Admiralty Ballroom
Hilton Crystal City
2399 Jefferson Davis Highway
Arlington, VA
Wednesday, September 9, 1998
MEMBERS PRESENT: LESLIE MOONVES, Co-Chair NORMAN J. ORNSTEIN, Co-Chair CHARLES BENTON FRANK M. BLYTHE PEGGY CHARREN HAROLD C. CRUMP FRANK H. CRUZ BARRY DILLER WILLIAM F. DUHAMEL, Ph.D. JAMES FLETCHER GOODMON PAUL A. LA CAMERA NEWTON N. MINOW JOSE LUIS RUIZ SHELBY SCHUCK SCOTT GIGI B. SOHN KAREN PELTZ STRAUSS JAMES YEE 2 ALSO PRESENT: KAREN M. EDWARDS, Designed Federal Official ANNE STAUFFER, Committee Liaison Officer P R O C E E D I N G S (8:53 a.m.) CO-CHAIR ORNSTEIN: Ladies and gentlemen, let's get started if we can. As you can see -- have we got our mike working? It doesn't sound like it. Can we get our technical support? There we go, okay. We have most, but not all, of our members here. We have a couple who are going to be here, but who are not here yet. But we have an ample majority, so we'll get started for what I expect is our penultimate meeting. The hope basically is that we can go through the framework that your two Co-Chairs have put together along with the suggestions and recommendations that are out there that have been put on the table by other members of the committee, have full discussion of them, see where we can reach an overall consensus, see where we have points of disagreement, move from this meeting then to drafting the report, including recommendations that we will trade back and forth, until we can either reach a consensus or find that we cannot, and then meet again on October 26th for discussion and presumably acceptance of the report that we have. We have reserved a day and a half for that meeting, October 26th and 27th. If all goes well, we will not use the day and a half, but what we'd like is to keep that as 4 an option and hope you can keep it on your schedules just in case it takes us more time to work these things through and redraft perhaps to reach that point. Then we'll go back to producing a report. Yes? MR. RUIZ: In Washington? CO-CHAIR ORNSTEIN: I assume it will be here in Washington, yes. Now, I do want to say we are here in beautiful downtown Crystal City, which for many years probably advertised itself as a place, because of its tunnels and the like, that you could live and work in Crystal City and never go outside. I would only say that if we have real trouble today and we have to have more meetings, on that basis I hold over your head the threat that we'll hold them all in Crystal City. So there's a major incentive to reach agreement quickly. MR. DUHAMEL: All day the 26th? CO-CHAIR ORNSTEIN: Yes. We start holding out the day of the 26th and then a half day on the 27th, but with every hope that we won't have to go to that full measure of time. So we'll see how it goes. What I hope we will do today is go through these various suggestions, recommendations areas, get opinions and views, and in many of them I hope and think that we can reach a general consensus. As I said to you before, 5 my view of consensus, it doesn't have to be unanimity, but I hope we can reach a point where the overwhelming weight of opinion of the committee will agree with what we're doing and we can maybe tweak some language. Let me also say that I expect that our report will, like Supreme Court decisions, have an open opportunity for concurring and dissenting opinions. In most cases I hope those will be concurring opinions, where people agree with the thrust of what we're doing but want to offer additional expansive views or suggest more specific things themselves, and we want to leave every opportunity for that to happen. But my goal -- and I don't want to speak entirely for my Co-Chair. Our goal I think is that we can reach consensus on a core of recommendations that will cut across all of our lines, and we say that in significant part because I believe, we believe, that as an advisory committee without any formal powers, the power that we have to have an impact on the policy is that of the weight of our members -- a very impressive group of people, cutting across a wide range of viewpoints and positions and perspectives. The power that we have as a committee is considerably greater in having resonance out there in the policy community if we can cut across those lines and reach a 6 consensus, particularly since there are large numbers of people out there who have been saying all along that there's no way that this group of diverse voices could reach any consensus on anything. So that's the hope here. The game plan is that we will start with the Co- Chairmen's framework of suggestions, go through those areas one by one. In many cases the proposal that Gigi Sohn has put on the table parallels those recommendations in the areas that are considered, so we can have a discussion of the different perspectives there. Then we'll turn to the other areas. That includes some of the questions of how we deal with notification of disasters, which we had discussed at an earlier meeting, and we have a suggestion that was put to us by the Federal Task Force on the notification of disasters. We do not have a specific proposal down here on the issues of captioning a video description, but I think we're close to a consensus on some of the language that Karen had submitted to us and we need to have further discussion of that so we can flesh that out and frame it through, and then the other suggestions that we have. We have a set of ideas that emerge for each of us to look at this morning from Jose Luis Ruiz and I would suggest that we take that up last so that we have time in the lunch period for everybody to read it so that we can 7 know what's there and discuss it. So that's the game plan and we'll start shortly on that basis. Let me turn to Les. CO-CHAIR MOONVES: Thank you, Norm. By and large -- not by and large. I agree with everything that Norm has just stated. Clearly, the Co- Chairmen's framework for our recommendations took a lot of work. There was a lot of effort on the part of a lot of members of this committee. In terms of recommendations, and I think we've come a long way towards reaching consensus on a lot of issues, there is still a lot of work to be done and I know a lot of discussion that we will have today. I think the good news is we have an entire day to do that. There are a lot of issues we need to get to. But to reiterate what Norm has said, I think it is almost essential that we reach agreement on a lot of these issues. If there is a great deal of dissent or in fact dissenting opinions and we can't come to a consensus, I think a lot of the work that we will have done will be in vain. I think if we can get a general framework, there will be plenty of opportunity for other opinions to go into the document that we put out. But as Norm said, it 8 is essential, I think, that we do have an informal consensus on this. In terms of -- we have a lot of issues to deal with. Everybody is going to get an opportunity to discuss all these issues, but there is a lot of ground to cover today. So everybody will get a lot of opportunity to speak. But just please keep it as succinct as possible, and I think we can get a lot accomplished. So back to you, Mr. Ornstein. CO-CHAIR ORNSTEIN: Does anyone have anything they want to say right at the outset? (No response.) CO-CHAIR ORNSTEIN: Okay. It seemed to us that the best way to handle this was simply to go through these areas one by one and see where people have problems with or want to expand upon the recommendations that we put out here. Let's start with the question as we have it in our framework. Clearly, this recommendation flowed from a lot of our discussion about the conditions under which additional public interest obligations might be appropriate for broadcasters as we move into the digital age. A lot of discussion in our meetings about the distinction between a world in which we would move from one analog station broadcasting one signal 24 hours a day 9 to a world in which there would be one digital signal, a digital station, high definition digital, broadcasting 24 hours a day after we make that transition -- something that many during and particularly after the debate on the Telecommunications Act in Congress believed would be the world that would emerge and was the rationalization for many of the members, many of the most prominent of the members, for suggesting that we not auction off the spectrum, but rather go through this process of lending the digital spectrum to go through the transition, and then the theory was that it would be a good deal for the public because they exchanged one lousy signal for one fabulous signal. But we recognize that the Act did not mandate that possibility and that there are lots of other possibilities. Now, of course the Act also said that if the digital spectrum were used by broadcasters for subscription services for paid purposes, for what were called ancillary and supplementary uses -- paging, pay per view, and whatever it might be -- rather than commercial- driven, free, over the air purposes, that fees would be assessed, and the Federal Communications Commission is in the process of assessing those fees. We in our deliberations, accepting that, also wanted to make a distinction between one over the air 10 commercial-driven channel and multiple channels that were free, commercial-driven, over the air. I think we came to an agreement at an earlier point that under those circumstances, and in particular if the digital spectrum, in a world that is unpredictable, of course, turned out to be one that provided a lot of commercial benefits to broadcasters by moving to multiple channels, then it was appropriate to assess additional public interest obligation in return. The recommendation that we put on the table is a reflection of that and it's a suggestion, with a number of options, on how to handle it. We wanted to be sure that we didn't kill any experimentation or opportunities that might be out there for people to see what would work in the marketplace. We don't know what will work in the marketplace. So we included in this proposal a 2-year moratorium to allow experimentation to take place and then a suggestion of a menu of options or obligations if following that broadcasters do indeed for some or all of the day move to multiple over the air commercial-driven channels, that range from assessing a fee to turning over one of those multiple channels for public interest purposes, but not following the cable model as a kind of empty public access experience, but rather with some 11 robust programming provided, or in lieu of the fee in- kind contributions of public interest activities, with of course Congress and the FCC to assess the specifics down the road. So that's what we have in this recommendation, Les. CO-CHAIR MOONVES: Yes. The only thing I want to add to that is the key to our recommendation in terms of multiplexing is the idea that -- is the fact that we know so little about what this world is going to look like. We still don't know whether certain stations are going to be using HDTV or multiplexing. We don't know the financial consequences of it. The key issue here is flexibility in all aspects in terms of what the future will look like, how much money is involved, and the options that are available if it does turn out to be a great windfall. So with that, we should open it up. CO-CHAIR ORNSTEIN: Yes, Gigi? MS. SOHN: Well, first -- I don't think this is on. Well, first I wanted to thank Les and Norm because I know a lot of sweat has gone into this framework, and my, I don't want to say criticisms about this issue, but my criticisms are not intended to diminish 12 what you guys have done. I think you have done a tremendous job. There is some language stuff in this draft that doesn't exactly excite me. I don't want to waste our time with that. I think we can work that out later. My preference is, if we want to achieve a consensus, let's have neutral language as opposed to provocative language on either side. So I want to limit my comments on the multiplexing, which I agree with in principle, to some of the substance. My concern is that the proposal as it's laid out here has some loopholes that could really render the obligation almost worthless. So again, I agree with the principle of the menu. I like the menu you've laid out, Norm. Just there are a couple of details, and I'll go through them very, very quickly just to get them on the record. My first concern, overall concern, is that I don't think we should be looking at this from a financial perspective. For example, the framework says that the obligations would only kick in when the revenues from the incremental channels, from the extra channels, incrementally exceed the revenue from the main channel. First of all, again, I think we need to look at this in terms of opportunities and not who's making money and 13 who's not making money, number one. Number two is, my concern is that since the primary channel is going to be having the best programming on it, the programming that brings in the most advertising revenues, we're never going to get to a point where the extra channels, even put together, are making more money than the primary channel, and therefore the obligations never kick in. That is probably my biggest concern. If there's a way of redoing that language so that it becomes more likely that the obligations will kick in than less likely, I can live with that. That's my biggest concern. My second concern is the definition of multicasting as several free over the air channels. Again, my concern is that most of what we're going to see -- again, we don't really know; there is uncertainty, I'll certainly agree to that. But a lot of what we're going to see is a mix of subscription and free. Again, we're not talking about money. We're talking about opportunity. We also may see multiple free or subscription high definition pictures. In the second paragraph you say "at less than high definition." Granted, at 1080I you won't have multicasting, but at 722 you can have multiplexing. And as compression technology changes, who knows; you may be 14 able to have three or four high definition pictures. So we don't want to limit it to that. So again, I think it should be multiple free or subscription, and it shouldn't be limited to whether it's high definition or not. The last substantive comment I have to make is just a general disagreement. I think when we go back -- I'm sorry. Let me go back to my prior point. My biggest concern on the subscription versus free is, what if you have a program stream that is both subscription and advertiser-supported. Then you basically have double-dipping because you're making money both from the subscription fees and from advertising fees. Yet it doesn't count towards your multiplexing obligation for the obligations kicking in. So there may be a compromise to be drawn here. It may be where it's both advertiser-supported and subscription, because the concern is double-dipping. My last concern is in paragraph 6, and again just to reiterate -- I will not have as many comments with regards to the other things, thank goodness. But this is just generally a disagreement, that if you have multiple free channels that you shouldn't multiply your obligations to do general interest programming. That's something that is contained in both of my proposals, the one I made on 15 April 15th and the one I'm making today. That's just a fundamental ideological difference. I really don't have much else to say about that. Actually, there is one more thing I want to say. At the end of that paragraph I think we need to be very careful. This is more in terms of the language. When we talk about where we put the fees, we talked about putting it in some other fashion, "agreed to by Congress, the President, and the FCC." My concern is that that kind of language opens it up to negotiation with the Treasury, which we don't want. I think we need to be very, very specific that we want the money to go into good public interest purposes and not to the Treasury and other functions. That's it. MR. BENTON: Two points. First, in public broadcasting's briefings generally about digital television they talk in terms of three dimensions: the high definition television, the multicasting or multiple channels, and the datacasting. This is kind of silent on the datacasting dimension and I think we really need to beef up the role of datacasting, because we all know that television and computers -- we're in the era of convergence. It's now a cliche, and we really need to think through the datacasting dimensions of the 16 multiplexing, which are not mentioned here but are critical in terms of the enriching and additional information supplementary and complementary to the broadcasting. So that's the first point. Secondly, your point about the moratoria, I am not sure I really understand this. Certainly I agree with giving broadcasters flexibility for experimentation and innovation. I have no problem with that at all, but it seems to me that things like ascertainment and reporting on what's going on should start from day one, should start immediately. There should be no moratorium on those processes that will allow us to gather information about what really is going on. So I would like to understand better the moratorium point, the goal of which, i.e., giving flexibility for innovation, I'm entirely in favor of, but the reporting of the facts here, what's going on, we've got to build in here. So I hope that is what you had in mind. CO-CHAIR MOONVES: Yes. The moratorium is not referring to the other issue, the financial. CO-CHAIR ORNSTEIN: It's strictly a moratorium on fees assessed, not on any other obligations, including not just existing ones but ones that we recommend otherwise. It's on fees. 17 The idea here is you want to do nothing to stifle innovation and experimentation, to see what works in the marketplace. I think partly our idea here is that if it's going to work in the marketplace, whatever fees we assess are not going to be a deterrent once it's taken hold in the market. Yes? MR. GOODMON: Let me just restate my view about this quickly. It seems to me that we really do know what's going to happen in digital. I know I can run one station or five stations or one station or two stations. To the viewer at home, this means more television stations and a mix of that, and it seems to me that the public interest obligations should apply to every channel that we have. I don't know why any second or third or fourth channel should be any different. So whatever the public interest obligations are for our stations should apply to all of our channels. I would also suggest that the notion that in my view we can somehow pay somebody something to not do that is not serving the public interest. These can be good stations that do a good job and the public interest programming on these stations is important. As a matter of fact, I think it's more important than paying somebody 18 something. That's why we have the stations, to serve the local community. So I'm off the page here. Every channel that we operate should have the same public interest requirements, whatever they are, and there shouldn't be any paying here. MR. CRUMP: I have a question. CO-CHAIR ORNSTEIN: Yes? MR. CRUMP: Am I correct in the assumption, though, because I'm hearing something a little different here today, and perhaps I'm incorrect, that when all of this would kick in would be when digital television