.

>> in conclusion, for all its flaws, american television is the ending of the world. tomorrow as a very proud father, i'm leaving for london where my younger son will coach in the olympics. i'm looking forward to every moment of the trip, except for being stuck watching british television. conversely, our 500 channel universe, largely in high

definition, has many something for everyone. whatever you do, be careful to not undermine the existing functions that is more successful than recognized. every country would rather have what other cultures have been able to achieve. thank you. >> thank you, mr. franks. mr. colleen abdoulah, ceo chairman of the board wow internet cable. >> thank you. i thank you for taking the initiative to open the review up. there are a lot of things to consider. it's extremely complex. especially because the pace of change is so rapid. i heard a gentleman in one of your last hearings from micro soft, that we'll see more change in the next 18 months than we've seen in the last faye years. i believe that. we know that laws written in '92, '96 do not converse or

support consumer behaviors and the expectations of consumers that are a direct result of the technological revolution that we're experiencing. consumers physical me directly what they want is more of what they want to buy and watch, and they want to do so on different devices, using different technologies. yet the outdated laws do not address the changes behaviors and consumers demands. instead, they create significant problems for consumers. specifically programming and retransmission con send negotiations are failing and the resulting in blackouts. as we stated, in fact, 69 blackouts have occurred in 2012 alone, up 35% since 2011, effecting literally tens of millions of viewers. retransmission fees are skyrocketing and consumers are paying the price. media consolidation has lead to rampant unwatched programming.

consumers ask us why do they have to pay for so many networks they don't want? i believe that's what we love about the internet. we get to choose what they pay for. and speaking of the internet, access to online video distribution rights is currently being withheld and slow rolled in the smaller cable operator by the big contend providers. that puts our customers at a disadvantage. then we have the big broadcasting cable networks paying what i think to be crazy fees for sports programming. because they know with the current business model they can force that cost on to consumers. the distortions caused by these outdated rules are really serious and not without consequence. particularly for the smaller cable operator. my colleagues and i within the american cable association with members in 49 states represent the small player in the small versus big business arena. in fact, 82% of aca members

serve fewer than 5,000 customers, 30% serve fewer than 500 customers. and what i find so disturbing is that in the past four years alone, 800 small cable systems have literally gone out of business. due in part to escalating retrans fees and overall programming cost. we're also getting squeezed out. when these businesses close, there's not only a loss of video to that community, there's a loss of broadcast services as well. smaller operators just simply do not have the leverage to negotiate fair market pricing for our video content. since '92, the title wave of media consolidation between broadcasters and cable networks has given enormous bargaining power to the big four networks. power that abuses the government sanctioned protections that may have made sense 20 years ago in

a completely different business environment, but they do not today. who pays for this? we do. because we are all consumers. this abuse of power should be outlawed. there are at least 46 cases that we know of that are separately owned market broadcasters coordinate the negotiations. the user benign term for this collusion, they call it shared services agreements. the impact of their collusion is that broadcasters who are supposed to be competing with one another use one single broker to negotiate carriage rights for two or more competing stations. we have given evidence to the fcc that proves that this unjust practice results in fees that are 21-161% higher than the fees that are created by broadcasters who negotiate carriage separately. now we as operators are not allowed to practice collusion and appropriately so.

broadcasters shouldn't be either. i've heard members in these hearings ask what should be done when you choose to reform the current laws? there are many improvements, i think, to consider, and i offer you just a few today. prohibit coordination negotiations by separately own broadcasters in the same market. provide specific considerations for the small operators, because they need them. require continuous carriage of signals during the retransmission consent to stop consumers from being held hostage by the blackouts. require binding baseball style arbitration of such disputes and give consumers and paid tv providers the right to embrace new technologies to access broadcast signals. thanks for having me. i look forward to questions. >> okay. >> thank you very much, mrs.

