Transcripts For CSPAN3 Future Of Media Ownership In The U.S.

CSPAN3 Future Of Media Ownership In The U.S. November 27, 2017

Local content and media diversity. This is an hour and 40 minutes. Good afternoon, everybody. Welcome. I am so excited to see this crowd to talk about the media ownership. Im gigi sohn, fellow at the georgetown university. I want to thank the institute for Technology Law and policy. The institute for public representation, which is will part of Georgetown Law Center. Fenton foundation and mozilla. I want to thank senator blumenthal from connecticut who well hopefully being hearing from soon for reserving this room and a Research Fellow and personal law clerk, doing a fabulous job, alexander gibbons, head of the institute, who some of you may have heard pro her leg when she and her son or daughter were shopping at h m were shoopping and a shoplifter knocked her over. I was there the day before. If people send well wishes to alex, shes done a great job running the institute. I want to thank other georgetown students gathered by Andy Schwartzman, our panelist, helping today with various and sundry logistics. So let me set the stage what are we talking about today. So in may of this year Sinclair Broadcast Group announces broadcast licenses of Tribune Media company. Its seeking approval both from the federal Communications Commission and 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 tv broadcaster next star would have 78 fewer stations. At the same time the fcc will vote tomorrow to eliminate or loosen several of the media ownership rules including newspaper broadcast ownership rule, the tv radio crossownership rule and the local tv ownership rule. The fcc reinstate add rule that counts ultrahigh frequency or uhf stations as half a station for purposes of the ownership rule. Ill just ask, take a pause, how many of you know what a uhf station is . Anybody under the age of 40 know what a uhf station here. I saw three hands. Thats pretty good. Well have an opportunity to talk about that a little later and whether that was a rule that should have been reinstated or whether chairman engaged in reregulation which really hasnt been his forte since hes been at the fcc. Another thing in the last couple of weeks, month or so, was eliminate studio rule which allows local broadcaster to maintain a studio in his community of license. It sounds like a really kind of old and crickety and unimportant rule. I think when you combine consolidation with the getting rid of the need to have a presence in the local community, i think its meaningful. So maybe well get to that today. These issues are obviously extremely timely with the vote coming tomorrow. So were going to talk about whether this merger is in the Public Interest and whether media ownership rules make sense in this day and age where you have many media outlets, 500 cables, chock a block information do they make sense. Let me talk about how today is going to go. Senator blumenthal is not here yet, so as everybody knows, when he comes well let him speak, regardless of what were doing. So i think what well do is start off with a debate. The debate is going to focus largely on the ownership rules, not so much on the merger. Then well follow with the panel, then well have audience questionandanswer. There are cards on your seats. Im not going to do the thing where i call on people. Thats bad. If you have a question, please write it down. Jamie, are you going to be the one collecting them . Okay. Raise your hand and walk around and show people who you are. Raise your hand. Okay. Thank you. Dont be shy. Be like me. Good. Show people. They will be collecting the cards. Jamie will go through them and select we wont have a whole lot of time for audience q a but hope any folks will stay afterwards and answer more questions. So lets start with the debate. Were very, very lucky. I think it was 9 30 morning i got an email from john hayne from pillsbury law arguing in favor of loosening ownership rules that he was too ill to come. I was, i think, still in my pajamas. I was not happy. But thankfully he brought in his place a fantastic substitute who ive known for years, jerry fritz, executive Vice President for Strategic Legal Affairs for one media, a joint venture controlled by sinclair. So jerry literally at the last minute has agreed to debate. Very excellent good friend and some may know from his appearances on msnbc. Hes the principle of good friend group and adjunct professor at Georgetown Law Center. So without further ado, each debater will have seven minutes to debate. Then whoever goes first, which i believe will be david, will have another two minutes to respond. David, the floor is all yours. Thank you, gigi. I have to say, again, gigi is not the only one who is grateful here that jerry showed up. I am, too. I literally got lastminute notice of this and has stepped in. I think that deserves all our thanks. Now, with that, i would like to take him on. Were going to hear a lot today and tomorrow at the fcc about how the world has changed. The world has changed. The world has changed since the ownership rules were first promulgated by fcc back when jerry worked at the fcc. That was a little bit ago. The world has changed. Theres the internet. The world has changed, theres cable tv. The world has changed. Look at all the Different Social Media platforms today. The world has changed. Therefore these antiquated, oldfashioned broadcast rules have got to go because t, the theory continues, thats the only way we can have free, over the air, broadcast tv. Thats the only way to survive in the modern world. Now, if thats where the story ended, i would have to concede, you win, jerry. Thank you. Everybody goes. Fortunately for me and the rest of us, thats not where the story ends, because thats not where the story began. The story began when broadcasters in this