kicks in, not that we assume the new recommendations today before we have the digital stations on the air and going? Is that correct or incorrect? CO-CHAIR ORNSTEIN: Yes, it's correct. when digital kicks in. MR. RUIZ: I just want to second what Jim said. I know you agreed to talk about my fax here, but there are some points that I think are important to this matter. If you're talking about multicasting or repeating the same thing and putting it on other channels or versions of it, like a soap opera channel, things like that, are we really serving the public? And I raise the question that we've always had a lack of minority ownership and participation in network 19 television and in local television, and I think this is an opportunity to introduce some notion that will allow minority participation. Is it going to be repeating the same thing we're doing in other channels? What is it we're proposing? Isn't there a better way to serve the public, bringing in new voices, new interests, and better services to underserved communities? Because if we don't change that, if we don't look at that seriously, we're looking at another 50 years like the last 50 years, and I think it would be very short-sighted. Can there be set-asides? Should we request set- asides for new voices, for new players to come in? We're not saying they're not going to be entrepreneurial. We're not saying that they're not going to try to make money for their institutions. We're saying these are new revenue streams, but there can be different programming, different services. Why haven't we looked at that? CO-CHAIR ORNSTEIN: Well, I think we should have a fuller discussion of the larger question of minority participation and ownership as we move along. In this particular context it's certainly worth talking about as well. But partly it's a question of I think the reason we haven't looked at those issues so much is that they were not brought up in any of our earlier meetings. They were 20 brought up in the meeting we had in Minneapolis almost for the first time. We haven't had, either from our members or from outside groups, proposals on the table here in this particular area until recently or just now. The question of whether or not we set aside channels specifically for that purpose, other than in the discussion we've had of an educational channel, obviously is something we need to talk about. Partly it's whether we want to. Of course, one of the suggestions that we have here at the table is that an option in multicasting is that a channel be set aside for public interest purposes. We can get more specific in that regard. If, however, you are talking about mandating or requiring that if there's multiplexing a channel be set aside or used by broadcasters -- not set aside -- used by broadcasters for a particular programming purpose, that's a slightly different issue and one in which I think there are differences of opinion. CO-CHAIR MOONVES: Obviously, the FCC right now is dealing with at great length the problem of minority ownership, that there certainly isn't enough either in the local television or radio level throughout the country, and it is something that needs to be dealt with. I don't know if multiplexing is the answer to 21 that particular question. Obviously, you have a proposal on the table which we just received, which certainly should be, elements of that, incorporated into our document. But in terms of being part of this particular discussion at this moment, I think it's rather difficult. I think it is apples and oranges right now. MR. RUIZ: I guess my dilemma is I'm trying to envision -- and I'm in a large market, Los Angeles -- what the future is going to look like. Like everybody here, we don't know what it's going to look like. But I'm sitting here saying, okay, there's a very large PBS station there that's going to be having five to seven channels or whatever the future holds. There's a board of education station. There's the University of California station. There's a college station, a 2-year college station. There is four public broadcasting stations. Then there are four -- there's five: FOX, ABC, NBC, CBS, and then the others. They're all going to set aside an educational channel. Where's all that programming going to come from? I mean, are we really talking about certain services, that we want to have diverse services in markets and access? Do we really want to make a blanket statement that all broadcasters in a market, say like Los Angeles, are going to set aside an access station, each one of them? They're 22 each going to set aside an educational station? And then you're going to have the public broadcasters? Where's all this programming going to come from? Aren't there other avenues and other ways of cutting up that pie to make it more inclusive to other groups and to other endeavors, commercial endeavors as well? Because we don't want to have seven access stations, seven educational channels, and the PBS channels. What we want is quality and good service. We want diverse voices. I think it's just more complex than making the very blanket statement or position. I think we would be in error, I'm sorry. MR. MINOW: Like Gigi, I first want to thank Les and Norm. I think you've made a significant contribution. With that, I want to just address philosophically the tone of the thing about what digital is. We're sort of saying, if there's a windfall here, if there is a windfall then something should follow. There's already been a windfall. The police would have loved to have these channels. The firemen would have loved to have these channels. The hospitals would love to have these channels. The schools would love to have these channels. But the decision was made not to give it to 23 them, but to give it to the broadcasters in exchange for a public interest commitment. So I wouldn't look at this as if it's a windfall. There's already been a windfall, to the exclusion of police, fire, and all the others who would like to use the channels. So the question is what should the public interest obligation be, not whether there should be a public interest obligation. So it's a matter of tone and language. CO-CHAIR ORNSTEIN: Okay. Gigi? MS. SOHN: I just want to make one suggestion that I don't think is going to completely ameliorate Luis' concerns, but may at least get us a little of the way there. My proposal proposes as one of the menu options that, basically a set-aside, that a broadcaster could choose to lease one program feed outside of the broadcaster's editorial control to another, to an unaffiliated programmer. Perhaps you want to say it could be a minority or a programmer from an underserved community, but that's certainly an option which I didn't see in the framework, which if you're amenable might be a good thing to add. CO-CHAIR ORNSTEIN: Sure. Yes? 24 MR. CRUZ: I submitted also a document on my behalf in reference to this particular concern of Jose Luis, which I wholeheartedly endorse. I think we would be very remiss as a body if, in consideration of the framework that we're undergoing now, the different areas of discussion, if we really didn't seriously take this into account. I think as you indicated, the two of you, at the start of this conversation here today, that by virtue of the weight that we carry as a body that we might have some influence on policy. I think the FCC, I think Congress, and I think the President and all are very, very interested in the kind of positions that we take. We would be remiss, I think, certainly I know I would as an individual, if we didn't take some kind of a stance to endorse women and minority entrepreneurship as well as employment opportunities. For us not to mention that in some capacity as we go through these discussions today -- and I think some serious thought has to be given to what Jose Luis has indicated, but I think we would be very remiss. And whether it was raised in Minnesota or not, it should always have been of interest to us from the beginning. We shouldn't have to wait for a proposal from any one of us to indicate that. I know I raised it simply because I had not seen 25 it mentioned at all before. But I think it's a very crucial issue. In light of the fact you have 1600 stations, and my good friend Mr. Goodmon here to my left just did the statistics for me. We have 1600 public television stations now. In the very near future there may be 8,000 channels. That's a lot. It says a lot. I think we should take those entrepreneurial and employment opportunities and concepts into consideration as we go through the educative, the multiplexing, the political discourse. CO-CHAIR ORNSTEIN: Certainly we can raise each of these serially and see what we can come up with. MS. CHARREN: Whatever we do about the programming concerns and the ownership concerns, certainly I don't think the Code is the kind of mechanism that promotes good policy, because when it's so voluntary the option is not to do it altogether. But we could get in there at least language about the need for attention to recruitment of women and minorities and the need for outreach efforts in this area. We seem to comment about everything else the broadcaster should pay attention to. That may not solve the problems you're talking about, but at least it recognizes that we have our efforts going into the twenty first century. 26 CO-CHAIR ORNSTEIN: There are clearly three areas of concern and they are of great concern, I think, to all of us. There's ownership, there's employment, and there's programming. We ought to see where we can draft these in different places, and perhaps they ought to be addressed in all of those places. Let me ask Jose Luis: If we included in the multiplexing area the option which you just suggested, which is as we go through fees and alternatives to fees, one of them is giving access to a channel specifically to minority and underserved communities, would that be useful and acceptable and satisfactory? MR. RUIZ: Yes, it's a first step. I don't want to ghetto-ize it. I think these are entrepreneurs that are coming in and building service to sizable audiences in their area. I think as you multiplex you are moving more and more toward niche programming. As you move toward niche programming, the reason why minorities have been excluded in the process is because we broadcast to a general audience. We are broadcasters, not narrowcasters. As you move into multiplexing, you are going to become more narrowcasters. You are going to go after specific groups, a specific age group, a specific ethnic group, or something like that. I think this opens the door for the same kind of philosophy to go into those 27 other kind of communities. I don't know if it's a set-aside. I guess my problem, Norm, is that if somebody can get up and draw me a picture of what, say, a market like Los Angeles would look like under what we're proposing, I would have a better understanding of it. But right now it's a very blurred picture, with too much access and not enough quality of service. I would like to try to refine that to make sure that we have a quality of service as well as access. It doesn't make any difference if you put a children's programming channel on if nobody watches it and it's a bad children's programming channel. What we want is good children's programming, good service. If we're going to put on African-American programming, we want good African-American programming that serves that community, or Latino programming or any other community. I think that's what we should do. I'm not just saying a broad thing of access. Access doesn't help anybody if nobody watches it. What broadcasting is about is serving people, people watching it. The problem with the cable access channels is that nobody knows they exist, because nobody watches them. We don't want to do that again. We don't want to make 28 that mistake. Let's learn from that mistake. CO-CHAIR ORNSTEIN: Certainly, as I said earlier, when we talked about one of the options here being using one of those channels for public interest purposes, we put in that it had to be programmed robustly. We certainly don't want to get into that. As we move ahead and talk about the educational channel, we made it contingent upon funding programming so it isn't just an empty exercise. We've got to be sensitive to those things. But I guess, Jose Luis, we need to get more tangible here in terms of options. MR. RUIZ: If you used a local children's channel and it was only CBS', their children's channel, their obligation, it would probably cost less, substantially. CO-CHAIR MOONVES: Sure. MR. RUIZ: Which tells me if it's too much access that no one's going to be able to afford the quality. They can afford the quality of two hours, three hours a day possibly, but not 14, 16 hours a day. CO-CHAIR MOONVES: Jose Luis, you bring up a very good point overall. When a local station goes from one channel to the world of six, what are they going to put on those other five channels? What are they going to 29 put on that makes economic sense? What are they going to put on that qualitatively can be good enough so people will watch it in a world of a 150-channel universe? That's the question we all have to deal with. Going back to your earlier point, there is ample opportunity for us throughout this document to be dealing with some of the issues that you and Frank have brought up and that you have written up. I think what we need to come up with is how to be more specific in terms of what you would like to see done and how is this possible in this new world. Part of what we're wrestling with now is exactly what you said: What is going to be on these channels? MR. RUIZ: I think part of my dilemma is visualizing what we have here already. You propose something; I want to be able to visualize what we have. In trying to look at this, are we saying that every channel will set aside a channel for access in the market? CO-CHAIR MOONVES: No. CO-CHAIR ORNSTEIN: No. What we're suggesting is that stations may in some cases, may just do one 24- hour high definition signal. That's what Jim has in mind. Others may not do it much at all. Some may go with two channels all the time. Indeed, those might be, as Gigi suggested, two what could be defined as high definition 30 channels, albeit less than 1080. And obviously we did not mean to suggest that they would be immune from any fees. Some may go with however many compression will allow. Those that do multiple channels will have obligations, but those obligations will not be the same for all of them. There will be, to provide flexibility, a menu of alternatives. They might be simply a fee, dollars assessed. What we're suggesting -- to get back to another point that Gigi made, in no instance here in this or in any other place, and we will make it as explicit as we can, would any of those fees revert to the Treasury. They are to be used for public interest purposes, including -- we will make this more specific as well -- programming, particular programming, and programming to make sure that it's enriched programming for a variety of communities to meet those diverse needs. In other instances we want to provide the flexibility to provide different kinds of public interest services in lieu of a fee, but that are at that same market level. That might be a channel that's set aside and programmed for public interest purposes or it might be providing free time to parties, that during the campaign that was the market value of whatever the fee would be, or it might be some other public interest purpose. 31 So we're not envisioning a world in which everybody will do exactly the same thing. We're trying to provide flexibility to serve public interests and we're trying to provide flexibility for broadcasters to feel out the marketplace. Peggy? MS. CHARREN: Based on 30 years of experience worrying about children's television and program diversity, I worry about a proposal that talks about robust programming. It reminds me about the way the Children's Television Act first said provide educational programming for children. If the broadcaster still has the power to make money from that public, so-called "public interest programming," there's a push to have it work in the marketplace. And for a lot of programming the marketplace doesn't provide the kind of choices and alternatives that I think you're talking about. If it did we wouldn't have to sit here talking about programming. So we can't legislate good programming. We thought maybe saying educational would help. I mean, after all, public broadcasting tends to know what educational means, at least most of the time. But when you have the -- I don't know. This isn't to attack NBC, but when we have the "Saved By the Bell" philosophy of education and that is what you get to serve the public 32 interest, then it's not working. I think we have to set up a structure that encourages the choice, without expecting the word "robust" to do anything in a system that is still working to serve the bottom line, and maybe the idea of noncommercial programming gets around that because at least it takes that pressure away. There's no question. Then you have to figure out how to pay for the programming. But I would worry about us recommending that the broadcaster fulfil all these needs of the public. I also think that to talk about the idea that there just isn't enough programming and what are we going to do -- if we're not careful we'll have like HBO; I get seven opportunities to see the same movies in my cable system. It's like saying, I think, why do we need any more books in the children's television library for? We've got all these books and you do a new book and how much audience can it get? I mean, sometimes even I think about that with the range of children's books there are. There's always opportunities for new ways to talk, say, to children and also to the rest of us, and there's creative people who figure out how to do it. I think the idea that you can't fill channels -- there's new ways of thinking about what children's programming should be, not based on what we've had for the last 30 years, but 33 other kinds of things that all these opportunities made possible, the kind of thing Charles has talked about, connections with data and getting out materials to families. Now, some of that fits into education. But when we're talking about programming, education is what we're talking about. I think we should just be careful not to set up a structure that limits what we get to the kinds of things that Jose is worrying about. CO-CHAIR ORNSTEIN: I worry too about how you can somehow encourage the possibility that you have a channel set aside, that it actually has something reasonable on it. I haven't come up with a better way of doing this. We certainly have -- there are a lot of arguments to be made on either side of whether you want to have commercial-free or not. If you have commercial- free, you may guarantee getting nothing out there. If you have some opportunity for commercial, it may provide a strong encouragement to put something that's better on the air. It may be that the best way to do this is not to have the broadcaster run that channel if that's the opportunity, but rather indeed to turn it over to some group in the community with the provision of studio time and editing and let them program it as they wish. That 34 may be a better way to go. We need to work that through a little bit more to reach a consensus. I agree