Transcripts For CSPAN2 Future Of Media Ownership In The U.S. 20171117

[inaudible conversations] the afternoon. I am so excited to be in this crowd to talk up the sinclair tribune merger and ownership if you dont know me i am a distinguished fellow at the Georgetown Institute on foreign policy. Before we start early to think a couple loved institutions in the institute for public representation that is part of Georgetown Law Center and of those alleged foundation for sponsoring this event also senator Richard Blumenthal we hope to hear from soon and also jaime who is a Research Fellow here georgetown and by personal locklear cantering a fabulous job and also the head of the institution in that you may have heard broke her leg when she and her child was shopping when shoplifter knocked them over down a flight of stairs. So of people could send her well wishes she is doing a fabulous job running the institute also other georgetown students and who will be helping today with logistics. So let me step set the stage. Whether we talking about . Made the shares Sinclair Broadcasting group wants to buy Tribune Media company. It is seeking approval from the fcc and department of justice for the merger if consummated a result in sinclair owning 72 percent of american viewers. The next largest broadcaster would have 78 fewer stations. At the same time the sec will vote tomorrow to eliminate the ownership rules that tv radio and though local tv ownership rules they have already reinstated herbal with the uhf and vhf stations as have the station for purposes of ownership. How many of you know what day uhf and vhf station is . Anybody under the age of 40 . [laughter] well have an opportunity to talk about that later if that was a rule that should have been reinstated or whether chairman pai is engaged of reregulation there really is not his forte. The other thing the fcc has done to eliminate the main studio rule to have a broadcaster having a studio in the county of license that is seems old and not important but when you combine consolidation with getting rid of the need to have a presence in the local community is meaningful and we will get to that today. These issues are timely with the vote tomorrow so we will talk it out of the merger is in the Public Interest and if those rules make sense in this day and age with 500 cable channels with the internet information. Let me talk about how today will go. Senator bloom and fall is not here yet. When he comes we let him speak regardless of what were doing but we will start off with the debate focusing largely on the ownership rules and not so much on the merger but then follow with the panel and then audience question in answer i will not call one people. If you have a question please write it down major hand. They will be collecting the kardashian jaime will go through those we dont have a lot of time but hopefully folks will stay after an answer more questions. Lets start with the debate and we are very, very lucky i got an email this morning to argue in favor of lifting as ownership rules he was unable to come and am still in my pajamas. I was not happy but fatefully he brought in his place a fantastic substitute i have known for years the executive Vice President for strategic and Legal Affairs so literally at the last minute agreed to debate a very good friend that you may know from his appearances on msnbc the a principal of the good son group and also an adjunct professor at Georgetown Law Center. Each will have seven minutes than david will have another two minutes to respond. The floor is yours. I have to say again that gigi is not the only one grateful that jerry showed up. With early last minute notice and has stepped in and that deserves all my things and with that. [laughter] we will hear a lot how the world has changed. The world has changed since the ownership rules were first promulgated back when jerry worked at the fcc a little bit ago. There is the internet and cable tv and a look at all the Different Social Media platforms today and therefore would these antiquated Old Fashioned rules have got to go because that is the way we can only have free over the air broadcast tv the only way to survive in the modern world. If that is where the story ended 1 2 to concede. You win. Thanks. [laughter] go home. But fortunately that is not where the story began it was when broadcasters got a great deal and it was a trade. We will give you free spectrum licenses the best in every market and not only that theyre worth billions of dollars today that under todays lot you can sell and if you want and get billions of dollars more. Free from the United States taxpayer but it doesnt stop there. So the laws passed in this institution and give broadcasters even more value. You are guaranteed distribution social me a business person that would not love that deal guaranteed gesture mission in lock as you the broadcaster are given a legal monopoly. A monopoly under the copyright law to provide Network Programming you were the only one in your part market permitted to do so if i want to buy a newspaper from another city i come by newspaper to go on the internet find content from anywhere in the world but not broadcast television. No. We give broadcasters the monopoly. And we also from time to time when we are worried about the budget like we are right now during tax reform we ask is there any possible way to get additional revenue from these licenses . What if we charge a fee . No. No fee. We you wanted for free as always. We are supposed to get something in return as the American People the argument like this. We get free over the air programming going to wonder to of the households for free. Number two, local news, weather and sports sports, localism. That is the Public Service from the broadcasters and the other thing we are supposed to get is a wide variety of perspective and in diversity we almost we are filled with different viewpoints and the odors boss is a city with the viewpoint to be this bin guess what . That is what it is and we say taken all and have it for free on us provided we get that back. It actually played that out that way with all the different choices and technology 82 percent of americans across all age groups trust local broadcast the most for local news. Local broadcast is trusted the most for local news by the way that survey also found people trust local broadcast news world there and they trust their own family what is going on locally. So in my view if you want the freebies and has to come with what we have passed for in return for you have to provide local news and if you want to take away those restrictions, that is fine but bin giveback the goodies you have gotten in return the House Republican leadership never introduced a bill city will get rid of them beyond have that copyright exclusivity anymore and guess what . What we want is all that matters not what you want as the public matters. Now we talk about a specific transaction and they are represented here today so what happens when big broadcasters get bigger . I will give you a preview. Sinclair advises the station to fire local reporters and staff