about is principled engagement. we have a strong bilateral relationship with the government of egypt and many, many security and other interests which are very important. they have been a partner in the middle east peace process, but these human rights issues are also front and center, and so we'll continue to raise these issues and continue to press them, and the sectarian tensions are an important piece of what we are discussing with them. ..

>> iran, north korea, saudi saudi arabia, sudan, and uzbekistan. now we are going to have an internal process to evaluate these and we will designate countries going forward that are on this list. [inaudible question] >> i can't speak to that. we haven't had the discussion. so it will -- as soon as we have the list we'll let you see it. >> this report with north korea and the other countries, and so have you discussed or have any

plans to discuss with north korea human conditions? >> you know, our -- as you know, our relations with north korea are strange to say the least. and we raised publicly and whatever ways we can a whole range of human rights concerns. the human rights situation in north korea is desperate. and so on every measure it is a country that's consistent violator of human rights. we will continue to raise those issues publicly in whatever ways we can, and try to encourage other governments to do the same. >> so -- my -- you address globally as human rights conditions? >> i'm sorry? >> the future six-party talks on north korea should address the human rights. >> you know, we have a special

representative here in the state department, bob kingsley, it's his job with the human rights issue in north korea. he's the person you ought to talk to. he leads that country. [inaudible question] >> well, you know, we have had a range of concerns with saudi arabia in terms of restrictions on religious freedom. they've been on the list since 2004. the government bans any public religious observance outside of islam. even private religious observance is sometimes interfered with. we are concerned, continued to be concerned about educational materials. the government has made commitments to reform the

textbooks and other educational materials. it has done some of that. but they still continue to be in the saudi textbooks references, very negative stereotypic references to jews and christians. that's a concern. we have another range of issues with the saudis. we have human rights concerns. we will continue to raise these concerns in particular with the saudis until these issues are addressed. >> thank you. >> it seems that most of the interference and persecutions going on in the countryside, according to your report, is the central government just failing to regulate the behavior of officials in the rural areas. >> i don't think i have much to add to what's in the report. i will say we have with the

government of laos signed an agreement which allowed a u.s.-based ngo to provide training on religious freedom, both to government officials and religious leaders. it's often the case laos, perhaps and elsewhere, that what the central government is doing is not completely in harmony with what goes on at a local level. to the credit to the government of laos, they have been open to the training program by an ngo, and it's certainly something we're going to continue to work on. >> time for a few more questions. you spoke just a minute ago, the principal engagements, the administrations with egypt, i was wondering if you could speak more about indonesia, given the fact that the president was just there? >> i think, again, i highlighted it as kind of an interesting example of a large muslim

country, but a pluralistic country where traditionally different religions -- different religious faiths have coexisted. we applaud the fact that the government has set up a national interfaith council. we undertook in january a religious dialogue where leaders, students, others came together from our two countries. one the things, again, i was in indonesia earlier this year, and one the things that's quite encouraging, as the president said, this is not a clean bill of health. there are obviously still a range of issues still to be addressed there. but there is a sense with the indonesian government that they have engaged in the issues from the president on down and there is, i think, a potential for us and we are eager to do it to work with them. not only with respect to indonesia, but with respect with the region more broadly.

>> the report says the government took some steps, but not enough. and you said, i quote, but the problems remain. can you explain this a little bit? >> you are talking about in indonesia? >> in pakistan. >> oh in pakistan. there is as you know a widespread pattern of violent attacks from extremist groups. i mention the one, the bombing in may, but there have been attacks against christians, they are still discriminatory laws, anti-imadi laws. the government is taking steps. it's an intense situation. there are tensions within the society. the government is taking steps. we give the government steps it's taken, but recognize that

more needs to be done. it's part of our diplomacy with them. >> you -- in your report you mention about this and now again you mention about the blaming the extremist. what about what you say the specific laws that discriminate against members of religious minorities in pakistan. that's under governmental control. >> right, as i said just a amount ago, we are mindful about the laws, we are concerned about the laws, we raise our concerns directly with the government of pakistan. one the things that report does is identify in pakistan and elsewhere government actions where they contribute to the problem. and where we see that, we are going to raise it. pakistan is not alone in that. >> just a quick follow up. >> sure. >> in all of your answers you mention that you raise the issues. what exactly level that goes into, you know, is it just a

meeting and then nothing happens? or you expect some results? and when can we hear about those results? >> you know, i don't think any meeting ever gets results. there has to be a consistent message delivered by different people and it has to be -- come from somebody to follow. that's what we are trying to do in each of the situations. we talked about egypt. i've been there twice. i'm going to go back there. there are other government officials raising our concerns, same thing in pakistan, and other countries that i'm describing. in some places we have more leverage than others. it's difficult for us to exactly be the one to promote the human rights in north korea, because our relationship is so strained. we will continue to raise the issues publicly and privately. the notice is this is part of what we do as a government. we are going to do it in a

consistent way, sustained way. multiple officials will raise it. we will keep pushing until we gets the results that we are aiming for. the goal here is to allow people to practice freely. it's a human rights issue. we regard it of importance. >> just a quick one, the secretary said today that we want to see religious freedom around the world. and she also said that she wants to see people with all faith or with no faith can love together and pakistan is a -- is your friend country. we have been giving billions pumping it, why cannot you have a clause of human rights and religious freedom? >> well, i think what i've said, and, you know, it's come up in several different with egypt, saudi arabia, pakistan, we apply a universal standard to other country friends and countries that we have difficult relationships with. that doesn't mean we don't have

security interest or economic interest or other diplomatic interest. but we will raise these issues as we see them. we'll call them as we see them. we'll right the reports straight out based on the universal standard and we will continue to press government to promote and respect religious freedom. the right of people to practice their religious freely without constraint. >> last two questions. in the back. go ahead. >> recently uk congressional delegate visited north korea. and they published the report that they found a little bit of improvement in the religious situation of north korea including this new seminary in protect seminary. do you have any comment? is there any reasons or examples why you put north korea on the cpc list, one the eight

countries? >> yeah, again, i'm going to take the question about the report. i have not seen the report. the designation in north korea was made two years ago. we're reviewing it now. but from our perspective, across the board, human rights are not respected, violated in north korea. i'm interested to see the report. i'll give you a reaction. we certainly see a very driconian government that doesn't respect religious or human rights generally. [inaudible question] >> yeah, i don't know about a

legal act. we certainly are trying to encourage a greater international attention to these issues at the u.n. and elsewhere. our decision to join the human rights council last year was predicated on a belief that we could by being engaged raise these and other issues. that's what we are trying to do. we are trying to -- in september, for example, took the lead on resolution of the freedom of association. part of that relates to religious communities. it's important that these religious communities, minority communities don't feel isolated. part of what we are trying to do with this report and this effort is to make sure that religious groups that are feeling isolated understand that we are paying attention and we are helping them. thank you very much. >> thank you.

>> a live picture of the u.s. capitol where the senate is done for the week after approving by unanimous consent a bill that allows payments to complete several months claims of the trusts. we'll head back to the house for a final vote before it can go to the president's desk for his significant. the senate will return on monday at 2 p.m. and at 4 p.m., lawmakers will resume work. live senate coverage here on c-span2 when the gavel comes down. >> earmarks account for less 1/2 of 1% of the federal budget. nay are part of the -- they are part of the agenda. find out what earmarks are on the c-span video library, search on the arguments for and against them. it's washington, your way. live this weekend,