that that's certainly a problem. Yes, Paul and Jim and Charles. MR. LA CAMERA: Norm, first of all let me add my voice to thank you for this framework. It's very logical and rational. Flexibility and openness is essential, I think, both to the group and to digital broadcasting. In the same way that Peggy said that you can't legislate good programming, that's why I worry also about this. You can't legislate economic success. I've said this before, as to how that multiplexing might work, if there was an immediate thought as to how to use that channel within the existing resources of a commercial television station, it would be a regional news service, a 24 hours a day regional news service modeled on the dozen or so cable news services that have been around the country now for 5, 6, 7, 8 years. Still I don't think there's one of them yet that's broken into the black, although I think some of them are getting close now. If I do that with a second channel, provide an ongoing 12, 14, 16 hour a day news service, I don't understand the logic of why that brings me the additional 35 burden of paying ascertainments, the additional burden of paying a fee, the additional burden of providing children's programming. Is that not by definition a service in itself? "Public service" may be too sweeping a term. It's an informational service. It's a news service. Gigi raised the point about subscription, use of some of these auxiliary channels for subscription use. I think we need to be concerned about that. But I thought again, as you pointed out, that the FCC was dealing with that point on the fee structure. As far as whatever resources emerge from this or whatever obligations, how those will be directed, I'd go back to what Robert Decherd and others have talked about earlier, and that is we should be looking at people who do that best and assist them to get some more resources, and that's public television. I don't think, as Jose Luis has said, the concept of seven additional educational channels, seven additional public service channels in the marketplace, makes any economic, practical, or programming sense. I just don't think it's feasible or possible. I just don't think it is. I think again, if we have resources to redirect, it shouldn't be to ourselves or in that direction or 36 taking on additional infrastructure burdens or programming obligations to ourselves, but to redirect them to those people who can and seem eager and appropriate to do it best, and that's public television. MR. GOODMON: We're getting to it here now. We might as well. I want to make two points. This from a practical point of view, WCVB can do a public affairs programming in prime time and get a five or so, get a good rating for it. Or WRAL can do a public affairs program in prime time and we'll get a good rating for you. If you put them in the community access channel in Raleigh, nobody will watch. But what we're trying to do here is, whatever our audiences are, everybody has an obligation to serve the public interest, and to come up with some channel that we're going to announce, here's all the public affairs stuff, it's not going to get the same viewership as if we do it on every station. Every station has a following. Again, I think we're making this way too complicated. We're either going to have 1600 stations or 8,000 stations or a combination, and if a station has a public interest obligation, and we think they should, then every station should have that obligation. I don't think that Paul thinks -- I know Paul 37 doesn't think that ascertainment is a burden or children's programming is a burden. It's an opportunity, it's a responsibility that we have, and we should do that on every station that we have. The public doesn't know whether it's digital or analog or anything. It's just another channel. This is really a straightforward proposition from the public's point of view. So I'm really interested in the notion that every channel has a public interest obligation, whatever they are, and that that's what we're doing. I've said that three times. CO-CHAIR ORNSTEIN: Charles. MR. BENTON: I think as we talk about the failure of access and the PEG, the public government access experiment on cable television, that we should remember what Henry Geller's conclusion on all this is, is that this was really a very good case of the failure of the public interest community to really push hard for the allocation of the access -- of the franchise fee, the 3 to 5 percent franchise fee, to programming. As you all remember the decision, when the Cable Act was passed in the eighties, it was to apply that franchise fee to the general fund of the cities and therefore it was lost to noncommercial programming and therefore gutted the public education access, the PEG. 38 So the funding of these public interest programmings is really absolutely central, and we need to take the lesson of what was not done in cable and bear this in mind in our current discussion. That's really point number one. Point number two, and I hear Jim and I'm enormously in admiration of his courage for his paper the last time in Minneapolis and the revised paper that he's given us today. Jim, the one point which we need to talk more about is the very important point that you have just made, your being vigorously opposed to the pay or play idea. If Luis is right in that as we're moving from the -- and Frank Cruz -- from the 1600 channels to the 8,000 channels in the next 5 to 10 years, then we are moving from a broadcasting to a narrowcasting model, and obviously all the programming requirements in the broadcasting environment should not apply to a narrowcasting environment. So how to maintain the spirit of your idealism, which I admire enormously, in calling for public service thinking and obligations on every channel, to the realistic point that every channel can't do everything and as we move into the narrowcasting mode, which is the trend, how can there be a better division of labor between 39 the commercial and the noncommercial interests? So in some cases the commercial folks will say, I don't want to do this, but I'm willing to pay out of this. I think that is a rational solution. How to do this precisely I don't know, but I think that is the very key point you've raised and it's something we need to talk about further. CO-CHAIR ORNSTEIN: Certainly there are going to be places where we're going to talk about that. Let me just stop for a minute. I want to raise some points that were raised earlier that we can dispose of relatively quickly and then come back to a couple of areas where we clearly need to spend more time. Some of the things that Gigi had raised -- let me say first, the notion of multiple high definition channels we clearly had no intention of leaving ambiguous or even suggesting otherwise that if there are multiple high definition channels that that would not fit a definition of multiplexing. We can change the language to fit that. In terms of the advertising-subscription mix, which clearly can happen, my judgment on that would be that if there is a fee structure set in place for ancillary and supplementary services, subscription services, and secondly for fees for multiple commercial- 40 driven over the air channels and there's a mix, that you have two fees assessed that wouldn't necessarily be the full fees. There'd be some proportional fee, but presumably it's going to be based on the revenues coming in, so that would be taken care of. I think we need to elucidate that more, but if you're going to do a mix of both you don't escape either, is the basic point. Clearly, in every instance in which we are recommending fees for revenues coming in we want to explicitly suggest that those moneys are to be used for the multiple public interest purposes that we are promoting in this process and not for general Treasury deficit reduction or for other related purposes. The moratorium, to reiterate, is only on whatever fees, we suggest, not on any other public interest obligations. Charles has raised a very interesting point, the question of channels that are used for datacasting. I think we need to work that through a little bit more, but obviously that's something we can include in this process. The question of the formula for revenues, and this gets in part to something that you were suggesting as well. We do have, as our deliberations have suggested, basic differences expressed among the members about what the grant of the digital spectrum meant. We have some 41 members, I think, who would try and make the case that broadcasters ought to be given money for taking on this tremendous burden, and obviously other perspectives that suggest that, even if no additional revenues accrue, this is a tremendous boon. I personally thought it fruitless to try to draw those lines in the dust and instead to see where we could compromise so that we could reach a point where we could come to some substantial additional benefit. So at this particular recommendation I thought it wise to be very sensitive to the questions of both the uncertainty of the marketplace and also to make this threshold where we could all agree that, if there were some financial boon for broadcasters, then clearly we all agree that there was something owed in return. On that, it's very difficult to come up with a formula. The idea here is that you have a formula, so that if there is multiplexing it isn't just a cannibalization, that if you get into a situation where you're going to run five signals and in effect you're just dividing up the old revenue pot the same way that's very different. Now, my own judgment is that basically broadcasters, because there's an incremental cost to putting out an additional signal, aren't going to do that. 42 They're going to run additional channels if there's a commercial benefit to running additional channels. I also believe that to take a static model that suggests that if you move from analog to digital all you're doing is dividing up marketplace is ridiculous. What we've seen is in every innovation in communications you expand the marketplace. That happened with the CD, it's happening with DVD, it happened with the VCR. It creates new markets and it expands markets. So I don't think we need to operate on the basis of a static model. We maybe can't find an appropriate formula here. It may be better for us simply to suggest that this is our intent. Besides, any formula that we offer is only a suggestion to be picked up by whatever bodies, the FCC and the Congress. The FCC presumably would assess fees. But that's the idea here. Perhaps we can discuss it more if there's some disagreement. MS. SOHN: Norm, if you presume, and I think you're correct in presuming, that broadcasters are only going to do multiple channels if they know they can make a profit from it -- and this is setting aside, of course, a couple years of experimentation, and both you guys and I agree that we should have a phase-in or a moratorium or whatever you want to call it, then what's the concern? 43 If broadcasters are going to do things that are profitable, then what is the money concern? You're kind of undercutting your argument. CO-CHAIR ORNSTEIN: At least what some would say is that this may be done just for competitive reasons in the marketplace, to compete against cable, and it may not be additional revenues. My own view is going to be different from some of the others, some of the broadcasters on the panel, in terms of what will happen and what they owe in terms of an obligation. But I wanted to be sensitive to all the different viewpoints here so that we can reach a consensus on the thrust of this, which is the most significant element. CO-CHAIR MOONVES: Gigi, I might respond. Let me throw the question back to you: What is the concern if we have set up a formula whereby, when and if -- with all due respect to Mr. Minow, the windfall has not happened. It very well could and there is the obvious hope that it will. And there will be an investment, that this will happen. But this allows us the flexibility that, when and if this does happen, then there will be fees and other alternatives. MS. SOHN: Well, one is an ideological viewpoint concern, which I mentioned at the very beginning, although not very articulately. I don't think I was awake yet. 44 That is that I don't think that revenues are relevant. I don't think the windfall question either way is relevant. I think this is about what are the opportunities broadcasters are going to get, what are the opportunities for more public service, what are the opportunities for the public? So that's the way. I framed the debate differently. Number one, my only concern is a more substantive practical concern as a risk: at the risk of repeating myself, that the way this is formulated now I think is highly unlikely, because you're going to put your best stuff on the primary channel. And if the broadcasters here think I'm full of it, please tell me. Because you're probably going to put your best stuff on the primary channel, it's unlikely that you're ever going to reach the point where the second, third, and fourth channel, even combined, have a revenue that exceeds the primary channel. I'd like to hear from the broadcasters. Tell me on that? MR. DUHAMEL: You're wrong on that, because the thing is, suppose you've got a Warner Brothers catalogue on the side. You want to take and develop that channel so that you've got some revenue potential. MS. SOHN: It's got some revenue potential.e MR. DUHAMEL: The point I'm trying to say is, suppose you were with NBC and you had this on the side. 45 You don't just take it all and the best of the deal you put on one channel. Then you've just got nothing. You have to spread it around and try to attract an audience on it. MR. RUIZ: Norm, I think what's going to make economic sense to begin with is the same thing that made economic sense in cable. That was other channels at different hours of the day. You're going to repeat much of what you've already paid for, product you've already paid for for your main channel. If you take away reruns from cable, what do you have? How much programming is actually manufactured today for cable itself? CO-CHAIR MOONVES: More and more every year. MR. RUIZ: More and more every year as the economic base grows, but the economic base is growing on reruns, not originated programming. I think if stations are going to survive, the first thing they're going to do, they're going to have to put on reruns. For economic reasons they're going to have to do that. To clarify, my biggest fear is exactly what Paul alluded to: deciding to put on another all-news channel. Do we really need, is the public really crying for, another all-news channel? And how much of an all-news channel is repeating and repeating and repeating the same 46 stories the next hour? MS. SOHN: Can I just speak to -- MR. RUIZ: One second. With the explosion of cable, cable channels, can somebody here at this table tell me who caters to the needs of the Native American community today with all these channels? Who really caters to the needs as a broadcaster or cablecaster of the African-American Community or the Asian community or the Latino community? And don't tell me Spanish language broadcasts. The same thing could potentially happen again if we're going to repeat and repeat and repeat what we did with cable. CO-CHAIR ORNSTEIN: Gigi. MS. SOHN: I just want to make one quick point. I think what you and he are both missing is the beauty of the menu. You talk about having seven access channels. No. If the marketplace is providing for education channels or all-news channels, a broadcaster is not going to be so stupid as to try to repeat the same thing. So if they want to give the money to public broadcasting, as you suggest is the object of very good programming, they can do that. That's why I think this works so well, is you don't have to. You can choose among a menu. 47 I'd like to expand this menu, but, as I've just said, with public interest things to do, and then you don't have to worry and the marketplace works. MS. CHARREN: Just two points relating to Paul's news channel. The fact is what's missing in prime time television as we know it is news for kids, news that helps kids understand what's happening, where it's happening, why it's happening. And on that news channel, if you were doing it, it would be appropriate to set some block aside that parents, who are having a little trouble with violence or whatever on the news, could find at the dinner table, for example. That could be a very practical part of that schedule. Secondly, I think we haven't really considered as we think of what programs are going to win the ratings game, what we're going to watch, that with all this stuff out there, with all these platforms and programming, we the public are going to have a different way of watching television. Cable changed how we watch television. When it started on television, UHF was a disaster. You couldn't even tune it in. You had to get the FCC to make rules for a click-dial on UHF stations, which was a real problem for early public broadcasting. Then cable came. At the beginning it didn't have much of an effect. Now nobody knows whether they're 48 watching cable or broadcast television. You have to put a little thing in the corner to know what you're looking at. When we have all this new way of getting stuff to the public, it's going to change how we watch and what we expect and where we go for programming. It won't be perfect. We might all still watch CBS, but I can't do anything about that. That was a joke. (Laughter.) CO-CHAIR MOONVES: Thank you, Peggy. MS. CHARREN: But this would be a new world if it works right, not in the first 5 years, but later. And with the synergy that Charles talks about and with data, hopefully this is going to be a new opportunity for the public to relate to each other, to acknowledge, to at least think in terms of what it could be like as we make the rules, and don't sort of limit it just to make sure we have some little things. CO-CHAIR ORNSTEIN: Let me make a couple of larger points here, one related to something Jose Luis said earlier. We haven't spent a lot of time on this, but one of my greater concerns that we are moving so rapidly towards this rich menu of narrowcasting that we are losing what broadcasting brings to the society and has brought to the society. When I go out and talk about this to the public 49 at large, I make the point that the last episode of Seinfeld, which was hyped more than any other television experience in history, was on the cover of every magazine imaginable, it went on for weeks and weeks, and it got an audience that was about 60 percent of the audience that had been there for the last episode of MASH. That's a reflection of the fact that broadcasting, which is the public square, which is where more Americans than anyplace else go for a common experience and a common message, is declining. One of the reasons, it seems to me, one of the rationales, for giving the digital spectrum to broadcasters as opposed to others is the hope that this can help us preserve at least some elements of a public square. I don't know what we can do to encourage all of that, and we obviously have to let the marketplace operate. That marketplace may lead us more and more to a kind of narrowcasting that has many advantages in terms of giving voice to different communities and satisfying different narrow interests. But that also runs the risk of compartmentalizing the society and taking us away from these common experiences. Indeed, as Jose Luis said, it's one thing if you have programming by minorities for minorities, but presumably we ought to have programming by minorities for 50 everybody. That's a part of what we want in a large and diverse society. So we have to deal with that. In terms of the narrowcasting, I for one do not believe that we are moving into a desert where we have 600 lanes of the superhighway and most of them are occupied by clunkers. Frankly, as I look at what's happening in the innovative marketplace I cable, as I see new channels developing, some of which are repackaging, they're terrific. The Classic Sports Channel is repackaging, but it's bringing back wonderful, rich information, indeed information to young people, generations, who didn't know that this stuff existed before. I love the fact that we have Turner Classic Movies now competing with American Movie Classics and those movies are back. A lot of what happens on Nick At Night is repackaging. But you can find ways to repackage and make it tremendously commercially successful. I believe in this marketplace the likelihood is that broadcasters are going to go out there and they're not going to just repackage the news. When I see what goes on the cable local news channel here, it's evolving to an extremely rich channel that often has a lot more local news, with a lot more community orientation, than what you find even in the multiple hours of news that go on the commercial channels. 