colleen abdoulah. now we end with with -- no, we don't. dr. mark cooper, director of research and consumers federation of america. >> mr. chairman and members of the committee, thank you for giving me this opportunity. in order to provide a fair evaluation for the cable and consumers protection act of 1992, it is important to recall that many of the most important provisions of that act were superseded or repealed by the '96 act. some of the most important policies pursued in the spectrum space have been outside of the '92 and '96 acts. nevertheless, the '92 cable act does provide an important baseline, because congress recognized the cable market was inflicted by problems and anti-consumer practice. congress knew that access to distribution media and control of market content are critical inputs that determine the fate of competition and the treatment of consumers. congress believes that the incumbent market power in the

video space was sufficiently pernicious and tenacious that it overrode president bush's only veto to enact in to law. unfortunately the congress in the '96 act failed to develop with the sufficient speed, breath, and scope to discipline cable market power. they returned soon after the '96 act and continued to this day because the multichannel video market and the broadband wireless access market remain very highly concentrated. competition was undermined in those markets by a serious of mergers which culminateed like comcast/nbc, and joint ventures like verizon and big cable. cable could compete against fiber. they have run up the white flag. and then the rest of the country

inferior technologies cannot compete against the single, dominant, coaxial network. it is equal to the failure to deconcentration commercial programming. congress granted a lucrative right in retransmission, extending the transmission rights with its retransmission rights. but it gave broadcasters those rights without new responsibilities. the broadcasters used their rights for retransmission to build cable programming bundles and force them in to the cable network. those fees paid for the cable networks, much of it goes to broadcasters. the cable operators are not innocent in this. they use their vertically integrated programming to dominate where they could. so the broadcasters leveraged their retransmission to respond to the cable operator vertical

market power. the end result was, of course, the independent production that has disappeared in prime time. bargaining over retransmission has become ugly. but no matter who wins between the cable operator and the broadcasters, the consumer always loses. the public occasionally loses access to programming, frequently is forced to pay more for programming and always is forced to buy massive amounts of programming it never watches. in contrast to the failure in those spaces, the success of the fcc's decision to use the spectrum for many to many communications is remarkable. indeed, the biggest success has come in the area where the fcc decided that it could allow the spectrum to be used without exclusive licenses at all. it concluded that a simple set of rules for sharing the section -- the spectrum would make the

public air waves open to speech. it invented wi-fi in the junk bands of the spectrum. and wi-fi today is as big as cellar in terms of traffic. the remarkable success of unlicensed spectrum requires a radical deregulatory remarket shift in thinking about how the spectrum is used. we can return the public airways to the public for more direct use than in the any time in exactly 100 years. and let's be clear, the original sin here is not compulsory copyright, not retransmission, it's exclusive broadcast licenses. that were tolerated 100 years because of technology, but are a fundamental affront to the first amendment. if congress intends to bring spectrum and video policy in to the 21st century, it must avoid making another 100-year

mistake. it must move the broadcasters out of the way and provide the maximum opportunity for all of the people to use the public air waves for their public purposes. if congress intends to rely on competition to fix the video space, as it should, public policy must ensure that competition on the small number of broadband platforms is not used to impede the development of competition. internet distribution of video must not be starved of professional contend by content owners and it must not be strangled by cable gate keepers. especially when they seek to defend the leftover antiquated 20th century policies. thank you. >> i thank you, sir. and -- >> and -- >> move on now to mr. padden.

i could identify you, you are an adjunct professor of law at the university of colorado. please proceed. >> thank you, members of the committee, my name is preston padden, i'm a senior fellow at the center for law, technology, and entrepreneurship at the university of colorado school of law, and an adjunct professor of communications law. we have 11 of our students interning in communications related offices in washington this summer, and i thank the committee very much for accommodating some of them here today. the views i express are my own. i have at least three things i did not have in earlier appearances before this committee. they are arthritis, hearing aids, and the prosecute perspective that comes from no longer being employed from one of the industry segments. america television regulatory policies have come to look like the old closet in your basement that you keep promising yourself

one day you will finally clean out. i appear today to offer a full throat the embrace of s2008 and hr3675, the next generation television marketplace act that would affect principal deregulation. priority number one must be the repeal of the cable and satellite compulsory licenses. these licenses seize all of the programs on local tv stations and give them for free to time warner cable and directv, but not to new online video distributors like netflix. this creates a huge impediment to the growth of online video distributors. the distributors that hold the most promise of new competition for the benefit of consumers. since multinational and bilateral treaties prohibit congress from enacting a compulsory license for television programs on the internet, the only way to level

