▶ 0:34:55Chair Cruz: Good morning. We interrupt this program for a senate commerce committee hearing on media ownership in the digital age. For over a century broadcast media stood at the epicenter of american historical and cultural life.
▶ 0:35:15Chair Cruz: It brought the nation classics, like "I love lucy," and shaped music landscape with elvis or the beatles or the ed sullivan show. Being what it is I watched the beatles on the ed sullivan show yesterday.
▶ 0:35:37Chair Cruz: It showed americans the realities of war, the wonder of the apollo 11 moon landing, and the defining political moments of their time, from the nixon-jfk debate, to president reagan's clarion call to tear down this wall.
▶ 0:36:02Chair Cruz: Through these shared viewing experiences, broadcasters helped to embed iconic moments in the collective american consciousness. The media's power to frame events and shape public perception is substantial, so it is understandable why congress placed limits on broadcast media ownership, intended to prevent an monopoly on programming and viewpoints.
▶ 0:36:31Chair Cruz: Indeed, from much of the last century holding a broadcast license was often called a license to print money. With limited competition, station owners commanded massive audiences and steady profits. But that era has passed. Cable and satellite ushered in 24/7 news, while the internet and mobile technologies unleashed a wave of streaming services.
▶ 0:37:02Chair Cruz: News and entertainment sites and social media, flooding americans' screens with endless content and fragmenting what were previously universal audiences. Today, broadcasters are fighting to stay competitive against media and tech companies with national and often global reach. This raises an important question. Are long-standing media broadcast ownership rules still relevant in the digital age? If so, to what extent.
▶ 0:37:37Chair Cruz: In recent years, some of these rules have been rolled back or eliminated. Whether more reform is needed, or if today's status quo remains sound policy, is what we will explore today. In the telecommunications act of 1990 six, congress anticipated the rise of today's competitive market by directing the fcc to periodically review its broadcast ownership rules with an eye towards the regulation.
▶ 0:38:08Chair Cruz: That is what statute says right now. Every four years the fcc was to decide whether to repeal or modify any regulation that no longer serve the public interest. One rule, however, was deliberately set out. The national tv audience reach cap. In two thousand four, congress specifically directed the fcc to set this cap at 39% of U.S.
▶ 0:38:39Chair Cruz: Television households, and it has remained at the same level for 22 years. Now, as several major mergers a loom, the fcc is considering lifting or eliminating this cap. Some argue that lifting the cap will allow broadcasters to scale, to invest more in local news outlets across the country, and to better compete with deep pocketed tech companies.
▶ 0:39:07Chair Cruz: Others say lifting the cap will consolidate viewpoints and hand control over to newsrooms in new york and hollywood, choking out local views. More fundamental than the optimal policy is the law. It may be the case that the fcc cannot modify the 39% cap, because congress at that number in statute. I look forward to hearing these perspectives and more today.
▶ 0:39:36Chair Cruz: If there's one thing that's clear, it's this. Current media ownership rules were written in a vastly different technological age. The days when broadcasters built a uniform global village across america's living rooms is over.
▶ 0:39:54Chair Cruz: As media has splintered into thousands of websites, tiktok accounts, podcasts, and other form of content, each catering to its own niche audience, yet even in this fragmented landscape the media's ability to shape the national discourse remains incredibly powerful, making questions about market concentration as important as ever.
▶ 0:40:24Chair Cruz: This hearing is designed to inform congress in answering these questions. Should congress revisit underlying statutes, and it does the fcc have appropriate authority or flexibility to address today's evolving media landscape? I'm grateful to our witnesses for being here today to help us in this effort. I now turn to ranking member cantwell.
▶ 0:40:46Sen. Cantwell: Thank you, Mr. chairman, thank you for calling the hearing and witnesses to be here today. This is a subject that generally I would say I care a lot about and I think today we will get into a pretty big debate about the amount of digital content now in advertising and controlling that market.
▶ 0:41:07Sen. Cantwell: I also think we will hear a lot about why it's not a good idea for consumers to have so much content behind pay walls and them not being to -- being able to access that. I believe the first two witnesses will agree on that, but not a lot of other things. Americans watched the super bowl. I'm happy about my state of washington and the seattle seahawks bringing home a second lombardi trophy.
▶ 0:41:32Chair Cruz: On the over-under if you would make it a minute before saying that I had the under. Congratulations. There were a lot of people helping the seahawks. A lot of texans, a lot of great job by your former quarterback. Yes.
▶ 0:42:01Chair Cruz: Right now, millions are also turning to the olympics. Watching that. This brings communities together. This brings fans together. It brings our country together. Mr. chairman, as the media landscapes become more fragmented every year through shared experiences are becoming rarer. I said earlier how much my concern about how much is being eaten up by tech companies in the broadcast model and how much is being put behind a pay wall is very concerning.
▶ 0:42:30Chair Cruz: That is why several years ago, as ranking member of the committee, we put out a local journalism report. America's most trusted news source. That is why my focus is, what are we going to do to help keep that? From the report, is as modern economic literature reviews this through the lens of "information economics," or asymmetrical information, now recognized as a basic tenet of economics.
▶ 0:43:01Chair Cruz: Basically, what we are saying is, if you don't have a lot of competition on information you are not going to get perfect information. You're going to get distorted information. As the report says, in terms of economists across the political spectrum agree that increased reporting on global conditions lease the fairer prices and goods, a decline in local journalism injuring decreases in local information result in market inefficiencies. Today, I'm here to fight for local journalism.