51 So there are ways of making that both commercially viable and feasible. So I expect that indeed we will see a lot of richness here. How we can convert that richness in ways that best serve the public interest along with what the marketplace offers is a part of our goal. I expect that there will be multiple channels that will be commercially viable and then we can use whatever revenues accrue from fees or whatever options occur here to make it an even richer experience. To turn to another area that we clearly need to spend more time on, the question of whether public interest obligations, existing ones and others that we recommend, then should apply equally to all channels in a multicasting world. There are going to be some differences here. Those differences it is clear cut across the normal lines. A part of the reason we put it down here, as I see it, that if you paid the fees then you only have to perform those other obligations on the one channel is for a couple of reasons. But one of the reasons is that the argument is that if you're going to run an all-soaps channel, say, it makes more sense to get fees. And instead of having them do three hours of children's programming, which will mean a soap for children presumably or something else, and there won't be an 52 audience, to take revenues for another opportunity to then provide enriched programming for children or for minorities or in other ways. That's some obligation, certainly, whether it's ascertainment of community needs, which I suspect that if the station's going to go out there and do ascertainment of community needs you're not going to have to do six separate ascertainments that are completely different if you're running six channels. You're going to be able to do that in a very efficient way that can meet all of those needs. Other things like closed captioning obviously we need to apply to all, but some of these other things could be done much more efficiently. Now, we need to air our views on this, I think, a little bit more and maybe we will come to a conclusion that's different than that. But it seems to me that a world in which you have a fee structure and they apply those obligations in the richest fashion in the place you're going to get the most audience, appropriate audience, and then have money that you can use for other obligations that are applied that can be spread out better, is a more efficient and a better way. MS. CHARREN: Just one point I forgot to mention. I think it's the third paragraph, you talk about the fees going to subscription channels, pay services, pay 53 per view. You didn't mention public broadcasting. You don't mean to keep them out of that mix, did you? CO-CHAIR ORNSTEIN: Those are the fees that are set to come in under the Act already for ancillary and supplemental services. MS. CHARREN: Yes, but we don't say where those fees are going. CO-CHAIR ORNSTEIN: In other places we do. CO-CHAIR MOONVES: In other places we say it's going to public television. MS. CHARREN: The more you mention that the happier I am, since I think that a lot of the public interest programming would get produced by public television. CO-CHAIR MOONVES: You've said that several times. CO-CHAIR ORNSTEIN: On that point, Paul obviously raises a point that we all have discussed and are sensitive to and generally agree with. We want, in a world where we want broadcasting and where we want these enriched experiences, to enhance to role of public broadcasting as much as we possibly can. But I don't want to dump all kinds of stuff simply into the laps of public broadcasting. I believe that we ought to encourage, as we do here in our language, that the transition to digital be 54 made easy for public broadcasting and that they be provided a base of ongoing revenues through some kind of trust fund and that they be given additional opportunities, but not the exclusive franchise for the creation of an educational channel, which we will determine very soon. I also think that commercial broadcasters in a digital age ought to play a very significant role and a role beyond just this minimal level of standards here, with a lot of opportunities that can enrich this experience. We've used the term before "ghetto-ize." I think it would be unfortunate if we ghetto-ize any area of public interest obligation into public broadcasting. It ought to be letting many flowers bloom. Paul. MR. LA CAMERA: I think you misunderstood a couple of my points. One, Peggy made a very good point about news for children and I was remiss in not thinking of that. CO-CHAIR ORNSTEIN: But you won't make that mistake again. (Laughter.) MR. LA CAMERA: In 27 years, you'd think I'd have learned. To use the term "robust," I would anticipate 55 that, again, if the station did decide to use one of these companion services for a local and regional news service it would be a robust news service and not a repackaging. I didn't mean to suggest that. That's where our expertise and resources tend to lie, to rest. Gigi, I understand the beauty of the menu. What i don't understand the beauty of is if I do that service, and again it's the most logical one available to us, why it brings with it a fee, the payment of a fee. If I'm providing an additional news service in a robust, creative way to my community, I don't understand why it brings with it the payment of a fee obligation, but if on the other hand I take one of those channels and give it back to my network -- and if my particular network is very interested in a soap channel, then I could understand there's economic consideration there. But if I'm providing a service locally, I don't understand why it necessitates additional obligations and burdens when I'm going into this experimental arena as it is. As I said, there are models, including the Washington model. These are yet to be determined economically viable or successful models. That's what I like about this, is that it does have within this model the component of the revenue, this being a successful venture, and if it becomes a successful revenue venture 56 then, yes, I agree with you and Jim that it should bring other obligations. If it's not, then these obligations become simple burdens and tend to be discouragements to experimentation and innovation. I sincerely believe that. MR. GOODMON: Norm. CO-CHAIR ORNSTEIN: Yes. MR. GOODMON: It seems to me the goal is to preserve and strengthen the local free, over the air local broadcasting system. Another model here is not that we create all these new wonderful program channels, but that business continues as it is now and it is now a fight for the best programming, a fight for the programming that gets the ratings. There's nothing to prevent one station now from having Fox and Warner Brothers, and if they're not going to do HD they could run three. We're going to really disenfranchise local broadcasters if we don't pay some attention. The big organizations that have the big power with the networks, what's to prevent UPN and Warner Brothers from being on the same station? MS. SCOTT: They are now. MR. GOODMON: Not at the same time. You only do that if there's not another one to do it. But now the networks are divided because of the number of stations. But when we get into the multicasting business somebody 57 could have two. I mean, we could really mess up the local broadcasting system that we have if we don't pay attention to this. What's going on now is who has the market power to get the best programming and that's what it's all about, and we're going to find some local broadcasters are going to be left without any if we don't pay attention to it. Is that too simple? That's just the market kind of notion. CO-CHAIR ORNSTEIN: But in part, if you have a local broadcaster who decides simultaneously to run Warner Brothers, UPN, Fox, or whatever, then at least under our model they will end up having to pay a significant fee that can be used for public interest purposes in the local community. MR. GOODMON: But it's undercutting the viability and the diversity of the local marketplace, which it seems to me we ought to be working the hardest on to make sure that our digital revolution doesn't destroy that. MR. CRUMP: I know this has been said many times before, but let's remember that what is going on here is a huge expenditure of money by the local broadcasters to go into digital. Our trade publications within the last 58 couple of weeks pointed out that in the four weeks of August for the first time if we added all of the network programming together, they were beaten by the total of the cable viewing that we had, which tells us how the narrowcasting is accumulating a total audience. What that means is our competition is getting more and more difficult to deal with. We're looking, many of us, looking at digital as a means of trying to, not preserve, but to try to resurrect, a larger audience that we used to possess previously but we don't have today. Then when we start to talk about we're going to narrowcasting and this -- well, there are many broadcasters who say: My God, people talk about this, you know, but what I'm about to do is take my own audience and split it as well, so that again I'm supposed to make money by splitting an audience as I go, when all of these years we've been trying to get to the largest audience we could get, and it's going to cost us additional expenses in order to do this. It's going to be an interesting situation. There undoubtedly will be great experimentation in various markets as to who does what, but I think in the very beginning and for many years it's going to be a continuing fight on the part of the local broadcaster to try to preserve the audience that he has for his main channel, 59 because we're losing it every single year. Now it's getting down to the point that for the first time we've looked the evil guy in the eye and have to say: My God, you're not only gaining on us, we're getting behind in this fight. I think we should remember that when we talk about a windfall coming to us. There's no built-in windfall there and it's going to be years before we can see any real results, because until the sets get out there and people can receive the digital signal that's going out in whatever form it's in, we have nothing to sell. But we have effectively increased tremendously the cost of what we are presenting to program because of the simulcast. MR. MINOW: Mark Twain once said: "One should never make predictions, especially about the future." I know when I served on the board of CBS at the beginning of the year we would be shown a presentation of what the schedules would be like of ABC, NBC, CBS. The second year I was on the board I said: You know, they used to have a chart like that in Detroit; it said "Ford, General Motors, and Chrysler." They didn't have room on the chart for Volkswagen or Toyota or anybody else. I said: What kind of chart have we got here? What about cable? What about UHF? What about satellite television? People in the business tended not to see what 60 was happening about them. When UHF was beginning and I was in the government, the UHF people were very worried about cable. They came to complain to me. I said: You know, cable is the best thing that's ever happened to you because it's going to make your channel as available as a V channel. This business is changing constantly. The best thing that's in your draft is the openness to experimentation. You've got the brightest, most creative minds in the country in this business. They'll figure out a way to do it. I don't know which way it's going to be, but you'd better look at this as a great opportunity to compete with cable, because you have the same opportunity they have of having more than one channel. The test here is going to be the limit of your imagination and creativity. The worst thing we could do or Congress could do or the FCC could do would be to write rules here which are inflexible. That's the point I want to make, although I do believe you can call it -- it gets into semantics. You can call it a windfall or whatever. I regard it as a choice that Congress made to say no to the policemen, no to the firemen, no to the hospitals, yes to the broadcasters. 61 But if it's a yes to the broadcasters, there's got to be an opportunity here to provide public service. CO-CHAIR ORNSTEIN: I think we're going to have to move on in a minute. Before we do, just for our own guidance, it seems to me we have some signals in most of these areas on what we can do to tighten our language and be more sensitive to these menu options and to diversity concerns. Let me just quickly read the couple of sentences that we have about the public interest obligations on all or one channel and see what the sense of the group is and whether we ought to change that, eliminate it, or leave it. What we say is: "With this fee or in-kind arrangement in place, other statutory or regulated public interest obligations in areas like children's television would only apply to the primary channel and not in equal amounts to all the other multiplexed signals, unless the broadcaster could demonstrate the public interest benefit to the FCC of proportionally spreading specific obligations around the multicast channels. For example, it may prove advantageous to give a broadcaster flexibility to place political messages on whatever channels attract the right demographic audience to achieve maximum benefit." MS. CHARREN: I'd like to do away with the word 62 "only" in that sentence. CO-CHAIR ORNSTEIN: "Would apply," yes. MS. CHARREN: The idea that it applies only to the primary channel is what that sentence is about and that's ridiculous. It may not apply to the equivalent of a porno channel, but the fact is there's a lot of places where a children's piece would be appropriate, and I think what you're trying to say is that there are some places where it might not be appropriate. I really am not terribly interested in a home shopping place for children on the Home Shopping Network, although the Girl Scouts just made it possible to get a fashion badge from the Express Fashion Store, which is disconcerting. So that I think that that's a flexible thing, too, that children belong in some places and not in others. But I think that this idea that it only applies to the primary channel is not the way to go. MS. SOHN: Maybe I misunderstood this, but my position has always been if you're doing three channels you've got to multiple the public interest obligation times three. You shouldn't necessarily have to spread them out over the channels, but you could, except for the political programming, which I think you have a legal problem on, which I don't want to get into right now 63 unless you really want to. But you could segregate them onto the primary channel if you wanted to. But you're saying you don't like my multiplication thing, right? CO-CHAIR ORNSTEIN: I want to get the sense -- MS. SOHN: I think you should multiply, but I don't have a problem with giving the broadcaster discretion to put them on one or another channel. MR. GOODMON: I don't know what the primary channel is. A channel is a channel. I don't know how you're going to define which one of your channels is the primary channel. If there are three or four channels, they're all -- CO-CHAIR MOONVES: My guess, Jim, is if you run five channels we'll be able to pick out what's the primary channel. MS. SCOTT: The one that makes the money. The one that makes the money. MR. GOODMON: The highest ratings? CO-CHAIR MOONVES: No. I think you'll find -- if you are a CBS affiliate at the moment, my assumption is you will put on that first channel what is the normal CBS schedule. On subsequent channels you will experiment somewhat more than that. My guess is that you will be able to tell what the primary channel is. 64 Gigi had a valid point, although I don't necessarily agree exactly with the economic model, because the secondary channel could in fact make more money than the primary channel. But I think it'll be fairly self- evident for the first several number of years what is the primary channel. MR. LA CAMERA: ...know what the primary channel is. MR. ORNSTEIN: To use an even better model, with HBO there's now a one, two, three, four, five family, and it's fairly clear what the primary one is, even though there's a lot of blurring. But it's fairly clear. But it's really a question of, that issue aside, I suppose it's at least theoretically possible that you could have a huge amount of blurring, although not likely. The larger question is the one that Gigi raised: Do we want to say that all channels are equal in this regard and they all have exactly the same obligations? Do we want to provide flexibility? Do we take care of that flexibility and remove the word "only"? MS. CHARREN: Not just remove "only." Well, that helps, but "not in equal amounts" is really the most problematic. In looking at that sentence, I think what's troubling me is "children's television." In all of this, 65 that's the one place where we really mandate to do three hours and it seems like this was a way of undercutting that mandate. CO-CHAIR CRUZ: That's easy. MS. SOHN: It's non-statutory. Again, you've got major legal problems segregating them. CO-CHAIR ORNSTEIN: Under Jim's recommendations here under multicasting, this statement seems pretty simple to me: "If the broadcaster selects the multichannel option of broadcasting in digital, he should be required to fulfil the same public commitments on each channel. Then he goes on to say there should be no opportunity for pay or play, which I'm sorry to say I disagree with and I think there should be discussion later on. CO-CHAIR MOONVES: I think if somebody has 5 channels I think he'd be hard-pressed to have 15 hours of educational children's programming on his 5 channels. MS. CHARREN: I disagree with that. CO-CHAIR MOONVES: I know you do. MR. BLYTHE: Could he run the same programming or does it have to be different? MS. CHARREN: The specials from ABC, ten years worth of programming. MR. GOODMON: It doesn't have to be different 66 programming. CO-CHAIR ORNSTEIN: No, presumably it doesn't have to be. But then you run into the question, does it serve the public interest if you have a sports channel or an all-sports channel to take three hours to run children's programming. CO-CHAIR MOONVES: The idea of the model is flexibility, flexibility to demand that the same... MS. CHARREN: I'd like to know why when we talk about public interest obligations on each station you use children's television as the thing that we don't have to do? Why does that come up? Because we have a legal mandate now? CO-CHAIR ORNSTEIN: No, it's because it's the most powerful. MS. CHARREN: Believe me, it's the most necessary kind of way of getting a democratic society to continue. I could give you 5,000 hours of programming that don't exist for children that should in a society that cares about young audiences. That doesn't mean ours is bad, but there's an opportunity for all kinds of programming for children. Now, I don't want to say that it has to happen in a particular way and I don't want to say that that's the only thing we need to do, but I don't want to preclude the idea that children are not 67 appropriate for any channel except the primary channel, which we have the obligation now. It isn't just, narrowly stating, education which is a particular type of programming children are entitled to. You know, it's 40 million individuals. It goes up to 17. By law now, when you're 18 you can vote, and only 17 percent of this audience votes when they're 18. If you want to reach the teen audience to try to make them understand what their responsibilities are, why it's important to know that you have to participate in making this country work, you could spend a lot of time on a lot of different channels making that happen. So I don't want to say children on the primary channel. I think that undercuts the whole purpose of what the digital opportunity is. On the other hand, I think there are more needs than just children. (Pause.) MS. CHARREN: My God, the whole place got silent. I didn't mean to turn you all off. CO-CHAIR ORNSTEIN: Our primary channel -- well, we'll grapple with this. I guess that's the best we can do right now. Let's move on to discuss the education issue, and we have some questions here as well. It probably isn't necessary to go into great 68 detail on what we have here in the proposal. It follows, I think, very much what we've talked about before, setting aside one 6-megahertz on the analog spectrum in each community for educational purposes, broadly defined, with first dibs on applying this going to the public broadcasting station or stations in the local area, but they have to come up with a plan and that plan has got to show great sensitivity to the local community, the diverse needs of that community, cooperation with institutions, libraries, schools, and others in the community, and a programming distinct from what otherwise is on those channels; and if the FCC doesn't approve the plan then it's open for bidding by others. So let's see what kind of comments we have on that. MR. RUIZ: Several I have. You have my paper. I don't think the public broadcasting station should be given first, no more than I think Les would say that, because NBC had football last year, they should have first option to carry it this year. It should be a laissez faire. For example, in Los Angeles we have a board of education station, then you have KCT. Well, KCT is the bigger, stronger, better financed station. But which one is the one that's totally dedicated to education? So I 69 think you have to be very careful there. They may be able to form a better partnership. So I don't want to exclude the public broadcasting station, but I don't want to give them first option. I don't think I can, as I spell out, support the trust without knowing what the trust is doing and what it's going for and how it's doing it. I think Congress needs to support public broadcasting as it makes the transition to digital and I support that. The request is $400 million, Frank? MR. CRUZ: Yes, for digital. MR. RUIZ: I support that. The other things I could not support unless I knew much more than I do. Now, I think we have to support the Department of Education in what they're doing. The only time that truly independent producers as well as minorities participated in children's programming, and others, was when ESAA was in existence, which Ronald Reagan knocked out in 1980. But under the ESAA grants you really had programming which dealt with not generalities, but specific needs of children in this country, and I think we are remiss in not looking at the public education in this case. CO-CHAIR ORNSTEIN: Explain what you mean by incorporating the Department of Education? 70 MR. RUIZ: Under ESAA the Department of Education gave grants. Things like Villa Allegre, Que Pasa and many, many other projects came out. It really launched some of your top minority producers today -- Montezuma Sparza, Juan Garcia got his start. But they were very specific. They would get a proposal. They weren't broadcasters, they weren't looking at what affects the whole nation, will this fly in the whole nation. They would sit there and say, here's the children's need, here is a proposal from producers to meet that child's need, and they would fund and produce the series. I think if we leave the Department of Education out of it, you have the FCC and you have stations and other things happening. If you really want to, say, address the question of preparing our children in math or science, which are really things that are pretty universal across the country, you're not going to get into the conflict with the Texas criteria or the California or New York criteria, I think there are certain standards that the Department of Education can work with producers to produce programming for our children in those fields of math, science, and other areas. So I think when you talk about funding and the month going to areas, I think we really want a partnership 71 with the Department of Education if we're going to talk about education channels. MS. CHARREN: It was always my feeling that public broadcasters would do more to serve kids, would do more to serve diverse audiences, if they had more money, if the structure was such that they could serve our audiences and still get funded. I think that California - - Los Angeles is such an unusual market in terms of how many stations you have that it's an unusual way to think about whether or not public broadcasting works. It's my feeling that public broadcasting has done a pretty good job with kids. MR. RUIZ: Recently? MS. CHARREN: It's a structure that's been set up. The Department of Education is not necessarily the best place to be a broadcaster. It has other things. MR. RUIZ: It's not a broadcaster. It's a programmer. MS. CHARREN: Programming. Well, I think the programming from the Department of Education could be part of the public broadcasting service. But if you don't think of public broadcasting as the institution that serves education, I think we're missing a very good bet in terms of what structure is going to run those. Villa Allegre was on PBH in Boston. Who's going 72 to distribute all of that? I do think that the producers, to get a diversity of producers, is important. But it sounds like I'm hearing that public broadcasters should not be where the education starts. That's like saying commercial television shouldn't be where the entertainment starts or the news starts. We could set up a whole news institution in the country to do news, which might be less connected to "if it bleeds it leads," but that's not what we're doing. I don't know, I may be hearing something you're not saying, but it sounds sort of negative to public broadcasting. As it encourages diversity, I think it's terrific. MR. RUIZ: I think that single public broadcasting as one homogeneous system would be a mistake. I think what I'm recommending in my paper is that there are educational licensees; because they get their licenses through an educational system doesn't mean that they are small systems. If you look at South Carolina, if you look at Nebraska, if you look at some of the others, I think if you bring those into the Department of Education to really work at addressing the issue, you come out with a better proposal. This is not excluding the delivery system, 73 Peggy. This is expanding the products, how does the product get manufactured, who manufactures the product, what is the intention of the product, that you will expand it. I don't think Los Angeles is a unique market. I think if you look at New York, if you look at Connecticut, if you look at New Jersey, if you look at the two stations that are in New York itself, you have a lot of that overlapping, but it's to do what. And you may find in that area -- for example, the New Jersey one is a network, is a State license. It has stations throughout the State of New Jersey, but they go into New York as well. The actual WNET is a New Jersey licensee, but it's housed in New York. CO-CHAIR MOONVES: Can I ask Frank what he thinks about this? A lot of this was based, obviously, on things that you had brought up. I'd like to hear your point of view. MR. CRUZ: A couple of thoughts. In reference to the proposal that was submitted on behalf of the Corporation for Public Broadcasting, ABS, PBS and the public broadcasting industry, our greatest concern, and I think the writings reflect it now, is that we certainly believe that we have a very difficult task in public broadcasting when we are subjected to the whims and ways 74 of Congress year in and year out. Just to take you back a couple of years ago, there were threats of zeroing public broadcasting out completely and we barely survived. The financial, the appropriations on an annual basis, is very problematic, because we never know how high it will be, how much they will cut. So the advocacy and the framework and the documentation that we submitted for a permanent adequate trust fund for the creation and for this conversion to digital I think is on target and that's what we would like to see. The second channel, the 6 megahertz, I think public broadcasting in essence, and our paper says that we are prepared to apply for that, to deal with that. However, our concern was that if it becomes another mandated issue and not funded that we would have the same problem that we have with regular public broadcasting that would have to be at the whims and ways of going back to Congress. I also happen to feel that the digital era -- I think I see things more in terms of opportunities than I do problems, and I think Jose Luis is on target in wanting to extract perhaps or at least ask of public broadcasting, if it does get this permanent trust fund and should it also get the second channel, that we certainly become more 75 inclusive and we become more adaptable to all of the different kinds of programming that is available, because I think it will offer an enormous amount of opportunities and an enormous amount of different kinds of new services and public services that we can apply. We should take all that into account. CO-CHAIR MOONVES: I think there may be a way to incorporate both of these things in language which does include public broadcasting as well as open up possibilities for other. MS. CHARREN: I agree with Frank, but what I got nervous with was saying -- I agree with all the programming concepts, but I worry about a gradual institution. CO-CHAIR ORNSTEIN: Let me say that the reason we drafted it this way was in part a sensitivity to public broadcasting, but it was also out of fear that we would overwhelm the FCC if they had a completely open bidding process for every single area and then they had to evaluate however many plans came in. At the same time, we clearly didn't, because everybody knows the quality and sensitivity to local needs of public television stations around the country is uneven, so we clearly didn't want to simply give it to stations that in many cases wouldn't be able to do the 76 job. So taking both of those things into account is why we came up with this process of giving them a first cut and then seeing if they could pass muster. But if there's a better way of doing that -- CO-CHAIR MOONVES: I also hesitate, on the Department of Education, to bring in another bureaucracy into the process. That scares me, adding yet another layer to accomplish what we want to. And I'm aware of a lot of the good shows you mentioned, a lot of the good programming, but I really feel that in the hands of public broadcasting as well as some of the other producers that you have brought up, I think it's better not to bring in another institution. CO-CHAIR ORNSTEIN: There may be a way at least of making sure that there's a linkage between the concerns the Department of Education has had in these areas and making sure that we have these channels, that there's a communication link set up. That's a thing we can work on. Charles and then Bill. MR. BENTON: I agree with this section as written, with a minor addition at the bottom of page 4 which I'll come to shortly. But I think, as I mention in my letter that I sent to you both and copies to everyone, that this single recommendation or set of recommendations in the arena of education could be the most important 77 legacy of our Commission if it actually did get implemented. I think Robert Decherd in suggesting a permanent retention of the 6 megahertz on a one channel per market basis has made a really fundamental contribution to the work of our Commission and I hope we do not lose sight of his vision on this as we move forward here. This one channel per market with the extra 6 megahertz could also help in a beginning way to solve the problem that is of deep concern to Mr. Tauzin in Congress and that public television is struggling with in an effort to sort out the overlapping stations. If there was one station per market for education, then there would be -- and some funding attached to it, obviously, which is critical -- then there would be an arena for cooperation among the competing overlapping public telecommunications entities on a per market basis. So this could really be good news. The specific that is missing, that I would like to suggest adding in the second paragraph, page 4, below the bottom, starting with "Under current law," you do need to add before "elementary, secondary, postsecondary," along with "lifelong learning," "preschool, and early childhood." So really the intent here should be cradle to grave and we do need to recognize the centrality, the 78 centrality of television in the preschool years, not just starting with elementary. So this is a crucial point. Let me just say finally that, despite Peggy's enthusiasm for public television's role here, that public television by and large on a national basis has failed in this area. They've failed badly. Educational television, with the exception of the Adult Learning Service, which has been a modest success, has been a failure and it's administered by public television, who has in fact just fired all the people and gotten out of the business. So the educational television forces, which are local in their control and meets at this convention which I was at in St. Louis last month, is radically underfunded and suffering from poverty big time. To give you the hard fact here, which I have mentioned several times before, the total amount of money for K-12 schools programming in this country, that is for production of new programming and for acquisition, is at best $5 million, compared to $50 million for the U.K. for new programming only with the two channels, BBC and Channel 4. Our use of the medium of television for education in this country is really nothing short of disgraceful. So the notion of harnessing this really powerful medium, not just for in-school programming but for addressing national problems and challenges like adult 79 functional literacy -- we've got 40 million adults who are functionally illiterate -- or job training and retraining, the opportunities for television here on a constructive basis, both from commercial stations and public stations - - this is not just a public television deal here; this is their opportunities. There are tremendous opportunities for the commercial sector as well. This is something I've spent my life in, trying to serve educational needs for the private sector, and the opportunities here for service and making money in a constructive way are enormous. So if we can get this permanent retention of the extra 6 megahertz on a one station per market basis as a result of our Commission activities, I believe it'll be one of the great legacies that we can be enormously proud of, and I give Robert Decherd the credit that is due to him for first initiating this idea. Hopefully he can get the NAB to support us as well and we can work together and make this really work. So this is a fabulous plan. I support it. There are some refinements, obviously. We'll have a chance to discuss those refinements later. But I think this plan as laid out in your paper is outstanding. CO-CHAIR ORNSTEIN: The record should reflect that Gigi came up with a comparable proposal simultaneously, so you can both share the credit. 