and sense of function to baltimore and the tribune has a better track record in fact, we had a steady of local news and found the top three stations to provide local news of both companies the tribune provides twice as much. So by that getting bigger they want to prove the local news that tribune provides will be just as good or even better if it passes is the prologue asking people in Oklahoma City or rochester or seattle where sinclair has stations it will not get better. It gets worse so what are we getting from this . And why should these limits we lifted to get bigger . Because then the nations largest broadcaster doesnt work out for the American People. Things were the invitation and i thought about shaving my head today. [laughter] i dont think i could pull off. [laughter] i apologize if i have not read all of the pleadings in this proceeding but since i first worked for the sec in 1975 and spent my time reviewing station in sales in the 70s and the time during the Reagan Administration chairman felt fowler to deal with some of these and cope with them in devising over the past 30 years sorry to bring a of a bit of perspective that could be a my inning but the question today is whether we need sec rules limiting broadcast ownership with higher resolution internet streaming from over the top services and more competition from distribution and we do not in the hyper competitive marketplace those antitrust principles are more than adequate for Television Broadcasting we dont need separate rules of bin mr. Bryan independent agency to impose artificial and arbitrary definitions of competition and diversity which will show decades ago that is in response of how Television Distribution works. The big promise that guides my view is i believe free over the air broadcasting is of Vital National asset sold every say about programming markets or advertising markets or the highest and best use of spectrum i urge you to consider if free over the air broadcasting did not exist in the sec allocated spectrum today with investors provide capital and new broadcasters could outbid the internet or multi channel pay platforms to acquire the highest cost programming to provide hours of live news in every market . And make it available for free . It is no longer a barrier to entry but nobody does these today. Second ive understand there is no free lunch we have chosen to finance by allowing them to compete for revenue in the marketplace so of those profits arent that means broadcasters cannot take anything for granted they have to earn their supply by paying for it and nobody requires them to broadcast nfl games mitt requires the nfl to distribute programming on a platform for free or sell games to end b. C. When fox sports will pay more. When i hear the typical argument for a consolidation the one that has never acknowledged is that broadcasters have to compete with those on regulated competitors for every minute of programming with every dollar of revenue. To giving the original cellular licenses away to the incumbent phone companies for free with no Public Interest and responsibilities and the same was true for the licenses. Dps, cellular and broadcast issue in the changed hands to those that changed market price. More to the point how they got their stations and limits on ownership is the intellectual ownership limits are not logically derivative from how the station was acquired. The fccs politically divided ownership rules have harmful effects of the market. I was an active witness in these consequences of making washington, d. C. A monopoly newspaper when the fcc made joe separate the washington star from its financial mornings nationally we do not need ownership passed because those particular rules present new competition to existing distribution platforms and as patent pointed out in his wall street journal oped they had the effect of freezing the National Television to abc, cbs and fox. Locally we dont need ownership restrictions because we need to allow those who are willing to invest in local markets to organize in a way that allow them to be as profitable as competing platforms. In the system we have chosen for the broadcasting, profits commensurate with competing platforms are not just good, they are essential even if you believe the next question is what is right for 2018 and beyond. I would reject as preposterous the restrictions on the buck at the time people were not the pearl harbor bombings from the over the air networks before facebookthey spoke, before goog, amazon, netflix or direct tv and when at t was a longdistance provider it was the best framework for the century. I sometimes feel like rip van winkle the world has changed. [laughter] get over it. The u. S. Chose the broadcasting profits that was easy when they had no competition except for each other. They had bad consequences but they were not existential threats. If you want the marketplace nfl games, prescriptive programming for everyone for free, you have to let the marketplace figure out how to do it because the programmers are going to sell to the highest bid every single time and the government isnt going to subsidize. Thank you. I said i was happy. I take it all back. You ended by saying the marketplace wouldve figured out and im going to come back to a point i made earlier. The government would have no role whatsoever but as long as they have their thumb on the scale and guaranteed distribution and free licenses at a time when other competitors have to buy them, we the American People get something in return. Heres an analogy i used all the time. Did you know that 22 of the stadiums in the country were built in whole or in part to the taxpayer money in thtax payer mf the billionaire owner and what do you get in return to that . May bmaybe it gets plucked out altogether my view is as long as the American Public is giving something to an industry we have every right to ask for something in return and i think the way to to handle this we do want the broadcast and localism and things available to the public for free. Those are all great things but you only get to argue that those rules should go if you can show somehow theres a disconnect between the value we get into the diversity of the voices on the platform that matters most for local news, broadcast and so far i have seen nothing in the filings submitted that would show that. In fact every time one of us that is opposing the merger suggests the question they could answer why can you please show us how your local news hiring and content compares to the rest of the industry were the tribune, the company you want to buy, crickets, no answer. Except we are going to bring local basketball, high school basketball. Thats great if i can compare it to the rest. Once again, we can talk about the free market all day long but as long as uncle sam and taxpayers are subsidizing the industry, we get a say an in the font local news and diversity. Lets give a hand. [applause] when senator blumenthal arrives, we will give him the podium. Its a lectern, not a podium. Ive been corrected. Let me briefly introduce the speakers on the Georgetown Law Center website