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Who serves on the judiciary and commerce communities. The text that opposition to the merger. This was hosted by the georgetown law institute. Good afternoon. Welcome im so excited to see this crowd, to talk about the merger of the future media ownership. My name is gigi and im a fellow with the Georgetown Institute for technology. I want to thank a couple of folks, the institute for public representation which is part of georgetown law center, the Benton Foundation the mozilla foundation. Also senator blumenthal of connecticut who your be hearing from soon and jamie was a Research Fellow at georgetown and alexander who is head of the institute for you may have heard she broke her leg when she and her son or daughter were shopping. A shoplifter knocked them over. I was in there the day before. Anyway if you could send well wishes to her. Also the other georgetown students gathered by andy, panelists helping today with logistics. The me set the stage. In may Sinclair Broadcast Group announced its intention. It is seeking approval on the department of justice for the merger, which if consummated will result in sinclair owning 233 stations covering 72 of american viewers. The next largest will have 70 fewer stations. At the same time the fcc will come out tomorrow including newspaper broadcast, the tv radio and the local tv. Theyve reinstated a rule that counts ultrahigh how many of you know what a uhf station is . Anybody under the age of 40 now . I saw three hands. Or of an opportunity to talk about that later and if that was a real to be reinstated whether engaged in reregulation. The other thing the fcc did was eliminate the main studio which requires a local broadcaster to maintain his studio and its community of license. Since i cannot Important Role but when you combine consolidation with getting rid of having a presence in the local community is important. These are timely with the votes coming tomorrow. Lets talk about of the mergers in the Public Interest and if this makes sense in the stand age. You have an internet, do they make sense. Senator blumenthal is not here yet, when he comes we let him speak regardless of what were doing. Well start off with her debate will focus on ownership rules limit follow with the panel and then have audience questionandanswer. Im knocking to do a thing or a column people. If you have a question right a time. Raise your hand and walk around and show people who you are to be shy, they will be collecting the cards and jamie will go through the one have a whole lot of time but hopefully folks will stay after. Lets start with the debate. Real lucky. I think at 930 i got an email from john whos going to argue in favor of the ownership rule that he was too ill to come. I was not happy the thankfully he brought a substitute have known for years jerry with one media, literally at the last minute he agreed to debate you may know him from his appearances on msnbc. His principle of the good friend group and adjunct professor. Without further do each debater will have seven minutes of then you have two minutes to respond. Thank you. I have to say again not the only one whos grateful that jerry showed up. I am too. He got lastminute notice and stepped in that deserves our thanks. Now with that i would like to take him on. Will hear it a lot today and tomorrow about how the world has changed. Since the ownership rules were first promulgated that was a little bit ago. Theres the internet, cable tv, look at Different Social Media platforms. Therefore these antiquated oldfashioned broadcast roles have to go. Theory continues thats the only way we can have free over their broadcast tv. The only way to survive in the modern world. If thats where the story ended at have to concede that you win. For me its not where the story and. Its not where the story began. It was when broadcasters got a great deal. A trade are going to give you free spectrum licenses in every market these that are worth billions of dollars today you can sell them if you want to get billions of dollars more for free. Doesnt stop there. The laws passed give broadcasters more value. Do the broadcaster guaranteed distribution and cable and satellite tv. Guaranteed. You are given a legal monopoly under the copyright law to provide network programming. Youre the only one permitted to do so. If i want it by a newspaper from another city i can go and find content from anywhere in the world, but not with broadcast tv. The American People from time to time over worried about the budget and taxes like we are right now we ask is there any possible way what if we charged a fee no say the broadcasters, no fees. We want it for free as we always had. The American People are supposed to get something in return. We get free over the air programming. Its for free. Number two, we get local news, weather and sports. These different choices and forms of technology according to the trust, 82 of americans across all age groups trust local broadcast the most of the local news. Local broadcast is trusted the most for local news. By the way the survey found the local broadcast news they trust more than their own family for what is going on locally. Now, in my view if you want all the freebies its got to come with the favors in return that we asked for. You have to provide local news and a variety of voices. We will get rid of these regulations but youre not going to have them to carry anymore or the copyright exclusivity anymore and guess what broadcasters in the world of broadcasters. We are going to ask ourselves what happens when broadcasters get bigger and i will give you a preview. And the tribune that attempts to buy this transaction has a better track record. In fact when we did a study of local news at both companies and found that the top three stations that provide local news to both companies provide twice as much. Sinclair must prove to you today that ive been getting bigger, the local news that they provide is either going to be just as good or even better. What are we getting from this bargain and why should the limits of the lifted so they can get even bigger. Thanks, david for the invitation. I havent read all of the pleadings in the preceding. I first worked for chairman whiteley and commissioner lee back in 1975 through the first staff time reviewing the station sales in the mid70s to my time with the chairman and the Reagan Administration with some of the rules in the ets to cope with them advising the owners in the past 30 years the question today is whether we need the rules for the broadcast ownership in the age of ubiquitous highresolution internet streaming, new overthetop services and competition from the distribution. Todays hyper competitive marketplace antitrust principles are more than adequate to govern the consolidation and television broadcasting. The arbitrary definitions of competition and diversity all of which were chosen decades ago as political compromises rather than in response to the rigorous thoughts about how this works. Free over the air broadcasting is a vital treasure. The advertising markets were the highest and best use of the spectrum they would urge you to consider this. If over the air broadcasting