80 MS. CHARREN: Just as I complain of the fact that our schools are falling apart structurally from lack of funding, not because people want kids to be in buildings that don't work, I feel that way about the fact that public broadcasting doesn't do enough in this area on funding problems, which are not something which they endorse. They know they have funding problems. I just want to add that we should recognize, I think, as a group because we have to deal with it after the fact of the proposal, that the money from auctioning this additional spectrum that we're going to presumably say should go to public broadcasting is already allocated in the budget, in the deficit, and whatever one does with money. That's going to be a politically tough row to push, or to plant or something, for all of us, because if the money is allocated in the budget getting it back is very difficult. CO-CHAIR ORNSTEIN: It is no doubt very controversial to recommend that money that has already been allocated for budget purposes be reallocated. We are an Advisory Committee, obviously. That's a decision that has to be made by Congress. I would hope that here is another area where the power of our commitment and what we do afterwards will matter. MS. CHARREN: I agree with that. 81 CO-CHAIR ORNSTEIN: Bill and James, did you have a comment as well? Let me turn to Bill first. MR. DUHAMEL: Actually, what I wanted to say has been said here, but my children were preschoolers in Chicago before I moved to South Dakota and the educational programming that was there in those days, it was just marvelous, the things they were doing. And it's gone, or maybe if it's not gone it's limited. I think the crying shame is the potential for educational programming. That's why I wanted to emphasize this. The thing is now that I live in South Dakota, South Dakota-North Dakota is probably 700 miles north and south and 400 miles east and west, and there's about 1.4 million in that. There are very tiny school districts out there that are 50 miles from anybody else. They have severe educational problems. They're trying to keep these things open because they physically can't move people more than 50 miles a day. The need is here in the rural areas. Frank would probably say the same thing in Nebraska, Wyoming, Montana, and the need is here. I agree with Charles on adding the preschool in there, but I would like to see the emphasis on this expanded spectrum here go into this lifelong learning from preschool on, and not just -- one of the criticisms I have is I'm old enough I remember in 82 the sixties when it was ETV and it became public broadcasting. Public broadcasting has done some marvelous things, but I just don't want to see another deal that's put out here generally and somehow we forget the educational things because, as Peggy says, there are serious problems in our schools and nobody can figure out how to solve these things. Maybe if we took some of the money they're dumping in there, somehow they can figure out how to solve them. But the rural areas are just -- oh God, it's just terrible out there. That's what I wanted to say that this is critical on. CO-CHAIR ORNSTEIN: James. MR. YEE: I guess the comments I'm stating are one sitting have already been stated, but I must disagree with Jose Luis on why public television did not get first shot at this. I still have mixed opinions on this, because I do believe that this is an opportunity to fire up public broadcasting again and give them a clarity of mission and purpose. In some ways they've been calcified over the years due to survival purposes. I also do think that if we do let the public TV stations go in first they'll come back with the same things, the same old things. By forcing them to open up a little bit, I'm not sure whether by a one or a two-step 83 process or just one step -- I think that's something that could be negotiated -- I think it will really make them competitive to bring in new leadership, to bring in ways of doing things, create again in a creative way. They're not challenged now other than just limping along. That disturbs me because I think that they're just at a midpoint where public broadcasting don't want to be unwell, but they ought to bring in the alliances, the partnerships they may not be thinking about. If you open it up to not just public TV, but to other bodies in this nonprofit vein, I think we could see something happen here, something creative, something flexible. I do think that that again goes back to the importance of greater participation and thinking and imagination and commitment, not just a single focus. CO-CHAIR ORNSTEIN: What do members think about an alternative to having this two-step process? If there's a better way of building more flexibility in the beginning, then we certainly can incorporate that. MR. RUIZ: I think it's just taking out the word "first." Page 4, the bottom, last paragraph: "hope that public television stations will be given first opportunity." No, be given opportunities, but not first opportunities. Have them work on a partnership, that's all I'm saying. I'm not excluding them from the process. 84 I'm including them. I'm just saying, let's say laissez faire: the best proposal. CO-CHAIR ORNSTEIN: What you're saying is that there should be simply an open proposal process to any and all? MR. RUIZ: As Jim puts it, we would encourage them to form partnerships, local partnerships. MS. CHARREN: I think that if we did that we'd have to open up the digital stations to all comers. If we have the station in a market, the commercial station, getting this opportunity to increase their service to the public and their bottom line, that the same should hold for the public station in the community. MR. RUIZ: We're not talking about the digital. MR. DUHAMEL: This is the extra channel. MS. CHARREN: Yes, but you are going to set up a whole new structure. MS. STRAUSS: I'm not sure it's going to make that much of a difference if you take out the word "first." I think that because the public stations are in the position which they are now, they're automatically going to have significant advantages in that. CO-CHAIR MOONVES: I think we can easily take out the word. I think we can also put in something about encouraging PBS to bring in. 85 CO-CHAIR ORNSTEIN: Yes, we can do that very easily. MS. STRAUSS: I want to add one more point about the age groups that we're talking about. I've heard a lot about preschoolers and as a parent of both a preschooler and a teenager I can tell you that actually I'm pretty satisfied with what's out there for preschoolers. It may have been a little better, I admit, a little while back. But I still think that there's a significant amount of choice. There is nothing for teenagers. There's absolutely nothing. The point, Peggy, about news for teenagers, especially given what's gone on in this country over the last ten months -- I turn off the news rather than leave it on and let them hear some of the things that are being said over the mainstream news stations. Not only that, but, as you pointed out, by the time they turn 18 hardly any of them are voting. I would like to see something in our final report addressing the need for stations to address the needs of the teen years in broadcasting, because it's just, it's absolutely not being done anywhere. CO-CHAIR ORNSTEIN: One of the things that we might do here is to actually add another paragraph or at least a couple more sentences on what we define as 86 education. CO-CHAIR MOONVES: Dawson's Creek doesn't fit? MS. CHARREN: And neither does Melrose Place. CO-CHAIR ORNSTEIN: That can certainly be defining education here, as Charles said, to make sure that we start with preschool and to emphasize lifelong learning. I think we can also say this goes well beyond classroom education and includes public education, it includes public affairs education. It ought to show in any of these plans a commitment to covering all age groups in different ways across the spectrum or it's not going to be an acceptable plan. MS. CHARREN: Ethnic, racial. CO-CHAIR ORNSTEIN: Yes. MS. SOHN: I had drafted just such language, anticipating that. That had been my concern, is the narrowness of the definition, although there's different ways to skin the cat. It appears to me from discussions I've had outside this committee, in the committee, that what's missing from public broadcasting or what's being underserved in public broadcasting is programming that's targeted to underserved communities, independently produced programming, and local and national public affairs programming. Now, I'd like to see the definition expanded to 87 include that. In the alternative we could, because we're giving public broadcasting a pot of money, ask them to do program streams dedicated to any one or a number of those three areas that I just mentioned. So there are several ways to skin the cat, but it seems to me that I've got what PBS submitted to us in January, or was it December. They're planning on doing oodles and oodles and oodles of classroom learning stuff. That does not seem to be what's missing. It may be missing now, but it doesn't seem to be what's going to be missing in the digital era. But what I didn't see any discussion of in PBS or ABS materials is increasing programming to underserved communities and independently produced programming. CO-CHAIR ORNSTEIN: Well, we'll certainly redefine. I think part of what is going to happen on this channel is data transmission to classrooms, which can be a very, very useful thing. One last comment. MR. RUIZ: Just one more thing. I would hope you would consider with the analog system, if it is given to them, a must-carry of ITV on the analog system. CO-CHAIR ORNSTEIN: A must-carry for what? MR. RUIZ: ITV, educational television. Right now educational television has to pay local stations to put on the educational programming to simply put it in the 88 classroom, and they don't have the money, either. The state department of education has to have the money. So if you're going to get them an analog system then I think they must carry that ITV coming down from the state. Is that all right, Peggy? MS. CHARREN: Oh, sure. They need enough money to make that whole thing work. CO-CHAIR ORNSTEIN: The last couple of comments, Charles and Paul. MR. BENTON: We are at a crucial point here. In my judgment, and this may sound a bit harsh, but there is neither the leadership nor the commitment at the national level here at PBS, perhaps a little bit more so with CPB but certainly not PBS, to do the education job. But where the real challenge lies here is not with the national organizations, but with local public television broadcasters, public and educational broadcasters. The process that you outline at the bottom of page 4 and the top of page 5 is exactly right on. In fact, this notion of a local public telecommunications cooperative and consortium and reaching out to other organizations in a systematic way to infuse, as Jim Yee is urging us, new thinking and new talent, to address the challenge of education, broadly defined -- and I have no problem with a broad definition of education which 89 includes, at the top of page, that the FCC "should pay particular attention to how these stations would propose to serve underprivileged and minority communities that have typically less access to the educational opportunities present in the information age," I think that wording is most appropriate. So the issue here is to create a structure that is going to encourage and in fact motivate the leaders at the local level in public telecommunications to get together with their community leaders and begin to build a new infrastructure that can use this extra permanent 6 megahertz. This is going to be done, this job will be done, at the local level. Some national leadership would certainly be useful, but this is quintessentially a local challenge. And the way this is written reflects that and the understanding of that, so I think we've got to be clear about this. CO-CHAIR ORNSTEIN: Paul. MR. LA CAMERA: I would just add that I would really caution you, don't broaden the language so far on educational programming that it becomes so burdensome that public broadcasting doesn't say, no, thank you, you're asking too much and offering too little for us to accomplish this. To me that's very important. 90 MS. CHARREN: One more thing. This piece of spectrum that causes Congress to think that they don't need to fund the other piece of public broadcasting spectrum, which is a politically attractive idea to some - - MR. BENTON: That's key, that's key. That's why it's got to be defined very specifically. Don't throw in the kitchen sink. CO-CHAIR ORNSTEIN: We'll make that explicit, too. We'll take a 15-minute break and then we will come back and move on. Before you go, I did want to mention something that I neglected to mention right at the beginning, which is that the breakfast that was provided this morning and the lunch are courtesy of Charles Benton. (Recess from 11:04 a.m. to 11:41 a.m.) CO-CHAIR ORNSTEIN: Let's reconvene our proceedings so we can expedite our procedures in order to have lunch on time. Let's move on to the next area, which is the voluntary standards of conduct. Now, I don't think we need to spend much time on this, in part because at our last meeting in Minneapolis we had a full and frank airing of views on this subject, to a point where many believed that this was the only thing we were considering. And as 91 we can see, it's obviously not, although a significant piece. We have here language that basically suggests our overall belief that we should start with a voluntary set of standards, that we had them in the past, that we can satisfy the antitrust objections that resulted ultimately in the consent decree that caused the withdrawal of a code, and move to something that fits the digital age, and we suggest here that we simply include in an appendix the model code based on the 1952 code that Cass and his subgroup put together, along with, for comparison purposes, the statement of principles that had been adopted by the board of directors of the NAB to replace the old code. So that's what we have now and let's open this up for any discussion that people have. Shelby. MS. SCOTT: Because I was not with you in Minneapolis and tried to from Switzerland hear you on the phone, which kept cutting in and out -- CO-CHAIR ORNSTEIN: Yes, we have abject apologies for our technical failures, by the way. MS. SCOTT: That's the Swiss telephone company. We can't blame Ma Bell for this one, I guess. The funny part is, the meetings I was attending in Switzerland, the attorney for the NAB was there. So I 92 talked to him after the telephone call and asked him. He said that they're not in the least interested. Now, that's just one attorney speaking for the NAB. But you know, it would be great if we went back to that, because it worked in some places and didn't work in others, but it worked better than what's happening today after the code. But I just, I can't buy this. I don't think it's enough. MS. CHARREN: You don't think it's enough? spectrum. MS. SCOTT: I don't think it'll happen. I don't think there will be a voluntary code. Therefore I think we should do something else. It would be great if it would, but from my conversations they're just not interested. CO-CHAIR ORNSTEIN: So when you say there should be something more -- MS. SCOTT: And I hate stiff regulatory stuff, too. It just, it's horrible, but broadcasters have failed to serve the public interest in many areas of our country, especially on the local level. I mean, there are issues going on in many cities and towns now that get no coverage on the news. They don't have public service programming very often in many stations. So those issues are not brought to the local community. 93 I think we're failing local communities all across the country. That's why I'd like to see us do a little more than a voluntary code of conduct that probably will not be adopted. CO-CHAIR ORNSTEIN: Jim. MR. GOODMON: I'm coming at this from a positive point of view, not from a broadcasting is terrible and we've got to bring out the police department here to do something about it. We saw from the NAB report about all the work all the stations are doing all over the country. The proposal that's in the full -- can I talk about that now? Is that okay? My notion is and has been that there should be a minimum level of public interest responsibilities for stations, and I have suggested what they should be, and this is different from my first suggestion in that I took out numbers and things. I'm just trying to see if we can agree that there should be minimum standards and it should be in these areas, and somebody else can work on how many PSA's or whatever. But I think that it makes a lot of sense for us to have minimum standards and then on top of that have a voluntary code. I also think, Shelby, that if the NAB doesn't want the do the code we need to figure out some other organization to do the code. I don't know who that would 94 be, but I don't want to give up on the notion of a code whether we have minimum standards or not. I think we ought to stay with that and I said that at the first meeting. We passed out the old code. I mean, I think where we're really going to make progress is with the code. The minimum standards that we're proposing most folks are doing anyhow. So I'd like to see us have minimum standards minimum standards. I'd like to see us adopt this proposal. How do I do that? CO-CHAIR ORNSTEIN: Let's do this. Let's put this on the table now, because certainly the questions of minimum standards and the code are related. Let's discuss it further and then we'll figure out what procedure to follow. MR. RUIZ: There is an August 10th letter from Charles Benton. Were any of these points ever confirmed? He asked for some information from the NAB, stuff like that. Where does the NAB stand on this? Are you familiar with the letter? CO-CHAIR ORNSTEIN: Let me go back and see what part of the letter you're referring to. MR. BENTON: It was on the first page, code of conduct. I can do it briefly if you like. I say: "Before we are asked to comment on the code again, I 95 request...should receive the following statistics: number one, what percentage of commercial and noncommercial broadcasters belong to the NAB; and two, what percentage of NAB members subscribe to the old code." I just think from a factual point of view we need to understand these facts before understanding the role of voluntarism versus other means of developing minimum standards, and the NAB seems to be very silent on these points. I think we really need to hear from the NAB to understand where they are, what their position is on all of this, and we really need to understand this. Otherwise, I agree with Jim, if they're not going to be responsive then let's try to find some other body that will. MS. SOHN: I'll tell you why I support minimum standards. This is very thoughtful, Jim. I'm glad you took out the numbers. I think the numbers are kind of -- they're not as relevant as the principle. I'll support a code, but only with some minimum standards. I agree with Jim that the voluntary code should be something above and beyond what a minimum standard is. And as I think I've said ad nauseam, the reason we have minimum standards is so that the bad broadcasters can rise to a level in which they deserve to have a license. All the broadcasters around this table 96 and others in this room, the minimum standards are not going to hurt them because they already do it. But everybody should have to do something to maintain a license. So that's number one. The second reason why I think minimum requirements is important is because -- I'm probably jumping the gun here, but I think one of the single most important things that we may do here in this Advisory Committee is put forth this pay or play model, and if you don't make it worthwhile to pay everybody will play. Right now you don't have to do a whole heck of a lot to play, so nobody's going to pay. So if we really, really care about a pay or play model and funding good things -- public broadcasting, noncommercial programming, blah, blah, blah -- then we have to make it meaningful to play, and that's why I think you need some sort of mandated minimums. MR. DILLER: Mr. Chairman. CO-CHAIR ORNSTEIN: Yes. MR. DILLER: I agree with Mr. Goodmon. I think that there should be minimum guidelines, minimum standards, because there has to be a code of conduct, and if the NAB won't do it it should be done astride them. What a horrible thought. I also think that it should apply to cable as 97 well as broadcast. I think there should be one code of conduct for broadcasters. There must be minimum guidelines for public interest, that are public interest responsibilities. I've always believed that what broadcasters should do is to say, to pledge what it is they are going to do to acquit those responsibilities, because some broadcasters have talents in one area and interests in others, and that there should be flexibility for that. They should say, this is what we intend to provide to acquit these responsibilities, and then they simply should be judged as to whether or not they've met them in some simple test or form, and if they haven't why, and a process for correcting it. That has to be at least the minimum standard for a free license to use the airwaves. And it must be coupled with a rational code. Those two in tandem will take care of much, not all -- it can't happen, all, but much - of what has been discussed already this morning. I would simply say, relative to Mr. Goodmon saying, okay, how do I get this done, that we should talk about it a bit more and resolve to do it and make it be clear in its language and try and take the leadership to actually get it done, hopefully with the NAB and, if not, then without them. CO-CHAIR ORNSTEIN: Yes, Bill. 98 MR. DUHAMEL: One of the things that Cass had stressed is this had to be a voluntary code. He said if there is coercion there are some significant legal problems that this would raise, because, remember, he had that quite extensive discussion that the key word is "voluntary" in this. I recall Gigi and I had an exchange over the deal about real teeth in the voluntary code. I think there is a significant legal problem here that we have to at least be aware of. CO-CHAIR ORNSTEIN: Yes, Newt Minow. MR. MINOW: I agree with Jim Goodmon and with Barry Diller, and I also emphatically, and I've said this before and I just want to repeat it, it should apply to cable as well. It's got to be across the board. MR. LA CAMERA: What's the practicality of applying any of this to cable and what does that mean? Who does it apply to in cable? Is it the national channels? Is it the distribution systems? MR. DILLER: It's to the programmers. MR. LA CAMERA: So this would apply to HBO? MR. DILLER: Absolutely. MR. LA CAMERA: Is that again within our realm and responsibility? MS. STRAUSS: It's not within our 99 responsibilities, but we could put anything we want into the report. But technically, no, it's not within our charge. CO-CHAIR ORNSTEIN: Our charge is digital television broadcasters. But as a body that can make recommendations, we presumably can make any recommendations we want and they will be taken into account by appropriate bodies accordingly. So it's certainly not outside our authority if we want to suggest that anything that we're doing with regard to the public interest that applies to broadcasters also apply to cable and apply to satellite. Certainly that's there. But it does raise tricky questions, obviously, in terms of implementation. But that's another issue that we don't even have to spend a lot of time on. Yes, Frank. MR. BLYTHE: The voluntary code here is well written. I thank Jim for his efforts in this area, too. What jumps out at me in all the documents that I've read here in the last couple of weeks is that the issues of accountability and enforcement in the code situation, everything seems to be that we don't want to place an undue burden on broadcasters, we should have some minimum standards, it should all be voluntary, and then makes recommendations on how that would happen. 