they are very easy to find in any Search Engine and im not going to mention any particular. I feel very lucky to be on this panel. It directly to my right we have rebecca hansen, senior Vice President for strategy policy for Sinclair Broadcasting group, executive Vice President general counsel for the tribune corporation. Its a big deal to have the two parties. Then we have the director for policy and Legal Affairs at the Media Coalition and directly to her right is the National Association of black owned broadcasters and then my mentor and a longtime friend and sometimes pain and whatever, Andy Schwartzman, senior counselor and attorney at the Georgetown Institute for public representation. Thank you, everybody. We have very stark visions. One is an industry that gets a lot of government taxpayer benefits and therefore owes something to the public, a fiduciary and one of the things they owe is a diversity of voices. On the other hand we have a scrappy competitor in the competitive marketplace and with a freemarket it ought to rule. Whatever needs to be done to make sure they survive this kind of the way that i read what jerry was talking about so i thought id ask anybody on the panel that they want to respond. Which is it, or is it a little bit of both . David paints a very rosy picture and and a love of the s are not disputable accept the fact we got a section for free and i will be assessing a 4. 4 billion check at some point in addition to the 85 billion that the company has paid over the years and acquisitions that weve made. So there is an investment in spectrum regardless of the origin of the original licenses issued. But the other part of the picture David Pinkett is what you see before you and it is basically the environment in which we try to use the socalled government benefits to create a selfsustaining solid ability to deliver local news. This is a slide showing where broadcasters are in that ecosystem for which we have to work. We have networks for whom we buy programming, 50, 60 billion then where we distribute the programming. To summarize where we are in the landscape, the major challenges they are supposed to provide the Public Benefits include major Revenue Sources like local advertising. Major consolidation of the satellite and Cable Companies with nationwide or near nationwide footprint, consolidation of National Programming networks come increased cost of programming including sports. The entry of massive competitors such as google, netflix and facebook. I want to set the scene but it is not as blackandwhite as david presented it and i will stop there. Lets talk about the spectrum. We own the spectrum, the public owns the spectrum sinclair doesnt own spectrum. What sinclair bought was licenses that expire but they have the rights to the renewal if they earn it. They are supposed to earn it with Public Service but make no mistake about it we own the spectrum and you need to be within that contexview itin thae what youre saying is we the public on the spectrum we can seset up appropriate conditionso it is used to benefit the public and that includes ensuring competition and diversity. So, when jerry says antitrust can take care of it, antitrust backs and the diversity is the most important thing that we are trying to get here. We own it, they dont. Im not sure that its that fruitful of a discussion to talk about who owns the spectrum quite the way we are. Many local broadcasters, some of the biggest dont provide local news and the reason they dont does its usually expensive. The people who provide local news provide as much or more than most because it is a differentiator because they live and believe in the communities, they want to serve the communities and if they can afford it, they invest deeply in local news and sports, they invested deeply in their anchors and relationships in the communities, but to do that its not a government requirement, that is something you do because you think it is the right way to run your business. There is an explanation for that part of that which is the biggest markets new york, chicago and la we have cw affiliates or independent. You run local news on this because you are not required by your Network Partner to have Good Morning America or the today show or what they put on and required you to put on when youryou were a network affiliae with sinclair and most of their biggest stations. They are deeply devoted to local news and the reason for that is that our way of delivering value to consumers. David has had one other thing i will point out which is we get automatic distribution. That is and what sinclair and the tribune and most of the other broadcasters do. They choose content in the freemarket involved where you negotiate with cable and satellite providers. You dont get automatic carriage, so the structure of the marketplace is different than what has been described here. In some of the smaller markets we have awardwinning newscast that do an excellent job year after year but the ad revenue in the markets is not enough and so they are not profitable so if it would be delivering the same thing david [inaudible] we have a national audience, so when you say the retransmission consent, could one of the two of you who ever has the microphone just explain to people what that is . Scenic as a broadcaster theres two ways you can get distribution on the main distribution platform. The one you send the signal over the air. You are going to pay me for the consent to my signal and happens then is to engage in a negotiation of what the pric upf that is going to be and the cable or satellite operator this is oversimplified but basically pays the local broadcaster for the signal in the market and then in the local broadcaster this is also very important as an increasing share back to the network but its affiliated wi with. If it is an abc affiliate you pay it back to abc, so what has happened in the marketplace today, the local broadcast advertising dollars which are the major driver of the revenue in all local broadcasters is down and has been for years because the increased competition from cable and the internet. The consent revenue is going up and its going up faster so all local broadcasters feel they are in a tremendous financial squeeze. Thats what that slide is and that is what drives the industry like broadcasting to consolidate because that drives the synergy which allows the companies to save money and reinvest into the local communities. In the absence of god there will be no growth in the broadcast industry until there is a technological change in the industry and thats why you have us sitting up here as members of two separate companies that the shareholders arent interested in becoming one company. I want you to respond to what any site becauseddie said becaue struck that broadcasters dont have a legal or statutory obligation to serve their local communities. We dont have a requirement to put on local news. But the vast majority of broadcasters do not put on local news. It doesnt mean they are not serving the communities. My mentor taught me about this, thank you for clarifying. Im good. The first thing i