didnt exist and allocated the spectrum today what investors provide capital and would the new broadcasters be able to outbid the internet or the multichannel platforms to acquire the most popular programming and produce hours and hours of live news and every market. Weve chosen to findings by allowing broadcasters to compete with revenue in the marketplace. To broadcast nfl games nobody requires the nfl to distribute its programming on a platform available for free or sell games to nbc when espn and fox sports will pay more. For every minute of programming and every dollar of revenue they will say broadcasters have special interest obligations and they got the spectrum for free and that justifies limits on control. The problem is one does not follow the other. That justifies the regulations that thwart the competitiveness and drives me crazy. Very few stations are in the hands of the licensees. To the incumbent phone companies for free with no Public Interest responsibilities and the same was true for the licenses issued for free for those who pay the market price. More to the plaintiff how they got the stations and limits on ownership is an intellectual non sequitur. The fccs ownership rules have very harmful effects in the market. I was an active witness in the unintended consequence of making washington, d. C. A monopoly newspaper town when they made him separate the washington star and it died. Nationally, we do not need ownership caps because those particular rules prevent new competition to existing platforms. As preston pointed out in his washington journal oped they have the effect of freezing National Television to abc, cbs and fox they have 100 . Why shouldnt others have the same option . Locally, we dont need ownership restrictions either because we need to allow those that are willing to invest in local markets to organize in a way that allowed them to be as platforms and in the system we have chosen in the finance broadcasting, profits with computing platforms are not just good, they are essential even if you believe broadcast ownership should be regulated beyond antitrust, next question is what is right for 2018 and beyond. I would object that as preposterous to restrictions on the books written at the time people learned of the pearl harbor bombings from the over the air networks before facebook, google, amazon, netflix, directv. And when at t was a longdistance provider whether that is the best framework for the 21st century. I sometimes feel like rip van winkle. The world has changed. [laughter] the u. S. Shows the marketplace profits and that was easy when they had no competitive competition except for each other. Restrictive ownership limits have bad consequences but they were not existential threats. If you want the marketplace to find a way to bring you local news, nfl games, highcost scripted programming for everyone you haveveryone you hae marketplace figure out how to do it because programmers are going to sell to the highest bidder every time coming and the government isnt going to subsidize. Thank you. When i said i was happy to be here, i take it all back. You ended by saying the marketplace will figure it out and im coming back to the point i made earlier if this were the real marketplace the government would have no role whatsoever as long as they have the thumb on the scale providing guaranteed distribution and yes, free licenses at the time of her competitors have to buy them, we and the American People get something in return. It is an anthology i use all the time. 29 of the 32 nfl stadiums in the country were built with taxpayer money. That is your money and it went right into the pocket of a billionaire owner and what do you get in return for that flex 400 per family or maybe it gets blocked altogether or maybe you have to subscribe to the network to get it. As long as the American Public is giving something to the industry we have every right to ask for something in return even if it isnt efficient from the economic standpoint and i think the way to handle the debate is to say okay, we do want over the air broadcasting and we do want things available to the public for free. Those are all great things but you only get to argue that the rules should go if you can show somehow theres a disconnect between the value we get in the diversity of voices on the one platform that is most for local news, broadcast and so i see nothing and i mean zero in the filings submitted that would show that. In fact any time one of us suggests the question they could answer like can you show us how the local news high uranium content compares to the rest or even the company you want to buy, no answer except maybe platitudes like we are going to bring local basketball. Thats great if i can compare it to how the rest does. So once again we can talk about the free market all day long but as long as they are subsidizing this industry, we get a say and we want local news and local diversity. [applause] when senator blumenthal overrides, we will give him the podium. Ive been corrected. Let me briefly introduced the speakers and i believe that their biographies are on the wall Center Website that they are also very easy to find in any Search Engine and im not going to name any particular Search Engines. Look them up because they are all terrific. I feel very lucky to be able to sit here on this panel. To my right we have the Senior Vice President for strategy and policy person Sinclair Broadcast Groups. The counsel for the tribune corporation. Its a big deal to have the representatives of the parties. Then we have the director for policy and Legal Affairs for the coalition and directly to her right is the association of black owned broadcasters and is my mentor and longtime friend and a pain in the whatever, Andy Schwartzman who spend the senior counsel and attorney at the Georgetown Institute for public representation. Welcome everybody. The first question i want to ask, we have to start petitions. Wine is an industry that gets a lot of government tax payer benefits and is something to the public and one of the things they owe is the diversity of the voices and on the other hand, we have a competitor in the marketplace and with a freemarket whatever needs to be done to make sure broadcasters survive. I thought i would ask anybody on the panel if they want to respond what is it or is it a little bit of both . A lot of the points he makes are not disputable except we got our section for free and if that is the case i will be expecting a check back in addition to the 85 billion that our company paid over the years and acquisitions that weve made. So there is an investment in spectrum regardless of the origin of how the original licenses were issued. But the other part of the picture david painted is what you see before you and it is basically the environment in which we try to use these socalled government benefits to create a selfsustaining financially solid ability to deliver local news. This is a slide showing where broadcasters are in the middle of the ecosystem in which we have to work. We have networks from whom we buy programming, 50, 60 billion then this is where we distribute our programming. To summarize where we are in the landscape, the major challenges in