>> c-span2, one of c-span's live public affairs offerings, weekdays, live coverage of the u.s. senate, and weekends, booktv. connect with us on facebook, twitter, and youtube, and sign up for alert e-mails at c-span.org. >> fox's news corporation pulled it's channel in new york and philadelphia for two weeks last month. leaveing many without access to the world series and other programming. this was the result of a dispute news news corporation and cablevision which broadcasters

like fox pay cable companies like cablevision in order for them to carry the broadcast channel. this addresses issues of cable and broadcast tv negotiation, and it is just under 2 hours. >> good morning. we will come to order. i apologize for being late. we have one too many caucuses. we appreciate the opportunity to have this hearings. and i thank you for your patience, and also for bearing with us as we moved it back to accommodate the senate schedule. we are here to examine the recent disputes between video distributors and broadcasters. thank you for being here. given the truncated time, i'll try to summarize. at issue are the fees that broadcasters charge distributors for retransmitting the broadcast

signal that's sent over the public air waves. too often, the negotiations over that fees lead to both sides putting up web sites and ads calling each other greedy, urging consumers to take a side, and warning those consumers about the loss of service. that's typically followed by tense, last-minute negotiations, and in some cases pulling of the signal until one side or the other ends or breaks as the case maybe. at the end of the process after the period of consumers uncertainly, there's no transparency in the private reached or the nature of the agreement. "the new york times" now quotes it as a regular event. "bloomberg news" say the tv blackouts have reached the highest level in the decades and may blame as they fight higher

fees sought by consent producers. during the most recent of the disputes, millions of the cable subscribers interesting in watching fox had to find a place other than their home. one couple had to watch the giants game in a bar instead of the living room. the wife told "the new york times" we're too old to be in this place. and on the other hand, for bar owners, subscribe to cablevision, they lost business. an ap story quoted one, saying, this is ridiculous. i'm relying on people to come in who are giants fan, and they are walking out, even though i pay for the football package. they went on to say regular, quote, everyday people get caught in the middle. that's precisely what brings us here today. our goal is to discuss alternative ways to resolve the disagreement and protect the

consumers. that's what brings us to the table. our preelection is not to get involved or try to somehow manage the marketplace in ways that, you know, that are inappropriate and are first instinct for everybody here is to want that marketplace to work effectively. when the consumers keep getting crunched in the middle, and keep coming back to us and saying we feel powerless and we seemed to get screwed. we are tired of it. that's when we come to the table. our constituents should not be the pawns in these corporate negotiations. and i'm concerned that without a better were more transparent process for dealing with impasses in negotiations and adequate fcc oversight, more fights and disruption of service are what people have to look forward to. prices from consumers will rise and independent programming will get crowded out. during the recess, i circulated

an al certaintive process. it will still allow the broadcaster to pull the signal, but limit to last resort after the fcc executed some oversight to ensure the parties are acting in good faith. hopefully we can encourage greater cooperation by stating off the pulling of the signal and imposing transparency on offers in case of a true impasse. ultimately, if parties are going to ask consumers to take sides and deny them as much as, then frankly, consumers deserve to know why. and the commission needs to know exactly what is happening in the market. my commitment in this is not to any one al alternative. i want to make sure that's clear today. my commitment, and i think my colleagues season with to protecting consumers and finding the best way to do that. i still believe the fcc can and should use it's existing authority to draft new rules.

i remind the agency that it's role it to protect those consumers. i look toward to working with my colleagues and the fcc, the hearing from the witnesses today with that purpose in mind. let me turn to the ranking member and the chair of the full committee. if colleagues don't mind, we'll go right on into the testimony, thank you. senator ensign. >> thank you, mr. chairman. video programming marketplace in america today is incredibly robust and verse. video content owners negotiate dozens, maybe hundreds of deals each year with their distributors. most get done quietly with little fanfare. occasionally as we've seen lately, negotiations with more difficult and lead to the public disputes. and a handful of high profile transmission -- retransmission concept this year captured the attention of the press and policymakers alike. in the case of cablevision,

millions of cable subscribers lost network programs while deals were being worked out. in light of these unfortunate disruptions, it makes sense for the subcommittee to hold the hearing and other federal laws that impact the broadcast/distributor negotiations. there have been changes in the marketplace since the rules were created in 1992. thanks to last year's successful transition, they can watch high definition transmission over the air for free. americans can choose from hundreds of tv channels offered by cable companies, satellite companies, and now even television companies. back in 1992, there was -- there were far less cable channels available, satellite was not a robust competitor to cable, and television companies weren't even in the pay tv picture. consumers today also have access to a remarkable array on online

video content that they can watch from their computer, their tv, their cell phone, or even their mp3 player. the video marketplace as never been more competitive. it maybe time to consider revising our retranses regulations. senator kerry has proposed reforming the rules by giving the fcc authority to convene in the disputes. i do have some concerns about putting the fcc in the middle of the carriage negotiations. we should take a holistic took to see if we need to move them towards a more free market where consumers interest, rather than government regulations drive competition. in dead we directed the copyright to study of satellite extension and localism act. during a hear on s.e.l.a., it's

one of the provisions that impact the negotiations. like i can during that hearing, i urge my colleagues to today to really think about what our cable, broadcast regulations fit today's marketplace. this hearing is part of the process to review the appropriateness of those regulations. i want to thank the chairman for holding today's hearing. ill also like to thank the panel of witnesses. we appreciate the time you've taken today. mr. chairman? >> thank you. senator rockefeller. >> thank you, mr. chairman. i also welcome all of you and recognize you are busy folks. television is, obviously, a very powerful force. i believe the system that we have for developing television content, packaging that content, and distributing that content is broken. it may serve companies well, but it does not serve us well.

as consumers, and probably more importantly, as citizens. let me explain why. when it comes to developing content, our entertainment machine is too often in a race to the bottom. in fact, it is in a race to the bottom getting close. even worse our news media has all but surrendered to the forces of entertainment. much of our news media is entertainment as opposed to news. in several watchdog that is a check on the excesses of government and business, we have the endless barking of a 24-hour news cycle. we have journalism that is always ravenous for the next rumor. but insufficiently hungry for the facts that can nourish something called our democracy. as citizens, we are paying one heck of a price in the dumbing

down of america. you are partly responsible for that. when it comes to packaging content, why do consumers have to order so many channels? why do they have to pay so much when households watch so few channels? the old adage of 500 channels and nothing on has never been as true as it is today. when it comes to delivering content, why do we pay so much? the federal communications tell us from 1995 to 2008, the average monthly price is three times the rate of inflation. that's money for you and the citizens and customers. no wonder consumers are cutting the pay television cord in record numbers. no wonder they are turning back to over the air and turning on

to programming over the internet and other sources. they are tired of paying rates that go up as much -- so much every single year, every year. and in our hearing today, we do not get at the root of these problems. i want to make this statement. this is a broader discussion that we will need to have, and we will have. indeed, it's a conversation that we owe to the citizens of this country. but today's hearing is important and timely because we make a good faith effort to address one of the symptoms of these broader concerns. we are talking about retransmission consent. this is a policy that allows local broadcasters to negotiate with cable and satellite companies or carriage of their local station. for the the carriage of their local stations.

when it works, consumers see them on cable and satellite systems. when it fails, consumers are saddled with the dark screens and denied access to local news and sports programming. that's what happened to millions of television in new york but didn't get to see that. so let me caution our witnesses today. if you fail to fix this situation, all three parts of it, we're going to fix it for you. but when we do that, we will seek to do more than referee your corporate money disputes. because more than just retransmission consent ails our television markets. we need new catalyst for quality news. and entertainment programming. i hunger for quality news. i'm tired of the right and the

left. there's a little bug inside of me which wants to get the fcc to say to fox and to msnbc, out, off, end, good-bye. be a big favor to the political discourse, our ability to do the work here in congress and to the american people to be able to talk with each other and have faith in their government and more importantly, in their future. we need slimmed-down channel packages that better expect what we really want to watch. and we need to find ways to provide greater value for television viewers. at lower costs. because people are tired of always escalating rates. again, i thank you for being here today. and i greatly respect senator kerry and the interest he's shown in this whole area in

which he is expert. i thank you. >> senator rockefeller, thank you, for a courageous statement. senator latenberg has asked if he could make a statement because of the people in his area affected. do people agree to that? >> mr. chairman, i want to say that i am very proud of our chairman for that statement we articulates what so many of us have been feeling about the slow decline of bringing news to the consumer and the consumer have available packages that they want to see and they don't have to buy something that they don't want to see. and they are not threatened as the screen going dark.