will say is if they are serious about maintaining the level of local coverage i think they should suggest that be in writing in ad any order that they put out or that the government does in putting out a merger but you will never hear them commit to that because as i said before, they buy the stations and fire local resources and local reporters, local sportscasters. Do you really want the government to dictate the broadcasters what kind of content to put over the air . Just last month the entire Washington Community was up in arms because the chair man didnt come out forcefully enough so nbc licenses wouldnt be in jeopardy. For you to suggest that the government in order from the fcc should direct broadcasters if they have any specific type of programming would be dressed the most constitutionally it would be a different degree and the department of justice or how about just a letter from the ceo saying i will not cut local staff in chicago, la or any other property you will not here becaushearbecause it would be ae statement . Now we know one thing for sure. The company intends to raise prices. Look at the transcript from their investor for the ceo said we are going to raise the fees. That means you, the american taxpayer if you subscribe to cable or satellite your prices will go up. Ive worked in washington they be known as bone that for 27 years and never have i seen a emerging company come to town and say please approve the merger we intend on raising prices and maybe thats why. We have conservatives like chris and progressives like Andy Schwartzman on the same page agreeing that its bad news. Maybe thats why under the antitrust law you have the attorneys generals from different states including the home state saying this is a bad merger. I think the raising of prices and failure to commit to localism is really selling a bad deal. I want to shift gears a little bit because we havent heard and they have a lot to say. I want to ask first in response to what youve heard in the last ten minutes and also i want to focus we are talking a lot about money. The consent fees and making profits but obviously the diversity of places affects other things, the electoral process, whether the marginalized communities will get to speak. So i was hoping jim and carmen maybe you could talk about some of your concerns not only with the change in ownership rules but perhaps the merger as well about its impact on places of color so why dont you start and then jim can follow. Ive heard a lot of talk about localism is not much talk about diversity and the impact this will have and we are talking about the marketplace. As it stands, women of color by far behind men in broadcast ownership and the number is about 4. 5 of broadcast television and when you are talking about diversity, when you consolidate and make peace segments thathesesegments that y produced and distributed to the local stations across the country, you are pushing out and keeping the diverse owners out of the market and not only that but we dont have the diversity of the community needs. Specifically the National Association of broadcasters put out a study and said latinos did proportionately rely on broadcast media for their news and 31 of the households rely on broadcast tv as their sole source of news and the numbers are even higher for spanishspeaking households, 47. 7 . So if you like this consultation will not serve the diversity needed to serve the community. A few of you in the room may be familiar with this so i will go back a little bit. In 78 the commission recognized the lack of diversity ownership of broadcasting particularly among minorities [inaudible] a minority ownership policy designed to increase broadcast facilities by africanamericans and other minorities. The program worked very well in 78. There were no africanamerican owned television stations. At its peak, it represented 250 africanamerican owned stations and 23 television stations which was a huge increase from 78 to 95. Unfortunately it was out of 11,000 in america and out of 1400 america and since that time because of congressional and fcc policy changes the numbers have actually decreased so now we are at 180 radio stations so when you talk about consolidation in the industry is already caused a great loss throughout the industry and as carmen was saying, they rely upon broadcast, radio and television for the news more than the general market suddenly talk about consolidation in the industry come its always a matter of great concern and historically, we have always been a kneejerk response, no more consolidation. The sinclair tribune merger comes at an interesting time because recently we have been in conversation and they brought home a key point for us. Try not to talk and acronyms. The general market association. What they brought to mind is the market cap you see him back and if you look at the Television Companies you see theres a fraction of those they have to compete with city with comcast and nbc with market caps, at t, directv so i if youre a broadcaster in 2017 you are competing against companies that are many more times your size not to mention facebook and google all of whom are looking for the advertising dollar so where we are now is a crossroads trying to figure out how do we navigate and what does that mean for us so when i look at the transaction, there is a discussion that may be spun off so we are looking at this and more of a complex way than we would have previously and i think it does require they are given a close look and the kind of things they have been talking about might result in some actual positive games. I would like to respond not only took carmen an to what care said but also the general question this is going to create a broadcast behemoth nobody has seen before, 72 of coverage. Responding to the remarks assuming an underlying causal relationship between the broadcast ownership and minority ownership that has never proven to be the case the only thing that has resulted in increased minority ownership is the Congress Minority tax cuts and if congress were to bring that back i think you would see an increase because that is the only data editor has been proven and to do correctly point out that to the extent we do plan we are going to have to spin off some stations. Right now 20 of potential buyers are either minority or women owned and that is a strong percentage and we are very proud of that. Going back i would have to take off the table the applications that when the sinclair buys a station we sort of go in and fire everyone and run it from baltimore. That isnt true. That is a caricature of a narrative that is being spun and it clouds the policy debate which days how do we fix the situation so that the over the air broadcast can continue and how many hours of news we have added to the broadcast and where weve added investigative reporters. Speaking to the people making the decisions on this which is the ftc. Rebecca, let me get back to the question is that in the Public Interest case . Gives me the affirmative case if you can chime in as well what do you say in the second row about why the merger is in the