the playing field between time warner cable and netflix is to repeal the satellite and compulsory licenses. these licenses were first adopted in 1976 because congress did not then believe there was a reasonable marketplace mechanism to clear the copyright of broadcast programs. but today the programs on more than 500 nonbroadcast networks which are not subject to the compulsory licenses get retransmitted all across the country through simple marketplace negotiations. the nonbroadcast channel owners simply aggregate the rights in all of the programs on their schedule and then engage in a simple copyright-base negotiations with the cable operator or satellite operator. broadcasters could do exactly the same thing. the worst of all possible results would be to modify or

repeal, retransmission consent while leaving the compulsory copyright licenses in place. that would produce a totally unwarranted windfall for cable and satellite operators and would do nothing to help consumers gain access to new video options from online distributors. the bedrock principal that broadcasters and program creators deserve to be compensated when another party sells their programs at retail is not outdated. it is timeless. as old add capitalism itself. i ask the committee to distinguish between the antiquated system that needs to be examed that the broadcast programming deserve to be compensated for their product. s2008 and hr3675 would bring out other much needed deregulation.

for example, because of the tv, newspaper cross ownership rule, "the times" did not have the option of seeking to merge with a local television station, and result, consumers in newspaper now get only three newspapers a week. by champions principal deregulation, i do not mean to tilt for or against any industry segment. i love them all. free over the air access to most watched programming and vital news and community service. cable lead by dr. richard green deserves enormous praise for investing more than $175 billion of private capital to build america's only nearly nationwide high speed broadband network. satellite carriers and online

video distributors offer much needed alternative source of video programming. and without the program creators, nothing else in the television ecosystem would matter. i have confidence that all of these industry segments will thrive in a deregulated future. i understand that a regulated environment, especially one that your industry helped to shape, is known and secure. but i firmly believe that the future of all of these industry segments and of segments not yet even conceived lies not in regulation, but in the freedom to innovate in the service of consumers. thank you very much. >> thank you very much. the chairman is obviously made a mistake here. because we started 2:30. it's now 3:30. and that is fundamentally unfair to members who came. some of whom have already

departed. i check with the ranking member, what we're going to do is -- all of the -- those who gave testimony, they come long distance, they want to do their five minutes. some went beyond that. we're going to skip me, skip kay bailey, senator hutchinson, demint, and we'll go to those who did not give opening statements but those who are still here. >> thank you, mr. chairman. i appreciate that. there's one who came hoping to get out before i had a chance to ask a question -- [laughter] >> i appreciate the great opportunity you've given me. let me -- no, i'm a sophomore too. we won't do that. let me say this, i'm a cable subscribers that watches the sunday shows delivered by the broadcasters.

i appreciate retransmission allowing me to be able to subscribe to cable and see those tv shows. i am a customer of all that you sell. i listened to all of the testimony. i know there's a lot of contention and number of phone calls and this leads me to believe there's more. the best way to get all of the facts is to have hearings like this. i appreciate the chairman doing so. i also share an interest. both are big fans of the atlanta braves. thanks to access, i can go home and watch them on tv. even though i'm 800 miles away. i appreciate the services that you bring us. i actually have a few questions, all of which is raised by comments that you amaze. i will start with mr. padden. are you a doctor? >> i'm a recovering lawyer. >> recovering lawyer. good. those are the best kinds. [laughter] >> let me ask this. you said the marketplace is better than licensing for the future; is that right? >> yes, sir. you were around and employed by

one of the companies 20 years ago when the cable bill passed? >> i was at fox broadcasting company. >> would you elaborate on the licensing platform that caused the licensing regimen to be set up in 1992? >> well, actually it starts in 1976. the supreme court had twice ruled that cable retransmission was not a performance under the then 1909 copyright act. so no copyright liability attached to retransmitting broadcasted programming. the supreme court urged congress to amend the copyright act. it was done in 1976 to make retransmission of broadcast programming a performance for which copyright was due. everyone thought it would be burdensome for the cable operator to have to negotiate with the owner of each program

