 lowest unit rate is an enormous burden on 12 broadcasters. It costs them 30 percent of what they 13 would otherwise get. 14 If it's unconstitutional, why hasn't it 15 been challenged? 16 MR. DeVORE: You're asking me a question 17 that I simply can't answer. I mean to some extent 18 the broadcasters have lived with this system and 19 started a very, very regulatory mode in the late '20s 20 and early '30s when there were very few stations and 21 very few frequencies. 22 If you chart this over time, Norm, I think 23 a fair observer would have to say that there has 24 been, in effect, deregulation over time as the number 25 of frequencies, the amount of spectrum, all of that 128 1 is included. 2 So we're talking about things that happened 3 on a timeline over time. 4 I don't know why it hasn't been challenged, 5 but it hasn't been. 6 CO-CHAIR ORNSTEIN: Okay. Well, I can see 7 I'm not going to get you on that slippery slope. So 8 I'll move along. 9 You have a little section in your paper on 10 property rights. And I notice you say here that, 11 "While broadcasters may have no legal claim against 12 the government for the spectrum as such, broadcasters 13 certainly have a cognizable interest in the 14 businesses they have developed using that spectrum, 15 and an interest that cannot be eradicated by 16 government fiat." 17 There's only one senator, so far as I know, 18 who has taken that perspective, and that's Arlen 19 Specter, who said that there is a property right that 20 has come not because the grant of the spectrum, but 21 because over the years they've developed that 22 property right. 23 But when I asked Arlen Specter whether that 24 same right would apply to the digital spectrum -- 25 which has not yet taken hold -- he said no. And 129 1 that, in fact, there were not property rights 2 attached to the digital spectrum. 3 Is Arlen Specter wrong? 4 MR. DeVORE: I have considerable respect 5 for Arlen Specter, although I don't turn to him for 6 my Constitutional opinions. 7 I think as far as this part of my paper is 8 concerned, it's in much less detail. We're not First 9 Amendment -- having a First Amendment discussion, 10 we're having a Fifth Amendment taking discussion 11 about whether there -- 12 CO-CHAIR ORNSTEIN: Yes. 13 MR. DeVORE: -- will be compensation if you 14 did this. 15 I think the best thing I can do is just to 16 commit you to Lillian BeVier's paper. And she deals 17 with this in remarkable detail, citing cases and so 18 forth. And I come away from reading her paper even 19 more convinced than I have been that there would also 20 be a second and valid Fifth Amendment argument. 21 CO-CHAIR ORNSTEIN: I came away from her 22 paper with exactly the opposite. But, let me -- 23 MR. DeVORE: You're using the eye-of-the- 24 beholder. 25 CO-CHAIR ORNSTEIN: Yes. 130 1 Let me move on and just ask you a couple of 2 other quick questions. 3 Do you think there are any public interest 4 obligations that broadcasters have with the grant of 5 the spectrum? 6 MR. DeVORE: That's such a vague question, 7 Norm, that I wouldn't even know how to respond to it. 8 CO-CHAIR ORNSTEIN: Should the government 9 has the ability to mandate obligations in the public 10 interest with the grant of the spectrum of any 11 variety, any sort; or are they all unconstitutional? 12 MR. DeVORE: That's sort, "Have you stopped 13 beating your wife," Norm. And I just don't see how I 14 can respond. 15 I mean, what do you suggest? 16 CO-CHAIR ORNSTEIN: That's a simple 17 question. 18 MR. DeVORE: What are you proposing as a 19 regulation? 20 CO-CHAIR ORNSTEIN: Well, no. If this is 21 unconstitutional, is children's television time, as a 22 mandate, unconstitutional? 23 MR. DeVORE: That's a very complicated 24 issue, and it may not be, I don't know. 25 CO-CHAIR ORNSTEIN: So -- 131 1 MR. DeVORE: I already told you there were 2 special children authorities in the First Amendment 3 jurisprudence. 4 CO-CHAIR ORNSTEIN: But you wouldn't 5 suggest that public interest obligations, imposed on 6 broadcasters in return for the grant of the spectrum, 7 are by definition unconstitutional? 8 MR. DeVORE: It depends on what they are. 9 If they deal with content and they deal with 10 editorial freedom, then they are. 11 CO-CHAIR ORNSTEIN: One last question. 12 If Congress had auctioned off the spectrum, 13 and it h gotten whatever sum of money had accrued 14 from that and had used some of that money to then 15 bring about a program with now funds that had come to 16 the government to purchase time or to give time to 17 parties or to candidates, is that unconstitutional? 18 MR. DeVORE: I think Buckley v. Valeo 19 teaches that it would not be unconstitutional. 