country got a great, great deal. It was a trade. We are going to give you we, the American People, the american taxpayers are going to give you free spectrum licenses. The best that there is, in every single market. And not only that, these spectrum licenses that are worth billions of dollars today, under todays law, you can sell them if you want and get billions of dollars more. Free. From the United States taxpayer. It doesnt stop there. The laws passed in this institution give broadcasters even more value. You the broadcaster are guaranteed distribution on cable and satellite tv. Show me a business person who would not love that deal, guaranteed distribution of your product in law. You, the broadcaster, are given a legal monopoly. Thats right. A monopoly, under the copy right law, you are the only one permed to do so. If i want to buy a newspaper from another city, i can go to a bookstore and find a newspaper from another city. If i want to go on the internet and find content from anywhere in the world i can, but not when it comes to the content on broadcast tv. No. We the American People, give broadcasters monopoly for Network Affiliated content. And we also from time to time when were worried about the budget and taxes and where revenue is going to come from, like we are now during tax reform, is there any possible way to get additional revenue from these licenses . What if we charged a fee for using this public property. No, say the broadcasters. No fees. We want it for free as weve always had it. Now, we are supposed to get something in return. The American People are supposed to get something in return. The bargain went Something Like this. Number one, we get free over the air programming. Advertiser supported, available to 100 of the households in the United States, for free. Number two, we get low news, weather, and, yes, sports, because thats important. Local is. We get that as a Public Service from the broadcaster. And the other thing were supposed to get, and this is where we get to our conversation today, were supposed to get a wide variety of perspectives. Diversity of viewpoint, diversity of perspectives. We all know this country is filled with different viewpoints. We also know that the owner is boss. If the owner as boss says i want the viewpoint to be this, guess what, thats what the viewpoint is going to be. We the American People say to the broadcasters take it, take it all, for free on us, provided we get those things back. Its actually played out that way even in the midst of this vast market with all these different choices and all these different forms of technology, according to the Charitable Trust 82 of americans, across all age groups, trust local broadcast the most or local news. Local broadcast is trusted the most for local news. By the way, that survey also found people trust their local broadcast news more than they trust their own family for whats going on locally. Now, in my view, if you want all the freebies, its got to come with the favors in return that weve asked for. You have to provide local news, and you have to provide a variety of voices. If you want to take away those restrictions, thats fine, just give back all the goodies youve got in return. Steve scalise on the house side, Republican Leadership member introduced a bill, well get rid of broadcast but youre not going to vm copy right exclusivity anymore. Guess what, broadcasters, fight it. In the world of broadcaster, what we want is what matters. Not what you want, the public. Now were going to talk about a specific transaction and specific broadcaster, sinclair. They are represented today. Were going to ask ourselves what happens when big broadcasters get bigger. Ill give you a preview. Sinclair when it buys a station fires local reporters, local sports casters, local staff, and sends those function toss baltimo functions to baltimore, its headquarters. The tribune, attempted to buy in this transaction, happens to have a better track record. In fact, we did a study of local news at both companies and found that the top three stations that provide local news at both companies, tribune provides twice as much. Sinclair must prove to you today that by them getting bigger, the local news tribune provides is either going to be just as good or even better after the transaction. If past is prologue and you ask people in Oklahoma City or rochester, new york, or seattle where sinclair bought stations, it aint going to get better, its going to get worse, which begs the question, what are we the American People getting for this bargain, freebies for broadcasters. Why should these ownership limits be lifted so they can get even bigger . The past is prologue and behavior of the nations largest broadcaster tells us anything, it doesnt work out well for the American People. Jerry. Thanks, david, and thanks, gigi, for the invitation. I thought about shaving my head to emulate my friend but i dont think i could pull it off. I apologize if i have not read all the pleadings in this proceedings but i have been part of these rules since i first worked for chairman wiley and commissioner lee back in 1975 through my first through my fcc staff time reviewing station sales in the mid70s to my time with chairman fowler during Reagan Administration deregulating some of these rules in the 80s and trying to cope with them and advising station owners for the past 30 years. So i bring a little bit of perspective that might be enlightening. The question today, as david suggests, is whether we need fcc rules limiting broadcast ownership in the age of ubiquitous highresolution internet streaming, new over the top services, and more competition than ever from mvpd distribution. We do not. In todays hyper competitive media marketplace, antitrust principles are more than adequate to govern consolidation in Television Broadcasting. We dont need separate