Public Interest why should the American People support the merger . We believe it should be just as compelling and have just as high Quality Content and you can only do that with scale. We are investing a lot of news but theres other content vanishing in this over the air landscape and the only scale will bring that back. Sports is a good example. The most successful africanamerican woman producer is going to netflix so now if you like greys anatomy or any other show you have to pay 10 a month. With scale broadcasters can keep that on over the air tv because we believe it is in the ecosystem and we dont want to see it become a secondclass service for people who cant afford cable or dont want to pay for cable and you only get that in this day and age. You can afford the parkour its inconvenient or you are not a cable or satellite subscriber, the only way to see the dodgers is on the station, the same is true in chicago. We carry 150 majorleague Sports Events on w wgn. Those are expensive contracts. It is difficult for local broadcast to compete. Its difficult for National Networks to compete but for local to compete its a virtual impossibility. But we managed. Without deep pockets you cannot continue that. Where games are going to go beyond the pay well. Of all the broadcasters, the one i would say most devoted to sports is st. Clair. They understand the value differentiation. And your suggested that we would walk away from these that are popular with their audience. Can i explain what a pay wallace. Its basically tv for pay. You have to climb of the wall or pay the gatekeeper to get the program. Let me also explained while eddie can look me in the eye and say why i should care about this. Im the founder and chairman of sports fan coalition. We petitioned the sec to in the sports blackout rule. They unanimously voted to end including votes from now chairman pie and the commissioners. Of course i care about sports and them being available to the public. My beef is not with tribune, youve done a great job of putting free over there sports. Im glad you mention the tennis channel. This is what will happen when sinclair takes over. They will take the sports rights and push them on the pay Wall Properties takes stadium in tennis channel so you cannot get them over the air. You will have to pay more to watch local sports. I will be the first to say, sports on the are important. But the nfl claimed that without that regulatory support, nfl games to come up broadcast tv but that didnt happen. The nfl voluntarily and it is local blackout practice. Broadcast is still the only medium where you can reach 100 of television households. So if your advertisers include budweiser, coke, pepsi and other brands, youre still going to get broadcast advertising. Local broadcast is still the most popular place to get your local news. Youll have a huge audience on broadcast. I do believe on keeping sports on the air. Stadium is not behind the pay wall, were starting to roll out a broadcast component. So that fact needs to be corrected. I dont know what basis you have they would move the sports off broadcasting. The reason they wont his kids when you do these one of the ways you deliver value to them and get paid is by having the sports on your channel. If they move it behind the pay wall they will lose money, that makes no sense. Would you commit to not taking down that programming. Thats how the broadcasters get the money they get. The incentive to behind the pay wall and makes no economic sense. As a broadcaster is counterintuitive. I will stop you there. I want to talk about talk about us shorthand called sidecar agreement. For 25 or 30 years broadcasters hardly engaged in these agreements which allow them to have caps through a variety of sharing agreements with stations for advertising and sales. A more powerful broadcaster will cut a deal with the weaker one to sell advertising or share facilities or management. In my mind its a way to skirt the ownership rules. Talk about what they are and why hes troubled by them. I like their broadcast folks to respond for lifting these rules anyway, its gonna happen tomorrow why do we need sidecar agreements anymore . I can understand that when the rules were more restrictive youre trying to find ways to get around them. Now were just saying a lot of regulations why should there be ways to get around that as well . I will exercise the privilege of responding. Most people have no problem with the guidelines the fcc had in place for many years that set the goal of having minimum amounts of programming for every station. I certainly have no problem with the 1991 Childrens Television act that a minimum amount of program has to be carried to meet their informational needs of children. I havent heard anybody challenge that statute and the fccs enforcement of it. The airwaves belong to the public and we are entitled to extract to the public. That extends to sidecar agreements. It was a blatant evasion of the ownership rules to contractual arrangements give all but actual ownership to one company under the Securities Exchange Commission Accounting rules the sidecar stations are generally reported as being owned by the dominant company and not by the Front Company in operation. My gases as they left the ownership rules side cars will become unnecessary and many times they have option agreements that will allow them to buy up the Sidecar Companies anyway. Thats a means of having someone who does nothing other than hold the license and pretends own and operate the station for the benefit of another company. It makes a mockery. I want carmen and jim to weigh in on the sidecar agreements. If the sinclair tribune merchant is consummated therell be sidecar agreements and 63 markets. I concluded 35. Okay, go ahead jim, and carmen. With respect to sidecar agreements, the position is consistent with what andy said that how theyre being use to evade the ownership rules. If the fcc is going to change that ownership rule, many of the agreements have a right for the dominant broadcaster to purchase this station and take absolute control. I worry because what they are proposing this so farreaching in terms of relaxing the ownership rules, you could see a station that buys out the sidecar so it owns two stations outright in the market. The relaxation room does not prohibit another sidecar agreement after they own two. So think it has the potential to destroy any local broadcast television ownership. Its a very bad step. I agree with indian jim. The sidecar agreements working consolidation and they exploded the loopholes. With the consolidation is less time devoted to local news and journalism. I think theres a concern it will undermine competition and diversity of voices needed. I want to direct your attention to this five thats about the benefits. These are industrywide. That is joint sales agreements. Sort two stations will combine advertising and consolidate ads so they can more efficiently sell advertising and reinvest save costs into other broadcast operations. This shows in numerous markets more local news or local news where there wasnt any on the smaller station