which we are supposed to provide all the Public Benefits include major declines in the primary Revenue Source which is local advertising. Major consultation of satellite and cable companies. Consolidation of National Programming networks. Increased cost including sports. Fragmentation of the viewership and entry of competitors such as apple, google, netflix and facebook. I want to leave that out to set the scene but its not as black and white as david presented and i will stop there. Lets talk about the spectr spectrum. We own the spectrum, the public owns the spectrum. We are the landlords and they are the tenets. Sinclair doesnt own the spectrum. What sinclair bought was licenses. Licenses for eight years which expire and they have the right to renewal if they earn it unfortunately the fcc rubberstamps that they are supposed to earn it with Public Service but make no mistake about it, we own the spectrum and you need to view it in that context when you realize what youre saying is because we own the spectrum we can set the appropriate conditions to make sure it is used to benefit the public and that includes ensuring competition and diversity so when they say antitrust can take care of it, the Communications Act is about diversity, and diversity is ultimately the most important thing we are trying to get here. When i hear that this is over spectrum, it really turns me upside down. We own it, they dont i am not sure it is that fruitful of the discussion to talk about who owns the spectrum quite the way we are. I think all local broadcasters feel obligations to their communities. Thats what sets local broadcasters apart. The trade david described is not accurate. There is no requirement that they provide local news. Many local broadcasters, some of the biggest, many local broadcasters to provide local news and the way they dont is that its usually expensive. Its because they live in these communities and if they can afford it, they invest deeply in their relationships wit with thr communities but to do that it is not a government requirement, that is something you do because you think it is the right way to run your business. David talks about the fact that tribune puts on more local news than sinclair, but theres actually a very simple explanation for a good part of that which is our biggest market in new york, chicago and la we have either cw affiliate for independence. You run local news because you are not required by the Network Partner to have Good Morning America or the today show or what they put on and reclaim your u2 put on whe when you wera Network Affiliate where sinclair did most of their biggest stations are Network Affiliates and therefore they are required in circumstances to run network programming. Both are deeply devoted to local news and the reason for that is it is our way of delivering value to the consumers and david said one other thing i will point out which is we get automatic distribution. Its true local broadcasters can choose must carry to get the local distribution, but that is isnt what sinclair and tribune and the major broadcasters do. He makes a very important point because in some of the smaller markets we have awardwinning newscasts that do an excellent job year after year the ad revenue isnt enough so they are not profitable. We wouldnt be able to deliver the very same thing david wants us to deliver. We have a national audience. Can one of you explain to people what that is . There are two ways you can get distribution on the platfo platform. If you are subscribing to cable or satellite it happens in one of two ways. The cable and satellite people dont pay you for your signal but they have to carry it, or you choose the retransmission consent and what happens then is you engage in a negotiation about the price of that is going to be and the cable or satellite operator basically pays for local broadcaster for the signal and the market and the local broadcaster has an increasing share of the money back to the network but its affiliated wi with. What has happened in the marketplace today the local broadcast advertising dollars which are major driver of the revenue of all broadcasters is slapped down and has been for years because of the competition from cable and the internet. Transmission can send revenue is going up at the local broadcaster is going up faster so all broadcasters feel themselves in a tremendous financial squeeze. That is what the slide is and that is what drives the industry like broadcasting to consolidate because that drives the synergy to allow companies to save money and reinvest into the local communities. In the absence of god there will be no growth in the industry until there is a technological change and thats why you have us sitting up here as members of a separate Company Interested in becoming one company. I was struck that broadcasters dont have a legal or obligation to i said we dont have the requirement to put on local ne news, but the vast majority of broadcasters do not put on local news but that doesnt mean they are not serving their local communities. My mentor said thank you for clarifying, im good. The first thing i will say is if they are serious about maintaining local coverage i think they would suggest that be in writing in any order it puts al gore the government does but you will never hear them commit to that because as i said before they buy stations and fire local resources. Do you really want the government to dictate to broadcasters that kind of content to put on the air . Just last month the entire community was up in arms because the chairman and event come out forcefully enough in favor of the First Amendment so that the licenses wouldnt be in jeopardy. For you to suggest that the government in order from the fcc should direct broadcasters to have any specific type of programming would be the most constitutionally it would be a negotiated Consent Decree or how about even just a letter from the ceo saying i will not cut local staff in chicago, la, new york or any other property because it would be a false statement . Now we know one thing for sure. This company in tends to raise prices. Look at the transcript where they said we are going to raise the fees. That means the american taxpayer if you subscribe to cable or satellite your prices will go up. I worked in washington for 27 years and never have i seen a merging company come to the town to say we intend to raise prices and maybe thats why we have conservatives like chris who runs the news max and progressives on the same page agreeing that its bad news. Maybe thats why even under the antitrust law you have attorneys generals including sinclair saying this is a bad merger. I want to shift gears a little bit. If you have any response from the last ten minutes and also we are talking a lot about money with it for consent fees and making a profit but obviously it affects other things like whether marginalized communities will get to speak. So i was hoping maybe you could talk a little bit about some of your concerns not only with the change of the rules but perhapss the merger as well about its impact on the voices of color. Why dont you start and then j jim. Ive heard a lot of talk about localism but not much talk about diversity and the impact this will have and we are talking about the marketplace. As it stands, women and people of color are far behind those in broadcast ownership and the number is abysmally low about 4. 