on the schedule. congress conferred a compulsory license a rare act to be done only when there's a market failure and the rights can't be cleared in the marketplace. subsequent, cable networks invented channels like hbo and history channel. they are not subject to this compulsory license, because they weren't around when it was adopted. so what they did was the channel owner licenses programming from various parties and get the rights to sublicense that programming to cable and satellite operators so the cable and satellite operators don't have to negotiate with all of these different program owners. they just have a single negotiate with the channel owner. my proposition to you today is the fact that more than 500 of these nonbroadcast channels are distributed all across the country without needing the government intervention of a

compulsory copyright license shows that the broadcast channels could be distributed exactly the same way, each station channel 7 here in washington, in addition to licensing the show like "oprah" would get the right to sublicense the show to the cable operators in the washington area. cable orbit tours would have a single negotiation with that station. you could get rid of a whole bunch of communication act regulation that was adopted specifically to identify this. i wish it was easier to explain. >> you still got a little lawyer left in you. thank you for the answer. dr. cooper, you used a term i didn't understand. you said cable gate keepers. what contend did you use that phrase? >> i use in the context of the

cable companies putting together big bundles of packages, as senator rockefeller mentioned, and deciding the bundling. they don't get choice. they get to choose a couple of bundles. they end up paying for many more channels than they ever watch. they are the gate keepers between the consumers and the programming. and they actually have a very large market presence. they have a market share at the local level. which is, of course, the only way i can reach those programs, see those programs. they have a very large market share. there is very little -- there's more competition than there was in '92, for sure, but there's not enough to break the anti-consumers bundling. they will the gate keepers. >> can i have one more question? would that be okay?

all right. i'll tell you what, knowing the question i'm going to ask, it's not going to be rapid. i'll yield back. >> thank you, you are a gentleman. senator pryor. >> thank you, mr. chairman, and thank you both for having the hearing today. let me jump right in, miss colleen, i see a lot of investment and a lot of creative efforts and a lot of good things. i guess my question is why should we change that? and how do we know if we do make some changes it's actually going to be better? >> great question. on the latter, i think it's just with real thoughtful conversations to the consequences when reform and changes are made to really try to think through those consequences. to the former question, why should we change it? for the reasons that i've said. i think -- i love the

competitive landscape. we know how to compete. that's what we're all about. so it's not about wanting to limit competition, innovation, and creativity. we welcome that. we want that. as a small operator or large operator. it's samplely taking regulation that currently allows monopolistic activity to go on to remove that so that it truly is based on a fair market and fair market pricing. unfortunately, dr. cooper is wrong, we are not gate keepers in the stand point of being able to -- we don't decide how we offer or programming. i wish we could. i wish i could offer a sports tier, so that 50% of our viewers who don't want sports aren't subsidizing the enormous sports cost. i don't have that right. the programmers, the broadcasters tell us and mandate and the laws help them do this, mandate how we carry it. so that's why it has to change.

because consumers are saying give me choice, give me what i want when i want it, and we can't do that due to the rules today. that's why they have to change to allow more innovation and flexibility. >> all right. if i have time, i want to come back. i want to ask mr. smith a question. always great to see my former colleague. welcome back. >> thank you. >> one of the things that you mentioned, and i just wanted to make sure i have this clear is the cable acts requirement and the sort of the connection to localism and retransmission. and tell me why they are checked. i know why localism is important. i see it every day in my local tv stations. tell me what the connections is there. >> i believe what the committee and the congress intended was to make sure that in retransmission con send small broadcasters in arkansas and other small rural communities, along with their

networks, had an opportunity to recoop the value of their contend, but also their signal. both things have great value. and when you consider retransmission consent, must carry, compulsory copyright, this is a three-legged stool. you pull one of them out and you will dramatically damage the rule broadcaster, you will dramatically damage those who are under privileged and can't afford $150 a month per cable. you'll damage the ability of rural states to be able to sell a car in pierre, south dakota. i think it's very important. if you want a robust national system that focuses on localism, the resources have to get to local as well as to networks.