20 CO-CHAIR ORNSTEIN: And if, as a part of a 21 process of determining public interest obligations, 22 we adopted a model similar to the one that Billy 23 Tauzin has suggested or that Henry Geller suggested, 24 that broadcasters be able in lieu of committing some 25 public interest obligations to pay some fee. 132 1 And that fee were used not simply for 2 Public Broadcasting, but fee going to the government 3 used for air time, would that be unconstitutional? 4 MR. DeVORE: Again, you're talking about 5 something we'd have to analyze in some detail, Norm. 6 I mean, it seems to me that if you're going to work 7 out something where, in effect, you're taxing the 8 broadcasters on a different basis to fund all of 9 this, you're going to have exactly the same 10 Constitutional problem that you have now. 11 CO-CHAIR ORNSTEIN: If broadcasters are 12 given options of either doing some of these things or 13 paying the fee in lieu of them, is that 14 unconstitutional? 15 MR. DeVORE: No, I've never seen that 16 proposal written down. Now if you want to have an 17 exchange outside this forum, I'd be glad to try to 18 respond to specific proposals in whatever detail 19 you'd like. 20 CO-CHAIR ORNSTEIN: Okay. 21 MR. SUNSTEIN: Frank. 22 MR. CRUZ: He had some of my questions 23 there, Norm. But let me try to re-ask one of them 24 because I think it is of interest. 25 Given the fact that the search for this 133 1 Holy Grail of the public interest obligations over 2 the years have been upheld either by the FCC or 3 imposed or approved by Courts and the Congress of the 4 United States, what if we as this particular body, 5 and I've got two different areas to ask, but what if 6 this particular body here imposed regulations on the 7 broadcast industry now, with that additional 8 spectrum, are we being unfair or unconstitutional or 9 wrong in letting cable and satellite and others 10 slide? 11 Don't answer it yet. Three of you can ask. 12 The other one has to do with the idea that 13 could it be the time right now appropriate, at this 14 particular juncture, given this technological 15 revolution that we're going through, that we really 16 should, perhaps, deregulate the industry and perhaps 17 take some of that onus of some of those public 18 interest obligations away from the commercial 19 broadcaster, and in lieu of that -- as I predicated 20 the statement by saying that FCC and the Courts and 21 others have upheld obligations -- freeing them of 22 those obligations and in exchange for that, perhaps 23 using that funding to, perhaps fund all political air 24 time on public broadcasting in America. 25 MR. DeVORE: Those seem to me to be 134 1 perfectly appropriate subjects for this Committee and 2 Commission to consider. 3 Certainly a model of National Public Radio 4 or a governmentally funded broadcasting is something 5 which doesn't exist to a large extent in this 6 country, certainly not to the extent that would solve 7 the problems that Paul and Tracy have defined. 8 It's possible that we could have juggled 9 ourselves a different way and that you may recommend 10 that some of that be done and that we do it a 11 different way in the future; but the present model 12 doesn't work that way. As far as whether it "ain't 13 fair" to just do it to broadcasters and maybe it 14 would be better if it also included cable and some 15 perhaps entities that are growing increasingly strong 16 on the Internet, there's a whole bunch of folks out 17 there who might bear some part of this burden. 18 It seems to me that just generally, that if 19 free air time is what we're talking about as opposed 20 to increasing the regulatory scope of what the FCC or 21 some new agency does, you have the same 22 constitutional problem in mandating content even if 23 you have a broader set of regulated entities. 24 MR. SUNSTEIN: James Goodmon -- yes. Okay. 25 A brief comment. 135 1 MR. WESTEN: Very briefly. Yes. I think 2 it would be unfair to apply these burdens only to 3 digital broadcasters. I think they ought to be 4 applied across the spectrum including cable, 5 particular the pay cable networks. 6 By "pay," I mean advertising supported 7 networks such as ESPN and so forth. 8 Secondly, I think the answer -- in 9 listening to your first panel, the best answer I can 10 think of for dealing with the problems of independent 11 producers is the Geller solution in which some money 12 is given to public broadcasting to fund, among other 13 things, independent productions. 14 What makes this issue difficult and 15 different is that you don't want to create a -- you 16 don't want to "ghetto-ize" political speech. And 17 excuse me for using the word "ghetto" in the context 18 of public broadcasting, which is extraordinarily 19 important. But it has a special audience. 