5 and when you are talking about diversity when you consolidate and have these segments that are centrally produced and segmented to the local stations across the country, you are pushing out and keeping diverse owners out of the market and not only that but we just dont have the diversity of the Community Needs and specifically the association of broadcasters put out a study every year and said they did proportionately rely on the broadcast media for their news and 31 of households rely on broadcast tv as the source for news and the numbers are even higher for spanishspeaking households, 47 . So i feel like this consultation will not serve what is needed to serve that community. I feel like i need t to givet a bit of history as the National Association of black owned broadcasters. Some of you in the room may be familiar. I will go back a little bit. In 1978, they were recognizing the diversity of the ownership of broadcasting particularly among the minorities that created a is that better . Created a minority ownership policy that was designed to increase. That program worked very well in 1978. At its peak they represented 250 and 23 television stations which was a huge increase from 1978 to 1995. Unfortunately it was out of 11,000 in america and it was over 1400. Since that time the numbers have decreased so now we have 12. When you talk about consolidation in the industry, its already caused a great loss throughout the industry. We rely upon broadcast, radio and television for the news more than the general market so when we talk about consolidation in the industry its always a matter of great concern and its always been no more consolidation. The sinclair merger comes at an interesting time because recently we have been in conversation and they brought home a key point for us. Try not to talk in acronyms if we can help it. The general market association. What they brought to mind was this market cap and if you look at the Largest Television companies, you see tha that thes a fraction of the companies they have to compete with, so you get comcast, nbc with a huge market cap. You get at t, direct tv, and so if you are a broadcaster in 2017, you are competing against companies that are many more times your size not to mention facebook and google, all of whom are working for the advertising dollar. So where we are now is a crossroads trying to figure out how do we navigate if the broadcast industry as a whole is at a disadvantage when does that mean for us as africanamerican broadcasters. So when i look at the tribune transaction, i am hoping since theres a discussion from some of of the stations being acquired it may be spun off to the minority broadcasters. So we are looking at it in a more complex way than we would have previously and it does require a very hard and close look and the hope the kind of things theyve been talking about in general terms might result in some games. I would like to respond to the general question this is going to create a broadcast behemoth nobody has seen before, 273 stations, the coverage of the American People why is it in the Public Interest. Responding to what i heard in peace remarks, there is an underlying relationship between the broadcast ownership limits and minority and that has never been proven to be the case. The only thing that has resulted in increased minority ownership in the Congress Minority tax cuts and if congress were to bring that back i think you would see an increase because historically that is the only data that has ever proven what causes minority ownership and you do correctly point out that to the extent we planned that we are going to have to spend all some of the stations, right now, 20 of the potential buyers of the stations are either minority or womenowned and that is a very strong percentage and we are very proud of that. I have to take off the table baseless allegations that when they buy a station we sort of go in and fire every one. That isnt true. That is a caricature of a narrative thats being spun, and it clouds the policy debate that should be discussed which is held to be fix the situation so that the over the air broadcasts can continue. We show how many hours of newsweek added to the broadcast and where weve added investigative reporters into digital reporters. I dont want to waste precious time going through those, but we are happy that the filing speaks for itself to the people who are making the decisions on this which is the fcc. Is that your Public Interest case . Gave me the affirmative case and you can chime in as well. What do you say to craig aaron in the second row about why the merger is in the Public Interest. Theres highquality content as part which is migrating beyond the pay wall and you can only do that with scale. We are investing a lot of news that is vanishing from the over the air landscape and the only scalable to serve and bring that back. Most successful africanamerican woman producer whos going to netflix so if you like greys anatomy or any other shows you have to pay 10 a month. We believe it is in the Communications Ecosystem and we dont want to see it become a secondclass service for people who cant afford cable or dont want to pay for cable and you only get that in this day and age. We play a particular role in the over the air sports. I would have thought he would have been one of the biggest cheerleaders of the merger and the reason for that is. The only way to see the mets or the yankees if you are one of the huge number of hispanics in los angeles who are over the air only it is a High Percentage and you want to watch the dodgers and you cant afford the park or its inconvenient or you are not a cable or satellite subscriber the only way to see them is in los angeles and at the same is true in chicago. We carry 150 majorleague Sports Events on wgn. A hugely expensive contract. It is exceedingly difficult for local broadcast to compete, its difficult for the National Networks to compete, but for local broadcast it as a virtual impossibility tha but we have managed to do it. You cant continue that and more will go beyond the pay wall. Of all of the broadcasters, the one that i would say a ton of money to buy the tennis channel is sinclair. They understand the value differentiation and i dont understand why that is not a plus. We would walk away from the valuable properties that are popular with our audience. I just explained what they pay wall is. Again it is basically tv for pay. Climb over the wall or pay whoever the gatekeeper is to get the programming. Let me also explain why he can look me in the ey the imsail people should care about the issue. Im the chairman of a nonprofit called sportsmen coalition. When he worked at the fcc we petitioned them to end the sports blackout rule and im proud to say in 2014 they voted to end includin and including ve now chairman and commissioner of oreilly and commissioner clyburn, so of course i care about sports, and i care about sports being available to the public and free over the air tv. My beef isnt with tribune. Youve done