[inaudible conversations] >> we will now come to order. the chair now recognizes himself for five minutes. good morning. i'd like to welcome everyone to the subcommittee's first hearing of the new congress on the evolving media marketplace. it also like to thank her witnesses for appearing before us today to discuss these important issues. five years ago this committee passed reauthorization act this spill extended the operation for satellite television companies to provide broadcast content to unserved households. according to the satellite tv industry this provision enables roughly 870,000 customers in mostly rural amenities to receive over the air broadcast television signals. these customers fall into a few categories per the first is household they cannot receive broadcast content using an antenna for the second as markets where satellite providers do not offer local to local service and the third is short markets where there are no local affiliate stations with any of the records and family satellite tv subscribers that receive service or commercial truck or an rv. in effect this provision enables rural customers of directv to receive content from nbc, abc, cbs, fox and other broadcast stations and where it isn't otherwise available. steller requires broadcast stations and in dvd telco and satellite companies like charter verizon dish and others that offer television service to negotiate the carriage of broadcast content on their systems which is known as retransmission in consent. under good faith standard to be decided by the ftc. this regulatory backstop was and is important because there have been allegations that these negotiations have at times not been carried out in good faith. when negotiations dollar breakdown broadcasters may pull their signal from an nppd system channel lineup resulting in a blackout of that content in these circumstances consumers suffer as a result of the two parties inability to come to an agreement and while it is true that some customers have the ability to set up an antenna to get this content over the air when it gets pulled off their cable or satellite service for many this option is too complicated or they go without this broadcast content during the dispute. requiring that parties engage in good-faith negotiations was intended to reduce the number of blackouts and resulting consumer harm. these were the major provisions of the bills that are now set to expire at the end of this year. some in the broadcast industry have argued that this legislation should sunset and the provisions are no longer necessary. while i agree that this wasn't a perfect solution allowing this legislation to sunset would create a crisis that could result in nearly 1 million consumers losing access to important broadcast content and allowing the laps of the good faith standard and retransmission consent negotiation only invites bad behavior and consumer harm. more broadly the media landscape has changed a lot in the last five years with major consolidation of occurring among drug testers and mvpd's. ms. boyers argues the two sides have resulted in increased rates for smaller rural cable providers who don't have the skill to get per french are and often time pay higher rates for content than their larger rivals however across-the-board we hear from stelar that the retransmission is increasing but we have seen the over-the-top retailers explain hulu offering the internet directly to consumers. this is a complex marketplace that consumers rely on for information and entertainment and americans pay a lot every year to get access to this content. at door to the testimony of her witnesses and with that i yield one minute to my friend from california. suh i thank the chairman for yielding to me. i think today's hearing is not so much about choosing sides between broadcasters and cable. i think it's really about consumers who i think are losing out to the media market in two ways, blackouts and unexpected fees. too often consumers are held hostage during disputes between broadcasters and cable. 2017 there were 200 or teen blackouts which is more than double the number from five years prior. i'm pleased to report that we have agreed to champion legislation to end blackouts by overhauling outdated regulations. next i think we should do with the hundreds of millions of dollars of misleading below the market fees for consumers get stuck with the chair. my bill simply requires cable phone and internet providers include all fees and the prices they advertise to consumers, kind of a commonsense idea. i think it would ensure that consumers would then know exactly what they are paying when they sign up for a service of thank you mr. chairman. i look forward to productive hearing and thank you for yielding to me. suh i think the gentlelady and now the chair recognizes mr. latta for his opening statement. suh thank you mr. chairman thank you for holding today's hearing and thank you to our panel of witnesses for being with us today. today's hearing once again considers the interplay between local broadcasters and direct broadcast satellite services known as stelar. key provisions of stelar expired in 2019. we started examining the current state of the video marketplace. in the subcommittee hearing last september we learned about changes and consumers viewing habits such as the continued rise of the over-the-top video services and notable shift of advertising expenses across the various medium. nevertheless while on line video service were innovative alternatives is the bedrock of favre video marketplace remains local broadcasting a program. all of us rely on local broadcasts of the news and emergency updates of weather traffic community engagement and local interest programming. accordingly the subcommittee has a duty to ensure that local broadcasters retain the ability to invest in infrastructure and programming connected to their communities. for 30 years congress has played a key role in ensuring that rural americans who are unable to receive over the air broadcast network signal are able to receive local news and content via direct broadcast satellite services. congress accomplish this in 1998 by creating a statutory copyright license for fees, license fees that help the direct broadcast satellite industry take root but the video marketplace continues to evolve and accordingly every five years be carefully examined whether this model should be reauthorized a revised. they are each iteration of what we now call stelar we have the experts subject matter agencies to report on statutory license fee models and we hold hearings calling upon a broad selection of the stakeholders representing consumers and industrial participants. i'm pleased we have again a qualified panel of experts who can assist this committee to paint an accurate picture of the market. it's important we foster a competitive video marketplace and ensure that all americans continue to receive access to unbiased local news reports up to the minute weather updates and critical information during emergencies. for example unfortunately last week in ohio we had a series of tornadoes and folks back home in my district particularly had to rely on local broadcasts. i look forward to working with the chairman and members of the subcommittee as we re-examine her authorization and i think her witnesses -- i thank her witnesses and at this time i'm going to yield to mr. lawton. >> i thank my friend for nothing at like to thank the witnesses for being here. i'm especially happy to see a fellow missourian here today even though she did make the unfortunate decision to live in jason smith's district but not mine. i was a real estate broker for many years and i feel if you are going to move into the best for fournette 35 districts we can set you up. the marketplace has and is rapidly evolving. there is more competition than ever and government intervention is not always the answer. it is important for us to examine the state of video marketplace but as we approach the potential six asian of stelar we need to take a hard look at the underlying policy and its relevance today whether assuming passage is a necessity. there only three things up in life that are certain, death taxes and the reauthorization of stellar. we should ignore the inclination to rubberstamp this legislation only because this committee is historically done so in the past and i yield back. suh mr. chairman at this time are there any other members who would like to claim the remainder of my time? >> thank you ranking member and mr. chairman. appreciate all of you coming to talk about stelar and not just stelar in the context of reauthorization in that silo but it forces us to i think would look at the entire marker placed the entire video marketplace. i actually share the expressions of some of the panelists who talk about why they think stelar should expire. not because they think it should just go away because they want more reforms. some people might think that stelar going awake at this reform but it really doesn't. stelar going away brings us back to the fundamental 1992 cable act laws a foundation which is incredibly outdated. we have got a marketplace which is changed medically since 1992. i think everybody knows that. i lead. i let her of the kemple of content on this device right here and it's not governed by primarily most of what i would pull up is not governed by the 1992 cable act but some actually is governed by the 1992 cable act but if i go on the internet and pull something up over the top why do we have such a diverse set of rules and laws that apply to a basic industry in our country? we need to reform the entire 1992 cable act. it's long past time for this congress to do it. i applaud congresswoman eshoo and that though she spoke a few minutes ago. we have been working very closely and hopefully we can get to the point where we were formed the entire marker place with regards to video. i appreciate the time mr. chairman and i yield back. >> the gentleman yields back for the chair recognizes mr. blunt the chairman of the full committee for his opening statement. >> for nearly 70 years television has been a unifying of bringing people together. co-workers share their fears about the twists and turns of the most-watched series. tv is the place where we get our local and national news and were returned from urgency information during a storm or natural disaster but the hearing discloses a few arcane provisions in copyright laws but it is fundamentally about consumers getting access broadcast programming whether they are an urban arra areas. we should continue to focus on the timeless values that inform our media policy those of localism and diversity and competition. the stelar reauthorization act of 2014 or stelar its predecessors establish the framework that allows satellite in television providers to deliver broadcast stations inside and sometimes outside of the prescribers market for their customers. some so-called unserved subscribers can perceive their local stations from an antenna because they are too far away but they are in a media market that doesn't have the station affiliated with one or more of the big four networks in these consumers must be protected. the same time satellite television providers are not required to carry local broadcast networks and as a result some subscribers receive out of network programming from your satellite provider instead of local stations. congress created the good-faith negotiation rules that underlie the agreements that allow system to watch over the air broadcast stations as part of their cable and satellite tv package. as media consolidation has grown so to have the fights over programming agreements and unfortunately consumers have been caught in the middle. a number of blackouts has been increasing as has the rates that consumers pay. smaller medication companies are facing a choice whether to continue as cable operators are simply become broadband providers. as we begin our examination of stelar it's important as the ultimate question of how best to put consumers first expect my colleagues on both sides of the aisle will offer a number of different solutions large and small tackling different issues propping up with in the media landscape in my opinion we should focus on our analysis on the consumers and questions like what are the applications that stelar is not and how is the over 800,000 consumers currently receiving signals be impacted. what is the path that gives consumers the ability to access prices they can afford and the television content they want. how do we ensure that consumers are not rendered high-stakes negotiations between video distribution companies and broadcasters station groups and how can we ensure that broadcast stations remain vibrant outlets of expression and trusted sources of information for the local committees while promoting competition to the benefit of consumers. also how to make urge the caring of local programming at reasonable rates and the local programming reflects the diversity of views? this committee will closely examine these issues and work together to find a consensus approach in moving forward but i want to thank the witnesses for being here today. i will yield back. >> i will yield to the vice chairman. >> thank you very much mr. chairman and they thank chairman doyle and the ranking member. good morning. i want to thank you for holding this very important hearing. providing equal television broadcast access to consumers is crucial to inform the public and having more willentz assistant decisions. in a seat here to discuss satellite and cable operators are broadcasters for that matter. we are here today to focus on the consumer. our constituents that protect them but they deserve rules that protect the diversity of voices of the media and access to the spectrum. it's my hope that your input and expertise will give us that room in that space to do just that i'm without mr. mr. chairman i yield back. >> and i yield back as well mr. chairman. >> the gentleman yields back for the chair recognizes mr. walton the ranking member the full committee for five minutes for his opening statement. >> good morning mr. chairman naked warning to our witnesses. we are delighted to have featured and i know your expertise is going to help us as we work on this legislation and review the media marketplace and whether or not the a.c.t. first pass by ronald reagan is president works for television viewers today. special like to extend a warm welcome to my friend and hello oregonian senator gordon smith who effectively serve them a nice descent for dozen years. it's good to see you over here in the people's house. 