20 Now when -- it is important that political 21 ideas reach everyone. And for that reason I've 22 proposed this "access system," if you like, that will 23 allow political candidates to reach all broadcast 24 audiences, not just public broadcast audiences. 25 I think our democratic system is so 136 1 important that it be broad based, that we have to 2 consider that option. 3 With respect to innovative programming, I 4 think the public broadcasting options is the right 5 move. 6 MR. SUNSTEIN: James Goodmon, and then Cass 7 Sunstein has a brief question or two. 8 MR. GOODMON: Let me just mention two or 9 three notions to get your response to this. 10 I think we're all on the same page: 11 Informed electorate, more vibrant democracy. The 12 notion that I have as a broadcaster, though, is that 13 I am dealing with very sophisticated and capable 14 marketeers. 15 I think one of the first groups would say 16 that they don't particularly like your proposal is 17 the candidates. They don't want two minutes a week. 18 They want 30 seconds on Thursday night between the 19 local news and the national news on Thursdays. 20 I mean they have a very targeted marketing 21 strategy for what they're doing. And while I agree 22 with you that from the informed electorate, the 23 program time for candidates and more information, is 24 a really good idea. I don't think it'll change by 25 one dollar the amount of money they spend on 137 1 television. 2 I mean because that's how they do it. And 3 it's a targeted buy and it's marketing. And it's not 4 just get time, it's get time on certain stations at 5 certain times on certain days. So that they're going 6 to lower their television spending because of this is 7 not the reason I think it should be done, as the most 8 -- another couple of things I'm going bring up. 9 I don't think the lowest unit rate works to 10 the benefit of the candidates. And I do think that 11 if the candidates do have any preference, whether it 12 be free time or equal -- all of these preferences 13 that federal candidates have, my notion is they 14 shouldn't have any of those unless the candidates 15 appear. 16 To me, the whole notion here is to give the 17 candidate an opportunity to appear, not to give the 18 advertising agency another reason, another shot at 19 something. So whatever we come up with as a 20 preference for candidates, my notion is it should be 21 the candidates should have to appear. 22 The most serious notion I've seen -- and, 23 by the way, the President, in his last radio -- the 24 last time the President talked about this, he said 25 free time for candidates in return for spending 138 1 limits. Those were his word- -- I mean so there is 2 the notion that all of this fits into some kind of 3 campaign reform package. 4 The most serious thing that I've noticed in 5 observing this is the third-party expenditures. And 6 I don't think we can talk about this without talking 7 about that, in terms of what is the overall -- what 8 are we doing? I mean the candidates are almost 9 forced into these spending, rising spendings when 10 these third-parties, who are under no control, start 11 doing all their spending. And to me that's more 12 important than what the candidates are spending, 13 because I think it's a cause and effect. 14 And one other thing that I'm just -- I'm 15 not trying to be smart, but from the broadcast -- you 16 know, nobody has to buy television. Sometimes when 17 this s presented, it's like broadcasters make 18 candidates. If you want to be elected you have to 19 buy television. 20 I mean nobody has to raise $10 million in a 21 senate campaign. Nobody has to buy television. I 22 mean we're not causing this. That doesn't make any 23 sense -- but you don't have to buy television. You 24 can spend it in the newspaper. You can spend it on 25 radio, you can do anything. This is not a 139 1 television-orchestrated notion. 2 But I'm with you on the informed electorate 3 and program time and stuff like that. 4 MR. WESTEN: There's a lot I agree with 5 you. And a lot of what you said that I agree on. 6 I think two -- I've suggested two minutes 7 because I think it would allow them to get more into 8 the issues. And I want to encourage them to do that. 9 I don't think they really want to. 10 MR. GOODMON: No. 11 MR. WESTEN: If the best we can get is 30 12 seconds, I would take it in a minute. But I -- 13 MR. GOODMON: Well, let me just add that I 14 think the majority of the time that we offer time to 15 candidates to appear to discuss issues, they do not 16 want to do it. That's not part of the plan. It's 17 not part of their plan. 18 MR. WESTEN: Yes. But I think creating a 19 longer format would, in many instances, create 20 incentives to address more issues than you can 21 address in 30 seconds. 