a great job of putting free over the air sports on tv. Im glad you mentioned this tennis channel though. Its good to have in ones sinclair takes over they will take the sports rights that the employer and push them on to the table property they havpay walle stadium and the tennis channel so that you will not be to get them over the air and will have to pay more to watch your local sports which i think is a travesty. Now i will be the first to say that sports on the air over importeimported up with me alsod you that the nfl claims when we were fighting them to end the rule that without the regulatory support, they were going to come on to broadcast tv. That didnt happen. The nfl voluntarily ended its own local blackout practice. Its still the only medium in the United States where you can reach 100 of households. If advertisers include budweiser and coke and pepsi and other brands that requires 100 , you will still get broadcast advertising and as long as local broadcast is still come and it is the most popular place to get your news, then you will still have an extremely huge audience on broadcast, so i do believe in keeping sports on the air. But i do not believe the merger is the way to get it. We are starting to roll out a broadcast component of the digital subchannel so that fact needs to be corrected. I dont know the basis that you have for saying that they would move them off broadcast and the reason they want is when you do the consent negotiations, one of the ways you deliver value to them and therefore get paid is by having the sports on your channel. If they move it by the pay wall, they are quick to end up losing money and that makes no sense. Do you connect to not taking down the programming or do subscribers can get the benefits of not being able to . Quick response and then i want to move onto something el else. That is one of the major reasons broadcasters get the money they get and so the idea is there is an incentive to move out of the broadcast games behind the pay wall. As a broadcaster it seems totally counterintuitive. Im going to stop you there and turned to andy now and i want to talk about something on the shorthand called a sidecar agreement. So for years broadcasters have engaged in these agreements essentially allow them to skirt local and National Paths through a variety of sharing agreement with other stations firsthalf advertising so in other words, a more powerful broadcaster will cut a deal to sell all of their advertising or share facilities or management and in my mind if i can offer an opinion as moderator is a way to skirt the ownership rules. I want you to talk about what they are and then i would like to broadcast folks to respond if we are lifting the ownership rules anyway, its going to happen tomorrow, why do we need these agreements anymore . I can understand when the rules were more restricted but now its just why should there be ways to get around that as well . First, the privilege of responding on the one point, most people have no problems with the guidelines that were in place that set the goal of having certain amount of public programming for every station. It specifies that theres a minimum amounthere is aminimum g that has to be carried to meet the needs of children and i havent heard anybody else challenge the constitutionality or desirability of that statute and the enforcement of it because as i said at the beginning it belongs to the public and are entitled to extract Public Service for the free use of the public spectrum and that extends to the socalled sidecar agreement that was a blatant evasion of the ownership rule to the contractual arrangements that gave all actual ownership to one company while having an owner in place. In fact under the Securities Exchange commission rules, the socalled sidecar stations are generally reported as being owned by the dominant company and not the Front Company in operation. My guess is as they lived the te rules, they will become on necessary and my suspicion is that in many of these instances they have agreements that then allow them to buy the company is anyway. A sidecar is a means of having somebody who does nothing but hold a license and goes through the motions of pretending to operate for the benefit of another company. Its a disgrace to Public Policy and it makes a mockery of the law. I want you to weigh in on these agreements as well and just to let people know if it is, there will be agreements in different markets so that is pretty significant. I actually counted 35. With respect with inconsistent with how they are being used on the rules and if they are about to change that ownership rule many of these do have the right for the dominant broadcaster to purchase the sidecar station and take absolute control but i do worry that if they change because what they are proposing is so farreaching and relaxing or eliminating the rules is that you may see a station that buys out the sidecar so that it now owns the stations outright in a market because the relaxation of the rule doesnt prohibit another sidecar agreement after they owned the two, so i think it has a potential for destroying any Television Ownership and its a very bad step that they are taking. I agree it is a consultation by another name and they just exploit the loopholes and ownership rules. With this consolidation was time to put into the news and journalism and i agree i think there is a concern that this is going to undermine competition and the voices in the market. I would direct your attention to the slide shows the benefits resulting over the years. Its where the two stations combine their advertising and consolidate the sales to more efficiently so their advertising to other broadcast operations, but to respond to your point, this shows in the numerous markets, more local news or local news where there wasnt any on that station before was introduced into the marketplace as a result. Similarly there are non news benefits which they can get these benefits but i guess i would like to step back and ask the panel why the characterization that they sidestepped the rules if the fcc has been providing guidance on exactly how to craft bead visa o that they are in compliance. The staff has bee been an tht of the broadcasting industry for years, thats why. Ever since 2008, theyve approved 85 and and they shouldnt have been approved. Thereve never been any demonstrable harms, and one more point, Congress Actually asked them to study a number of years ago and they concluded there was no data showing that they harm the Public Interest or ownership rules so its time to put this topic to bed. We are talking about the ways that consolidation might take place or potentially grows in scale. One is i a wood on more stations across the country and cover a larger part of the country but the question where is what percentage is okay for broadcasters to have as a kind of horizontal matter across the country in a world where many distributors now reach 100 and in the old days only broadcasters could and now the internet has changed. That. The second question is within each market, how many stations can you either own or have a significant relationship with such as these socalled . And when it comes to the market it is important