so it's a very careful balance that's structureed. >> let me ask you, mrs. witmer, i saw you nodded your head a few minutes able was talking about the cost of programming and things like that. i know the cost is high. also i understand that's not a very transparent system. me as a subscribers, when i buy a local cable package, whatever it is, i don't always know what my cable provider, i. e., what i'm paying for, but what my cable provider had to pay for all of the various programming. a lot of it as we all talked about, a lot of it we don't want. it's part of the package. what's wrong with more transparency? why shouldn't the consumer, the subscriber, the end user have a

right to know how much you pay for it to know if we are being charged fairly? >> thank you for your questions, senator pryor. i think for us, our consumers are first and foremost in our mind. i was add nodding at not being gate keepers. we offer an environment. one the things not well understand in the competition environment in which we are operating. we are consumers facing. we are in their homes, talking to them from our call centers, we bill them for their services and gauge directly with consumers. the competition that we face is all about the consumers. we understand their desire for transparency. what we find from our consumers that we don't well understand the system through which they buy television and they receive

content. we still find many consumers don't necessary understand that first of all cable operators don't program the networks they receive, and they don't necessarily understand that we actually pay for and negotiate for licenses to carry all of that programming. there's no doubt that the biggest issue facing video customers today is skyrocketing programming costs. i believe unable to see the chart from this side. but i can tell you that time warner cable spends nearly 60% of the cost every year in programming are spend paying owners of broadcast stations. we spend over $2 billion a year compensating those companies. so we know that the system feels that it lacks some transparency for consumers. i think they understand not a lot about how it works. and more transparency might help them. at the end of the day though for the consumers that wants to may

be different. it's not always transparent for them. >> more specifically, we can't tell you what we pay. the programming agreements that we have to sign do not allow us to share it with anyone, to share it with consumers, each other, anyone. >> mr. chairman, thank you. i'm beyond my time. i understand what you are saying on the last statement. i don't like the aspect of the agreement. i don't like the lack of transparency. thank you very much. >> thank you. senator thune and udall. >> thank you. i appreciate the hearing. i hope we can find 21st century solutions to 21st century challenges. i think the one thing about the television marketplace is we've seen remarkable improvements over time. it really is an area in which

with technology and all of the changes occurred out there it's been good for most americans. obviously there are issues that come up across the way that need to be addressed. i think the committee needs to be informed by all of your input as we try to address that. and senator smith, welcome back. nice to have you with us again here today. one the things that i hear is that television blackouts due to disputes is on the rise. everybody has talked about the various statistics that bare that out today. and are likely to increase if we retain the current regulatory regime. i ask the question to someone that believes in the free market and instincts that deregulation is a good approach. with regard to the types of blackouts when is your assessment as to whether we're going to see fewer tv blackouts or more if we were to completely

deregulate and to go to an aappropriate like senator demint has proposed his legislation. i open that up to whomever. >> senator thune, good to see you. as i said in my testimony, i think when you increase by ten times the number of rights holders that would have to come to an agreement, you have to have a tenfold increase in the likelihood of disruptions of some kind. and that's just logically to me. but perhaps other have a perspective on that. >> i think the other perspective that i would share is that part of the regulatory landscape requires cable operators to sell broadcast station as a point of entry to purchasing anything else from us. that is unlike any other

platform. satellite providers are not required to sell the broadcast stations, certainly access to entry to viewing content, even broadcast content on the web does not require that subsidy to be paid in order to be able to use any other form of content. and so part of the tension i think for the operator as these costs are skyrocketing is that we cannot sell a consumer anything else without being obligated by virtue of the privileges of this law to pathos broadcasters. and it is unique to cable. and it is placing greater and greater tension on our ability to compete and our ability to provide consumers with access to other content that they want without having to pay that toll to enter our store. >> senator thune, if i may, i guess two points. as i said in my testimony, i guess my fear is along the lines of senator smith said. if you introduce more players and some of them are hard to

find even to clear the rights. i fear that it's going to lead to many more disputes rather than fewer. i guess i'd like to make a related point if i may. i was in a situation last year in a negotiation where we were getting fairly close, and the fcc announced its proceeding and the operator pulled back. because he thought that he was on the verge of getting a better deal from washington. and it's frustrating to me as a company, we -- our television station, cbs only negotiations for the station we only. it covers 32% of the country. 32 million households, i've been doing this six and a half years. we've done 100 agrees, including two are colleen abdullah and mrs. witmer. we haven't had blackout. i almost don't recognize the environment. they are describing a world that doesn't exist amongst our three companies. i guess my concern is, i know