22 MR. GOODMON: Right. 23 MR. WESTEN: But of this the only option 24 were 30 seconds or nothing, I think that's clearly 25 better than what we now have. 140 1 I think you're right. This would not 2 change the amount of money spent on television. 3 This, by itself, is not a campaign finance solution. 4 You'd need expenditure ceilings. But, nonetheless, 5 it will considerably add to the information mix. And 6 I think that's its main benefit. 7 Lowest unit rate, I agree with you a 8 hundred percent. I think candidates ought to 9 participate. And I think it's an innovative idea the 10 whole Commission should to consider. 11 The third-party expenditures, yes, a major 12 and growing problem. But that's why I think we've 13 got to at least give the candidates some say in the 14 outcome of their own election. 15 And, finally, no one has to buy television, 16 you're absolutely right. But in many instances, if 17 you don't do it, you're just not competitive. And 18 that also is the reality. And it is the medium of 19 choice simply because it is the most effective. Any 20 candidate, if they can get television, will pick it 21 over virtually any other medium. And that's the 22 reality we have to deal with. 23 So I think you've had several innovative 24 suggestions. And I think the whole group ought to 25 consider them. And I think there are many ways we 141 1 can get from here to there, and they ought to be 2 explored. 3 MR. SUNSTEIN: I have just two very small 4 questions. 5 The first is for Cam DeVore. I just had a 6 chance to look over your brief very quickly. But on 7 the takings issue, what did you say about the 8 Kaiser-Aetna case, it's a little technical, but it's 9 the closest case? 10 MR. DeVORE: Which case? 11 MR. SUNSTEIN: Kaiser-Aetna against the 12 United States. 13 MR. DeVORE: I don't really discuss it in 14 the thing. And, again, you'll find I think a longer 15 discussion of it in Lillian's piece. And I'm not 16 that familiar with the case. 17 MR. SUNSTEIN: Okay. The more general 18 question is -- there's a factual issue here, which 19 is: If we had free air time for candidates, how many 20 people would watch? 21 It's a factual question crucial to, Tracy, 22 your point. 23 Do any of you have anything that ranges 24 toward the "hard," that is, in terms of projection of 25 numbers, worst-case/best-case, of the number of 142 1 people who would watch? 2 MR. TAYLOR: Well, I think it depends 3 entirely on the format. If you created a regime of 4 mandatory free air time and that you gave to 5 candidates in a way that the candidate would most 6 likely use it, they would simply take those resources 7 and do more of the 30-second spots that we are all so 8 familiar with. 9 I saw one survey that from April through 10 October of 1996 there were something like 750,000 of 11 those 30-second political spots in markets around the 12 country. And there is a variety of political science 13 analysis as to how much they move votes. But that's 14 a pretty substantial volume. That's what you would 15 get -- that's what you would get more of. 16 MR. SUNSTEIN: The question isn't really 17 what we'd get more of. It's how many people would 18 watch. Because the skeptics would say, "You're just 19 going to have people turning off the TV or watching 20 other things, so you won't accomplish the 21 informational goals." 22 MR. TAYLOR: But the whole purpose of 23 packaging in a 30-second spot is to reach a semi- 24 captive audience, is to put it -- everybody 25 understands that. That's why we get them there. The 143 1 people who don't voluntarily want to watch these 2 things, but there they are, they land in their lap. 3 If you go to other kinds of formats, you 4 know, will diminish the audience to some degree, but 5 there is still something between a 30-second spot and 6 some other high-minded PBS type of format. It's very 7 hard to give you hard numbers on it, but common sense 8 would suggest let's try to invent something that's 9 both engaging and informative. I think most of us 10 are frustrated we're not there yet. 11 MR. SUNSTEIN: All right. Thank you all. 12 This was an excellent panel and we're very grateful. 13 (Comments off the record.) 14 MS. EDWARDS: Actually, what I think the 15 members are going to do is they're going to have 16 lunch provided by the Annenberg School in a 17 second-floor conference room. And we'll meet you 18 there. And then we're going to reconvene at about 19 1:30 for everyone else. 20 (Whereupon, the Committee broke for lunch from 21 12:17 p.m. to 1:34 p.m.)Go to the transcript of the afternoon session