100 I'm just looking in terms of what Shelby's comments are, that some things won't happen if it's voluntary and how is the accountability factor and the compliance factor or the enforcement factor being developed and written into some of the recommendations. I think we should see very strong language in those areas. CO-CHAIR ORNSTEIN: Frank. MR. CRUZ: I couldn't agree with you more. I quite understand the limitations of our charge here, but in many ways to hold public interest obligations solely on digital broadcasting does not make for a level playing field, and I think if there were recognition that it should apply to the cable industry I would wholeheartedly endorse that. Kudos here to Jim for the minimum standards here. The only thing that I would like to add to it would be that we insert, if at all possible, in his all the way A through J, perhaps something that pertains to employment opportunities for women and minorities, encouraging that as a minimal standard, because if we did away with that it seems to me, given the massive amount of explosion that can occur in reference to the future of the digital era, we would be remiss not to mention that and not to encourage those kinds of opportunities. 101 Entrepreneurship is another area. I think certainly in terms of employment opportunities it should be part and parcel of what broadcasters should consider. CO-CHAIR ORNSTEIN: Karen. MS. STRAUSS: I also want to thank Jim for putting together the minimum standards. As you know, I've always since the beginning of this Commission agreed with the concept of setting forth some minimum requirements, because I do think that that was our charge, not to suggest just voluntary requirements. I don't think that Cass indicated that there would be any legal problems with setting forth minimum requirements. There may have been some legal issues that arose with respect to some of the items that we were putting forth on providing free time or providing free political access, et cetera. But to the best of my knowledge, there are no legal restraints to putting forth minimum requirements. CO-CHAIR MOONVES: Let me just voice an objection here or a concern, and I'm not even dealing with the legality. Obviously, this is a point that, I agree with Barry, the NAB will not be part of this. They will not be part of a group of minimum requirements. We can put down all the requirements we want. The broadcasters, unless there is an act of Congress or the FCC, will not pay attention to the minimum requirements. 102 If there is in fact a voluntary code that we can in fact get the broadcasters to embrace, I think we have a better opportunity of getting something accomplished here. We can write whatever we want. We can write you need to put one PSA per half hour prime time network television, you can do whatever you want, three hours of public interest programming, you can write whatever you want. You can make this document as strong and tie it as tight as you would like. The NAB will say they're not going to be part of it. That may be fine. You may want to ignore them. But so will many broadcasters. If in fact we can get something where the NAB will in fact embrace it, or some other organization, I think we have a better opportunity of getting something accomplished that will in fact be done. MS. STRAUSS: Has there been any indication to date? CO-CHAIR MOONVES: About what? MS. STRAUSS: Of how the NAB will receive our document? CO-CHAIR MOONVES: I do not know. I do not know. I honestly do not know. MR. CRUZ: It strikes me that the NAB, as diligent as they are in sending us information -- I know I 103 was the topic if Louis Weinrich on the last one in terms of some of the concerns that he had with public broadcasting. If they had been as diligent as they have been in the past nigh these many months that we've been meeting, why should they have not responded by now? I'm not asking you, but generally speaking. CO-CHAIR MOONVES: I don't know. MR. CRUZ: What is their perspective on this? MR. LA CAMERA: From what I understand, the television board met and discussed this issue of a resurrection of the voluntary standards. There was quite substantive and heated discussion on the issue and I think, at the urging of the representatives on that board of CBS, Belo Broadcasting, and Heart-Argyle Television, those three individuals persuaded the board to postpone any further discussion or consideration and maintain an open mind until they saw the final document. I think that's where it stands. CO-CHAIR ORNSTEIN: Peggy, then Gigi. MS. CHARREN: In the front where it talks about must-carry, I agree that's a nice mandatory requirement, but it's subject to a lot of concern in the marketplace, all these channels. I would like to -- I mean, you're talking about must carry all the signals? CO-CHAIR MOONVES: Right. 104 MS. CHARREN: Should that fail because of pressure from cable not to carry all those signals, which could be a lot of signals, I'd like to make some reference to the idea that at the very least they should be carrying public broadcasting signals, which I think are a special case. On the one hand, that might undermine what you're trying to say here, but I think that if you do away with must-carry and then we don't carry public television, we're doing in the needs of the American public. MR. DILLER: If you do not have must-carry, then everything you have discussed today is academic. So you either have must-carry for the digital spectrum or all of you should go home and forget about any further deliberations, because they will be meaningless. MS. CHARREN: Do you think that that's going to happen? MR. DILLER: It either happens or you don't happen. MS. CHARREN: Okay. MR. DILLER: And to split off -- excuse me. To have a concept of splitting off must-carry for public television and not for commercial broadcasting is, by the way, to send the biggest death knell to commercial broadcasting through any other act you could possibly do. It's extraordinarily dangerous. 105 MS. CHARREN: Well, then if it's extraordinarily important, if it's extraordinarily important, there should be some way to highlight that as extraordinarily important, because it's going to be tough. MR. DILLER: I mean, for sure, without must- carry it's all toast. MS. CHARREN: Well, then I think we should spend a little more time explaining that. MR. DILLER: Is it not self-evident? MS. CHARREN: Well, defending it -- MS. SOHN: It's a little bit more nuanced than that. But I do want to make one point about must-carry, is that under no circumstances do I think we should support must-carry without minimum standards. What do you think about that, Mr. Diller? MR. DILLER: I think that's fine. MS. SOHN: All right. MR. DILLER: Of course that's fine. MS. SOHN: But it's a little bit more nuanced than that. The big must-carry issue -- and people I'm sure will feel free to correct me if they want -- is during the transition period, because the law is kind of ambiguous. It's not ambiguous as to whether cable operators have to carry broadcasters after the transition, though some cable operators probably want to hang me right 106 now. I think the law is quite clear that after the transition is over they must be carried. So the difficult period is in the transition period between when people start carrying the signals and when they give the analog spectrum back. The question there is should broadcasters have to carry both the analog and the digital, one or the other, should they let the broadcaster choose? The FCC has come out with this menu of options, and the broadcasters I believe -- again, correct me if I'm wrong, but they want both carriage of the analog and the digital signal during the transition period. MS. CHARREN: That's what I meant. That's the period I'm talking about. MR. CRUMP: Let's not forget that that is one of the most important things that we can do, because what's driving all of this when we get to the digital signal that we're putting out and we're going to the point where we're going to give the analog channel back, we're looking at an 85 percent penetration of the market. That is, that we must have that many sets sold out there, and if indeed all those folks who are on cable cannot get the digital signal then it's just going to delay this year after year and what we're putting in this report of all the things we would like to have done at that particular point is just 107 being put off almost forever, but certainly past the immediate future. To me that's counterproductive. MR. RUIZ: I'd like to hear from the broadcasters on how to proceed from this point on, especially the ones that haven't had any involvement in raising this, because two months have passed. I believe, Norm, you made the suggestion that we accept the commitment from the NAB, and then there was a question as to whether there was any commitment from that leadership, and it didn't seem to progress any in this area. What do we need to do to move this forward? CO-CHAIR ORNSTEIN: Let me make some -- Newton wanted to say something. MR. MINOW: I think the justification for must- carry presumes that what you're carrying serves the public interest. MR. GOODMON: Exactly. MR. MINOW: So I think what you do is tie together the Jim Goodmon minimum public interest requirement as a condition of must-carry. MR. LA CAMERA: Absolutely. MR. GOODMON: That's the whole rationale. MR. CRUZ: Norm. CO-CHAIR ORNSTEIN: Frank. MR. CRUZ: The submission that I sent to all the 108 members of the Commission, although it pointed to public broadcasting and the reasons why there must be must-carry for public broadcasting, we also had in there that the committee should endorse must-carry rules for public broadcasting, and that should be the core work of this committee. We've outlined some of the reasons why. I think many of you have indicated -- the minimum standards I think would be very much needed. I've outlined in my presentation to you about four or five or six reasons -- five reasons -- as to why it is applicable, must-carry, to public. But I'm sure that logic and that thinking is applicable mostly to commercial broadcasting. CO-CHAIR ORNSTEIN: Let me raise just a series of challenges we have here. This is obviously difficult. My strong preference as a co-chair of this body is, where we can, to avoid issues where we draw a line in the dust and we have a lot of broadcasters on one side and a lot of other people, including some broadcasters, on the other if we can avoid it. I'd like to avoid a confrontation with the industry if we can, because I think in the end the likelihood is that that's not productive. It may not work. I'd like to see if we can explore these ways in which we can achieve these goals without drawing that 109 sharp line in the dust, and it may or may not be possible. There's also the issue that Bill raised, which is a real issue. If we are talking about a voluntary code, it cannot be implicitly coercive coming from a governmental body. So we cannot in our recommendations say the NAB should adopt a voluntary code, and we cannot say as a body: And if they don't, then we're going to come down hard on them. Now, there are ways to get around that or ways to deal with that particular issue. Certainly one thing we can suggest is that a set of standards be adopted by the NAB and, whether the NAB adopts standards or not, that an outside group, the equivalent of a News Council, be created through private support to do its own code and to do its own monitoring of stations. If that's not made contingent on what any other organization does, that's not coercive, and that's one thing we can recommend as a part of what we're doing. At the same time, we have a question of whether we want to have a separate recommendation for minimum standards or whether we want to incorporate minimum standards into a code and put it out there as something that can be adopted by either or both organizations. So there may be ways at least of getting around some of this obvious disagreement. 110 Yes, Peggy. MS. CHARREN: I think that the whole idea of minimum requirements is a ruling. I mean, you have to do that. That's not voluntary. That's the difference between this and the voluntary code. If this is going to work, I think you have to do it -- CO-CHAIR MOONVES: You have to do it? You have to do it. Are you in Congress? Are you passing a law? MS. CHARREN: Well, I'm saying this is a recommendation. MS. SOHN: Right, it's a recommendation to the FCC. MS. CHARREN: Right. You could take the position that nothing we're going to do is going to happen in the real world, and then you don't have to meet at all. The fact is we have to say something that's worth doing, and that's worth doing. MR. GOODMON: I've thought a lot about the FCC versus the Congress. You know, many of us used to have two or three people and all they did was count the percentage we used to have in news, children, entertainment, non-entertainment. I think that a lot of broadcasters are worried that, okay, well, wait a minute. All right, we do this, this is okay; but this is the beginning of a -- if it's this this year, it will be more 111 next year; we're getting something started and we're very much against that. And we have talked about whether these minimum standards should come from Congress or whether the FCC -- it changes it every time there's a new FCC as an issue. But I think the main concern is that we're getting something started here that will get us back to where we used to be. So how can we work on that problem? How can we work on that? I don't think there's such a thing as the broadcasters. There is big companies, there is little companies. We all have different ideas, we all have different views. There are as many views on the NAB board as there are people on the NAB board. My notion is that we were charged with the responsibility of coming up with a reasonable public policy for these digital licenses, and I think it is very reasonable to say that every digital station should have some minimum standards, not none. MS. CHARREN: For who to say it, Jim? MR. GOODMON: For the Commission or Congress or whoever says it. MS. CHARREN: Right. MR. GOODMON: And that we ought to recommend that there be minimum standards and a voluntary code on 112 top of that, giving the broadcasters as much flexibility as possible in how they meet it, recognizing the First Amendment rights of everybody involved, including the public, and moving ahead. It seems to me that that makes a lot of sense in terms of what's reasonable public policy. MR. LA CAMERA: From my understanding, this is exactly what the hierarchy within the National Association of Broadcasters was concerned with, that this voluntary code would evolve at some point into minimum standards. Well, we seem to be there, to have anticipated that. Why did we put Cass through this exercise? MS. SOHN: Why are we mushing this together? We're talking about two separate things. I think some people are trying to jumble it. We're talking about a voluntary code. I like this code. Cass did a great job. But it's worthless in my mind, okay, it's a worthless exercise, unless there are some separate minimum standards as well. It's separate. They're not together. I'm not talking about any coercive language in the voluntary code. MR. DILLER: Where would they not parallel each other? MS. SOHN: They could, they very much could. I'm not saying they wouldn't. 113 MR. DILLER: Where would you say they wouldn't? MS. SOHN: I would think the voluntary -- well, go ahead. I'm sorry. MS. STRAUSS: The voluntary code, if you look at what's covered in the voluntary code, it goes way beyond these minimum standards. It covers the treatment of news. it covers responsibilities towards children, covering elections. It's very specific. It's very specific guidance on programming options. The minimum standards are much more global. So I think there's room definitely for both. And when I said before that there are no legal issues -- MR. DILLER: They're not mutually -- in other words, they don't contradict each other? When one extends -- MS. STRAUSS: We can make sure that they don't. MR. DILLER: So long as they don't contradict each other, and since it's going to be clear that there are some things you can mandate and some things you can only have by kind of the coercion of voluntarism, why not keep them separate, in which case you can end the debate - - MS. STRAUSS: Right. MR. DILLER: -- and move on and resolve it. MS. STRAUSS: Right. I think that they are 114 separate. They're separate now. I think the question here is whether anybody -- whether there's a consensus that, in addition to the voluntary code, there should be these minimum standards. MR. DILLER: There's no question about that. MS. STRAUSS: Well, there's no question to you and I and to several other people. (Laughter.) MS. SOHN: But that's a serious thing. Looking around the table, I'm not hearing a lot of dissent. You're talking about that there's a lot of dissent. I'm hearing more people in favor than against. MS. STRAUSS: So we can find out if there's a consensus. MR. DILLER: What a shocking thought. CO-CHAIR MOONVES: There will be a dissenting opinion on this piece. MR. DILLER: So why don't we hear it. Why don't we hear it so that it can be exposed and understood and heard. CO-CHAIR MOONVES: You've heard it. There are people -- MR. LA CAMERA: Robert Decherd articulated it at the last meeting. CO-CHAIR MOONVES: Right. 