that you are all worried about the current system. for a businessman who needs to make a plan, we invest $5.5 billion a year in programming. we need to be able to plan. we need to know what the rules are going to be. we know how this system works. it has its flaws. but it basically works. abandoning it for some whole new system or a system that repeals, retranses and leaves the compulsory license. i guess we prefer the devil that we know. >> two things -- we all have something to say. two things on that, is that we may like this -- some people may like the model that is for lots of reasons, but the consumers don't. and the consumers don't have the same model on the internet. it's time that the businesses that we're talking about create a new sustainable, innovative

business model that serves consumers and reduces confusion. that's one point. the second point is i sure hope we don't evaluate the success of deals getting done based on blackouts. because that's not the only measure of success or failure. there is a failure in the fact that we have these double digit, triple digit increases that are not rationalized by ratings or anything else on many networks. they are not rationalized, we have to pass them through to consumers, every year they take the brunt of the increases. that's failure in my mind. i can tell you the service that is we do manage, internet and phone, we haven't taken those services up. we haven't taken an increase in years. and i can represent many aca members who will tell you the same thing. some that have not taken hsd or phone up for ten years. where are the prices increases

coming from? programming on video. >> let me briefly follow up. we've testified together before. the only way to reform the market is to restore consumer sovereignty. it's to make sure the consumers have to right to choose to pay for the programs they want. that is the fundamental program in the marketplace. and you can fool around with we transes, you'll just shift the balance from one big entity to another big entity. the only way to break the market power is to ensure that the consumers have choices of what to pay for and not being forced to buy the huge bundles. that's what she wants. because she faces the consumers. she's willing to face consumer sovereignty. she doesn't have any market power. the big cable operators and the big broadcasters content providers do have market power. >> as for the -- >> with all due respect, i have

to cut that question off here. we're already 2 minutes and 20 seconds over it. senator udall is waiting. >> thank you, chairman rockefeller and ranking member hutchinson. i really thank the panel. i think this has been very lively, and a very, very good discussion. i understand my cousin, senator smith, reminisced earlier about his service on the committee, on the commerce committee, and also about tradition -- the udall tradition of public service. i can voyage for that. we're close cousins. i'm not going to say i regret. my one big regret is not serving with you in senate. as you know, you are you is -- you were succeed by a democrat.

i'm going to stop. [laughter] >> they have must carry rules. and there's a proposal that you all have been talking about to abolish the rules. if must carry rules went away, would small local channels such as a religious broadcasters with a relatively small audience or regional focus have the same access to tv audiences as they do today. >> senator udall, when i served on this committee, there was an appropriate concern for diversity and fostering niche markets. i understand some don't like the must carry provisions. but the idea was to foster that in america. to get rid of must carry. most of my members don't count on must carry. but some do. who are they? they are the religious

broadcaster. they are the rural. they are the foreign language. they are often minority communities. i mean you wouldn't have univision today, you wouldn't have fox today. you might like that, mr. chairman. [laughter] >> but these great networks developed with must carry because of the wisdom and foresight of this committee to foster this diversity, this niche, this service of all of america in its great complexions. and its great needs. so must carry -- must carry is important to many small, rural communities. if it goes away, -- again weeing go back to the -- if you want to sell a chevy in pierre, south dakota, and must carry goes away, rapid city may have to go

to denver. if you are a chevy dealer, you are not going to be able to afford that. sioux falls may have to go to minneapolis. you won't be able to afford those markets. if you want to continuing fostering localism, must carry is important. >> mrs. colleen, they tell me they pay more in places like new york and los angeles. what explains the costs for the cable and satellite tv providers? >> great question, leverage. we don't have the leverage in the negotiation. so in they walk with the same service, same deliver system, same costs, and they charge us double digit higher rates than the big guy. because if i say to them, i'm going to take off 1,000

customers if you don't get reasonable, they say okay. if comcast says be reasonable -- give me what i want or i'm going to shut off 24 million, they have a lot more leverage. it comes down to the big versus small guy. >> i'm real worried about colleen colleen abdoulah. she's suffering and needs protection. she does just fine with abc. we didn't have the leverage and clout. the big bad media company couldn't persuade to carry a channel. this notion that these weak players that need protection. let me tell you, they are not not negotiating rooms i'm in. they do just fine. >> it's not a notion.