to remember that there are two screens any deal has to pass. One is the department of justice where they look to see if the combination of stations in any given market are going to be too large and if it is they say youve got to get rid of the station and then theres the sort of overlays which involve its own test. We have a special guest and that was perfect. I am so delighted senator blumenthal was able to join us and i will turn the microphone over for a few remarks. I apologize i didnt mean to interrupt. And if you havent finished, please do. Im sure that my words can wait. I really want to thank the institute for organizing today and im pleased that we have this excellent turnout for a merger that i think is profoundly important for the future of communications and media in america soon after sinclair announced its proposal to acquire the tribune media, i called on th the chairman of the judiciary and the Commerce Committee to have a hearing. I am profoundly disappointed and troubled but there has been no hearing and there is no immediate prospect of one. I think it is potentially a disservice to the American Public that will be impacted with more than 70 of american households that will be affected by an acquisition of this scope and scale and it has even more profoundly important ramifications Going Forward so theres no question congressional scrutiny and at least one congressional hearing is necessary and appropriate and probably more than one because both the judiciary and commerce have a role. This merger or he simply threatens to create a concentration of unprecedented scope and scale in the Media Industry in america and will affect the Public Interest whether you are for or against it. I welcome this conversation today because it provides what i hope will be a preview of coming attractions for a prelude to what should be close and i hope thathe deliberation today will raise some of the issues to my colleagues anthat mycolleagues n obligation to conquer and. Ive laid out the details about why i oppose the proposed acquisition in a letter i sent i sent on september 22, 2017 to the chairman of the fcc. I opposed it because it violates longstanding media ownership rules and would demonstrably harm media diversity, localism and competition that is deeply ingrained in the rules. Diversity is part of the fiber in democracy. Allowing this to move forward with reflex a failure to do its job. I again want to thank all of you for being here today particularly the wonderful panel that you have and i hope that there will be more opportunities to air the reasons that this transaction would be a great disservice to the American Public. Again, my apologies for interrupting a. [applause] i think there were two interesting questions. Number one, should congress hold a hearing but then a second question is she mentioned the Judiciary Committee and the department of justice has been talked about a lot lately with regards to the at t time warner merger but it hasnt been talked about at all with regards to this merger. Thats the point i made and i think it was referred to earlier as well but this isnt the wild west. You cant just put a bunch of companies together regardless of concentration and consolidation. There are some very wellestablished rules in the department of justice. What more should the fcc do. What we are trying to do is make the case. If we truly do believe in serving those communities you shoulwhoshould be in favor of t. You will be gone inescapabl drao that conclusion. Decades ago the local broadcaster is probably dominated three quarters of the chart this is a declining situation that we are facing. I would like to respond to some concern. Everyone needs to understand every broadcaster knows if youre not local, youre not going to succeed in your market. Localism is alive and well. Im not going to read it all but this is a list where we are number one and number two in our markets and you dont get there unless you are meeting the needs of everyone in the community. We are going to have to close. Usually when it comes to broadcast mergers of the type, we tend to divert to the fcc. Im guess im asking should play a bigger role . It doesnt look at the Public Interest generally up what role should they play and then whatever else you want to respond to. I have a couple of former students in the room and they are about to roll their eyes because we would talk about the various ways in which different parts of the government will get a transaction like this. Get it out in the public can have a debate because congress decides the date of the merger but because they have oversight responsibilities. Different agencies with different jurisdictions. It may sound like a redundancy and thats because it is. Different agencies with Different Missions look at the transaction and it is no difference here. Heres where i think weve gone off the rails a little bit though. We havent talked a lot about a change to the rule or interpretation of the statute that has a profound affect. There is a rule on the books that says no broadcaster may get above 39 of u. S. Households. Im pretty sure and someone can correct me if im wrong this isnt something they just invented, this is in statute. With all of the talk we heard from supporters of the merger of the world has changed and technology has changed and competition has changed from internet and all this great stuff, what is the one thing which remanded to the rule plaques he went backwards in time to before the digital transactiotransition and said tw we are going to count households. It had the effect of raising the number you could reach through broadcasts today. What does that mean for the department of justice . Will they look at that and say the Expert Agency believes the rules from 1975 about how to count how is should still apply today because that is what the chairman thinks we are all about the future and technology when it comes to getting rid of rules on this one we are going to go back in time. Will the department of justice look at that and say i guess they know more than we do about how to count households over what they say that seems pretty backwards way are we talking about an analog way of counting when everyone has gone digital and we are going to look at this with fresh eyes . I hope based on what we see at the department of justice provision is pretty aggressive enforcement when it comes to the at t time warner merger and i hope we see the same level of energy and enforcement when it comes to this merger and if they disregard this rather odd regression to the 70s to the chairman has chosen for the county household. [inaudible] i said that is an unfair alice in wonderland description of what the chair did. All he did is say if you are going to reexamine the discount, which is just a way of measuring 39 , you have to think about the 39 of the same time and think about what the Public Interest is. Thats all he did. And that is almost an arguably correct. The 39 cap is high in the antiquated in this day and age and so if you are going to look at one, you should look at the other and that is all he said. The commission that has only just changed the rule a few months before because this was on the motion to the