was introduced into that marketplace. Non news benefits are partnerships in the smaller station can get non news benefits. I just one asked the panel why the characterization that they sidestep the rules if the fcc has been providing guidance on how to craft these so that they are in compliance . They been in the pocket of broadcast industry for 30 years. [inaudible] since 2008 the fcc has approved the 5j essays. And everyone should not have been approved. There has never been any demonstrable harms. Congress asked gao to study these years ago. They even concluded no data showed that they harm the Public Interest. Seems to me its time to put this topic to bed. I think for the people who are not into the lingo, were talking about two ways consolidation might take place to is a gross potentially on a gross scale. One is a horizontal point which is that the combined company would own more stations across the country and therefore cover a larger part of the country. The question there is what percentage is okay for broadcasters to have as a horizontal matter in a world where many distributors reach 100 . Now the internet has change that. The second question within each market how many stations can you all or have a significant relationship with. When it comes to the markets importance remember theres two screens and a deal has to pass. One the department of justice where they look to see if the combination of stations is going to be too large. If it is, they say you have to get rid of the station. Then the overlay involves its own tests and potential for structuring deals. That was perfect, im so delighted that senator blumenthal is able to join us. I apologize, i did not mean to interrupt. If you havent finished, please do. Im sure my words can wait. Im delighted you could join us. I want to thank the Georgetown Institute for organizing today. Im very pleased we have this excellent turnout for merger i think is profoundly important to the future of communications and media in america. Soon after sinclair announced the proposal to acquire Tribune Media, called on the chairman of both the judiciary,s committee to have a hearing and have full and complete consideration. I am profoundly disappointed in troubled there has been no hearing and no prospect of one. It is also potentially disservice to the American Public that will be of affected. In fact more than 70 of the households will be affected on acquisition of the scope and scale. It has more profoundly important ramifications going forward. No question that congressional scrutiny and at least one congressional hearing is necessary and appropriate, probably more than one because both judiciary and commerce have a role here. This merger threatens to create a concentration of unprecedented scope and scale in the Media Industry in america and will affect the Public Interest, whether you are for or against it. So, i welcome this conversation today. It provides what i hope will be a preview of coming attractions. At the very least, prelude of what should be close and searching congressional scrutiny. I hope to liberations will raise the issues that my colleagues and i have an obligation to confront. A look at the details of why i oppose the tribune in the letter i sent september 27, 2017 to the chairman of the fcc. I oppose this merger because it violates longstanding rules and would harm media diversity, localism. Localism is deeply ingrained in those rules. And diversity is part of our fiber and democracy. Allowing this acquisition to move forward would reflect the failure by the fcc to do its job. I want to thank you for being here particularly the wonderful panel you have i hope there will be more opportunities to air reasons this transaction would be a great disservice to the American Public. My apologies for interrupting. And, go to it. [applause] i think it raise two questions. Should congress hold a hearing . But then the second question, you mentioned the judiciary committee. The department of justice has been talked a lot about lately regarding a warner merger but not talked about it all with regard to this merger. My point thats the point i made and i think jerry referred to it earlier. This is not the wild west. You cannot just willynilly put people together in this country and consolidation. There are wellestablished rules at the department of justice or guidelines, this merger will need to pass through that review. I will not talk about that nature with that but the doj has been rigorous about its review. Its not the first or tenth they been down this road many times. The fcc review is a second level of review. In addition to these limits, what more should they do. Even with the relaxed guidelines they would be doing more than the department of justice. Its not the wild west to put companies together willynilly. So how strict should the rules be . Were trying to make the case that if you love local broadcast and serving those committees you should be in favor of the steel. The resources necessary to do it the environment is much more competitive you can look at the Balance Sheets and trendlines on revenue. It will be drawn to that conclusion. This ad revenue chart, decades ago local broadcasters dominated three quarters of it. But this is the declining situation were facing. I want to respond to some concern. Every broadcaster knows that if you are not local you will not succeed in your market. Localism is a live and well. Im not can you read it out but this is a list where you are number one or two in the markets we dont get there unless you meeting the needs of everyone in your community. Were gonna have to close. I want people to address usually when it comes to broadcast mergers the doj defers. Today play a bigger role . Its more constrained, doesnt look at the Public Interest but what role should they play . Of a few former students and their about to roll their eyes. In our class who talk about various ways in which different parts of the government look at a transaction like this. Get it in the public, have a debate not because congress decides the fate of the merger but because they have oversight responsibilities. It may sound like a redundancy and it is, different agencies with Different Missions look at the same transactions. We havent talked a lot about a change to interpretation of a statue that had profound effects. Theres a rule that says no broadcaster can get above 39 of u. S. Households. This is not something the fcc invented. With the talk that weve heard about the supporters of the merger how the world in technology and technology has changed, what is the one thing that the chairman did to that rule . He went backwards to before the transition when they used uhf signals and said thats how well count households. That has a practical effect of raising the number of households you could reach today. What does that mean . Will they look at that and say the Expert Agency believes rules from 1975 should still believe today. On this one, were going to go back in time. Will the department of justice look at then say they must know more than we do or, will they say it seems backwards, why are we