we can prove that we pay more. we can prove. if there was more transparency, you would know exactly how much more. i would welcome that. >> are ugging to carry -- >> not a good value. >> why? >> customers aren't asking for it. >> chairman, i'm out of time. you can intervene here. >> why don't each of you send us the numbers to find out which of you is telling the truth? >> i wish we could, sir. we're not allowed to. our contracts do not allow us to share what we pay for the programming. >> i'm a very confidential source. >> i'm with you. >> senator udall, go ahead if you want. >> i'm out of time. >> yeah, you are. >> so i was urging you to intervene in the middle of that. >> i was enjoying that. okay. senator demint and senator hutchinson, and then i need to

talk, i will be brief in the way i thank all of you. senator hutchinson and i will go behind the door. please forgive me for that. you will be brief, i know. >> this is really very helpful hearing today. i'm convinced if we kept talking -- very helpful hearing. i'm convinced if we kept talking that all of you would convince yourself that the free market approach is the best approach. as mr. franks was just saying, they don't need protection. now that we've got a very dynamic market. i'm convinced that we let this continue to work, it would work a lot better. i'm convinced, senator smith, that broadcasters would find themselves in the cat bird seat because of their own control because of the package of local, national, and syndicated

programs. all of the other cable companies have to negotiate with you to get it. i think your broadcasters would be in a great position to do this. and i think we need to realize that the innovation and a lot of dynamic that's going on with the 500 or more canals that don't operate any kind of compulsory license or retransmission. that when we're talking about taking away retransmission, we're not talking about taking away carriage negotiations, which again the broadcasters will have the ability to continue to do. my bill does not affect noncommercial, pbs, religious broadcasters, as you know, the new digital signals that all of the broadcasters have the ability to send a free, crystal clear signal to 100% of the market in their adi.

so we have an amazing dynamic. if cable or other distributors are not willing in this environment to deliver programming that the consumers want, someone will give it to them. that's why you see the growth of streaming or netflix types of programming today. but again i'm -- instead of asking a questioning i just hope, mr. chairman, we can continue to do that. the more everyone talks, i think the more we realize that we have got a very dynamic and competitive marketplace. and if in a thoughtful, systemic way we let this work, i think we would find that the consumers gets what they want. but at the same time, there's another player, mr. chairman. we certainly want the consumers to have the choices they want. but private property whether it be copyrights, content control, is our responsibility as well. and i do not think the government should be telling the cable companies what they have

to buy or the broadcasters what they have to sell or the networks or what they charge. i'm convinced again that we would find a very competitive, active dynamic marketplace with lots of choices if we continue to talk through this. thank you all for coming and getting this conversation started. i think that's what it is. i heard from a lot of folks on the panel here that there may be a lot of common ground if we proceed through this thoughtfully. thank you, mr. chairman. >> thank you, senator. senator hutchinson. >> thank you, mr. chairman. i just have one more question. i think we've had a great discussion here in all of the media interest. but i want to go back to the newspaper, television, cross ownership rules. which senator smith, you and i had as issues when you were on this committee. and i thought mr. padden's

remarks were very interesting. and i was a strong component. the cross ownership, because there were two markets. in georgia, you had such a lock on the media outlets with the only newspaper in town, plus the major television station being owned by the same companies in a grandfather that superseded the ban. however, i quickly retrieved it from my position as the proliferation of outlets came just in the last ten years. and changed the whole marketplace, and i think mr. padden, you mentioned the new orleans situation which now is the opposite, and has caused

great harm to the nation's eldest and most revered newspapers because they couldn't invest in the television. which would be the money that would keep the newspaper going. my question to mr. smith and mr. padden is is the fcc either e limbuated or modified the cost ownership, do you think it would hurt localism, do you think, in fact, as you have stated, in some cases it would actually promote localism and -- are there other instances where you think it could have the opposite effect? or do you think that would be universal? i'd be interested in both of your views. >> senator hutchinson, i think it's very clear that we live in a different world on this score. there are many -- particularly our brothers and sisters in the