you pointed out in the northeast, it happened a year ago in the sugar bowl when the university of florida was playing. there was the big dispute fox and one of the cable companies. and, of course, that was the threat up until the 11th hour, the 11th hour in 59 minutes, as a matter of fact. so let's put the consumer first. and i'm delighted that mr. huva is here from univision. >> thanks very much, mr. chairman. we're here today to make sure that the american people are no longer forgetten in the fight between the cable companies and the broadcasters. and this isn't about taking the side of the broadcasters or taking the side of the cable company. this is about taking the side of what i'll call the customers who need us to look out for them. the big media corporations

believe that it's good business to lead consumers in the dark while they haggle over their latest retransmission gain. that's exactly what happened during recent battle between fox and cablevision. 3 million subscribers, it was already mentioned, including 1 million new jerseyians, were unable to see either their favorite programs or anything that they are interested in, including part of this year's baseball playoffs. make no mistake, this is about much more than simply being able to watch sports on tv. television remains a lifeline for millions of americans even in this age of ipads and youtubes. more than 80% of the viewers receive television by subscribing to cable or another multichannel video service. the public relies on the resource for local news and cultural programming.

seniors rely on television as a source of critical information. like energies in their communities that may affect their safety. many parents depend on educational programming to help their children get ready for school. and it's wrong to hold viewers like these hostage during the retransmission negotiation. it's wrong to treat them like chest pieces in the high staking pace off between giant media corporation. it's wrong to deny viewers the able to see programming that they need and that they want and need and pay for. we've got to put a stop to these programming blackouts once and for all. that's why i'm pleased to work with chairman john kerry on retransmission content legislation that will put the focus back where it belongs, on the consumers. our proposal would require a cooling off period when programming must be kept on the

air during an impasse of negotiations. and, mr. chairman, my support to work with you is unbounded. we're going to get this done. i look forward to hearing from our witnesses. i seek ways to work together to make sure americans, television viewers are never again left in the dark. >> thanks very much, senator latenberg. thank you for your patience, folks. we are delighted to welcome the president and ceo of time warner cable, the president ceo and of cablevision, mr. tom rutledge, chief operating of cablevision systems, mr. chase carey, the chief operating officer, and mr. charles siegers. thank you for being here.

will you let off, mr. britt, and we'll run down the line? >> good afternoon members. i want to thank you for inviting me here today. i also want to express my appreciation to chairman kerry and other members who have recognized the regime is broken and in need of reform. i will focus on three points to demonstrate why reform is needed. congress created retransmission consent 18 years ago as a new property right to subsidize free over the air broadcasting. much has changed since that time. when retransmission consent was first created, broadcasters and cable operators each enjoyed local cable monopolies. they negotiated from relatively equal positioned of strength and with a shared interest on reaching an agreement on beneficial terms.

this produced a process that was essentially invisible to the public. retransmission consent negotiations now occur in a vastly different environment. today the pay tv industry is robustly competitive. while local broadcasters retain the government-granted monopolies and other governments, this has allowed broadcasters to play competing distributors off of each other and has encouraged broadcasters to take more extreme disruptive positions, instead of seeking compromise. consumers caught in the middle are the ones getting hurt. unfortunately, this imbalance in negotiating power is exacerbated by the fcc's rules which take the hand's off approach based on the outdated assumptions that broadcasters have neither the incentive more the ability to disrupt the access to the signals. the fcc has brought statutory authority over broadcasters and

the retransmission rights. time warner cable and division interest have asked the fcc to exercise it's authority by adopting new rules to protect consumers such as in term carriage, and dispute resolution measures. despite wide support for these and other reform proposals and the growing number of disruptive retransmission consent disputes, the fcc has failed to act. instead, the fcc insists it's hands are tied when it comes to protecting the public from the consequences of retransmission concept fights. my second point focuses on the impact on consumers who are bearing the brunt of the fcc inaction. broadcasters have the incentive and the ability to put consumers in harm's way during the negotiations. as we've now seen, broadcasters

clearly willing to -- even when a service interruption is avoided, consumers are still needlessly subjected to weeks and months of advertising, designed not to inform them, but to preserve pressure on the pay tv providers to give into demands that ultimately will be paid by consumers. finally, i'd like to put to rest one the arguments made by those opposes these simple reforms. namely, that the government should not interfere with premarket negotiations. time warner cable agrees that free markets are preferable to regulated markets. retransmission consent, however, is not a free market. rather, this is one of the number of special privileges given the broadcasters as part of the thicket of outdated resolutions. they include must care rights,

protection, guaranteed right to basic carriage, and of course, the broadcasters free use of the public airways are supposed to safeguard, not threaten the public's access. time warner cable does not object to paying broadcasters to retransmit their signals. our objection is to a government-sanctioned process that allows broadcasters to put consumers at risk. in order to protect consumers, congress should encourage the fcc to exercise existing authority and to initiate rulemaking to explore proposed changing in the rules. in addition, congress should continue to explore legislative changes. if broadcasters truly want to operate in a free market, then they should not be allowed to keep their special privileges. but the broadcasters want to retain their special privileges, then congress and the fcc should update the rules to prevent broadcasters from using

consumers to gain leverage in negotiations. we look forward to continuing to work with senator kerry and the other members of the committee on this important issue and i'd be happy to answer any questions that you might have. thank you. >> thank you very much, mr. britt. mr. huva. >> thank you, members. my name is joe. i'm the president and c owe of the communications. univision is is the leading spanish company in the united states. in addition to our broadcasting cable networks, our production business, our radio station, and online, we own and operate 62 television stations across the united states and puerto rico, taking us one the top five. today i'd like to share univision experience in negotiating the consent agreements with distribution partners across the country. i think our experience tells and

demonstrating the importance of the rtc system of the univision local forecast and the communities that we serve. traditionally, univision stations relied upon the must-carry rules in order to obtain cable carriage and receive no compensation for the programs. at the same time, our programming, like that of other broadcasters is helping control the youth of those -- growth of those distributors. in 2008, we announced we will embark on rtc negotiations, seeking for the first time with our distribution partners, fair compensation for the valuable programming our stations offer. over the next 18 months, univision successfully negotiated over 150 carriage agreements with cable, satellite, and television companies, including distributors who are represented

on this panel. these deals were reached without disruption in signal carriage and their viewers during the negotiations. we decided no elect retransmission consent for several reasons. first, univision recognized in order to meet the changing needs of the rapidly growing u.s. hispanic community, we needed the additional resources that come from a dual revenue stream. second, univision believed it would be fair and appropriate to participant with our distribution partners in the value of the high quality programming. indeed, the audience for univision broadcast programming is larger than that of many cable programming services for which multichannel distributors have been paying fees for years. finally, univision elected consent because we saw an opportunity to establish long term value-created partnerships with our multichannel distributors, such as the leading spanish language, video

on demand service. revenue from retransmission consent has enabled univision to expand it's mission of informing, entertaining, and empowers hispanics in the united states. for example, we recently launched campaigns to promote the value of education in the hispanic community, encouraged hispanics to participant in the u.s. ken -- u.s. census. we have distributions and high programming on our stations. we launched a nationwide voter education drive to help boost hispanic voter turnout to unprecedented levels for our midterm elections, invested in the most robust and comprehensive election coverage that we have offered, and hosted historic candidate debates. listening to all of the recent rhetoric about retransmission, one might have thought that

univision would never have been able to reach rtc agreements without carriage content. i can personally attest that we were able to do so because in every retransmission consent negotiation, there are natural incentives for the parties to reach an agreement. from univision's perspective, the desire to reach the deal and avoid a service disruption is a powerful employee say tour. -- motivator. and damage our relationship with advertisers. we tv the distribution partners face compelling motivations to reach a deal. they understand the signal disruption created the risk of subscribers attrition, as well as customer dissatisfaction. i understand the concerns by e lekked officials that their constituents not have to face the temporary loss of a station

signal on satellite. we are concerned that government mandates, such as requiring univision to keep providing our programming even where we failed to reach a deal would distort the market by removing our distributors primary incentive to reach agreement. we are also concerned that even the threat of government intervention would have a negative impact on our business. investors know that mandated interim carriage only benefit cable operators. this is precisely the wrong time to do anything that will further depress incentive confidence in broadcasts and local services. thank you for allowing univision to join the television today. i look forward to any questions that you may have. >> thank you very much, mr. uva. mr. rutledge? >> thank you. i'm tom rutledge, chief operate tour of the cablevision systems.