talking about an analog when everybody has gone digital. I hope what we see today which is aggressive enforcement in terms of at t and time warner merger. I hope we see the same level of energy with this one. They disregard this odd regression to the 70s. That is on fair, alice in wonderland description. All he did was say if you are going to reexamine the uhf discount which is just a way of measuring 39 you have to think about the 39 and what the Public Interest is. It is almost an arguably correct. The cap is highly antiquated. If you get a look at one you should look at the other. The Wheeler Commission which had just change the rule a few months before had made a mistake and decided to undo the discount without looking at the cap. They said it would take too long. Its not a good way to make policy. So he put the ball on the field. Not sure i follow that. But youre smarter than me, maybe you understand some i dont. Under chairman pies revision of the rule, with the merged company have to divest more or fewer television stations than under the wheeler version . Under the change wheeler made their companies are ready over the cap. Our transaction we would have to vest more. Okay. So chairman wheeler did something that means you would have to divest fewer tv stations. Thats all i need to know. I dont know why it was all necessary in the first place. Therefore talk about making a rule on how to count audience reach. Hes making a rule in looking at about what the definition of reach out to be. The question is not how you count uhf stations. Ultimately, should broadcasters, in an age where everybody gets to reach 100 of the country only reached 29. Chairman pi wants to answer that question. Look, abc, nbc, all have a hundred reach. Because they do that through contract with Companies Like mine. Heres an audience question. Great questions. Sinclair said it is forever expanding like the universe. You could wish for anything to be consolidation of the industry. Should they be allowed to own every local station . Should there be any limits . Google has 100 reach so you should too . I answered that when i described the rules in place. The antitrust division looks at these things. Their established guidelines that dont allow for anything like that. The rules of the fcc more stringent. Thats a hypothetical. And to keep perspective, the proposed rule change is not to illuminate the ownership rules its just to look at them more closely. Number one, theyre not looking at this reading. Im talking about the top four. Number two, over talking about with the National Ownership cap is set in place by congress. Congress at 39 and they will have to change that. Ideas talking as if theres not a statute. Looking at the discount in conduction with the ownership cap is pointless because congress at 39 . Number three, your lining national reach, for the whole hour youve been talk about the importance of localism. You dont need 100 of the country to do a better job. You want that because you want to extract more programming rents. Started network. I mentioned the ultrahigh frequency discount early on. I think its worth it, you can take two minutes to explain why was there a discount . Im old so when i was a kid if you want channels one through 13 theres no remote control. If you wanted higher ups youd have to tune it like a radio. Those are you hs stations. Nobody wash them. Thats why there is a uhf discount, to encourage folks to buy these less than optimal stations. Once we went to digital tv 2009 that disadvantage when away. Thats why we got rid of the discount. Is the height of hypocrisy to reinstate a rule that has nothing in reality. Especially chairman who likes to say you have to take the facts as they are, not as you wish them to be. As i understand it, he wants that conversation. What is the right number. The proceeding he wants to open is to start the dialogue and create a record and get public input and look at the marketplace are and ask ourselves is this the right number . Im not afraid of that dialogue. Its easier to have that dialogue in an agency set up to have the input than in congress. Thank you for explaining the discount. The one i make a point that theres no technological justifications. Everyone hears agrees. Youre making a procedural argument of how to consider it. Youd be over the cap that exists thats a congressional. When he put them together before the deal is complete they want to come into compliance under the current rule the combination. Theyve already said they will come into compliance with the rule. This argument because of the rule in your view is obsolete and theres people who will take the other side should be on done without looking at the fabric of regulation. When you undo the discount immediately its massively constricting for group of companies to consolidate. That has a bad to a but thats what you do. Do not looking at the overarching role of what number should be the right number. The idea that you should just pull that thread without looking at the picture of the Market Structure, when i got into the chief of staff job he took me to dinner and said one piece of advice. Everything in the world is about Market Structure. If you dont think about Market Structure industries account on the government are going to suffer terribly. All the chairman is doing is say we should look at it in the sense to understand where the broadcast businesses today. How thats objectionable i dont understand. Those are very real concerns about it terrible problem about diversity ownership. Its widespread. How to solve the problem while i was there dont think we were successful moving the ball. Its really hard. Taking and manipulating the consolidation roles for companies in an industry thats hurting enforcing diversity is the wrong way to think about the problem. We have to solve it in ways. I agree with one thing. The minority tax credit was extremely successful. Can you explain with dennis. Sure. You cant buy a tv station or anything if you dont have credit. If there is a banker, lender or investor behind you. How do you make an investment attractive . You give them the tax break. And you can stop me. What congress did was change the tax code so somebody who did lend or sell a minority owner got a tax benefit. Under the decision from the Supreme Court were far more limited in our ability to raise specific incentives. We have to do is look out the window and see that we havent gotten there. Nothing stops you corporately voluntarily doing it. When you are forced to divest stations you announce they will be sold to people not in the business maybe thats one way to address diversity. Theres a point we havent close the circle on. If you talk about the value of the policy in the ability to spinoff stations the success of the pulse was because fcc had rules. If chairman pot the ownership rules there are no stations that are going to be spun off. As jim said at the beginning, if there is value is a spinoff of stations. If the fcc lifts the rules and so that large deeppocketed companies can buy up all the stations fewer opportunities to buy stations. Theres a direct link between