reconsideration had made a mistake deciding to undo the discount without looking at the cafe itself because the Commission Said that would take too long and that isnt a good way to make policy. He wants to look at it holistically thats the right way to look at it so he put the ball back down on the field where it was before the additional mistake was made. Im not sure that i follow what you said. Can you tell me under th the chairmans rendition of the rule, would the company have to divest more or fewer television stations . There are a bunch of companies that are already over the cap. We would have to invest more. So that means they would have to divest fewer stations. Thats all i need to know. In fact i dont understand why it was necessary in the first place. It seems if we are talking about making a rule about how to count the audience reach. He is looking at a rule about the definition of the reach ought to be. The question isnt how do you count of stations. The ultimate question is should broadcasters in the age where everybody else gets to reach 100 of the country will make it to reach 39. Hopefully the department of justice will answer it a little bit better. They all have 100 reach not because they have licenses but because they do it through contracts with Companies Like mine. Heres a question from the audience and by the way, great questions. I wish we had time to answer them all that we dont. But we dont. They said its forever expanding like the universe and if you could wish for anything should they be allowed to own the local stations and should there be any limits . Hispanic i think i answered that question when i described the rules are in place. The antitrust division and the department of justice looks at these things. Above rules are mor roles are mt and will be applied. To keep some perspective, the proposed rule change tomorro tof not eliminate the local ownership its just too looked at them more closely on a casebycase basis. They are not looking at them, they are eviscerating them. Number two, what ar you are talking about with a National Ownership cap is set in place by congress. Congress is going to have to change that. Hes talking as if it isnt a statute that precludes looking at the discount in conjunction with the cap is pointless because Congress Said 39 . Number three, you are talking about national reaching for the whole hour youve been talking about the importance of localism coming dont need 100 of the country to do a better job in these local communities. He wants 100 because you want to extract more programming and if you want that like abc, start a network. I want rebecca to respond but i also mentioned the frequency discount early on, and i think it is worth it. If you can take just two minutes to explain. If you wanted channels one through 13 when i was a kid who clicked in. And click send. Was 14 to 69 you would have to tune it like a radio. They were at a severe disadvantage and nobody watched them. Thats why there was a discount, to encourage folks to buy these less than optimal stations. Thats why there was a discount but once we went to the Digital Transition in 2009, that disadvantage went okay and we got rid of discount so to me it is the height of hypocrisy to reinstate a rule that has absolutely no basis in reality and especially a chair man who likes to say you have to take the facts as they are, not as you wish them to be. As i understand he wants the conversation but in reality what is the right number on the why is it 39 . I think the proceeding he said he wants to open us to start that dialogue and create a record and get public input and look at todays advertising marketplace or consolidation market place and ask ourselves after decades is this the right number . I am not afraid of having a dialogue. We welcome it and its easier to have that dialogue in an agency that is setup t set up to have t of them in congress. Theres no technological justification and i think everyone agrees with that into you for making a procedural argument of the way we should consider it but even when you put them together, you would be 6. 5 over the cap that currently exists and is in congress. When you put them together, and im sure before the deal is complete they will have to come into compliance with the cap as you say under the current rule the combination is over. They already set i already set s they will come into compliance with the rule, but this argument that because in your view it is obsolete technologically and there are people that take the other side of that should be undone without looking at the fabric of the regulation. It makes no sense. When you undo the discount you are massively constricting the ability for a group of companies to consolidate. I guess it has a bad name to it but that is what you do. You are not then looking at the overarching goal of what should be the right number. The idea that you should just pull that one thread without looking at the picture, the democratic former chair of the fcc when i got into the chief of staffs job he said one piece of advice and that is everything in the world is about Market Structure you must think about Market Structure or if you dont come industries that count on the government to do th do great things are gointhe rightthing ar terribly. All the chair man is basically saying is we should look at this and the sense to understand where the broadcast businesses today. How that is objectionable i do not understand and that is apart from the concerns you expressed which are very real concerns about a triple problem with diversity ownership in the media today. Its very widespread. And how to solve the problem is one of those things and its really hard. Having to manipulate the consolidation rules for companies that are in an industry that is hurting as a way of forcing diversity to me is a wrong way to think about the problem. We have to solve it in ways that are more. I would agree with one thing. I think the minority tax credit was extremely successful. Can you explain. Sure. You cant buy a tv station or anything expensive really if you dont have credit if there isnt a banker or a lender or investor. So how do you make an investment attractive . One way is you give that investor a tax break and what we would call a transferable, one that could be traded. You can stop me if im [inaudible] what congress did is change the tax code such that somebody that did lend or sell to a minority owner got a tax benefit. Under the decision from the supreme court, as a country we are far more limited in our ability to do race specific incentives and i think that is a shame. That is the wall of the land and what we deawhats the deal with. Nothing i would argue stops your companies frocompany from volung this and i hope when you are forced youve announced that they will be sold to people that have not been in the business before and maybe that is one way to address diversity in the marketplace. Is a really essential point we havent quite closed the circle on. If you talk about the value of the tax certificate policy and the ability to spin off stations, the success was because of the rules that required limits and divestitures to take place. If the trend list chair man lise ownership rules so that