30 years ago congress sought to ensure arra americans unable to receive an over the air broadcast signal would still be able to do content via satellite services. for larger like this are quite mind that stretch from atlantic ocean to ohio this is critical. congress would bless with the discount copyright with each copyright holder. while the license to provide local is a permanent fixture the distant networks in the license is five years along with other elements that accompanied the extension. we did this five years ago during my time as a committee chair. this must be a transparent process driven by data printers the ftc last year commenced its quadrennial review of the media landscape but i'm also pursuit of the work by the government accountability office in crafting its report to congress directing and prescribing stakeholders to some phasing out the statutory license. our goal should certainly be that everyone in the country has access to local content and is a reasonable price preview all heard me discuss my background in radio broadcasting and i hope you understand my heard these that local content is reserved to do is have a model that were around the concept because although we might like watching the later shows on netflix or some other services is essentially affects us to snooze sports weather and emergency information. whether the wildfires or tornadoes traffic accidents emergency situations elsewhere in the country local content provides vital important trustworthy time information and communities across america. it's also important to understand our fast-moving world to take stock of what's changed with technological developments compare with how americans consume video driven in part by on line video services in the steep decline in prescribers and have seen advertising revenue drop it does affect broadcasters broadcasters extend per tremendous resources and serve a level playing field for their fcc licenses. they are trustees of the public's airwaves and must serve the public's interest. that means they serve the needs and interests of their communities. thus be careful not to hamstring them with negotiating restrictions not justified by market conditions. most importantly consumers will tolerate gaps in coverage blackouts and arbitrage opportunities the driver prices and reduce the quality of content for the bottom line is congress must consider whether distant network single licensing is a bridge or a blockade delivering local coverage but i'm committed to ensuring all rural communities in oregon and across the country continue to receive robust and affordable local coverage but am looking for due to the hearing today and hearing from or witnesses a cross-section of industry and public stakeholders and examine. >> the gentleman is back. the chair like to remind members pursuant to committee rules all members written opening statements will be made part of the public record that like to introduce a redness as for today's hearing. ms. patricia jo boyers, welcome. mr. robert thun senior vice president of content program at&t mobility and entertainment, welcome sir. senator gordon smith presidency of the national association of broadcasters. senator, welcome and mr. john errica mickens senior counsel public knowledge,, welcome cerp you want to thank or witnesses for joining us today. we look forward to your testimony. at this time the chair will now recognize each witness for five minutes to provide their opening statements. before you begin i would like to explain the lighting system in front of you is a series of lights. the light will initially be green with your opening statement and will turn yellow when you have one minute left so please start to wrap up your testimony at that point and the light will turn red when you're time expires. ms. boyers you're recognized for five minutes and please make sure your microphone is on. >> good morning. i bring greetings from the foothills of the great mountains of -- my husband and i started our mom and pop in 1996. this meant we had to take out a second mortgage on their home and we used our farm as collateral. it's never been easy. in most areas you need a -- our system are 147 miles from our local affiliate and more than 75 miles away from our local nbc and cbs station. most of us can't get the signal's free over the air and none of the stations offer local news sports or weather no matter what they tell you today. we have a very sensitive population. four of our five counties are impoverished. this simply means the medium annual household income of these counties has been below the national poverty level since the 1960s. yet we survived. what the retransmission consent problem doubled blackouts before defense and the requirements to carry channels that nobody's ever heard of so the reality for us as things have gotten worse since the last satellite television reauthorization. broadcasters increasingly control multiple network affiliates. for instance in my market the same folks in atlanta georgia on the local cbs and the abc affiliate. this naturally leads to higher prices. there is no other game in town for us and these two stations carry the exact same local broadcast. the same weather guy, the same new sky come the same words come the same news so that's one station for the price of two. secondly broadcasters now control many more stations. years ago i knew the owners of the broadcast station that i deal with, all three of them. now i deal with a few. means higher rates and terms of prices. the broadcasters do not know where i'm at and thirdly broadcasters are acquiring regional sports networks to increase the overall leverage to contract renewal. this is essentially egregious for us when sinclair family sent us. we could drive all the way to save lewis buy tickets hotdogs popcorn and beer for the price of what we pay sinclair for subscriber but i wonder whether broadcasters want this. their behavior and practices and system for their prices are especially bad for smaller parties like me. the ftc reports the small cable operators pay on average between 30% more than what we pay for transmission consent. for my system that is 7% tuesday before affiliated broadcast systems make up 20% of my programming fees and the rest is for the other three entered towns. that percentage is more than 200%. i know you all care as much about is your constituents as i do about my customers who are elderly and they depend on us for that video service and who are greatly impacted by a higher subscription fee. a lot of these folks can't get satellite or dish not because it's not available to them but because they can't afford it. they don't have checking accounts. they don't have credit cards. they don't have credit. all they can do is work with the locals cable tv provider who will work with them. we could work with him and we could even barter out our time. it simply ensures that those who live in the hills in southeast missouri and the rest of rural america will be uneconomical to reach an those that do have our service are paying through the nose for be the mandated regulatory advantage given broadband make a free-market price solution impossible. i hate the idea of congress getting involved but they are are involved in my business. so everything from basic buyouts so i do need your help. one solution of many is to help mitigate these fees would be to apply the good-faith rule to negotiate for the nctc which is a buying group that the small cable tv operators like itself use for affiliating with american communications association. the connects that we have an affiliation. regulations and asian reform are desperately needed. we can put our shoulder to the plow and figure this out now. thank you. >> thank you very much. the chair recognizes mr. thun for five minutes. so thank you chairman polodna ranking member wolpan subcommittee ranking member latta members of the committee. my name is rob thun but my current role and responsible securing content right for major networks and local broadcast station groups. at&t is 143 year history of innovation that includes a nobel prizes. employing more than 200,000 americans across all of the 50 states. .. for driving exchanges, high quality video content in the ability to want to wear and when they want to. it is important for policy makers for a video marketplace and i'll consume benefit from it. if present they do not. because legal framework for broadcast content distorts the market in favor of broadcasters. this framework is solely in need of recalibration. the retransmission regime that governs the video marketplace goes back to 1992 cable act. the competitive platforms of consumer options. is put in place to help broadcasters that at the time the only pay-tv offerings in most areas. despite the competition video marketplace, broadcaster fees were carrying these stations had doubled with the last five years. since 2008 - 2018 fees have grown from 500000000 500000000 - $10 billion. that is a 2000% increase which is clearly unsustainable. why is this happening? because under current law they cannot offer subscribers alternate programming even temporarily. these laws unfairly protect liberal broadcasters from the changes in the video marketplace harming innovation and consumer choice. when they attempt to limit the increases in these fees local broadcasters with statutory protections responder blackouts. local broadcasters have shutter records for blackouts and is a testify in burnaby today covering 25 markets. the cycle of increased broadcast fees and blackouts penalizes the nearly 90 million atb customers that have chosen to keep traditional services which include over 20 million of our premium customers. it is become a weapon for broadcasters who used to the detriment of these consumers. it is time to modernize a lot to reflect the current marketplace, providers to produce more level playing field with the local broadcasters. the marketplace has changed since the last renewed the cell and in 2014. they are now over 170 million over-the-top subscription with outlook seven more subscribers than at&t and podcast combined. as it is done in every past, they should view it as an opportunity to fix the marketplace, the broken retransmission regime. to be clear, at&t strongly supports the renewal of seller, including the good-faith negotiation requirements and the statutory copyright license permitting settling carriers to provide network programming to more than 870,000 satellites and scrubbers. among the subscribers are hundreds of thousands of rural harms the broadcast stations. in addition, it provides truckers, rv enthusiasts, and tailgating for scans the satellite delivered network tv. congress should take this opportunity to make permanent the satellite license that brings network service to hundreds of thousands customers. sellers requirement the broadcasters and mvp beast and import backstop that places guideposts on these negotiations. we still have issues with nations refusing to negotiate fairly or respond to offers in certain cases. despite this, the good faith provisions are important to help these along. they opposed provision is simple magic with the challenges under current law. at&t is great for to the committee for holding this important hearing. we would like to acknowledge and give you thanks for the bipartisan efforts of representatives. we look forward to working with them and all of you to find a solution, i look forward to answering any questions you may have. >> think the gentleman. now senator smith your reckoning for five minutes. >> thank you and good morning. the members of this distinguished subcommittee, i name is gordon smith, and the president on the national association of broadcasters. on behalf of the free and local pocket under broadcast television serving your hometowns, i appreciate the opportunity to testify on how congress can ensure that viewers are better able to access the local news, sports, weather, emergency information by allowing expiring provision this year. today seller is not only necessary due to considerable advantage in the media marketplace but any reauthorization will further harm the satellite viewers that are currently denied access to the local television stations as a result of this law for these reasons, broadcasters oppose stiller as reauthorization, similarly the copyright office, the expert agency charged with the ministry there license released a report yesterday calling for its expiration. in today's competitive media landscape, local broadcast television remains the most-watched source of news, updates, entertainment programs, sports and investigative journalism, something that is in trouble in this country. in communities across america, we are the lifeline. our viewers turn to local stations to get weather reports, learn how to help neighbors need and watched trusted th news ancs and give a biased view of what is happening in their communities. local broadcasting is a article electronic thread that keeps every community together and formed and safe. the exceptions to the benefits afforded by this local broadcast system are those communities that continue to be served by out of market stations as a result of seller in 1988, when the original satellite law was enacted viewers had two choices for video programming. broadcasting, television or subscription cable package offered by single local provider. that satellite legislation and predecessor of seller which is usually successful in enabling the satellite television companies to better compete with cable monopoly. it was never meant to be permanent and it gave satellite operators a crutch the ability to serve local workers at below market rates and without having to negotiate for, the 30 years later, today's media market is virtually unrecognizable and dramatically different, even compared to five years ago at the last renewal. those nations satellite companies that congress subsidize are now multibillion-dollar humus. in today's competition for viewers come not from the giant paid tv providers in the cable brothers, but also by unregulated behemoth tech companies such as facebook, google and online video providers like netflix and amazon. most important, no technological impediment exists today to prevent at&t and directv and dish from providing local broadcast channels to the subscribers across the country. yet their distant signal provisions incentivizes companies to serve a stricken universe of eligible viewers without a market station because of the subsidy. to put this in practical terms, directv subscribers in ottumwa, iowa saw a new story about a garbage truck catching fire in los angeles. the local news they should've seen is the insurance prices rising and impact on farmers in their state. in the hawkeye state. during times of emergency the difference between what the viewer see versus the local broadcast news is stark. it is making 12 rural markets across america. a choice that puts the prophet ahead of service to consumers in ahead of the safety of communities broadcast and viewers salute. two in this consumer harm, and to modernize the video marketplace laws, congress should allow to expire as it was originally intended, there is no policy justification or technological reason for this outdated law to be ou reauthori. the time has come to stop subsidizing billion-dollar satellite companies and to instead provide viewers with the most accurate, the most-watched, the most timely source of community news wanted for our governor. >> thank you. we now recognize mr. berkemeyer. >> thank you. congress must reauthorize stella or even better make it permanent, 870,000 satellite subscribers should not be bargaining for eight long since buttes. but there is called della or stallard which has