changing the rules and opportunities for and treat for new owners who are minorities. For Eddie Lazarus to talk about the fcc manipulating the ownership rules for sinclair and tribune, having sidecars stations on by the elderly mother of the ceo takes the a lot of guts. I received jim wants to anything. I agree. It is a problem when you look at what theyre doing in terms of eliminating the rules. Because of Court Decisions and congressional actions or inaction. The policy has been largely ineffective. Always been able to do is get some spinoff. To eliminate the rules they need to make it impossible for us to see Significant Growth coming up. I will let eddie and rebecca have the last word. Theres two questions i would ask in the wheel clothes. Actually dont have any j assays are tribune. Lets go to the next question. What was the impact on the merger political campaigns and election given the sinclair corporate directions . Also, is this really about the fact that sinclair has been purported to want to start a broadcast box . Is this about their political views . Theres no impact. I think what is been referred to. We launched the National News spirit that were proud of. Like many station groups we convert National Stories and share them with our stations. Their objective news stories without opinion in them. Therell be no impact whatsoever on elections with respect of what we hear and our news. If youre referring to short commentaries, the tiny fraction of what we run it. As times. They are the opinions of one person. They dont reflect the opinions of the 9000 people that work at sinclair. I dont think it will have any impact on your concern. These are segments that stations are required to air. No editorial judgment to be exercised. As a cardcarrying democrat my opposition does not stem from the fact that theres conservative views anymore than the opposition stem from consumer reviews. You wouldnt have newsmax in the blaze opposing this merger if they were against conservative views on the airway. Were against the power. The power, and yes elections will be affected by those. Why was it that david smith and sinclair broke their affiliate by not airing a story about a rack war and eliciting a letter from john mccain saying thats on patriotic. So, its not about what view is espoused. It is how much is being amassed under one group. I agree. I dont care about the conservative politics, you can eddie said the tribune has a sidecar company that has fses. [inaudible] [inaudible] he just said the reason we had them is because of the incredibly arcane role they can on the newspaper and a television station and say market. So you invaded the rules. The fcc passed on those, the rule makers decided we didnt debate the rules. Nothing rules you one but the rules in place. The rules that benefit the public. You defended the crossover rule until newspapers were put out of business. Newspapers were desperate. They wanted really fun ridiculous old rules from owning the station and newspaper were you could share news spirit save money and serve the community better. Wellmeaning people decide its too dangerous. As a result in communities local newspapers are failing. All just say youre right. Warmer question. Thank you to everyone for staying so long. Have a fantastic conversation. Sorry can catch all the questions. If antitrust laws are a we need to regulate broadcasters should we get rid of other regulations such as must carry. Were going back to where we started. To say get rid of the fcc, feel that antitrust rules, why should broadcasters have benefits which, is codified. I want to say the reason is so important is because our declining revenue is not sufficient to support everything people want us to do. So advertising is important we cant do it without it. If you care about free local broadcast you have to find a way to supplement our way of financing it and i think this is been the most fair way to do that. If youre asking whether given the fact there hasnt been a major rewrite of the telecom loss, whether this is an area in general right for congress to look at think about what the rules are to be, now that we have this broadband my answer would be yes. I dont think you should take a small corner and distort that peace by looking at what might be outmoded laws and regulations. Its time for another rewrite but the trouble is its hard to do legislation. It will get pushed onto regulatory agencies. So very hard. As a footnote, the ecosystem that broadcasters exist in is complicated. It involves private intellectual property that is true stiction in the coppery eight and broadcast loss. If you pillow part just one without addressing the overall issue property and how providers are compensated for their effort and for their intellectual property, that would be a disservice to the industry. You have to do it holistically. Youd want to do it in the broad look at how we should regulate content and private property. Siletz have carmen, jim, andy and david. I agree that maybe we should take a holistic approach. Id like to see studies of the impact this will have on diversity especially ownership for women and people of color. We need to understand that impact. I concur. Think where we are is the fcc is allowing they adopt the rule changes that would allow wholesale consolidation of the industry without having consideration of what it means for diversity. If all we can look for us a few spinoffs when we have consolidation on this level that will be inadequate. Ive said enough, i rest my case. We started off by talking about why broadcast is different. Some of us believe it is in. Its just many sources of information others believe it has unique Properties Like the fact that there is government taxpayer support or local news is still the most popular way to get information. What goes on at the fcc tomorrow, this is not an epidemic question. The real transaction and is waiting to have an impact on our lives. Thank you pillow, thanks to all of you. Have a great afternoon. On. [inaudible] [inaudible] new allegations of Sexual Harassment today. This time against senator al franken. The accuser, leanne tweeted said he kissed and groped me without my consent. She said it happened on the 2006 uso troop trip to entertain. Senator franken was a comedian at the time. The minnesota senator apologized saying in part, the first thing i want to do is apologize to leanne and everyone else was a part of the tour and everyone who works for me and to everyone who counts on me to be an ally, supporter and champion of women. I respect women. The fact that my own actions have given people a good reason to doubt that makes me feel ashamed. Mitch mcconnell waiting calling for an ethics investigation. The Senate Second kcs to be investigated today. The first was in the Corruption Case of bob menendez. Today that ended in a mistrial. Shortly after he spoke with reporters. Heres a look. First and above all, i want to thank god because its by his grace i was delivered from an unjust prosecution. I think my children are here every day with me in court drop my lovely granddaughter to new jersey that i could remember