as you noted, they are wreaking havoc. the draft legislation is a good framework for advancing this goal. we look toward to working with you and others to take consumers out of the middle. i'd like to make two central points today. first retransmission takes place within a highly regulated environment that heavily favors broadcasters over distributors and hurts consumers. it is not a free market. plain and simple, the rules create the potential for network television blackouts and raise prices for consumers. second, because the government laws created the problem, only the government, the fcc, or congress can fix it. we've proposed modest changes. here's why retransmission consent is broken. fcc rules give local broadcasters a government sanction monopoly on local programs and local markets.

the cable or satellite wants to carry, but thinks the local broadcasters monopoly price is too high. too bad. fcc rules prevent that providers from negotiating with any of the hundreds of other stations across the country that have the same network content. government rules also require our subscribers buy the broadcast channels before they are allowed to buy any other cable service, regardless if the consumers wants that station were or the prices charged by the broadcaster. the government gives the broadcasters free distribution in the form of free spectrum and gives an extraordinary guarantee of carriage through must carry. finally, capable operators are prohibited by law from propping -- from dropping a broadcasters from the sweeps week. nothing prevents the broadcasters from big events

such as the sugar bowl. 3 million new york households were blackouted for 15 days, black out world series, and nfl football. the fcc claimed it had no power to restore the programming. any claim that broadcasters not been paid for the broadcast channel is false. broadcasters that used existing rules to force other cable networks that they now own on to cable and satellite systems, charging billions of dollars for the cable network in turn for their permission to carry the broadcast stations. through the government-blessed systems, broadcast or owned cable channels have grown from just eight in 1993 to over 90 channels today. in fact, the driving force behind the rate increases in cable is the ability of broadcasters to demand, retake, and pay for these 90 channels by

tieing them to retransmission consent of their broadcast station. government laws created the problem and so only government, the fcc, or congress can fix it. we have proposed to the fcc a few modest changes that we can implement now to take consumers out of the middle. first, time. limit retransmission concept agreement to the carriage of broadcast channels so that the actual cost of broadcast stations are clear. second, require transparency, there's no reason why the cost of carrying broadcast networks needs to be secret. retransmission fees should be public. and third, forbid discrimination. broadcasters may set the price, they should not discriminate among cable and broadcast providers. you make the simple changes and the disputes still threaten to disrupt, the fcc already has

authority to propose mandatory arbitration. the proposed legislation would make it explicit. if this committee wants retransition consent negotiations to occur in a truly free market, we would welcome that. this would mean having the government eliminate all of the unfair advances that period of broadcasters enjoy. until that day, the fcc should exercise their authority to make sure the millions of consumers never find themselves with world series blackedout. thank you. >> thank you. >> thank you members of the subcommittee and thank you for the chance to testify. i'd like to address two issues. first, are proposed rates and negotiations have been more than fair. we have the most valuable programming on television. with more viewers in prime time than the top three cable

channels combined. we were asked for the small fraction of the rate paid for cable television. without revenues, broadcasters will simply not be able to compete with cable channels. we have already seen an increase of migrating, such as the college football, nfl, nba, and college basketball. local news, which is expensive to produce would be eliminated or become less local in nature. ultimately, this result would be devastated for the more than 30 million americans who rely on over the air television because they don't have cable, satellite, or telco video service. moreover, where advertisers have ever expanding choices, it's unrealistic to believe that broadcasters can compete with

cable channels. to argue the rules defies economic reality. second, some claim that the retransmission process is broken. the definition of broken is not when one party doesn't want to pay the fair price. it's the rate negotiation of carriage of a channel. channel owners and distributors have negotiated thousands of agreements. if we were asking for an unprecedented rate, then maybe one could say the process was broken. we're asking for one that puts us below msn, tnt, and others, all within a fraction of our audience. distributors point to large incentive increases, but fox receives no cash compensation before. any increase over zero is going to appear large. the statement that the process

is broken is puzzling because we have made agreement with three of the largest distributors without a disruption. unfortunately, our cablevision did result in disruption despite we began negotiations prior to a year. we still found ourselves facing a company that decided it did not want to reach a deal. they were offered the exact rate we had already negotiated with much larger distributors. cablevision agreed the rate we were asking for was fair, they simple i -- simply did not want to pay it. their goal was politicize the issue and interject the government into our private negotiations. no one should miss the fact that for the disruptions that occurred this year involved one company, cablevision. everyone cares about viewers. although it's important that

private industry manipulate the process to gain advantage. instead, there are steps that can and should be taken to protect consumers. first we can educate consumers on their options for getting broadcast signals elsewhere by simply hooking up to over-the-air antenna or distributors. second we can require they get a increase in their bills if channels are removed from their lineup. in conclusion, the retransmission consent law is experiencing growing pains because broadcasters like fox are for the first time seeking cash compensation. the good news is the actual interruptions in service are few and far between. the period of adjustment will be short lived once they accept they have to pay a price for the rebroadcast content. keeping the focus on consumers education and protection is the most efficient way to help consumers whether the temporary,

and short-lived unrest. thank you. >> thank you. mr. siegers. >> thank you for inviting us. my name is charles siegers, a viable independently own network, that has earned carriage, as paid a fair rate, market-based rate from distributors that are committed to providing unique service. they include time warner, mr. britt was the first to see the power of the arts. directv, chase, you launched our service. even comcast cable is rolling us out. the detrimental effect threatens the existence of independent networks like ovation. i'm here supporting the reform to ensure that consumers have access to a diversity of voices

in television. senator kerry in a recent editorial you quite apply pointed out that the old rules are outdated and to continue with the status quo is bad for consumers, competition, and democratic participation. as an independent programmers trying to remain competitive, your words definitely ring true. it structure restricts our ability to grow, maintain the subscribers fees, and reinvest those fees into local and national arts programming for an under served consumers. retransmission has enabled the largest broadcast company to bundle an excess of channels and taking up bandwidth and fees that would otherwise be able in the free market system. i grasp the meaning of being between a rock and a hard place.

the predicament that ovation and all independent programmers find themselves. it was a media company who since 1992, traded retransmission consent to gain carriage and fees to launch all new networks. now they are seeking effectively. once through the direct payment of retransmission fees for the broadcast programming and through fee increases on the very capable channels their retransmission consent enabled them to launch. on the other side are major distributors that believe they have been forced to carry and pay for networks they didn't want. now they must pay for the retransmission of free signals at a cost that adversely affects their ability to provide tv to their subscribers. in between the fiercely competitive companies are the last remaining, independent television networks. with retransmission fees likely to top $1.3 in 2012,

distributors will have to look to their customers to make up the difference. and they will have to aggressively cut programming cost. service, service bundling advance, and little leverage despite delivering under surf categories like the arts will be targeted. as a result, diversity and programming, one the very reasons retransmission consent and must carry was created in the first place will vanish. this is a call for a revel playing field. if large broadcasters are allowed to use their air waves to extract payment for historically tree tv services, then let's not allow them to bundle all of their services with it. if an alternative resolution process for distributors and programmers is to be considered, please do not limit only to the programmers who are trading on retransmission consent. but open that dispute process to all programmers, including the

few remaining independent ones. the greatest measurement of our democracy serves the freedom it gives the people to express their views, ideas, and information. you can mandate an examination and recommend the adjustment to better safeguard our freedom by ensuring the survival of diversity of independent networks in the media. on behalf of ovation, the only arts network in america, thank you for your time. >> thank you for your time. thank you, all of you, for taking time to commend. let me first of all begin just as a matter of framework. i'd like to have this kind of hearing, i know sometimes, you know, congress summons the executives and we have these kinds of show and tell deals. that's not my way of approaching this. i'd like to have a thoughtful dialogue with you folks to really try to understand this

tension in the marketplace that obviously has an impact. and i think, you know, our preelection, as i said earlier, is for the market to be the market. and to let pricing sort of be determined by the legitimate forces of the marketplace. : participants in that market are expressing the view that as was just said, the playing field is unfair and there's an inability for them to have a normal market relationship. now, to try to understand that, we need to sort of bear down on sort of what the number of things. first of all, i think we ought to dispel ourselves of the myth that this is sort of just a free market, and we ought to bog out,