ensured the companies can retransmit local broadcast stations to all of your customers. it is an important building block of video competition along viewers who live to continue to receive national programming. satellite television has been a success story it is ensure that satellite television, could access content and reach viewers. public policy that ensure new distribution can access content on fair terms, benefit the public interest and success of satellite should be a lesson for policymakers about the importance of fostering new video competition. congress should make it permanent. there's no reason for them to create artificial crises every few years jeopardizing the ability of satellite to remain a competitor. the reason why congress enacted in the first place remains unchanged. remains a necessary part of the current overall revelatory system which otherwise is no clear way for short market. if congress does choose to be reauthorized for only a few years consider timing its expiration to the expiration of other video marketplace provision which is distant signal or basic iq, this approach would incentivize all industry players to come to the table fundamentally if we were going to go by the rules they should benefit consumers not just one industry sector at the expense of another. years public colleges believe that this is an instance were predominantly deregulated approach is needed. in particular we would like to recognize representatives and for the leadership on video marketplace reforms. a promising approach would be to replace the cumbersome and do copyright license retransmission consent system with a regime based purely on copyright. this is better aligned interest of programming creators and distributors and eliminate negotiations. it would ensure that local broadcasters have the incentive to produce original relevant programming they would on the rights to. if they would been licensed to mpv's and dish to produce. it will make it much easier for non-video distributors to access programming by eliminating the current to track system or online video rates negotiated one way and income it at a structural advantage. to eliminate your blackout such an approach would keep good faith in place. as well as institute dispute resolution mechanisms. and it would avoid disruption. additionally, it is time to eliminate network non-duplications and at the indicated rejections as elimination as a sports blackout roll has proved such masers are unnecessary in the video industry with private contracting law. these are the best way to stream bill inflation. while public knowledge supports in both roles and should not be off the table if there's more feasible in the short term. the retransmission consent can be clear standards of good faith and the provision of actions that can be bad faith per se. congress should also consider addicting and promoting could have petted them it by directing the fcc and the basic care and unjustified policy that makes all of her offering unlawful. it can also extend the successful policies that protect and bpd's by anticompetitive conducts to certain online providers. congress should also promote internet openness and prevent discriminatory practices that can hold back online video. in addition to supporting strong roles under title ii they should examine whether discriminating data caps can hold back of competition. it's time for them to revamp, a video marketplace that serves the public interest and gives the viewers more choice the ability 20 programming wherever they want in on the device of their choice. at the same time, discrete and distributor zepeda for price. congress can begin the video reform by making still permanent or tying it to various other workplace will. >> we think all the witnesses for the testimony. that concludes opening statements. we are not going to move to moorpark questions, each memory will have five minutes to ask questions for witnesses and i will start by recognizing myself for five minutes. your testimony you say roughly 870,000 satellite tv subscription, mostly in rural areas depend on the provisions of stallard to receive broadcast content. what would happen if those provisions expire and you think any customers would lose programming that they currently receive? >> is your microphone? >> if seller was to expire, the customers would not receive broadcast stations. they would lose access to the programming. >> senator smith what do thing about that? >> right now there are 12 markets at at&t does not provide local news to that it could which it chooses not to, there's no technological reason that they could not. the market is fundamentally changed and renewing it perpetuates the harm. too many communities specifically that would continue. let me ask you, what would be the consequences if congress allows it to expire specifically the good faith provision related to retransmission ? >> thank you, congressman. it's important because the reauthorization gives congress that ability of the five years to re-examine the marketplace, to make necessary changes that protect customers, consumers, constituents and competition and less oversight by congress, it is critical to consumers. and the competition because the broadcast industry has shown willingness every year to write the prizes, and increase their broadband tv or their broadcast tv it will have no checks and no bounds whatsoever. but that is not good for your constituents, my consumers, my folks that we provide service to, it is that david and goliath thing. i have three thousands of scrubbers. i am really just an act. i said that this morning. they don't care. that is mark that i pay for espn any anything else. it's like david and goliath they need god to help them. and we need you to help us with the re-transition. >> what do you think about these two negotiations? >> i think they are critical. and as they sit today, they are extremely loose or guideposts to negotiations they do not work perfect, we are currently in a situation where we have blackout because we put on the table 60 days ago with seven broadcasters, they refused to respond, they did not want to do independently of each other, they wanted to do it together so they gave us no ability to keep the signals up, they took them away. so i welcome divine intervention because we are having an unsustainable path of price increases that go straight to the consumer and that is a bad place to be. >> senator smith what do you think? >> i heard from the seven and all of them said they offer them to keep the signal up and at&t said no. are we talking about the same one, i don't know. but i know if you want to go through the catalog, what you will find is there have been very few uses of the good faith provision and number have the broadcasters been found guilty of operating in negotiating and that faith. never in all the history. and we are committed to good faith. >> i understand there is a large number of tv markets in this country that are duopoly's, trial police in a single entity owns all four of the big four broadcast networks and a >> we had one company out of atlanta georgia that owned two, it creates a much larger price because they can come in and sign up. we really don't want to master the, take it or leave it. the good faith regulations help us and still have a seat at the table regardless of what the prices. >> yet 17 seconds left. >> it absolutely is to price increases. ironically one of those markets, i believe there's two markets have them, one of those we currently do not have signals because the broadcasters have been given too much power to the consolidation of the stations, i don't think that's the way the law was intended. there's loopholes that allow these broadcasters to put other signals on the par stations as well as multicast signals that create an undue market power. >> my time has expired. thank you very much 12 the witnesses and now we recognize the subcommittee ranking member. >> thank you. i believe local broadcasting is important and provides vital information services for communities. as i mentioned earlier we only know whether in traffic reports but appreciate the focus on local news programming and interest in the local area. my hometown the broadcasters are engaged in fundraisers and other charity events. and also held two large and might district for the pure crisis by local news anchors on their own time. local broadcasters want to help build and maintain strong communities outside of the newsroom, with that i am curious if people want to receive out-of-state and local broadcast programming and does tran11 ster providers for broadcast signals questioning. >> stelar enables, i don't know if there's the ohio park, it is not served with a local signal by at&t directv, and they're complaining about it and it would not cost at&t 200 billion-dollar company a whole lot to negotiate with the broadcaster. to me the whole point of the road. they would then as they promised on the go provide to everyone of the 212 markets in the country. that has not happened. and it should have. there's no reason for it not to. >> from us satellite perspective, providing local programs? >> in a 12 markets we do serve as constituent with local broadcasting, we have a solution that is integrated that provides a single experience for customers. so we do in fact in the markets provide local programming. to providing it are also cost, if we have to turn around -- of the 12 markets that we don't service they are either -- in all cases except for one double duopoly or trial police. in the market that is it is a short market. when you face that pointed to these markets with stations somehow circumventing what the laws were intended to have what will stations and makes it harder to enter into the markets seller was intended to help lawyers receive local news. but you make it clear you don't believe it's serving rural america. how can we ensure the constituents for the disproportionately impacted by the reforming or repealing seller. >> obviously i rewrite of the communications would be awesome. but we also know in my beaker a new level and small changes of lots needed. in a situation where the signal does get everywhere the ever increasing prices, they have the same thing we have in getting that signal, to our customers because of the price. if you're down in the hill, in missouri, you are not getting anything. if you don't have way, you are not getting anything. if you're on fixed income and your credit is bad and you can't get direct to become a needle hub boy, you're not getting anything. so those are the customers that we are concerned about, that makes up the bulk of my customers. of those folks that are economically impaired and do not have the ability, stelar is very important for us with the gate under good-faith roles. that's what makes a good caster like sinclair come to the table and say we don't want to talk to, we don't care we met you but we have to honor good-faith. when those go away they could care less whether or not if they could get the other settling companies that prohibit us from having their local channels at all. so there in lies protection for us and because we are small and were in the rules of rules. >> i realized my time is expired. >> the gentleman yields back. the chair recognizes mr. mckiernan. >> i appreciate you coming out here in talking to us. sir gordon -- yes, sir smith excuse me what percentage of the fees does the local broadcast affiliate typically receive after reverse transmission fees have been accounted for? >> interesting, when you add up these claims a broadcast for gouging the most-watched, most important news and entertainment, we represent depending on the company, 12 cents on a cable bill. i don't think were the cause of cable inflation or settlement inflation. and what we do appreciate, the opportunity to negotiate in a free market for the value of our content and that's what we do and that is what supports localism for the news, it's about you sir, not so good at the national level. -- >> i'm hearing the retransmission fees have been going up over time, what has happened to the share of local broadcast affiliates have been giving? >> the ratings are down. too directly answer question, the share is diminishing but we face an ever increasing sea of pricing. so i'm not sure where the 12 cents comes from but that's not the bill that we pay to any individual stations. it's much higher than that. it's a burden that we had to take on and ultimately our consumers take on and is a bad policy, it's about place for customers to be in if their bills continuously go up certainly that broadcasting fees are going up. >> thank you. between local broadcasters and a small portion of the retransmission fees, and ownership roles over the past two years, i'm concerned the principal of localism, one of the core principles behind broadcast licenses is being undermined and consumers have less access to local. how does a relaxation of media ownership rules over the last two years affect retransmission negotiations? >> yeah, i certainly share the goal of localism. i think local content is very important to viewers. i question whether the current regulatory scheme that we have in place is the best way to promote localism. one of the things is undermined close of the most is broadcaster consolidation. when you have broadcasters, not really local, owned by a national chain that spans the country, companies like sinclair, next which are just as big and powerful as any of the other media companies that are more known brand names to consumers. i think that structure were different stations are linked together as part of single retransmission consent negotiations and cable content is part of local signal retransmission negotiation, it harms programming and generally and hard to see how the system benefits localism and any significant way. >> your using the word consolidation is music to my ears. thank you for saying that. >> in your written testimony, you know while in 2014 congers prohibited local stations from jointly negotiating retransmission content and broadcasters have found ways away around these. what are the ways they are using to get around probations? >> like i said previously, they are using the multicast fees of the vehicle to put another big station upon their one broadcasting, as well final power stations and placing these networks upon them. so, we have faced seemingly more and more markets that have more than one station owned by the same company. that ultimately, the numbers always prevent at least higher prices which is about thing for consumer. >> please describe what effect blackouts have on your viewers and the relationship to your business. >> in my particular neck of the woods we don't have blackouts. we just simply don't. there is no place where anything that we have to say or do is controversial enough for the broadcaster to cut their signal off. in my statement, obviously for 75 - 145 miles away. >> and committee chairman yum nine seconds. >> thank you, we now recognize the ranking member of the committee mr. walton. >> i want to thank you all for being here and if i sit here and listen to this, i don't think there's an industry that is consolidating