sinclair can acquire, there are no stations that will be spun off. If theres going to be any value it will be the spinoff of the stations but if they listed the rules so that no stations to be spun off and so tha suck up thee deeppocketed companies can buy up all the stations it is fewer opportunities so there is a direct link between changing the rules and for the new owners who are minorities and owners of women defeat coke defeat coke ito who have gamed the system with sidecars and having the sidecar stations owned by the elderly mother of the ceo who was a different independent Company Takes a lot of chutzpah. I want to see if chen wants to add anything. I agree with everything he said. [laughter] i wont respond on that part, but it is a problem when you look at what youre doing eliminating the rules and in the recent years because of Court Decisions and congressional action or inaction, the policy has been largely ineffective and always been able to do is get spinoffs from the large mergers so if you eliminate the rules that acquire the spinoffs than you make it impossible to see any Significant Growth coming up in the ownership. There are two good questions i want to add. What would the impact be on the Political Campaigns given what they call them must run the muse directives and unknown rightwing and i will let you answer about to say is this really just about the fact that its purported to want to start a broadcast fox . Is it about their political views . Go ahead and answer the main question what would it be on the Political Campaign . There is no impact whatsoever. I think what she is referring to is are you talking about the National News bureau or the commentary . We lost a National News bureau we are very proud of and like many we have a bureau that we cover National Stories and the share them with the stations. These are completely objective without any opinions that answer the question there will be no impact whatsoever on elections with respect to what the air. If you are referring to a short commentary that weve gone, it is a tiny fraction and if they are the opinions of one person and they do not reflect the opinions of others and i dont think it will have any impact. These are segments that the stations are required to air so there is no judgment to be exercised. I want to say as a flamingly progressive democrat, my opposition of the merger doesnt stem from the fact that there are conservative views expressed any more than the opposition of conservatives against the merger if they were somehow against the views on the airwaves what we are against is the power and yes elections will be affected. They didnt want that viewpoint getting out and that is the point. Its not about what view is being espoused. Its how much power is being amassed under one roof. He said that the tribune technically is correc correct be a sidecar Company Called dream catcher and if you want me to explain the difference, there isnt any. [laughter] actually there is a difference but we can leave that aside. The reason we have the small markets which is different but in any event it doesnt make a difference. The reason we have them as because of the incredibly arcane rule that you cant go to a newspaper and televisionewspapen in the same market. You say they evaded the rules but they decided instead we are in compliance with those rules are actually in place. Heres the problem. Youve defended the newspaper ownership rule and they are put out of business. It is the same process. The newspapers were desperate for revenue and wanted relief from ridiculous rules around owning a station and newspaper in a market you could actually share a news bureau and sue to because of the Community Better but wellmeaning people decided that this too dangerous and as a result, local newspapers are failing. One last question then we will wrap up. Thank you for the fantastic conversation. The last question shouldnt we get rid of other regulations that distort the market such as must carry a. At the fre the freemarket fooly should broadcasters have benefits like must carry . As we have shown declining revenue isnt sufficient to support the things everyone on the panel ha have said they wans to do and they want American Communities to have, so while it is the most important revenue stream we cannot do it without. So, if you care about free and local broadcast, and you have to find a way to supplement our way of financing without a dime from the government and it has been the most fair way to do that. If yo youre asking whether given the fact there hasnt been a rewrite oany rewrite of the tw since 1996 and this is an area in general that is right for congress to take a look at and think about what the rules ought to be now that we have ubiquitous highspeed broadband and a bunch of other questions i think my answer would be yes. I dont think what you should just take a tiny corner of the world and distort that by looking only at what might be an outmoded law and regulation in the one area. Its absolutely time for a rewrite of the telecom act the trouble is that its hard to do the legislation as we are painfully aware a lot of it gets pushed down to the Regulatory Agency and we battle it out. The battles are over money and some are over other things, but its all very hard and thats what makes it work. The ecosystem that broadcasters exist is very complicated and vaults private property, intellectual property that has jurisdiction in the copyright law and broadcast law and that integration if you peel the part just one without addressing the overall issue of property and how Program Providers are compensated for their effort and their intellectual property, that would be a disservice to the entire industry and that is hard to do but you would want to do it in a broad look at how we should regulate content. One quick point, i do agree maybe we should take a holistic approach but what i would like to see is having some studies about the impact of specialty ownership for women and people of color and i think we need to understand the impact that will have before we move with any changes at all. If they adopt the rule changes for tomorrow they will allow the wholesale consultation without having any consideration on what it means for diversity so if all we can look to is perhaps a couple of spinoffs when we have consolidation on this level its going to be inadequate into the broadcast industry is going to continue. Ive said enough, i rest my case. We start off by talking about why broadcast is different. Some of us believe it isnt, then its one of many sources of information along with the internet into something that gets invented the next year. Others believe it has unique Properties Like the fact that the government public taxpayer support or the fact that local news is still over broadcast and the most popular way to get your information but make no mistake when we talk about these rules this isnt an abstract academic question. There are real implications waiting and its going to have an impact on all of our lives and we ought to be ready for it. Thank you, panelists thank you to all of you. Have a good afternoon. [applause] [inaudible conversations]

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