and we don't have an interest. it seems to me the case is fairly strong that when you have the several elements that were laid out earlier by mr. britt, i think, that you got the retransmission concept, you got spectrum itself, sweeps week, safe harbor, those are all government granted privileges. your access to the american consumer is fundamentally a government granted privilege based on a certain set of standards which we don't always measure very effectively, but within that, you know, we have obviously tried to allow those forces -- i remember when we wrote the 96telecom bill, we were behind the curve because within 6 months of the ink on the bill it was completely jut --

outdated. it was a debate in a new age information, and everybody got left behind, and that's the world we're operating in in many ways with huge transformational impacts. let me begin by trying to figure out a couple things if we can. first of all, i accept that there are thousands of these agreements in which you all reach agreement. is there something particular that distinguishes those cases where you can reach agreement from these sort of celebrated cases that wind up with a pulled signal? anybody want to tackle that? is there a way to frame why you can reach the agreement easily in some of those cases and the p's seem to be fair? >> sure. i think the easiest answer is if the rate of fee increase to the distributer is proportional to the kinds of general cost

increases that are occurring in an economy, it's a reasonable expectation that a deal gets done. when someone comes in and asks for a very disruptive price and in our case, somebody else paid the price, therefore you must pay the price regardless of what your conditions or market is, then you have a very big rate increase potential or a big cost increase potential to your business, and so i think it's really a question of degree and how exploy at a timive the request is. >> so your judgment, i mean, basically what you're saying is in the most recent case with respect to the world series ect., those fees were accessive, is that correct? >> yes, from our point of view, we had done deals over 18 months with cbs, nbc, univision, and

abc, and all of those deals were less than being asked for the particular service in question that had the world series, so that was -- we thought that was a lot, and we thought it was irrational, and we thought that we should say no to that. you know, ultimately -- >> but to what degree might there be a legitimacy to someone's belief that you're somehow saying, well, okay, let's get washington to get involved in this and, you know, we'll make this a case so that we don't get beat up in the future and in the market just in terms of the normal market forces? >> right. well, # what we reallimented was -- what we really wanted was a price similar to what the other stations we had already done deals with had agreed to absent that, and we had basically a take it or leave it offer. we thought that binding

arbitration would make sense. we thought that an abiding arbitration that if anyone looked at the market place in new york and looked what we were paying would work to our benefit. >> what about what i suggested beyond binding arbitration and beyond forces people away from the market decision, but we're at least creating a sufficiency of a judgment about the negotiation process itself being in good faith and also making a judgment about the transparency? >> right. >> so that people know what's going on. would that not -- if you shed light, if that sunshine existed in that way, would that not create a greater fairness in the bargaining process? >> i believe it would. in fact, that's what we proposed to the fcc previously. we had asked they do three things, prohibit tieing, that they be transparent. the reason you prohibit tieing

is there's agreements between 13 channels i believe, and so how you allocate the costs of all of those services is questionable. we think that in order to look at that and to really have transpaper sigh, you need to -- transparency, you need to seg agree gait what people -- senator kerry -- segregate so the cost is legit mas, and finally, do not discriminate. you know, the broadcaster has power over a small cable operator. they can extraght for the same product. >> do they? >> yes, and our competitors pay different rates than we do. direct tv or dish tv may pay more in some cases or pay less in some cases, but because of your position in lack of

transparency, you have the same customers living next door to each other paying a different rate. >> what do you say to that mr. carrey? >> as i said in my opening comments, we were getting 0 before, so, yes it was an increase, but any increase from 0 is going to be significant, and i do think that you have to have -- look at what we were asking for in the context of the quality of what we provide and look at it competitively again what other channels are asking for, and when you look at other top-rated cable channels, we were asking for a small fraction of it, so, you know, we were asking for an increase and you can say the broadcast business was negligent in past years and may have been the euphoria leading up to 2007

before the market crashed in 2008 and brought home the issues of being a one-revenue business, but what became clear as a one-revenue business, broadcasters were going to have deep problems, and our network today for the each of the last few years has lost hundreds of millions of dollars while the cable channels we compete with, you know, make hundreds of millions if not in some cases billions of dollars. we have seen proct that is moving. we up until a year ago the college football is moving to cable. we need to have a viable dual revenue business to be able to compete in this market. >> i don't disagree. i can remember the broadcasters, frankly the broadcasters' arrogance in the early years as cable came out, and they wouldn't talk to them. >> excuse me?

>> in the very beginning when cable started to come online in the early years of warner, i can remember when they first came to boston and there were negotiations going on and in subsequent years they had a hell of a time getting broadcasters to even talk to them and work out a deal and get carriage and so forth. the tables have turned, and now indeed there's a very significant revenue. i don't disagree with that at all, but that doesn't license a discriminatory relationship or a completely unbalanced relationship in the marketplace so that the consumer winds up not knowing what's going on, not knowing what the price is related to, and in fact paying conceivably much more than their neighbor is paying because of the relationships in absence of that transparency. i know there's a revenue issue,

but shouldn't there be a fair blueness in negotiating that revenue stream? >> we actually negotiate, but i say we take great pride in negotiating or agreements with consistent sigh in the market -- consistency in the market place. >> is it possible to negotiate without taking signals off the air in >> that's our goal. we got three agreements without going off the air. >> what's the distinctions? >> the one what went off the air in >> yes. >> i think they had the government come in and mandate a solution. they didn't want to pay the rate increase even those the rate increase we asked for we think we went beyond any judgment to be reasonable about it when you look at the quality and the rate, it's a fraction of what the channel would be worth on any competitive basis. >> i want to come back and ask you because i used up my time, and i'll come back and i'll

recognize senator lautenberg. >> thanks, mr. chairman, and thank you all for your testimony. we are stuck in not just middle, maybe a muddle, but the fact is that it's very hard to understand what takes place when mr. carrey you describe your rate increases fair. how do you define fair? i mean, is it -- do you have costs escalating for the transmission that you make to the cable company? >> i guess we look at fair we first look at the market. we're competing today with hundreds of channels. i mean, we are in a market place that, you know, is from our perspective for channels as robustly competitive as any

we've been in. we compete with them for audiences and content, so certainly one measure of fair, you know, is what are we receiving for compensation compared to other channels we're competing with receiving. we are, in fact, our request in this case, you know, has us receiving a small fraction of what others receive who have a rating that is a small fraction of ours. >> mr. rutledge, during the past year, cablevision has been involved in the two retransmission disputes resulting in blackouts where as competitors were able to negotiate agreements with -- without any blackouts. why are competitors able to negotiate agreements without a blackout when cablevision

can't? >> well, cablevaition is -- cablevision is trying to hold its rate and hold a valuable of a product as it can. our objective is to come out with the lowest rate as possible so we have the lowest price for service because we're competing against other providers, and so we've tried to hold the line, and we've looked at our marketplace, and we've actually been successful at holding the line, and we've had low rates of increase on a relative basis, but we're fig -- fighting for our customers and keeping our product as competitive as possible in a very competitive environment. we have robust competition with satellite, two providers, at&t

and so we have a very competitive distribution market and price matters. cablevision is very successful in the marketplace and we have the highest penetration of video of any company in the industry. we have the highest data penetration and highest voice. we have served our customers well, and we want to continue to do that. that's our objective, and that fixuates us on cost. >> do you -- >> i guess, i mean, i do think it's important and mr. rock feller addressed the cost of con feint. i agree what you said. it's a whole lis tick issue. i don't think one can look to is say somehow broadcast networks are going to be reel kateed to second class citizen status and not be fairly compensated in order to deal with the cost of content. if you're going to look at the cost of content, i agree what

was said up front. you can't expect broadcasters to carry a unique burden in that regard and not have the opportunity to be fairly compensated. >> what happens during a blackout? do your advertisers aren't getting what their paying for. >> no. >> and so you -- and so you do you lose revenues? >> yeah. >> is it charged by the day? >> they essentially pay on ratings so if we're not delivering an audience -- >> so are the rates calculated daily? >> every ad is based on the ratings that we receive for the show in which that ad -- >> so the advertiser does not get the exposure, and but is the