represented fear, everybody is and so -- [laughter] >> you could be a big player someday if you got to the haulers in the hills and all that. it is tough serving rural areas. my district is enormous. so i care a lot about how we get affordable programming to consumers but i also know programming has great value or you all would not have this discussion. it is how you set the value. in my opening statement, i talked about some of that in the copyright office wrote to the judiciary committee yesterday and they recommended that the license be allowed to sunset due to his current usage that the distant signal license. i'd like to ask that the letter be entered into the record. mr. chairman i think you have a copy. >> without objection. >> according to the data, royalties paid under the license plummeted since we last reauthorized this act of 2014. there down 85% to 87% nationwide. they say due to a dramatic decline in total subscribers which is affected by the overall number and stations carried to the disappearance of nonnetwork super stations such as wt and. there's about 500,000 households that get one distant signal. and i believe, according to your testimony that number is somewhere around 870,000 individuals. can each of you explain what those numbers are based on and what do you think explains the discrepancy there between 500,800,000 households. >> the only way they could get 300,000 number is to include the cw networks which is not about localism. >> is what happens? >> i'm not sure the details behind all the subscribers that go into those numbers, all i know the numbers are direct relationships that we had to customers related to distant signals and those numbers are combined and i assume they use the same measurement and have the same number and apply the same standard in gathering numbers and those are the relationships combine to the companies that we have. >> can you look into that war and providing force for the record after this? >> we will have her team work with you guys. >> i want to go back to you, at the end we talked about the importance of net neutrality is somehow in this hearing and entitled to. i'm curious as a small provider, what net neutrality title to might have meant and mean going forward if the restart. >> obviously we do not favor. >> why is that? >> the classification for broadband and hundreds of connect members do not support an act in opening internet legislation. that was apply to alter stations across the country and the ecosystems, no one should be able to block in the internet access service providers to access and local content. subject to reasonable and no one to be able to engage this rumination and pay prioritization. we follow good faith practices as well. and our businesses. so all providers should be required to disclose customers about their service. we do all those things. >> right. >> were a good player in that round i don't figure is productive, and to consider this issue. >> senator smith said broadcasters represent about 12 cents of the overall cable bill, is that right? where do you get that number questioning. >> at the number that we follow it regularly as an association. >> what do you say about the questioning. >> i am not sure, i wish they were that lot. >> this is the overall capable right? >> are numbers are significantly higher than that. i don't have the exact number of runway. i tell you the number of 12 cents is dwarfed by what we pay overall for retransmission. >> $12.16 to the subscriber as march 31, 2019. >> and that's for four stations. >> what you pay for other programming. >> $62.12 paid 79% of retail cable programming, 79% is programming and 20% of the 79% is 14 a. >> i really like about a small operator, she knows her numbers. >> hell yes. >> that is right. you heard her. i knew my numbers two. i appreciate all your testimonies on this issue. thank you. >> thank you, mr. chair and ranking member for having me and all the witnesses here. i really appreciate it. it's always enlightening to hear from different points of view because this is a complicated topic and we have a lot of different points of view represented. in a virtually, the consumers are the one who in the middle of all of this. and those are the folks, the consumers that we need to be focusing on, my constituents, the constituents of all of us here. i did write a letter recently which was mentioned by mr. smith and i appreciate this, raising an issue that is facing many of my constituents with with directv and i asking unanimous consent if i could cement that into the record. i would like to do that. >> without objection. >> while i'm talking about this, folks who live in ottumwa, iowa. they subscribe to directv, those books, they are not able to receive local broadcast unless they have an antenna, i was interviewed by one of the stations and they said what i thought about the all this. i said were having this hearing and will let you know more about what comes of it. but they knew about my letter obvious. in many places in attendance will pick up a local broadcast. this is ottumwa, iowa, southeast iowa. some may be aware that. one of the things that talk a lot about on this committee is rural broadband, and many rural areas the business case to build out broadband is very difficult and not possible. because there's not enough infrastructure and it cost a lot of money. but with satellite is seems the business case should not be all that hard, given that jerk to be is already been signals into ottumwa, so does at&t inject tb have any intention to bring local service in the near future questioning. >> we think we do, we provided through a local antenna in an integrated service that takes a signals over the air and subscribers can enjoy it with close captioning, parental control, we do have that in place. and for those customers we take $3 off their bill regardless of the package they are in. >> what is there for customers who cannot access a single via antenna? >> personally, and covenant onto broadcasters as well. they could invest in their broadcast stations and put more into putting out a broader signal, they do not do that, they're not intended to do that because they want to rely on us to pay them hefty retransmission consent fees. i don't know if all the blame should be shouldered upon us in this regard. >> i love your perspective, thank you so much for being here today. you have clearly have the insight it comes to serving rural areas in my district and i was very rural. so thank you. and i think this committee is familiar with public knowledge and advocacy on behalf of of consumers so it the question to both of you. you believe there is a home for customers who do not have access to local broadcast in their area? what kind of harm are we talking markabout? >> on the outside i will tell you why, is not coming to iowa. [laughter] just to let you know. i do believe that, and the general global statement, i believe every customer has the opportunity to receive local broadcast and we do everything that we can to make sure that happens. >> what about you? >> i would agree all things being equal it's better to have access to local programming. the only question, how best to get there. whether stelar expiring or been renewed, and may not make or break the system. basically the current regulatory system as we see at the debates today is not serving the interests of viewers of local programming is not serving the interest of people who pay bills. that is why in our written testimony we have a lot of specific detail proposals and supported pretty radical approaches that would in fact promote localism. >> my interest, the first priority for guaranteeing and for rural consumers. >> i think the first thing is to make stelar permanent so this crisis goes away and we can address the underlying fundamental issues with the video marketplace. i think one way, we start at the compulsory sensors for television signals back in the 1970s and layered retransmission consent on top of that already existing system. every little step made sense but we need to radically rethink the way that mvps and broadcasters industry produce react. and that will better align the interests of local broadcasters to produce local programming. >> thank you. i would like to cement to the record permit under mr. smith. >> a problem. >> just some historical remembering with the committee. i think we went to the digital transition and away from analog and ethically lost distance. there is a digital cleft and some information for my cogs who is not here during the battles. some of the rural areas, had trouble getting there signal and used to be able to. clearly we have a difference of opinion on reauthorization of stelar in the question, is this a binary choice? so let me ask this question, senator smith, good to see you and a chance to serve together when you were senator and happy to have you here. can you briefly described in more detail how you envision and negotiation process between broadcasters and satellite operators for local programming if stelar expires. >> probably not unlike what occurs now over-the-top offerings and spare market solutions to fix that. but as long as the incentive is given to not bring local into local, they have no incentive to come and talk to us. >> same question. >> i think you'd be a tremendous harm to us in our negotiation. from our perspective and were negotiating we feel like the minimum is being set here and in certain cases not being met, so that would be harmful ultimately, if that went away i'm not sure how broadcasters would behave presumably more aggressive than they are now. in a regime where we have those policies in place we have seen increases that i talked about, 2000% over ten years. crymac i medical back to senator smith to respond to that. >> when you start from nothing given 2000%, it is not hard. we offer the most important and most watch programming, we appreciate the opportunity to negotiate it for its value in a free market. that does not reflect it. what they pay for our content, is way below what they pay for much less watched other content that they pay for. i would like to speak, i don't mean to filibuster, there has to be a way in this expanding market to paper localism and investigative journalism, we were the last one standing, we have two revenue streams, the advertising model which is being cannibalized by digital companies, tech companies and re-transmission consent. we don't want to be like the newspapers but that is where we are heading. if we can't negotiate for the value of our content. >> my district has changed quite a bit over the years because of redistricting and the like. when i first came here i had the upper mississippi, st. louis north and a local tv station there in quincy that was on the lobby when the levee broke. so i get torn, i believe in the need of local broadcasters and local programming, fear, consolidation and purchasing power where we lose the stories of local high school teams and emergency activity and stuff. so we want to as much as we can, keep the localism and sometimes consolidation helps because it provides more dollars to coverage, there's some consolidation in that part of the state and you get better weather coverage because of the competition. let me turn over, the current system is challenging for you in negotiations. >> yes, sir. >> so your copy to the rock at her place. and i would ask you if it's a keep it or not keep it, maybe there is a middle ground of where you think the small providers are adequately listen to versus again if it's a binary choice between the others, i don't see how you are served by either. >> for one second if i could differ -- >> you have ten seconds. >> i completed a survey in 2018 my broadcast, and 47% return on a postop. 61% left the affiliate. 21% -- reverse. 6% watched affiliate that is 14. big to divert the it's the most support programming. however, in my neck of the wood, if your horse dies you wait till it's dead before you take your saddle off. all of the things that is happened in every revision of stelar has helped you retransmission, it is help the process along for me and to some specifics without anything to provide for that, i have no place for my saddle. >> the gentleman's time is expired. >> thank you, mr. chairman and thank you for holding this hearing. what broadcast television remains a resource for consumers to receive information about their communities including in times of severe weather and natural disasters. this role will only grow more important time as climate change worsens. as severe weather becomes more frequent and dangerous. local broadcast must be able to continue to get timely information to the communities in order to help keep them safe. despite the important role played by local broadcast television, especially in terms of danger, retransmission blackouts remain a problem. in 2017 and 2018 there is approximately 213 and 165 disruptions of the service nationwide respectively. in the sixth month between 18 we had 62 blackouts across the nation, while blackouts have fluctuated annually these numbers in comparison were only a blackouts on unacceptable. senator smith, first of all thank you for being here. i'm going to ask the same question to the senators and just a moment. i would like to start with you. why deeply blackouts are occurring just by existing good faith provisions and what would be the effect on markets and consumers where these stelar to expire. >> first of all, i would make the observation that 99% of them are negotiated successfully without any interruptions. we also point out that if people want to keep the digital antenna that comes with the tv set they have to plug in and to the other output, and put in they have all the local television that you can get over the years. i don't know where fighting is market, i leave that up to business people that i represent, that he represents, at the end of the day, we do not like them, but were always on and always available if people want to use antenna and we think it's really important that we have the ability to negotiate for the value of our content. >> we fully support localism. our services available to 99.58% of satellite reaches broadcast across the country that capture that. on the business person on the other end of the stick in these negotiations. and i tell you, absent good faith rules, i would predict the rate will go up. there is no other way to think, if we think you take those away and the rates will stabilize, and blackouts will go down, we are fooling herself. >> thank you. mr. berkemeyer, the good-faith requirements is not a solution to blackouts, is there more congress should consider? >> i think the good faith requirement would be a good opponent as well as interim carriage. we need to make it so blackouts aren't used as a tactic in negotiations to harm the other side and bring them to the table to pay more than they otherwise would for the local emergency you have. >> would you define interim carriage, while negotiations are ongoing between two parties and have not decided to part ways then the signal discontinues being carried under the terms of the previous agreement. >> thank you and i think all the witnesses and i yield