newspaper industry and the journalism, the solid journalism that they do is under assault and real threat. we care about them. every market is a little bit different. that's why the nab has supported relaxation, particularly in some communities of the cross ownership rules so that their economies have scaled at a radio, tv, newspaper, and small community could pool together and be able to survive so that you have legitimate journalism in the country without a taxpayers subsidy, but with the logic that comes with those kinds of synergies and economies of scale. we support the relaxation. >> thank you. >> i agree with senator smith. there was a time when newspapers and television stations were the only games in town. thanks largely to the efforts of this committee, we have a more robust place, cable, internet,

everything else. one side effect of the wonderful diversity is it has gotten tougher for the entities that used to be the only games in town. i really think before newspapers and small market television stations completely wither and die. if i could respectfully disagree with senator demint that it would cause more blackouts. i just don't think that's true at all. what we have today is the compulsory license confers the rights, and the cable negotiates with the broadcasters regarding the signal. in the world that senator demint bill would create, it's only single. only instead of it being the

legal fiction, it's about the signal, it would be a negotiation about the program rights. there's no reason why that should lead to the increase in the number of blackouts. >> may i submit a written answer to your question on a somewhat different point of view? >> i'd be happy for you to disagree right now. >> i wasn't going to disagree. i was actually going to point out they did relax the rules in the last round. we supported that. the court upheld. so in the markets where the newspapers had been under the most pressure and where there is there the most alternatives, they did. i have to look where new orleans failed. there have been no merges in the markets. >> you have to go before the fcc -- >> the presumption was the merger would be found in the public interest. it shifted the burden.

it said it could happen. we supported that change. in addition if there's a failing problem, there's always been that exception. so if they wanted to declare themselves a failing firm and get bought out, they have always had that option. to look at that case and say it was the result of this bad policy, i think is misleading. >> well, i think my view is it's obsolete now. i'm 180 degrees different from where i was. i felt like it was stifling any other voice in the market 20 years ago or 15 years ago. now i i -- as mr. smith said, which i agree. we need legitimate news organizations to be able to of function and have a voice.

because there's such a proliferation of voices with no capability for in depth reporting or even in some cases ethical standards. so i think that we do want to save newspapers and legitimate broadcasters to the extent that we can, even when i disagree with them 100%. >> we should not equate journalism with newspaper. it may well be other ways to have legitimate journalism in this new world that don't involve newspaper. and that's the transition that we're going through. >> i didn't mean to indicate that there's no journalism except in newspaper. but certainly newspaper and other legitimate broadcasters have exhibited standards that i

think we want to assure have a voice in the marketplace as well and not get drowned out with a proliferation of voices that might not have the -- even the resources for in depth reporting. i thank you all. >> thank you. and i thank you all of you very, very much. senator hutchinson and i are going to disappear. it may be some time before i have six witnesses again. however, you did very well. it was an interesting discussion. i think we all learned a lot from it. i thank you and the hearing is adjourned. [inaudible conversations] [inaudible conversations] >> >> next, q and a with supreme

court justice antonin scalia, and then calls on "washington journal." today the director discusses drug trafficking in americas. in 2010, it shifted the focus to agreement. >> internet and privacy becomes an artificial construct created by laws and institutions and enforcement. >> until a few weeks ago, rod oversaw the process of the domain names worldwide for

assigned names and numbers. on the communicators at 8 eastern on c-span2. >> this week on q & a, or guest is supreme court justice antonin scalia his new book is "reading law: the interpretation of reading texts". host: justice antonin scalia, your book "reading law" why not? guest: because i finished working on it now. host: why this book? how important is the book? you've done a bunch in the past? >> caller: -- guest: well,

i've done a bunch in the past. this is the first time i've tried to pull together all of the what you might say interpretive causes that i consider important, textualism, originalism, no use of legislative history, and have described, you know, the opposing theories of interpretation. and most important of all, maybe most important, but certainly most difficult of all, have gone through the steps that a textualist has to take in order to produce a correct reading of the text, namely the so-called cannons of interpretation which are, you know, largely ancient common sense rules of how

language is used. host: who do you expect to read this? guest: i hope judges will read this. i hope lawyers will read it. i hope lawsuits will read it. and i hope legislators will read it. because it's just as important that legislators know how their language will be interpreted by the courts as it is for the courts to know how they ought to interpret the language.