calculation for those few days reduced to the advertisers? >> yeah, i mean, if it's a broadcast station where we're not receiving free cast train fission, then the lost revenue is advertiser because we're not reaching the audience. >> what's been the rate of increase you received over the last several years? let's talk about cablevision in particular. do you have an idea? >> well, in retransmission, we've received nothing, so we've had until, you know, this last year, we've received 0, and so that is essentially -- >> that's a recent phenomena? >> yes, and as i said, in some ways you can say broadcasters should have realized this one-rev new business model was not going to survive and be

competitive in the world of dual networks. i think the economics strength of the market through 2007 masted a bit, and then, you know, didn't, you know issue probably made broadcasters, if any, delinquent in recognizing the problem. i think it hit home, and i think it became quite apparent that a single revenue advertising based business was not viable long term, and hence in the last 12 months we've moved to become a dual revenue business. >> mr. chairman, i think the hostage here is, of course, the consumer, and they're paying a price with nothing to say whether or not they're charged less over the week or month that they are out, and the consumer is left outside, in my view, like a spectator. they are not part of the

negotiation. they are a victim of or a ben fish rare of as you can see it, of an agreement between the parties, and there is really special place that all of you occupy because tv watching is now an integral part of life almost like gas and welcome -- electric and things of that nature and since the license is without fee for you to deliver your services, i wonder, you know, i come from the business community, and so i know you're in business to earn a profit, to get a return on investment and so fort, but i wonder what kind of a special obligation you feel to deliver this i'll call it a precious commodity that is now

part of daily life for the american people? >> we consider it a tremendously important obligation and a privilege in reality to deliver that content, but we need to have, you know, a business model that enables us to invest and create great content. in the last few years we lost millions of dollars a year on a broadcast network. that's not a sustainable model. you know, we need to move to a place, you know, where we have a business model that enails us to invest in keeping product like, you know, the nfl, you know, on fox, to continue to produce the local news that we do, and i do think, in fact, it is why you have seen a continued migration of product away from broadcasting and broadcasting with this business model to cable channels with a healthier business model and for us to continue to invest and create great content, that is our goal

to create shows like american idol and glee and deliver them to the american public, but we need a business model that enables us to do so. >> thank you. >> when you say we were paying nothing, we plaid nothing at that -- we paid nothing or we got nothing at that point. it's not because you bundled your cable and broadcast, and that was sort of a quid pro quo for your access; correct? >> yeah, we do. .. that enabled us to build cable channels. we build channels like "national geographic" wild. >> but it was an in-kind proposition, not a nothing proposition. >> that there is no different -- i mean the same thing happens

with companies that don't have broadcast stations. the time warner group have a bundle and the viacom group is a bundle. that is the nature of the business. >> i want to go on the record to reflect the value transferred, the reality of then you kick in and you have this new negotiation and not exactly going from zero up to hear. >> i guess, you mean yes it hasn been negotiated as a bundle.dle. i'm not sure i would agree with the characterization is a valuel transferred because we build channels that have value to customers. the amount degette for those channels is comapetitive those channels is competitive, not against when you compare rates to the national geographic channel we get left in discovery we compete with. >> let me come back to the competitive and i want to recognize senator lemieux. spriggs before, mr. chairman and for the way you are approaching it where we can have a discussion about these issues. sitting here listening to this occurs to me that there's a lot

of regulation of this industry and perhaps it's the regulation that's causing the problem. while i agree television is important and certainly i want to be able to watch football and baseball i've heard words like a devastating and crisis applied to these things in light of the other things that we are addressing it congress, not sure that they are. but let me say that with all these regulations perhaps the view should not be that we should create more regulation but maybe we should unpack some of the regulations we already have. the world is changing. television is important but there are so many alternate ways to receive content. we are watching television and movies and other forms of communication through various sources, not just the tv but on computer and how this will be transformed the next few years is hard to anticipate. it's going to be very different world and which we receive content. anderson and the importance of content, you have to tell you it.

we have copyright laws in this country. we have to tell you those copyright laws, but it occurs to me if we are going to get more involved in this discussion about the transmission consent and bring congress and federal government more into that process, we are going to create more unintended problems. i think if you look back 20 years ago when this legislation was put in place, it's probably caused many of the problems we have here today. now, perhaps i'm naive and i still knew here also i'm about to leave -- [laughter] but it looks like the the deletion has caused a lot of these problems. i want to ask the folks of the table instead of adding more regulation is there a way we can unpack the regulation so this marketplace can work? >> yes, i think that is a different way to go. if you think about chase was saying he thinks broadcast networks are not viable. this is a different thing and they really need to look and act

like cable networks and have two revenue streams. the part of the issue about every transmission consent is that there is a whole set of rules and regulations and laws that treat broadcasting different than the rest of this television industry. so i would say in response that if we got rid of all those special privileges and what have you for broadcasting, and if she's wanted fox to work with the cable network that would be perfectly fine with us and i think you would see -- >> the only have ktv. >> that is an alternative. that is an alternative. >> do you think you would please the american people? >> i think 80-some of a percentage subsidizing the rest would be happy. alternatively, the question is how do you figure out the amount of the subsidy? so rather than -- i said earlier

before in my testimony that we are not protesting the idea of paying. we are just saying that the mechanism for figuring out the amount is broken. and actually having a debate about who's channel was worth more or whatever is kind of irrelevant. so if we are going to treat broadcasting has a special thing and think it is soluble some of our citizens get it for free, which certainly is what was intended originally, and if we have other people subsidize that then we need to figure out what the mechanism is for deciding that amount. and that's what's broken is that process of figuring out the amount. >> mr. uva. >> thank you, senator. thank you for being here. i believe that what is special and unique about broadcasters is the way we serve the local community on a variety of ways, and localism is fundamentally

important in making sure that the citizens of this country are informed each and every day, not just by cnn or fox news on global international news age use or by a network newscast although we do network newscast just s fox does. we are very committed and we believe very strongly in the ability to stay relevant to the local communities. and that is an incentive for us to make sure that we deliver those newscasts and information that we purchase a peak in the community in ways that are in power in members of the community through public and community service and that costs money and that is where a great deal of the funding that goes to local broadcasters, particularly univision is reinvested and broadcast a special and cannot be treated and looked at the usual basis compared to what the

cable networks are. >> mr. kerry? >> i guess i want to first say that the wheat transmission clearly has a unique level of importance and we need to do a revenue stream, and we've had these other provisions in the end of the business but again is not competitive. it's not a trade. in most of the provisions that exist are ones we can achieve contractually and we are not -- i think the spectrum is important to provide a service for free to 30 plus million americans and actually have the ability of every american to get it for free, so the spectrum put in a different place has a different role and provides unique value that we think is important to provide the opportunity for every american to get a level of broadcasting. the others i think the ad importance to the broadcast industry as a whole and are a part as mr. uva said the localism that exists but for us

the transmission as a whole different level of importance because it provides an economic foundation to have a competitive business going forward. the others are things we can competitively compete for in the marketplace but i do respect the broadcast industry and recognize they are important and the foundations of the localism that has been so important for the local broadcasters and local communities. >> mr. chairman, mr. rutledge wants to finish up. >> thank you, senator. i want to say i think it's a policy question is the united states want to have a broadcasting business. if it does what are the objectives of that coming and historical you've got a broadcast license you've got some spectrum you ought to operate in the public interest and you have an obligation to serve the community and came up with renewals and were subject to question as to whether or not you met those obligations. so the power that has been entrusted to these organizations is enormous.

the reason that the world series exists on a broadcast network is because of the public trust that was granted to those entities to serve their communities and they mask their audiences that they did and had the power by the world series in creating the kind of contant that exists today, so it is a policy question. what do you want from broadcasters and how do they fulfill their obligations to the community? and if you're going to give them dalia will spectrum -- because i can turn that spectrum into a broadband wireless network very effected flee i think and serves a different part of the community. it is a valuable resource to the country and it's being used in a way that sexually abusing the consumers of the country. >> could i just that every household in america did have the opportunity including everyone living in cable television to get the world series over the air for free.