back. >> the gentleman yield back. the chair recognizes mr. olson for five minutes. >> i think the chair, senator smith is good to see you again. welcome and from the shelby city of texas, 22 missouri city, how the heck are you doing. >> i'm doing wonderful sir. >> although my questions on this first handout and broadcast during this disaster you all recall that almost two years ago to this very day 2017 my district was hit hard by hurricane harvey, parts of this kept 5 feet of water in less than two days, dramatic flooding. people turned to local news to get the weather information, loaroad closures, where they shd go, recovery operations, they too, cbs 11, one had their mean studio fled but the backup cap on air during the storm which is just amazing. abc 13, into fox 26, independent 39, and don't forget the most diverse in america to make spanish stations stayed online. and again, this question -- your testimony you detailed the history of stelar and how congress always meant for it to expire in the future. i know that mr. walden, a member of the head of our committee has said for open questions as to whether we should be authorizing it as well. and senator smith, we all know from a program through well and this is huge, to kill a vampire in a bad government program. so my question is, if we decide that stelar is a program that should be allowed to expire, how does the impact local tv during the time of crisis? >> thank you for the question, broadcasters have every incentive to be viewed on the platform's as possible, we don't want disruption, were there in good faith and we never been found to be otherwise and your question perfectly points out how vital my wonderful at&t phone crashes and the only thing you can get is your local television or radio. and so, as you tinker with the economics around i would remind you of the importance of our lifeline in the revenues that we have to support journalism and localism come from two sources, advertising is being cannibalized, retransmission is where we go it is very important that that might upset -- having the news about new members of congress and for your constituents. >> one comment on that, the doppler radar, we can see real-time that is out there as opposed to going to the weather channel or some other channel that has drifted out, it is very important to have both tv stations, again how about you, what would you do with the disasters, how important is local tv if stelar expires. >> as i testified earlier, i certainly do not think stelar should expire, i think will be bad for consumers. as it relates to getting programming as it pertains to weather, i think in a lot of cases, people are used to looking at the weather. i don't know many people who sit around waiting for whether, more and more he looking at the weather channel app or your weather up to see what is happening and when is going to happen. that is not the solution necessarily the other programs available but in these cases we would rather be up then down with your broadcast partners but unfortunately that is not always the case. we have relationships with them because of the prices they see. and, the services go down during bad weather but they also go down during times when there being unreasonable. >> i'm sorry, if i ask this question. victoria, texas, they sent a letter to judiciary leadership asking about making sure stelar was allowed to expire. and how bad it is if we consummate that to the record about to write? >> without objection. victoria is not a small town, and 60,200,592 cents in 2010. they are not a small town either, population 100,000, the senses modified in 2014. both of these towns have issues with the reception because of stelar. senator smith, you explain how they are responsible for 100 texans if not having access to local news. >> if he could do that in five seconds i'll let him answer. but were 45 seconds over your time. >> if i understand your question, obviously we want to constituents to have our product, is initiated with the cable writers and hopefully they can put up an antenna if all else fails and get it for free. the only one up your offering anything for free if you do not want to pay a subscription pay-tv -- >> gentlemen time is expired. >> thank you, mr. chairman the 18th largest media market in the nation and growing. in our area we are worried about programming and increasing local content and a worry about modernization across the nation, there are so many rate local towns across this nation that really need to have spanish-language and stations, every couple of years we have a crisis about certain programs being blocked in florida, puerto rico. i want to start with you, regarding basic requirements, if we were to put some in place as a condition of reauthorization of stelar would you be supported of that? >> i think we would have to see everything to know what were considering. we are certainly look at components of diversity. our record of providing television content is unassailable. by our measure, we distribute more diverse programming than any other distributor. if there is a poster child for somebody is a good actor at&t would be that. >> thank you for that. senator smith, how would that affect diversity programming? >> i think what is important about what we do, if you look at the percentage of the people reliance upon over the air broadcasting tends to be minority communities, we are very anxious to keep our content appealing to all and that's why we have networks that are specifically targeted to some of the hispanic communities. >> how would it affect original local content if stelar were to sunset? >> what i notice, if one of my members is going to succeed, they succeed when they focus on local, when they do otherwise they are less successful. and they cannot sell ads unless they focus on local. >> thank you. you mentioned changing the license with the reform of copyrights. can you explain more detail the increased profits or payments to artist and local providers. how that would work and what the incentive would be? . . . >> the current system where, you know, the local content is there, but also, you know, a lot of the primary leverage that happens is from reselling national programming. >> would this help out local broadcasters and local artists and producers? >> i believe the overall approach would end up certainly helping the production of local content, local artists by, you know, by basically streamlining the system. >> what about local sports or more diversity content? >> yeah, so i mean, i think that there's this notion that if you got the government out of the way somehow, that automatically localism would be fixed. you know, when i'm looking at how on-line video works today, i'm noticing that cbs has cbs all access that they are districting without any local broadcasters at all. you have youtube tv, directv now. a lot of them are missing the local broadcast content. i think that, you know, if we want to promote localism, it is going to require a lot. i think an important step would be streamlining the regulatory system, but i don't think it really can end there because i think that we have seen that a lot of the on-line providers simply aren't providing the local programming without being caused to. >> thank you. other than ozark and netflix which i have watched multiple episodes on, has they assisted in local content for the ozark mountains in your region? >> diversity, absolutely. we offer everything that's available to us, through the nctc. >> what's some local programming that you all provide? >> we have telemundo and bet which both companies -- [inaudible] -- we don't receive those from an off air station. >> from the ozark mountain areas, is there a local program >> no, sir, there suspect -- there isn't a local program being developed. >> what would help with that? >> funding obviously. money is the bottom line. the pretransmission consent fees prohibit me from -- i only have so much of a budget. >> sure. >> and where i'm at, i can't raise my rates and so those folks, i just have a certain amount of dollars i can pay for programming. >> i understand. i yield back. >> thank the gentleman. chair now yields five minutes to mr. johnson. >> thank you, mr. chairman. i appreciate the panel being here. this is a really important hearing. i represent a very rural district in appalachia. it is the longest district east of the mississippi, and we have many technological challenges. this is one of the biggest ones. we're here today to discuss the stellar act which expires at the end of this year. i have heard many different perspectives as to whether it should be considered must pass or whether it should be allowed to sunset. as we all know with the increase in the new technologies, the media marketplace has changed substantially since stella was first passed by congress in the late 80s. i appreciate all the perspectives that i've heard today. let me go to some very basic questions, though. mr. thune, many your testimony, you explain -- in your testimony, you explain that there are a number of people that still receive broadcast channels because of stellar. i know many of my colleagues in both the house and the senate have asked you for the specific breakdown of the markets for those subscribers that receive out of market channels because of stellar. while this committee considers whether or not this legislation needs to be reauthorized, it would be extremely helpful to understand what benefit the expiring provisions of stella are providing, how they are being used when the consequences would be should congress allow stellar to sunset. would you be willing to work with my staff and the committee's staff to supply us with the specifics of what subscribers receive? which subscribers receive what channels and from where on directv? >> yes, we would be willing to help provide you some more information related to your question. >> okay. all right. we'll call on you for that. senator smith, my district partially encompasses the zanesville market which i know only has one local broadcast affiliate, the nbc station. can you explain to me where satellite tv subscribers in zanesville will receive their other broadcast channels from if congress does not reauthorize stellar, will they still receive those stations? >> i know my local broadcasters will be anxious to talk with them and make them a fair price to make sure that rural constituents can get their signal. we have an incentive to make sure that people see what we produce and what we put over the air. and i know it's hard for you to manage the food fight up here with my friends, but the truth is, we all need each other, and ultimately everybody has to make a buck, and we're not trying to put anybody out of business, but we are trying to preserve localism, which is under threat. >> that's a really good point. you kind of threw me off my questions because you said everybody needs everybody up here. you are exactly right, we do. it would seem to me that common sense should prevail at some point. rather than congress having to mediate and solve this problem, it seems to me the industry ought to be able to come together and come up with some common sense solutions where everybody walks away a winner. senator smith, moving on, in his testimony, mr. thune spoke about how the number of impasses between local broadcast stations and cable and satellite television seem to peak a couple of years ago and how that resulted in some stations going off the air. what's your response to that testimony? >> well, i think it is a marketplace finding its level, and at the end of the day, i just would remind you, we have an incentive to make sure more people see our stuff. we sell advertising off of that and obviously retransmission is a piece of it, a vital piece to keeping local television available to all these communities and to these wonderful platforms that are represented here. >> yeah. okay. mr. thune, do you have anything to add to that? >> i agree. we both need each other. they are an important part of our business, but finding the level ground is what we're fighting over, i think. >> yeah. >> and in any rational case, even though we did start at a place, i should remind everybody that we were amongst the first if not the first to start paying for retransmission. so we didn't start at the baseline like a lot of others did. >> you are a great american. [laughter] >> but we can't sustain these kind of prices and hold that back from hitting consumers. that's bad for all of us in here. >> congressman, could i comment to that? >> i'm coming to you. >> oh, awesome. >> you stated that retransmission consent fees deter broad band deployment, so in addition to commenting on what i just said, or just asked, what do you mean when you say that video revenues support broad band deployment? >> video revenues, however small they may be, y'all care about closing that digital divide. and every precious dollar that we could put towards the broad band back even further into the woods is being used up by these ever increasing retransmission consent fees. now, rural and small cable operators, independent guys like me, we're the ones that are out there already, on that digital divide. we operate and almost on the front lines for the deployment of broad band. every dollar that goes to retransmission consent, i could deploy talking about $25,000 a mile to build ariel -- ariel, $32,500 to build underground if you can do it in ozark mountains. however to string it on a pole between a tree and a fencepost to get it back there. because where we are at, we only have a certain amount. >> gentle lady's time is up. >> i'm going to have to yield back. >> as much as i love spending time with all of you here, we're going to be here a long time if we keep going minutes over. >> i will let you arm wrestle. [laughter] >> yeah, i know. the chair recognizes for five minutes. >> i thank the gentleman. thank you to the witnesses. i'm sorry i have to bounce back and forth between health subcommittee hearing down stairs and this very important one. senator smith, it is wonderful to see you. >> thank you. >> long time friend and someone that has served people in our country really so -- so well. >> thank you. >> thank you. and each one of the witnesses. what were you going to say, ms. boyers when our distinguished chairman said we're going to be here all day. i will give you a little bit of my time so you can share your thought. >> i appreciate it so much. >> uh-huh. >> mr. smith spoke to everybody needs to make a buck. let it be known right now on your record we don't make a buck on retransmission consent. what the big guys charge me gets passed to my consumers. that $12.16, we don't make a buck on. simple pass-through. 