115 MR. LA CAMERA: That within the larger broadcasting, the contemporary broadcasting community today, ascertained through the National Association of Broadcasters, there is no interest in the assumption or resurrection of minimum standards. MR. DILLER: Any kind of minimum standards? MR. LA CAMERA: I'm sorry, I don't sit on the NAB board. MR. DILLER: I know. I'm just asking. I'm sorry. CO-CHAIR MOONVES: Barry, there are certain broadcasters, there's a large portion of them, there are a lot of them -- MR. DILLER: No minimum standards? CO-CHAIR MOONVES: -- who feel the word "mandatory," anything that is mandatory, is objectionable. MR. LA CAMERA: No matter what it is. MR. DILLER: Well -- CO-CHAIR MOONVES: Obviously, you disagree and that's fine. But there are certain people who feel that way. MR. DILLER: I wonder how they would feel if it was coupled with mandatory must-carry. CO-CHAIR MOONVES: Must-carry, that's a good question. 116 MS. STRAUSS: That's a great selling point with the minimum standards. Most of the people with representations around this table already meet those minimum standards. CO-CHAIR MOONVES: I would venture to say everybody who is at this table meets these minimums. MS. STRAUSS: Well, I don't have a station. CO-CHAIR MOONVES: No. Everybody sitting at this table. But once again, it's the good broadcaster versus the bad broadcaster. MS. CHARREN: But we don't have much leverage on service and we do have must-carry as leverage, and if we don't use that, I mean, what are we doing here? If you say that the reason that we want people to carry channels is because that is the way you serve the public, if there's no mandatory requirement you could feel that that's not true, I mean that they're not going to serve the public. MR. DILLER: I can't imagine that in the end reasonable minimal standards for broadcasters would be objected to by broadcasters. CO-CHAIR MOONVES: Barry, you should have been at the last board meeting. MR. DILLER: I just think it's reasonable -- CO-CHAIR MOONVES: Hold it. Barry, at the last 117 board meeting of the NAB they objected to the word "voluntary." I wasn't there, but this is what was reported back. MR. DILLER: I don't know. MR. GOODMON: Here's what I'm really trying to do. I keep calling myself a moderate for this reason. We have Mr. Decherd, who makes a very good presentation on the free market, that the free market is the best way to serve the public because the public will tell you, if they watch it or if they don't watch it. And then we have Mr. Minow announcing that he really loves the free market and he would like to auction my station off, and I'm saying, hold it a minute. Do we really want to have this argument? The government is issuing to us a license that is very valuable. For the government to suggest to us that we have some responsibilities in terms of getting that license is very reasonable. As a matter of fact, I would suggest they are negligent of they give away this very valuable public resource and tell us to go out and do whatever the hell we want to do. What I'm trying to do is come up with some minimum standards to give stations all the flexibility in the world in terms of what they do, and then for the rest of this stuff we put a code on it, and then we'll move on 118 and argue about important stuff like must-carry, because with 65 percent of the homes on cable, Peggy, you're never going to get your public interest channel on cable -- 67 percent. MS. CHARREN: I agree. I'm not arguing with you. MR. GOODMON: If we don't get on cable, we can do all the public interest stuff we want and nobody's going to see it. MS. CHARREN: I agree with that 100 percent. MR. GOODMON: I'm trying to take a middle position, not a pro-regulatory, anti-First Amendment. I'm just trying to be pragmatic about the reality. MS. CHARREN: I'm not arguing about -- MS. SOHN: You're very reasonable. MS. CHARREN: I think you're very reasonable. You misunderstood what I was saying. MS. SOHN: Maybe it's line-drawing time. I don't know. MR. DILLER: It's a rational minimum. MS. SOHN: Right. MS. CHARREN: I want that to happen. MR. DILLER: It's a rational minimum. MR. LA CAMERA: That's fine, but then be totally realistic and understand that this effort on a voluntary 119 code of conduct with the National Association of Broadcasters is never going to happen -- MS. SOHN: Well, we didn't think it was going to happen anyways. MS. CHARREN: I agree with that. MR. LA CAMERA: If you also include with that minimum mandatory standards, there is just no hope for it. And that's fine if that's the direction you want to go in. But don't expect both. CO-CHAIR MOONVES: Accepting the fact that there probably will be dissent on this issue, which I think is clear, and that's okay, are there further suggestions on the mandatory requirements that you have? In other words, should a station in New York City have the same requirements as the station that Bill Duhamel has? I mean, are we going to go that far? I mean, how far do you want to go with this? MR. DUHAMEL: There's one point that we talk about -- CO-CHAIR MOONVES: Wait, wait. Yes? MR. GOODMON: I took out of here numbers for that very reason. Basically, I said, first of all, whether we have minimum standards or not, we've got to work on accountability and reporting. It's very difficult to tell what a TV station is doing, and I don't have 120 specifically what that is. CO-CHAIR MOONVES: That rolls right into ascertainment. MR. GOODMON: Then we did the ascertainment, public service announcements. It didn't say how many, but the emphasis on public service announcements and public affairs programming is local. The reason we have these stations is to serve the local community. And then the multicasting and must-carry. I put political time in here. I'm sorry I did because that's -- CO-CHAIR MOONVES: That's a separate issue. MR. GOODMON: But the point I've made is it seems reasonable to me to require stations to provide program time for the discussion of candidates, but it doesn't seem reasonable to require stations to give free commercial time. And I tried to define that so it would include your 5-minute idea or 30-minute idea or whatever minutes anybody had in terms of programming. But I said stay away from giving candidates free commercial time to any extent, and I also suggested we try to make the lowest unit rate so it's understandable. I just tried to stay really -- CO-CHAIR MOONVES: General. MR. GOODMON: Yes. CO-CHAIR ORNSTEIN: Bill? 121 MR. DUHAMEL: The only thing that bugs me -- and Jim's right, he did take the deal out. It was Gigi's that I was thinking of. But there still is the problem in the small markets that I raised before, that we had a news show, a public affairs show, we had it on for 30 years and it was dying. And by changing it to a news program with two 5- minute public affairs interviews daily in that, we have increased the audience five times. I mean, to come out and just say you've got to have a half-hour show that nobody's going to watch -- MR. GOODMON: I don't think anybody's suggesting that. I don't think that was contained in the suggestion. MR. DILLER: So that the debate is onto the point, and it often goes awry on those kinds of differentiations, Mr. Goodmon's suggestions do not have that kind of specificity, and I think you must allow broadcasters flexibility to provide their public interest obligations in these varying parts in ways that are full but flexible, because some, as you say, some have much better ideas to do things that have more of a tuning fork frequency with the public than any written series of obligations which probably won't. It's not that hard to judge whether or not in fact you're meeting minimum requirements. It's not a hard test. 122 CO-CHAIR ORNSTEIN: Newt had a comment, and then Peggy and then Gigi. MR. MINOW: This might not be helpful, but if the NAB says we don't even want a voluntary code, maybe we don't want to have a voluntary exclusive license for channels. Maybe we don't want to have must-carry. Think about that. MS. CHARREN: You don't mean this, you don't mean this to do in legislative mandates like three hours of children's television? MS. STRAUSS: No, that's separate. MS. CHARREN: But if somebody raised this they could think that. CO-CHAIR MOONVES: That's already in the books. That's there. MS. STRAUSS: Closed captioning and children's programming is separate. That's already there. MS. CHARREN: You ought to say that and have a sentence that there are some things that are already there. CO-CHAIR ORNSTEIN: It's very easy to make clear that this is not to the exclusion of anything else. MS. SOHN: Let me defend myself against Bill. I don't care that much about the numbers and I'm perfectly happy to make a recommendation to the FCC for them to use 123 their expertise as the expert agency to determine what the numbers are. And I'm very, very, very, very for giving broadcasters flexibility in determining how they should meet the requirements. So we don't even have to discuss this part of my proposal if we indeed decide that some minimum requirements are a good thing. CO-CHAIR ORNSTEIN: Let me make a suggestion here. It seems to me the best way for us to proceed is that when we're done here that we'll pull together a small sub-group that can go over Jim's language, see if it fits, if it ought to be massaged a little bit, and that we pull together a recommendation that basically couples minimum standards with the must-carry, and that we have a separate recommendation along the lines of what we have here for a code. If you want, we can include a couple of sentences saying, whatever the NAB does, we encourage other organizations to draft their own standards, and that we then put it out to the members and see what reaction we get, recognizing that we will get a strong dissent and that it's going to have broader repercussions, but that that's the best way for us to go forward, and that we take members who represent a range of perspectives to try and go through this and make sure we have the best possible recommendation. 124 I would also suggest that as you do this, instead of just saying Congress or the FCC, that we ought to work through who ought to be doing this, rather than just throwing it up in the air and just saying "jump ball." I don't have an answer to that, but I think that ought to be a consideration. CO-CHAIR MOONVES: You mean who we're turning this paper in to? CO-CHAIR ORNSTEIN: We ought to have a recommendation that says the FCC should adopt minimum standards. MS. STRAUSS: Congress already said there are public interest obligations. CO-CHAIR MOONVES: I think we should give it to whoever will read it. (Laughter.) MR. DILLER: How about mandatory reading? (Laughter.) CO-CHAIR ORNSTEIN: In the few minutes we have remaining before we break, there's another element of this that we really ought to discuss which we have done, which we set out as a separate one, and that is the question of additional disclosure of information. My own judgment has been that no voluntary set of standards works unless you have a requirement that there's public disclosure of the 125 activities that stations are engaging in, and it ought to be disclosure parallel to what in fact the NAB asked in its survey of stations of the kinds of activities that they were doing. So let's throw that issue out there. MR. GOODMON: Is that what we call accountability? CO-CHAIR ORNSTEIN: That's the disclosure of public interest activities by broadcasters. That's the next element in this draft of ours. MR. DILLER: A simple clear checkoff once a year -- simple, clean. MR. LA CAMERA: I think this section is well done. I think one component notion is missing here and that's the role that this reporting plays as an important self-audit for broadcasters. That concluding sentence on page 7, "Greater availability of relevant information," "includes awareness, promote continuing dialogue between digital television broadcaster and community," "and provide an important self-audit to the broadcasters themselves." CO-CHAIR MOONVES: Okay. MR. LA CAMERA: Because I think it does do that. I think in many ways this is as important, this section, as anything else that's in this document. 126 CO-CHAIR MOONVES: I agree with that. Gigi. MS. SOHN: If you recall, I submitted, working actually with Barry's colleague Julius Jankowski, I developed a certification, a checkout, exactly what he was talking about, that would serve the purpose of disclosure. Might I suggest, if people want to fix that, play with it, we have maybe another subcommittee to work on that. CO-CHAIR ORNSTEIN: Yes. We have here, if you notice the language, it says "One possible form using a checkoff approach is included in the index." That presumably was to work off of what you have been doing, and I think it would make sense to refine that and keep it, as Barry said, simple. We want to get full information, but we want to make it as un-onerous as possible for all stations. MR. DUHAMEL: Why wasn't the appendix included? CO-CHAIR ORNSTEIN: We'll work that out. Basically, because we had our hands full coming up with this language. CO-CHAIR MOONVES: It's also because you can't have a checkoff until you know what you're checking off. MR. DUHAMEL: Oh, okay. So there isn't one. CO-CHAIR ORNSTEIN: No. We had a draft of one, but we haven't finalized that. 127 MS. SOHN: Would you like me to work on that? CO-CHAIR ORNSTEIN: Yes. MS. SOHN: And maybe if anybody wants to -- CO-CHAIR ORNSTEIN: Anybody else who wants to participate, and obviously that includes in particular the broadcasters. MS. SOHN: Do you want to volunteer Julius? MR. DILLER: He can volunteer himself. He's sitting back there. Or he can say no. CO-CHAIR ORNSTEIN: In his spare time. MR. CRUMP: I think we need to keep in mind the fact that this group is making recommendations. It's a recommendation of what this group thinks should be done. We're going to have people that will disagree with us, organizations that will disagree with us, both in the public service area and in the broadcasting area. What we're supposed to be doing is creating a situation whereby we're saying there are some standards that we feel should be met by people who have these licenses, and when we get down to something like how we're going to report and so forth, I think we have to realize again how the recommendation is received by the individuals involved. In this instance, they'll be all broadcasters. A great deal of that will have to do with what their mind 128 set is at the time. I think the fact that the NAB board meeting previously held, where there was a great deal of discussion and a great deal if dissent, that we were asking them to some degree to say: Okay, yes, we're going to be for this new code -- they didn't know what the details were. Yes, we can be for this, and all of a sudden here we've slipped them some things maybe they didn't like. Once we have put something out in writing and say, we think you should consider this, we may find that there are a large number of broadcasters and broadcasting groups who will assume positions of leadership and say: My God, there's nothing wrong with this; this is what we should do. Not only that. Depending upon the mind set that you have, you can say: You know, I've been doing this for all these years; maybe I haven't been getting the credit for it that I should have had; and now they're saying I should disclose this more to the public so I'm not in a guilty position perhaps of patting myself on the back, I am merely doing what they have suggested again in going forward. What I felt was good about the code in the old days was the fact that broadcasters were really proud of the fact that they did these things and they could talk 129 about them, and they would say, yes. You've got critics and we're going to have critics no matter what we do, because I have never met people -- I have this trite thinking in my own head. Not everyone is a lawyer, not everyone is a doctor, but I've never met anyone who wasn't a television producer, never in my life. They all know what should be there, they all know what's wrong. And hell, yes, we make a lot of mistakes, like everybody else does. But if you're trying to do the right thing and you're pushing along, then this is going to come back to help you. I really think what we're trying to do here or what I would like to see us do is to tickle the imagination of the broadcasters out there who are saying that we're already doing it, but yes, we need to do more, here we go, and give them some encouragement to go forward, not batter them over the head and tell them, hey, you know, you're in a bunch of bad guys and you're going to have to take your lumps with the rest of them because you haven't policed yourself. We're not in a policing situation. We're individual companies. I think we have an opportunity here, if things are worded right, we put it out that what we do is we provide some incentive and some encouragement to the good guys to lead the way again. 130 CO-CHAIR ORNSTEIN: That's a very good point. Certainly the specifics of recommendations and the language used to frame those recommendations are both extraordinarily important. I hope at every turn that we try to avoid the kind of language that would be provocative where it would be unnecessary. Given that, Harold, I hope you will help to participate in the drafting of these recommendations if possible, to keep us from doing that, recognizing that anything is going to be inflammatory, that we do, will be inflammatory to some. But we can try and minimize that. MR. LA CAMERA: I think that's what you've achieved, minimize that kind of language. And as we advance this and alter this, I think you've got to be very cautious not to cross that line. MR. DILLER: But don't be unclear. CO-CHAIR ORNSTEIN: Absolutely. As we go forward, the shape of the report that you're going to have is first going to emphasize, I hope, the areas in which we have an overall and almost complete consensus, which will be a very significant number of areas, I think, in quite far-reaching ways. Then we will, it seems clear, have an area or two where there will be some significant dissent, and then we will have other places where people can offer 131 additional opinions and views, and that's probably an appropriate way to go. This may be a good break point. We can move on this afternoon after our lunch period to the additional areas of political discourse and a new approach, and then also to consider Karen's proposal and the other things that we have out there on the proposal that we haven't gotten to yet. (Whereupon, at 12:33 p.m., the committee was recessed, to reconvene at 1:45 p.m. the same day.)