>> which makes the notion of charging for it ridiculous. [laughter] >> we treasure the opportunity to provide a signal for free, others are read transmitting the signal and the building a business based on it, we feel we have a right to be compensated if someone else is building a business based on the retransmission of our content we pay a lot of money for and invest a lot of money in. >> senator pryor. >> thank you, mr. chairman. i want to thank all the changes in technology and society since 1992. i do feel like it is time for us to try to draft legislation that embraces all those changes in the past but also paves the way for more innovation and to be smart about how we do things in the future, so i appreciate your

tufting this piece of legislation, mr. chairman, and one thing i like about it as i understand it is there is a revision where the signal states on the air where there's a breakdown in the negotiations and that makes sense to me, but what i would like to ask of panelists is is that good public policy or what's wrong with that policy of allowing signal to stay on the system when there's a breakdown negotiation. mr. britt, you want to take that? >> i think it's one of the very good ideas that are around. again i think it relates to everything that's been said because broadcasting occupies a unique and privileged place in our society. and depriving consumers of that is a problem. again, some people will say that will tilt the scales in favor of the distributors and other people's the other things.

but it is the consumer that is being held hostage, and that isn't a good thing. so we are, again, advocating some sort of better process for settling this. again we are not denying the value of the networks or whether the there should be payment. there is value but how do we decide the amount without disrupting the public? >> mr. uva, did you want to -- >> senator, thank you. i believe that the government needs to tread very carefully in this area cox and to remove the primary incentives to get a deal done if during negotiations you force a signal to remain at through the negotiations there doesn't seem to be negotiation on the distributor in a timely fashion to get an agreement. furthermore i think the rules as currently exist under the

communications act certainly fcc rules, the fcc is empowered to oversee this and if one party has a dispute or claims the other not negotiating and good faith and in fact bad faith, but during the time it shouldn't necessarily be a requirement -- >> that's a good play. on that issue the has the fcc ever found that the party is not proceeding in good faith? >> i am aware. >> i don't think they have as far as i know. mr. rutledge? >> i think that broadcasting has a special place in the social obligation to its community, and i think that the fcc and through other policy means should intervene when, rather than let signals go off, it does have some disruption, you know, nobody wants to pay high year rate, so i agree to make negotiations more complex for broadcasters, but i still think it's better than allowing people

to be held hostage so i think it is inappropriate for broadcasters to troops it falls which are free and unlikely spectrum being used for the public good. >> mr. uva? >> senator, thank you. i also believe that there is a very important role for both sides to play in educating consumers about twice because of the end of the day the consumer does have the choice to receive the signal free over the air, to buy it from a multiple system cable operators and satellite provider or telephone company. we believe very strongly that educating consumers about the choices they have and the remedies available is also important. >> mr. kerry committed to what that something? >> i would add a couple of things because i agree with mr. uva's points. first in terms of time, you

know, we provide a lot of time for the actual negotiations we had. our process with cable was for the better part of six months, so it's not -- it's not like these have come up and somehow there isn't time to address them. there's a lot of time. we've provided a lot of time to get there and realistically most agreements get done with a deadline and that seems to be the way the world works. at the point of a deadline they don't go along and i don't know -- we were getting zero. we were trying to get a fair rate. if one is going along open and the i'm not sure where the incident isn't for the cable operator to keep it going open-ended lee for as is happening pushed to a point of time which it happened in some other cases this summer where

the broadcaster has particularly disadvantageous time of year like this summer when you're on the run and all of a sudden decide that's a good time to bring it to the head and drop it because of your ship is at the lowest point of times of the deadline is important to get a deadline. and i do think it is generally where it works. we have a lot of channel negotiations. we do this in a lot of cases. i still struggle with this negotiation is so unique. we are not asking for a rate that is presidential. >> i've never done one of these negotiations. i have no idea of complex they are but he said time is not usually a major factor but the deadline is helpful and we understand that put on these are you mostly just negotiated with the number of channels and the price per viewer? it is a fairly straightforward

set of negotiations -- >> that's why i don't know if you just extend it with the extension is going to achieve other than just a draft. i agree with you. that's why i said when you've been talking for 13 months you probably have sifry attack on the table and it just becomes a point in time -- >> to make a decision. >> we've had times of times with the channels and distributors and you get to the point and reach an agreement to read the process worked. this just happens to be a case where the distribution industry wants to politicize and try to change the rules on how the system, yet this isn't that different a process and what we've been asking for is as said before on any comparative basis more than fair. >> would you like to -- >> i just want to make sure that any re-examination or reform lookit transmission includes the dependent program we need to participate in that dispute process if that is put into

place. i would say i don't want any of senator kerry's comments to get lost when he mentioned cheese is sitting here saying the broadcast network hasn't gotten paid in reality has also launched a number of different cable channels based on the retransmission and many of the channels are extraordinary value for the consumer so there is billions of dollars that are being generated by the real-estate that read transmission allows. cable also has good to do and they are launching an art network a week of every day and say they have a responsibility not just the broadcaster and they reached down to a small independent network of privately funded, no government handout and they're putting in art network on cable television but it gets very complicated when we transmission takes about only the valuable bandwidth, but these very public arguments ensue. >> chairman kerry, have one more

closing comment rather than a question but if anybody has a response. it's always bothered me in these negotiations the total lack of transparency where a consumer, john v. were out here doesn't know sam sitting on comcast for example i don't have any idea what comcast is paid and i don't know and i travel and stay with million walls or something and they are on time warner, whatever it is, i have no idea what they pay for that and i cannot imagine any public policy reason for the total lack of transparency. is there a good policy i am missing here? >> does anyone want comment on that? >> realistically i can't think of any real business where you negotiate in a public forum in a public forum i think the competitive complications will

be damaging as you try to continue to do deals putting in a public forum the provisions of private negotiations and i can't really think tough -- i'm trying to think of an industry -- >> it happens all the time when one already knows the market value is for something and they go out and negotiate -- >> we have a pretty good understanding. i mean, there's industry research out there that in a range will tell you pretty much what most of the channels get. they may not be accurate with precision, but there is certainly industry experts and the industry is covered in many ways that that information is there and its publicly available. >> i think what senator pryor is getting out and i mentioned the transparency earlier -- with the transparency may be one of the most effective ways to deal with this without you guys would missing that, quote, heavy hand of government coming in and

suggesting what happens here. but there are really more than two parties of the table, with all due respect. you could say conceivably there are four parties at the table. you have consumer, who is sort of battered in the middle of this thing on occasion, or even, los? price differentials, maybe they are paying a lot but they are not sure what the differential sar and then you've got us, because the truth is that public broadcasting is receiving billions of dollars of subsidy. through the thing called a spectrum. it's worth billions. that is a huge subsidies. and let's be honest about it. so, and there are standards applied to the who gets it and how which i don't think has been a rigorously thought through, there's a public interest there

there is a public interest of the table, and so i think that in many cases people in this country for home in emergency life in our communication or other kinds of information that's vital to the degree a couple of companies called it a commodity in the context of a lot of people would cook monetize it sweet to think the implications are which is where the fcc has certain authorities. what would happen if every transmission is taken away? what would happen? where with your business plan go? there's no transmission consent requirement. >> so we're in advertising only supported business. >> went to survive? >> long term our survival would be threatened. >> what do you think mr. uva?