100% to my consumer and they know what they're paying for their broadcast channels. >> uh-huh. >> that being said, i don't know where the 12ths is coming from -- i don't know where the 12 cents is coming from, and i want that deal, and we shall talk after the committee meeting convenes -- i mean dismisses because i want a 12 cent deal. >> i think you are one hell of a witness, i tell you. >> thank you, ma'am. >> i would love to be there with you and senator smith, but i think i will have to go back down stairs again. >> i got your back. >> yeah, okay. to mr. thune, you've argued for regulatory overhaul, and i agree with you, and specifically you state that retransmission consent is in dire need of reform. i've thought this for a long time. it is not any secret. i understand why at&t doesn't like the current regime. tell us through your experience how it affects your customers. is it the same whether it's a small cable operator and you're a giant and everyone in between? this is all passed to the consumer? >> yeah, i think it affects us similarly in that we are offering a video product to our consumers, and it is predicated on what we are charged to program that. and if those prices go up, our prices correspondingly went up. and that happened for years. what we've hit is a wall. consumers aren't willing to pay any more. and so the plight that we face is this is not a win-win where money is -- where our revenue is going up and their revenues are going up. this is simply margin shrinking to the point where certain businesses especially rural cable operators are going out of business because they can't afford the programming costs. this goes straight to the consumer. >> it's where we need them because they -- the larger guys don't go out to where ms. boyers is. >> yes, ma'am. >> so it's -- senator smith, let me ask a really obvious question. maybe it's already been asked. every five years, you know, this comes up, and now we're reauthorizing, and it seems to me that there's a pattern here. and that is the year or the year before reauthorization comes up, the numbers dip a little on retrans, and then afterward it's jacked up all over again. what -- i can't imagine that this is comfortable for you. you in the broader sense of broadcasters. have the broadcasters thought of some other kind of model? i mean, this is -- this is not sustainab sustainable, and most frankly, and you're a very reasonable and intelligent man, it's not defensible. it's not defensible. i mean, you know, it keeps going up, up, up. the blackouts increase. people are ticked off. they are still paying. they're still paying while there's a blackout. i don't know anyone in the country that's got an refund when there's a blackout. so are you thinking of something else? are you just going to hold on to this thing that is kind of a homely child? >> i would share with you, congresswoman, that stellar reauthorizations are not my favorite time of year. >> i can imagine. >> pound away at retransmission consent. the point i keep making is this is one of two ways we support localism. it is the way you have -- >> yeah, but at what price, though, localism? >> you can get it for free. i'm the only one up here that offers everything we do for free. if they want it that way. if they can get a signal. >> gentleman's time -- gentle lady's time is expired >> thank you, mr. chairman. >> chair now recognizes mr. scalise for five minutes. >> thank you, mr. chairman. i will follow up where my colleague and dear friend left off, and you're right, the signal is available for free. you are seeing more people choose that option. i mean, the reason you are seeing such a growth in people cutting the cord, which means you don't get any retransmission consent dollars is because the laws don't work for today's marketplace. and so if you can go one place and have a broader experience and a wider array of options than the other place that's confined by the 1992 cable act, you're seeing consumers walk. and so what i've been suggesting is when stella comes up, you shouldn't look at it in a negative way. it absolutely is an opportunity for us to look at the video marketplace. if we look at the video marketplace and recognize that the laws just don't work for today's world, then maybe we can also help solve the problem of why you're getting less retransmission consent dollars because people are cutting the cord. they're walking away from the entire system. and so if we say okay, maybe you want to cherry pick and say let stella expire. i don't associate myself with that because i do think we shouldn't just look at stella. we should look at the whole thing, and maybe in 92, they wrote a perfect law. there's no such thing. but let's say they did in 1992. does anybody want to come up to this table and suggest that when they wrote the law in 92 they took into account how the world works today, how people get their video content today? of course they didn't. you can talk to the people who wrote the law. you weren't around when it happened, but the people that were there when it happened, they recognized that the world's different today. why hasn't the law been updated? and so what i would suggest is, as we talk about retransmission consent or any other, you ought to get paid for your content. that's the bottom line of it. you know, the deal with retransmission consent, and again, when you talk to the people that created it, was that they wanted to help keep that local content that you talked about. the problem is, i think mr. mcinerney talked about this earlier. more and more you're seeing the motherships the national networks take a bigger and bigger chunk of retransmission consent so your local stations aren't even getting that money. that was the deal for the free spectrum that's out there that, again, the reason why you have to make it available for free, people can go buy a $30 dish and get a better high definition signal off of the local stations than if they went through their local cable company. and so all i would ask, and i would like to ask everybody to comment on this, if you look at stella in a silo, regardless of where you are, expiring or being renewed, do you think the current laws especially the foundational 1992 cable act needs to be updated to reflect the world we live in today? i will start with you, ms. boyers >> thank you, congressman. absolutely. >> thank you. >> i would love to be a part of that. >> i would love for all of you, including mr. smith, and i know we have had some conversations. we may not always be in the same place, but i do think we want to get to a similar place and can get to a better place, and i know we have worked very hard on how we can have a bipartisan approach that hopefully every member of the committee that wants to be part of it as well as everybody here who wants to be a part of updating and modernizing our laws to reflect the world we live in. mr. thune? >> absolutely. we commend your efforts with the representative's efforts to try to modernize these laws. they are clearly outdated. they're broken. and they need to be fixed. >> thanks. mr. smith? >> congressman, i really appreciate your noting the sort of symbiotic relationship between my network members and affiliate members. they need each other. affiliates need the networks for sports programming and weekly shows and they have very high ratings, and yet the networks really need the locals to provide the tornado alerts. they need this life line -- >> don't sell yourself short. i mean, i want my local broadcasting weather and local sports. when i watch the saints and the lsu tiger updates, i'm not going to get that from iowa. i want to get it from my local station. >> exactly. >> and the warriors, you know, they are going to go up 2-1. >> yeah, and the golden state warriors. [laughter] >> so would you be open to working with us on reforms to the 92 cable act that creates some of these problems? >> i'm tempted to quote reagan. there's nothing permanent -- >> you are always in a good place in quoting reagan. >> that said, we are always open to new ways to do it, but i want to emphasize is that the earlier act created a system that is a benefit and a blessing to the american people -- >> i agree on that, only have 12 seconds left. i do want to give mr mr. bergmeyers -- >> and my concern is that somehow a reform would just focus on national and forget the local. >> we absolutely want the local content. we do. we have talked about blackouts for that very reason. again, don't sell yourself short. people want that content. i'm sorry, mr. bergmeyer. >> i think you need a lot of policy measures to increase diversity to programming. an important first step is to rethink the 92 cable act and we're with you on it. >> thank you very much. appreciate it. mr. chairman, yield back. >> time expired. chair now recognizes for five minutes. >> thank you, mr. chairman. so i hear all of my colleagues here, and i completely agree that local broadcasters provide great coverage of local events, weather, disasters, as well as senator, you talked about how holding elected officials accountable for their actions because they're invested in the community. i think that's really an important role and one that we continue to see dissipate. something else we've seen in the denver media market, and i know we're seeing this around the country, is we're seeing venture capital and private equity start to buy up some of the media outlets, in particular, in the print industry, we saw this with the denver post. we have seen it other places. and so i want to start with you, mr. bergmeyer. how do you think the incentives of venture capital and private equity, the financial incentives align with this other incentive that i'm talking about, that local tv provides which is coverage of local events, weather, in depth coverage of politics and other issues. how do you think that the profit motive and those -- and the need to staff up and invest in the local news weigh, and how is that going to work in the long run? >> yeah, absolutely. i agree. a huge problem throughout the economy, but it's particularly noticeable in media is when you have these investors who take over companies, and they just have a short-term perspective. they are just interested in extracting as much cash in the short-term from these businesses as possible and just walking away and forgetting that, you know, particularly with media, with newspapers, with local broadcasters, it is really about a long-term commitment to serve the community. >> that's right. how do those goals -- how do those challenges line up as we look at reauthorization of stellar? >> well, i think stella offers an opportunity to look at a wide range of different media and video industry policies, including media ownership rules and i think something like, you know, the short-term investor kind of thing that sort of relates to the broader media ownership and consolidation points that have come out in today's hearing. >> senator, do you have anything to add to that? >> i would just re-emphasize to those who may want to invest in broadcasting, if you invest and you're not focused on local, you're not going to make any money because people are going to change the channel. what i'm telling you is that my members who are successful financially are the ones who keep a focus on local, to avoid the denver post kind of situation. >> yeah. but that's assuming that there's that competition. and that's -- if there's no channel to change it to, then that's where you run into that trouble, and so that kind of -- >> we have lots of competition, i will tell you that. >> well, yeah. >> from over the top now, and we have got -- some of our members do. people are going directly to the internet to get our product, and there's a lot of ways to get our product. we want people to see it. but where others try to sell our product to their advantage, we are entitled a retransmission consent. >> so i do want to talk a little bit about this consolidation issue that i kind of alluded to a minute ago. mr. thune, you said that some ownership groups are using loopholes to get around the fcc rules, prohibiting a single owner from controlling more than one station affiliated with a major network in some of the areas. can you talk very briefly about that? >> yeah, i'm not sure if that ownership changes the emphasis on localism between these broadcast stations, but what i'm discussing, in the negotiations that ensue when we go into a renewal in a particular deal, if the broadcast station owns more stations than that particular market, what they were initially entitled to, or what the law intended for them, it makes it more challenging. they hold on to their positions. they hold on to their economics, and they are extremely stubborn and it often yields blackouts. >> i want of course close with you, ms. boyers and ask you, what does media consolidation do to consumers when broadcasting groups can't reach an agreement with video providers? >> well, it removes the local programming from them because if they were to turn the signal off, because we couldn't reach any kind of an agreement, but i would tell you, that the broadcasters themselves, the big affiliates and the local broadcasters are biting their own noses off despite their faces. i mean they have got over the top competition with themselves. i mean, you've got cbs all access. i mean, those kinds of things are competing with your own local stations. i would tell you, that if you will listen to the underlying current here, my esteemed friend down here with the broadcasters, he's only sitting on a stool with two legs. he's got his advertising and he's got me. and he is utilizing the captured marketplace which is the broadcast -- or the -- we're called transmitters to send our signal down to his eyeballs that he needs to see. his only two revenue streams today are advertising, which is dwindling and me. so the only people who are cutting their cords are the ones that can. the ones who can't cut that cord is betty dock out on county road 450 who doesn't have a credit card, couldn't get dish. she has to have me and she's 90 days past due all the time. the one that brings me eggs, i'm just telling you. >> okay, thank you. >> they are utilizing me for their revenue source. >> we got ya. >> the gentle lady's time has expired. good lord. okay, where are we at? [laughter] >> chair now recognizes mr. long. >> thank you, mr. chairman, and ms. boyers, i want to remind you the irs does monitor these hearings so -- >> yes, sir. >> talking about taking eggs for payment, you might want to -- >> i will report all of my income -- >> you may not want to go there. [laughter] >> 1974, george foreman was going to fight muhammad ali. muhammad ali came up with a strategy to fight a younger george foreman. that's exactly right. he would cover up and back into the ropes and let george just pummel away on him. and that's kind of like what i felt like the last few weeks with the broadcasters and at&t, people coming into my office, everybody wants to pummel on us and figure out, you know, how this thing is going to come out in the end. mr. bergmayer, what is a local broadcast station? you referenced a local broadcast station earlier. what is a local broadcast station? >> well, i guess there's two ways -- any broadcaster serves a specific geographic region so it is local to that region. so i think that if you're in that region, you know, that's your station. i think the problem is when there's -- when you're short a market, when you are in a market where there's no affiliate for a particular broadcaster then you just need, you know, some kind of station. i suppose it is not going to be local to your particular market. but nevertheless, that