rules administered by independent agency imposing artificial and arbitrary definitions of competition and diversity, all of which were chosen decades ago as political compromises rather than in response to rigorous thought about how Television Distribution works. Two basic premises guide by views. I believe free over the air broadcasting is a Vital National asset. A treasure even. I dont take it for granted. Whatever you say about programming markets or retransmission consent or advertising markets or the highest and best use of spectrum, i urge you to consider this. If free over the air broadcasting did not exist, and fcc allocated spectrum for today, would investors provide capital and would the new broadcasters be able to outbid internet or multichannel pay platforms to acquire the very highest cost and most popular programming and produce hours and hours of live news in every market. That is day in and day out and make it available for free. Access to people is no longer a barrier to entry, but nobody else does these things today. Second, i understand theres no free lunch. Weve chosen to finance over the air Television Broadcasting by allowing broadcasters to compete for revenue in the marketplace. The decision to finance free over the air broadcasting with profits earned in the marketplace means that broadcasters cannot take anything for granted. They have to earn their supply of programming by paying for it. Nobody requires cbs stations to broadcast nfl games. Nobody requires nfl to distribute its programming on a platform thats available for free, or to sell games to nbc when espn and fox sports will pay more. When i hear the typical arguments against broadcast consolidation, the one fact that never gets acknowledged is the simple premise that broadcasters have to compete against unregulated competitors for every minute of programming and every dollar of revenue. But they will say broadcasters, as you heard david say, have special Public Interest obligations and got their spectrum for free and that justifies limits on control. The problem is one does not follow the other. The canard that broadcasters got their spectrum for free, that justifies ownership regulation that is thwart their competitiveness drives me crazy. Very few stationers in the hand of original licensees who got their stations for free. I was there when chairman fowler dissented to giving original cellular licenses away to incumbent phone companies for free with no Public Interest but responsibilities. The same was true for dbs. Most licenses dbs and broadcast issued for free have changed hands to buyers who paid market price. More to the point, how they got their stations and limits on ownership is an intellectual non sequit sequitur. Ownership limits are not derivative from how a station was acquired. The fccs politically divine ownership rules have innumerable, perverse and harmful effects on the market. I was an active witness on the absurd unintended consequence of making washington, d. C. , a monopoly newspaper town when fcc made Joe Albritton separate washington star from its financial moorings at wjla tv, and it died. Nationally we do not need ownership caps. Because those particular rules prevent new competition to existing National Distribution platforms. As Preston Patton pointed out just two days in his wall street journal oped, the rules have the effect of freezing National Television to abc, nbc, cbs, and fox. They have 100 of american laws, why shouldnt others have that same option. Locally we dont need ownership restrictions either. We need to allow those willing to invest in local markets to organize in a way that allows them to be as profitable as competing platforms. In the system weve chosen to finance broadcasting, profits commensurate with profits of competing platforms are not just good, they are essential. Even if you believe that broadcast ownership should be regulated beyond antitrust, the next question is what ownership rules are right for 2018 and beyond. I reject as preposterous the argument that the ownership restrictions on the books, written at a time when people learned of pearl harbor bombings from three over the air networks before facebook, before google, amazon, netflix or directv or davids former employer as existed. At t was still a Long Distance provider, whether that is the best framework for 21 it 1st ce. I feel like rip van winkle. Heads up, the world has changed, rip. Get over it. The u. S. Shows finance broadcasting through markets. That was easy when broadcasters had no competition except for each other. Restrictive ownership limits had bad consequences but they were not existential threats for free television. If you want the marketplace to find a way to bring you local news, nfl games, high cost scripted programming to everyone for free, you have to let the marketplace figure out how to do it, because programmers are going to sell to the highest bidder every single time and the government aint going to subsidize. Thank you. When i said i was happy jerry is here, i take it all back. Jerry, you ended by saying the marketplace will figure it out. Im going to come back to a point i made earlier. If it this were a real marketplace, the government would have no role in there whatsoever. As long as the government has its thumb on the scale providing guaranteed distribution and, yes, free licenses at a time when other competitors have to buy them, we the American People get something in return. Here is an analogy. An analogy i use all the time. Did you know that 29 of the 32 nfl stadiums in this country were built in whole or in part with taxpayer money. That taxpayer money is your money, and it went right into the pocket of a billionaire owner. What do you get in return for that . 400 per family to attend a game. Thats what you get. Or maybe a gam

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