>> is a very threatened -- >> threatened, correct? the fact the government is requiring the transmission consent to create your business plan -- >> to be competitive we are creating with channels -- stat how do you have a plan of your not competitive it's not a good plan. so, you know, this -- we've got to think this through carefully. i do not want, and i said this at the beginning, i don't think any member here wants to come leaping in an inappropriate way, but i think what's been put on the table this kind of at least for discussion purposes a way of engaging in thinking about what's the harm insurance renzi. suppose people have a better sense with the costs are in certain places for instance mr. britt, what's the difference

the retransmission consent payments that you pay to carry the espn versus fox for instance >> on the top of my head i don't know that but we would be happy to get that for you. we of many networks from those companies so -- we can get it to you. >> you can't tell me whether you consider it fair the source differential? >> it's the result of a negotiation. i'm not sure what fare is in the sense you're asking. >> you've ever walked out and said why we got screwed on that? [laughter] >> i say that all the time. >> i think there's a fair amount of public information. i used to sit on the other side of this and so i am not going to disclose their numbers but it's widely known that espn would

have a rate that is five, six times what we would be getting in retransmission to be done was to have a unique deal unlike anybody else it is a multiple -- >> you were sitting on the other side of that weren't you? when you sat on the other side you thought it was good to pay zero. [laughter] >> about was my job if i can fight that fight. estimate to understand what my job is. >> i do understand. the reality wasn't that long ago and i did see it from both sides and i think it is why in many ways it tried to approach. i've said publicly we could have gone in and asks for a higher number in the justified based on ratings and other things. we didn't try to do that we tried to go with a request we thought was manageable, was

realistic but enabled broadcasters to have a model that would be competitive in the i was at directv still. i would be pushing back at that. that's my job and i would be trying to manage my cost as i can. the fact of the matter is directv, the two companies here make a lot of money. they are not fighting for survival in the of very profitable high margin businesses and we recognize nonetheless they are trying to manage the business intelligence. i respect that but i do think broadcasting content needs to have an opportunity to continue to compete in this marketplace. i don't think it benefits anybody including the guys here if you find the nfl is going to be on the cable network when our

deal expires in three or four years and that's where you are headed because you don't have a business model that lets us compete. >> on the understand that and that's why we've met over the years, 25 years now, many times with broadcasters coming in and complaining about their lack of power in the marketplace which is why i commented on the reversal where we were and then i want to comment to the kovacic am i senator klobuchar. in the 2009 cable industry prices and they concluded from 1995 to 2008 the average monthly price of expanded basic cable grew from $22.35 to $49.65. to an increase of 122.1%. and going forward, the media research firm predicts that

retransmission consent revenues for broadcasters would grow from 762 million in 2009 to 1.36 billion in 2011 and perhaps more than 2.6 billion in 2016. i assume some of these can be passed on to consumers in terms of their monthly mvp. i am not sure. what are we looking at as we go forward? what are we going to be able to say as we go home and they complain about the sort of packaging and what they have to purchase and total amount of money and so forth? >> i guess what i would say is those numbers will still be a small fraction of the aggregate programming cost that exists for that universe. >> that amount of money? >> if you look with the total

program cost is for the content for that same universe is a small part of its and with some degree singling them out. >> what we are talking about in terms of global production costs. >> in global programming costs? >> i probably don't have the number going to spitball it and my guess is it is a 30 to 40 billion-dollar number. 30, $40 billion. i'm doing that very extrapolating of the top of my head so it might be completely right. so, you put those numbers in that context, and again i get trouble on how the broadcasters takes unique blame. i'm not blaming or vilifying other companies, but there are big companies out there that are big driving networks with viacom that have largely talk about

networks that are driving and creating new networks around a big powerful networks. it's not just broadcasters bundling. it's everybody and somehow this issue is putting broadcasters in this unique might like they are doing something the industry is asking for something that is outside the practices of the business. we are looking for a fair rate like the channels to compete with. we think they are benefits for us and the consumer and the distributors for us to continue to develop programming that is of interest to them, and we do take a responsibility to look to put prices that are fair that we think are reasonable and when we look at fox we think we are asking for a more than fair price for fox. >> much did you ask for and receive for cable at time

warner? >> again i think specifics -- i think putting -- i don't think it's constructive. i think it's a fraction of what channels like espn or nsg which cable loans is a small fraction of what other channels like that but a much smaller than us receive. before cable vision we dealt with them fairly and consistently. >> well we have to figure out whether we need to get at those numbers in order to sort of thing through what's the reality of this location in the marketplace or not. maybe it isn't and they conceive those numbers would help you, not hurt you but we don't know the answer to that right now. so let me fall that one over and

see how we proceed. senator klobuchar. >> thank you very much mr. chairman for holding this and for your thought-provoking questions and i know a lot of questions have been asked but i will add a few of my own. i think you said 86% of all americans pay for their television and that's why retransmission consent is an issue that affects americans whether they've heard of it before and know it or not and my primary focus is to make sure the consumer is protected with their cable bills go up or they are subject to a blackout consumers end up being the innocent victim and that just shouldn't happen. so since you were fielding a lot of the questions, mr. kerry, i will start with you. i've heard from executives from the broadcast network that he should be compensated on par with cable networks especially given the fact the audience share is haulier for broadcast and cable. do you agree with that

statement? >> yes i think we should have fair compensation and i guess i would say we are asking for a small fractions of what that mass would calculate and would lead to as a great. >> mr. britt, you want to comment on that how you think the compensation what would be fair? >> yes i think we're talking about apples and oranges and peaches. they were created an uncertain environment which was around free over the air broadcast. they are for each station and we don't really talk about a station as we talk about networks. they are exclusive so there's only one fox station on each market, completely different

market cable networks were invented in the world they had to sell to the different distributors the british and no privileges, they conveyed copyright with the network. we support lippitt for copyright's for the broadcast networks so it's a very complicated question. one thing left out of all of this is we are talking as though the broadcast industry is a monolithic thing. most that own networks and the relationship between the stations and the networks have changed dramatically since 1992 and i'm not in this business but my understanding is at that point the networks used to pay the stations and now they don't and in fact the networks are asking the stations to be paid. so you don't have anybody here

that's just a station owner but they ought to be here, too, because that relationship is an important part of this whole thing. >> anyone want to respond to that? >> i have one question to -- >> mr. rutledge had one. >> i think would come out of a long history in broadcasting and broadcasters have a public obligation in my view and they get public benefits including very valuable spectrum to provide that public obligation. over the last 18 years since the retransmission consent has been forced, we've gone from eight channels owned by broadcasters that are cable channels to 90 calls a substantial part of america is feeling now is controlled by large network broadcast of winners and cable owners, the ellen both come and the value being extracted in various places, so it's hard to

pinpoint what things cost the the fact is to raise the historic public obligation broadcasters have. and the other thing i want to say is in the new york area where we primarily operate cable systems there's over 25 tv stations. only five look for retransmission consent. all the rest do what is called must carry which is another opportunity for broadcasters to be carried on a cable system and enjoy the benefits of the channel placement and so forth that is included in bill wally so the majority of broadcasters aren't even in this regime it's only the powerful network owned broadcasters and affiliates that are trying to extract these payments from customers. most broadcast stations aren't doing this. >> mr. carey i thought you might want to respond very powerful. [laughter] >> i'm at their mercy

[inaudible] [laughter] we have a public service obligations and to get jerry seriously and is embodied in the local news and is in many ways a foundation of what we do. i don't think the public service obligation means we are on loss-making businesses. i don't know you were here i said before the last year we have lost between 2 million to $3 million, so, yes, we do have a public service obligations. we take it seriously. we treasure the ability to bring television to every household in america. we don't have the right to get compensated in some deals retransmits and builds business based on our product, but we think to remain viable and continue to brank programming to america will need to have the ability to have a viable business model in the world today is different than it was in the past and clearly in today's world with hundreds of channels that have tool revenue

streams you just can't expect a broadcaster to compete as an advertiser supporter network and it will end up losing money. it will end up having content migrate to cable channels and it will end up with us becoming second-class citizens in the business environment. yes broadcasters pursue different paths. we invested three expensive the 25 stations to york we pursue the region's missions and we invest billions of dollars in creating the great content in order to make that business makes sense to bring the nfl, to bring the world series, to bring american vital to the american public we need to have a business model that lets us sustain that. the channels pursuing are a different role in a different strategy that pursues the different business model but the stations like ours that are

pursuing a type of television that i think is the american public cherishes requires our ability to be competitive in the marketplace. >> mr. segars, how does the retransmission consent impact specialized programming geared to the minority community? >> i can say that when broadcast treated on the retransmission to launch a networks i will say that some of those networks to they have brought great value and no one wants to vilify the networks by the imagination the the small broadcaster does have a public -- really a public responsibility but cable also does, and i've said this again and again that cable is reaching down to support independent networks. a diversity of voices, the arts be in one .. nel called hallmark and outdoor channel,pe