station in its own market is still, you know, thought of as a local station. >> so ms. boyers i believe said i'm still with you mr. bergmayer, she said her local affiliate cape girardeau is like 147 miles away. is that a local station? >> i think the definition of local might get stretched a bit in rural areas where the stations are few and far between due to geography and population density, but, you know, it's certainly closer than a station in los angeles or new york. >> because i know that when i go home, on the weekends, two or three days a week, whenever we get to spend at home, i sit down to watch the local news with my wife, and i will say who is that? who is that? i mean, all the reporters are, you know, when i was growing up, you had the same reporter, same news people, same sports people, like your whole life. and now every time you go home, they've got new young kids out of college because apparently that's who they can afford to pay, and it just constantly shifting, and with that, senator smith, you're talking about bringing local into local. walk me through that. what's that look like, bringing local into local. >> well, it means where there is a demographic area that is served by a television station, that the people within that area get that signal and not something from los angeles or new york. >> if there's not, i mean if you are ms. boyers and it's 147 miles away, i thought you were saying there was a way to bring local broadcasting into that market. >> there are translators that help beam our signals to rural areas, over mountains and into valleys. they are all over this country, if they don't want to have a subscription, i don't know, in the ozarks whether there are sufficient number of translators to get it for free, but we offer it for free. >> but i was a little bit confused on bringing local into local in the fact of i mean like i said, i go home, we're in a town of 160 some thousand people, 250,000 people, we've got abc, cbs, nbc, local, but two of them, we've fought this battle before, have gone into together, nbc and abc affiliate moved into the same building, run by the same people. for a while they tried to keep their news people separate and all that, but now they are all piled in there together. there's not a real way to bring a local station that would be functioning and make a profit in ms. boyers area; correct? >>i think what you are speaking to is the expense of running a newsroom. journalism is expensive. localism is expensivexpensive. >> but i mean somebody who doesn't have a local station like ms. boyers doesn't. ms. boyers moving to you, what do you do during recent tornadoes in your area? i know we were hit. who covers -- does cape girardeau cover the tornadoes in poplar bluff? >> yes, sir, if you watch the weather, and it's the same on the cbs station as it is on kbif fox, it is the same news team, once again, they -- but the only time you are going to hear it in poplar bluff is when the radar dips in the southwest part of the circle. they call themselves a tri-state area, but the local news is cape girardeau. >> one quick last question, you came by my office the other day and in your testimony today you mentioned this 47%. tell me -- you're paying 47% more than your competitors and that is because of what? >> yes, sir, based on the fcc's report, the study they put together at the end of the year last year. >> okay, but why? they have more accounts than you do? >> that's what i'm offered in my negotiations with the off air channels. 47% more. >> gentleman's time is expired. chair now recognizes mr. flores. >> thank you, mr. chairman. i appreciate the hearing this morning. mr. thun, i have a quick question i would like you to answer supplemental for me, if you would. at&t and directv have made two commitments to serve all 210 dmas with local channels. i would like -- none of those commitments have been met. i would like you to supplementally respond to as to why those haven't been down. put the markets where you down convert the hv signals and what the plans would be to remove the down conversion features moving forward. i want to continue on to talk about the subject that has been introduced, and that is what should the statutory framework look like for video moving forward, with the reemergence of over the air, with ott, with the mvpt options that we have today, and then there are things that are gleams in people's eyes today that are going to totally transform this business space. i would like some ideas from you as to what the statutory framework would look like for the video market of the 21st century, not relying on the 1992 act, not relying on stellar. what should the statutory framework look like? i give each of you about 45 seconds starting with mr. bergmayer. >> i believe you should start with copy right as the fundamental unit of negotiation and then build from there. right now we have a system where copy right -- you have a compulsory license, and then on top of that, you have retransmission consent which is negotiated in the marketplace. i think this adds too much complication, too many layers. i think you simplify things. you start with copy right and see if that improves things for consumers. i think that offers a more sound starting point for addressing the market. that's how it works everywhere else. >> thank you. thank you for staying within 45 seconds. ms. boyers? >> for us, it would be choice. choice for the consumer, choice for us as a provider. in today's framework, we are mandated by federal law to provide the off air stations first and foremost to air one of my sub vibe -- subscribers. if they don't want to watch them, they shouldn't have to pay for them. absolutely, more choice. let the marketplace set the demands. >> you have been a great witness. i appreciate you being here today. >> thank you. >> mr. thun? >> i think for us we're open to any and all ideas. i mean one of the things that's brought us here today is the retransmission consent needs to be fixed and somehow the exact measures around that, not sure, but i think it starts with working on the 92 act, starting from scratch, and seeing laws that can create marketplace conditions that are not punitive to our consumers. >> i don't really want to start with the 92 act. i want to start with a blank sheet of paper. what would that look like? >> amen. >> does anybody disagree with that approach? >> no, sir. >> i mean, because the market is totally different than it was -- you know, it's totally different than it was in 92. totally different than it was when i was a kid and had three channels located 80 miles from the broadcast channels. i would have to get up on the 45 foot tower to fix the antenna after a storm. >> if the president was on, you were screwed. you didn't get to watch anything else, you had to watch the president on all three channels. >> true. senator smith? >> basically you have to options. you can have the government manage prices and these negotiations which i would strongly oppose -- >> yeah, i'm opposed to that. >> or you can allow the pretransmission consent process to go on which i've always said is kind of a food fight when people are freely trying to bargain for the value of content. my own view is that the dollars should follow the eyeballs. we've got the eyeballs. >> okay. i think retransmission consent is part of it, but at the same time, i do think it is thinking too small. there's a new technology that's going to come in and it is going to go around retransmission consent. i think we need to figure out what the statutory infrastructure looks like so that we create the video marketplace for the future that puts consumers first. with that, mr. chairman, i yield back the balance of my time. >> the gentleman yields back and the chair thanks him. chair now recognizes for five minutes. >> thank you, mr. chairman. i would like to thank the ranking member for having this important hearing. i would like to point out that earlier today, there's been testimony that no broadcaster has been fined for violating the good faith rules. i want to point out that there was an investigation and a settlement of 9.5 million dollars with sinclair. so i just wanted to state that for the record. the way that many consumers watch video is changing, but for a lot of folks, they still receive local news, local weather, emergency alerts and local entertainment over the air and by way of cable and satellite. i know that this is a comply katd issue for those -- complicated issue for those in the video market, so i'm glad to see so many stake holders at the table so we can get this right. above all, we need to remember the bottom line, that consumers have access to local diverse programming. there's important to me and to millions and millions of americans. -- that's important to me and to millions and millions of americans. my first question is to senator smith, ceo of nap, i understand that significant populations of latinos and other communities o of color depend on free local broadcast to stay up to date on local news, disaster alerts and other educational entertainment programming. can you discuss the rate of viewership amongst communities of color? >> yes, it is one of the proudest things we have to offer as free local broadcasters is those who exclusively rely on us tend to be minority communities and the economically disadvantaged. we are very proud of univision and telemundo, members of our association. i think we're doing everything we can to make sure that there's content available to them, free over the air and those communities disproportionately rely on us >> thank you for that testimony. with all the big players on the field, it is important we don't lose sight for the independent programmers who bring quality local diverse content to their communities in a space where we see more and more consolidation, we need to make sure that local networks can continue to operate and that there's room for new entrants into the markets. ms. boyers, we've heard from independent networks that the retransmission consent process can cut into programming budget ets that could otherwise be used to create content that showcases diverse and unique voices. in your experience, is that accurate? >> absolutely. we only have certain bucket of money for programming. and retransmission consent fees take away funds in my small business to provide compelling independent programming. we are on the same side of this issue with the independent programmers. we all have the same financial straps. we have the same, you know, problems that independent programmers have. we want to do everything we can to get those folks on our station, but we only have so many dollars. >> uh-huh. you mentioned buckets, but i've been visited by some of the small players on the field, and it looks like they go around with a little tin cup. >> yes, sir. >> hoping they will get something to rattle in there. that's one of the things that really concerns me because the smaller the player, the more likely that they are not going to be able to play, that they will just go away. i think one of the saddest things that we could see in america is to see someone who is passionate, who is heart felt about wanting to be that, to do that as a career, and realize that there's no room on the playing field for them because it just doesn't -- they can't eat and do the beautiful wonderful content that they can and are capable of producing, but if you can't eat, you do something else. >> yes, sir, that's right. >> that's one of the things that's a big concern of mine. >> yes, sir. >> mr. thun, same question. >> we i believe have an excellent track record carrying independent channels, hitting diverse audiences. i testified earlier i think we have an unassailable record. as far as i know, we distribute more diverse content than any other distributor in the marketplace. so we want to reach all the different audiences. we have a national platform so that we can touch people across the country in those different pockets, and we try to do so with providing a robust experience for them to touch different pieces of content that aren't from the same voices. >> okay. thank you. mr. bergmayer, do you have anything to add to this? >> i would say the current regulatory system as well as the market structure benefits primarily just the most major programmers. it also doesn't particularly harm, i think, the very largest mvpds, the comcast, the charters. you have a system where you have these large fighting each other all the time in the interest of smaller diverse programmers as well as small cable systems simply often get forgotten. >> so perhaps the system is not broken broken, but some tweaks here and there by congress might be welcome? >> well, i would favor some pretty fundamental changes to the system, but i've also -- i'm totally open to lots of small tweaks within the current framework as well as addressing the consolidation issues which i don't think help either. >> gentleman's time is expired. chair now recognizes mr. wallberg for five minutes. >> thank you, mr. chairman. thanks to the panel this has been one of the most interesting panels i have had the privilege of listening to, with a lot of good humor, good information, and i just have to tell you, i agree with all of you. [laughter] >> i want you all to be satisfied. is that okay, mr. chairman? [laughter] >> not sure if that will happen, but i've learned some great new words i can use in my town halls too. [laughter] >> i appreciate that. mr. thun, one of the counties in my district, in my home county in fact, in michigan, it is an orphan county. it's in the toledo market. and as great as the local broadcaster's content may be, i'm sure my constituents would prefer to be watching the michigan ohio state game from a local michigan affiliate. >> they would lose anyway. [laughter] >> we have such comedy on the -- [laughter] >> localism will be especially appreciated during the football season as chairman wheeler used to put it. mr. thun, can you help me understand why directv can't just import local out of market signals to serve subscribers in that county, for instance? or what would it take to ensure subscribers in that county are able to receive local content? >> in terms of the orphan counties, i think in every instance that a broadcast station has come to us, we have complied and been able to distribute it, except in cases where it was technically not feasible. certain cases our spot beams don't cover a particular area, so therefore technically we wouldn't be able to deliver it. but in the case of your particular example, i'm not exactly well attuned to what that particular area is or what's been spoken was but we're absolutely receptive to looking at that, and if a broadcaster comes to us for distribution there to provide you with the michigan point of view instead of the ohio point of view, nothing against the buckeyes or nothing for the necessarily the wolverines -- >> you started out well. [laughter] >> but we're happy -- we're supportive of that. >> senator smith, do you have anything to add to that? >> yeah, i would just note that in the last stellar bill, reauthorization, there was a provision, authority given to the fcc to deal with orphan county issues. we supported that. we've worked with them. we hope that your county, if they're orphaned will work through that process, and we have been able to address a number of these issues for a number of orphan counties. >> senator smith, can you walk me through how the distance signal compulsory copy right works versus the retransmission consent process? >> well, what it means, if, for example, mitch mcconnell's bowling green area for some reason that is not served with the local stations that are there, a distant signal is brought in from new york city to them. there are 12 markets like that. these are ones that at&t, directv has not provided local, the way outlined in stellar, and if stellar went away, i'm sure they would work with us, and i think local stations there would be anxious to find a price that they could deliver local into local. but as long as stellar remains, they have an easy out. >> could i assume that that sounds something like a subsidy if they could negotiate directly? >> it is a subsidy. if you add up all the market capitalization of every broadcaster in america, who will not equal the market capitalization of at&t. the question becomes do they need a subsidy? >> mr. thun, your thoughts? >> as i testified earlier, we do serve those communities. we do have a solution over their antenna and part of that is incumbent upon the broadcaster to provide a signal that's strong enough so other people -- other folks can receive it. they are not insented to provide a strong signal. we come in. we don't get paid for delivering beyond the footprint they are able to do. so they enjoy rates from us that are very -- [inaudible] -- continue to go out of control. the 12 markets that we don't serve, 11 of them are either duopolies, double or triopolies. every time we try to go into those negotiations the prices are somehow higher. the lack of reauthorization wouldn't ensure we go into those 12 markets by any stretch. >> okay. thank you. i yield back. >> thank you. chair now recognizes mr. butterfield for five minutes. >> thank you very much, mr. chairman. let me join my colleagues in thanking the witnesses for your testimony today. i've been ping-ponging between subcommittees, and i think gordon understands that drill and how that works, but thank you for your patience. let me begin by making an observation. my district as many of you may know is very rural. many of my constituents in the first district of north carolina rely on satellite to receive their local news, to receive their content, that really matters to their families. and so mr. smith, let me ask you, how would allowing the relevant provisions of stellar to expire promote access to local programming in rural communities? help me with that. >> well, if mr. waller were still here, i would share with him and you, a similar thing, a place up in the blue mountains of oregon, i'm a good directv customer and we get l.a. news there. so i think if stellar continues, that will continue. and i think if it goes away, i'm sure mr. thun and i could work out a deal where we can fix these 12 markets, but that's left to people at a higher pay grade than we are, and our companies hopefully can get that done unless there is an out that allows them to bring it in a distant signal. >> my staff has gone through your written testimony. i have not. i acknowledge that, but i depend on them greatly. they tell me that you questioned whether the good faith requirements currently imposed by congress are necessary, for fair and fruitful negotiations. without the good faith rules, what would change from the consumer's perspective? >> i think a good side of the retransmission consent process now is that both sides have -- are incentiveized to come to a deal. we want them to have our product. we appreciate the resources it brings to us. it helps support local journalism. and they want more eyeballs too. so we actually have a community of interest, but neither mr. thun and i are involved in it. >> maybe mr. bergmayer can help us with that. >> my read of the statute and the rules is that good faith does apply to both sides, both mvpds and broadcasters. i would say just saying that negotiations have to happen in good faith not really clarifying that doesn't really get you that far. we want to put some teeth behind it. >> let me go to the other side of the spectrum, no pun intended, mr. thun, how does the distant signal license provided by the current regulatory framework benefit rural consumers? >> in rural areas, consumers are not able to get an over the air signal. for those pockets that they can't, we're able to provide a distant signal so they can get network programming, not local, but network programming so they can see the various pieces of content that they enjoy. >> would expiration of that affect local programming? >> i don't know if it would do anything for local programming, but what it would do for those customers who can't get local programming because they get it through a distant signal, that would sunset, and i'm not sure what process would take place for them to get that content. >> let me try this one, how do increasing programming fees affect your efforts to deploy broad band in currently underserved areas? >> like ms. boyers said earlier, if we are -- we have multiple revenue streams, and one of them being video. and if that -- if that revenue stream is shrinking, that affords us less money to invest in other areas of the business. one of them being broad band. so just intuitive financial principle would dictate that if you are making less money, in your business, you're going to have less money to spend on other areas. >> ms. boyers, you are in a rural community, is that correct? >> yes, sir. >> how would this affect your universe? >> how would the sunsetting -- >> yes, as an operator, how would it affect -- >> it would affect us dramatically. keep talking about this no good faith complaints as a way to have saying you don't need -- as a way of saying you don't need good faith rules. rule breaking -- rules aren't made for breaking. so i think that it's a testament that we do all come to the table together under the guise of these, you know, mandated good faith rules. and to be able to allow even other folks to come in under the guise of a good faith rules, like buy-in groups like the nctc on our behalf would help us have lower rates possibly for that -- for those so we can have more money to deploy, but the good faith rules are, you know, important hanger for us. >> thank you. >> gentleman's time is expired. chair now recognizes for five minutes. >> thank you, mr. chairman. and thank you to the panel. this has been very insightful, your testimony today. i appreciate getting the sides. consumers should have access to their local news. our local stations provide -- serve a critical function in our communities in keeping public informed, connecting rural communities in montana. they really rely on the local stations for news and weather. some communities in our state including our state capital helena however does not receive their local station through directv. what local news can directv subscribers in our state capital get? well, new york or los angeles. people in helena care about their community events, local weather, the coming wildfire season, not necessarily about stand still traffic on i-5 or the subway breakdown in new york city. as more consumers look to cut the cord, i think providing viewers with their local broadcast stations would be an effective way to keep consumers. we need to consider how to lower the cost to consumers and increase competition all while making sure neglected markets like helena and glendive are covered. first i would like to focus on getting prices down for consumers. i see constant news stories and i hear directly from my constituents that their pay tv bills are continually on the rise. ms. boyers, i appreciate your testimony today. >> thank you. >> can you help us with this? how can we get consumers relief on the prices? >> to lower them. i mean, honestly, we're being pushed into a vacuum as the pass of retransmitter broadcast signal. we are their eyeballs in a lot areas that's the only eyeballs they have. they can't do antenna. they don't offer it on broadcast so we are being penalized for being small and for being rural and we are subsidizing the lack of the revenue generating in their business model. if they could come up with a different business model and lower my rates, then i would pass it on to my customer. we don't make a buck on retransmission consent. >> you testified earlier that 79% of your total pnl expenses are related to programming, not in local? >> yes, sir. >> thank you for that. there's two markets in our state including capita where directt -- including capital where directv doesn't provide local to local. you mentioned antenna option. the challenge we have, montana, mountains, the broadcast doesn't work. why can you not provide local stations to our state capital? >> well, i think we can, just to be clear. we don't bring the distant signals into the heart of helena. it is going to the outskirts where the white areas are. so our solution as i said previously is the over the air antenna that's integrated into our set top box. >> but those over the air antennas don't work when you are in the mountains. why can those citizens not get access to local news? what's the impediment today? >> the impediment is that in certain cases the broadcaster signal technically probably can't get to those certain areas. there's probably areas within the dmas -- >> what's preventing it from going over your network? >> what's preventing it? we have explored looking into these 12 markets. as i have testified previously, they have duopolies and tri opolies. >> senator smith, would you like provide the broadcast perspective on this? >> yeah, i think there's no technological impediment any longer to at&t being able to provide this. there's plenty of competition. . you have got to support the local stations there in montana. we do that. obviously if people in helena want our stuff directly, that is supported by advertising revenue, they just put up their digital antenna, but i do think the way you make sure at&t does not provide it over their system is to renew stellar. >> okay. >> well, clearly we have some difference of opinions. i appreciate the transparent testimony today. i look forward to working with you all to figure this out so our constituents are better served at prices they can afford. thank you. >> thank the gentleman. ms. brooks, five minutes. >> thank you. thank you mr. chairman. i too apologize. i have been running between a couple of different hearings, but what's been pretty clear to me is that there is not a lot of agreement from the panel, and so i guess i'd like to -- >> there's a big surprise. >> i would like to start out by asking and because i've kind of gone in and out of this hearing, senator smith, could you please share with us -- and i apologize if this has been asked -- can you explain how retransmission consent prices are actually decided because as i have come in and out of this, that seems to be the sticking point or one of sticking points. can you talk about how those prices get decided? >> obviously i don't negotiate them and if mr. thun and i did, i'm sure we would come up with a deal. their business people and our business people, my members, they sit down and negotiate, and i would just make the point that they pay for their own content, far more than they pay for ours which is much higher watched. so our members try to get the dollars reflected by the eyeballs that we bring to their system and ours. >> and is that why prices might vary based on the size of the mvpd? >> of course. >> okay. and any disagreement, anyone else, on that answer? i'm just trying to see if there is any agreement on -- >> well, i mean, i would just say i have some sympathy for ms. boyer because i'm from a very rural part of oregon. >> right. >> i know what it is like to be rural and left out. and yet the economics going into those places sometimes make it very difficult. >> i emphatically disagree. it costs absolutely no more for me to pick up that signal once it comes from their transmitter to my receiver, and then it comes into my head end, and there's where i incur the expense, by the mile to get it aerial air underground for that customer. what they are charging me for is what gets to my head end. i retransmit it to them. it costs them no more for me to get that signal than for them to transmit to cape girardeau itself. however i'm paying 47% more. i don't understand that. i was really interested in that answer that we were supposed to get that you just asked. i have no idea other than the fact that we have no leverage, no bargaining power, when we sit down, and it's take it or leave it. >> going back a little bit too and while i appreciate you aren't actually, senator smith, in the negotiations, what are in those discussions and in, you know, good faith discussions, what are the factors that are as we have to explore how to go forward, with this incredibly changing landscape? >> i don't know because i'm not in there, but i can imagine that comparables for other programming are evaluated. viewership and ratings, those probably come into bear on what a broadcaster would ask. but i'm just assuming that. i've never been involved in those negotiations. >> i have a concern about blackouts as we've all heard, from various communities, and what happened. particularly as it relates to public safety. :: it seems to me that although they say even if there's a threat of a blackout, 99% of the contracts are made. we have liberty in their threatening a blackout because of the hurricane. i'll pay high prices but much more able to do that because of the hurricane coming. i find it compelling that these blackout seemed to hover around times of consent. >> i would be interested on many answers on how we resolve the issue of blackout. >> time is expired. i ask unanimous consent to enter the documents into the record. a letter from the national association of black on black casters, a letter from ride tv, rural group coalition, a statement from motion picture statement of america, sports fan coalition and a letter from our street without objection. i want to think the witnesses. you can testify for me anytime you want. [laughter] i want to thank you for being here today. there are ten business days for the questions to be answered. i asked each witness to respond promptly. the subcommittee is adjourned. [inaudible conversations] >> it spoke tv on c-span2. >> you will hear from others who have written books about silicon valley. the first with president trump in el paso to memorialize victims home this past weekend shooting. i want to show you programs from our archive doing link with mass shootings.

Related Keywords

New York , United States , Georgia , Montana , Texas , Missouri , Florida , Missouri City , Oregon , Michigan , Denver , Colorado , Mississippi , Iowa , Ohio , Los Angeles , California , France , Missourian , Americans , America , French , American , Patricia Jo , Robert Thun , Gordon Smith , Ronald Reagan , Mitch Mcconnell Bowling , Muhammad Ali , Ariel , El Paso ,