▶ 0:43:32Chair Cruz: If the nexstar techno deal goes through a single company will control 260 5000 stations capable of reaching 85% of all television households, more than double the current cap. For nearly half of their audience, 100 million people, nexstar would own two or more stations in the media market. That concerns me. To me, that is not more local voices, it is fewer.
▶ 0:43:59Chair Cruz: I want to see how we are going to deal with this kind of situation. We have invited Mr. waldman who in his testimony says roughly 40 local journalists for every 100,000 americans today. That number is in 2002. That number is now down to eight. The decline is not just limited to small outlets. This week we saw a massive layoff at the washington post, including cutting over half of the journalists covering local pc news.
▶ 0:44:30Chair Cruz: If flagships are struggling, imagine the pressure on small newspapers, creating in my opinion the need for more accountability not less competition. Local news is in my opinion seed for ai.
▶ 0:44:57Chair Cruz: You can't have perfect information of journalists are not creating it but we know that ai is consolidating that data and all of that information and if before they were not compensated for that, now they certainly are perpetrating a business model that will make that even less clear. Mr. walden describes we are in a vicious cycle of less local news making ai less accurate and it makes local news less valuable. We have to fix this.
▶ 0:45:31Chair Cruz: That is why I introduced the bipartisan copied act with senator blackburn to stop ai companies from using journalists content without their consent. We were just discussing tax credit where states are using tax credits for local journalism as we proposed. And ai companies should want a format where you are creating content and that content is accurate and competitive in a nature that makes U.S. stack ai information more accurate than other countries. That to me seems the goal.
▶ 0:46:01Chair Cruz: So, changes to the cap do not address the structure problem and risks reducing the diversity of local voices without solving the underlying problems of economics. So, I look forward to hearing from our witnesses about the solutions that will help us grow local journalism for the future. Thank you, Mr. chairman.
▶ 0:46:19Chair Cruz: I would like to introduce our witnesses for the day. Our first witness is my friend chris ruddy, chief executive officer of newsmax, an american conservative news media organization. Our second witness is curtis legeyt, did she president and chief executive officer of the national association of broadcasters where he advocates on behalf of america's television and radio broadcasters.
▶ 0:46:47Chair Cruz: Our third witness is thomas johnson, partner and cochair of the issues and appeals practice at wiley rein llp. He previously served as the general counsel of the federal communications commission. Our final witness is steve waldman, founder and president of rebuild local news, a nonprofit focused on revitalizing local news across america. Mr. ruddy, we will start with you.
▶ 0:47:15Mr. Ruddy: Mr. chairman, ranking member cantwell, members of the committee, my name is chris ruddy, I'm the ceo of newsmax media. Thank you for inviting me to testify about the important issue of broadcast media ownership. Newsmax reaches more than 50 million americans regularly. We are a significant player in cable tv with the nation's fourth highest rated cable news channel. Forbes has described us as a news powerhouse.
▶ 0:47:45Mr. Ruddy: Our success is remarkable because the regulatory framework at the fcc favors media conglomerates and effectively blocks independent voices both from the right and the left. There are 50 top cable channels in america. Newsmax is the only one operated by an independent media company. Every other channel is owned or created by an conglomerate. Newsmax's success proves the system is broken.
▶ 0:48:14Mr. Ruddy: That this poses risks to competition, consumers, and even our democracy. We need more independent media, we need more competition, not less. Newsmax does not hold any broadcast licenses, but we are directly affected by tv consolidation. A large station groups hold enormous leverage over pay-tv operators through retransmission fees, better known as retrans fees.
▶ 0:48:43Mr. Ruddy: They can dictate prices and determine which networks they carry. Nexstar owns about 200 stations today, many abc, nbc affiliated ones. If cable operators want to carry the stations they have to pay nexstar heavy retrans fees. If not they can pull the plug, go dark, leaving viewers without the programming. Nexstar insists that they carry the channel newsnation.
▶ 0:49:12Mr. Ruddy: Last year newsmax delivered five times the rating of newsnation, yet operators were forced to not only carry newsnation, but the pay license fees higher than that paid to newsmax. Clearly, nexstar's market leverage, senator cantwell you talked about the 80% reach they have, suppresses competition and harms consumers. The national television ownership cap was meant to protect against such abuses.
▶ 0:49:44Mr. Ruddy: In 1990 six congress established this cap into law and later the cap was moved to 39%. Only congress may change the cap. Nevertheless, the fcc subverted the law by using the so-called uhf discount. Today, uhf stations reach 100% of households and no discount should be applied, yet nexstar used the discount to acquire tribune and expand its national reach to 70% of U.S.
▶ 0:50:10Mr. Ruddy: Households a few years ago, way above the 30 9% cap. They are not satisfied with that. Now they want 80% reach. The industry, broadcast industry, wants to replicate nexstar's model and the pursuit of power and money. To the detriment of the public interest. President reagan first adopted the cap because it was dangerous to allow big networks to own stations in every market across the country.
▶ 0:50:39Mr. Ruddy: At that time he set it at 25%. Since then, a bipartisan consensus developed that the public is best served by limiting tv ownership and preserving competition. This is why so many from the left and the right oppose lifting the cap. The national religious broadcasters, oam, zoa, have urged congress to keep the cap at 39%.
▶ 0:51:09Mr. Ruddy: Local tv is critical in providing tv news. With the collapse of newspapers, television stands alone as the primary source of local reporting. Big tech does hardly any local news reporting. The tvp, and studies found at the local broadcast news is the number one source for americans seeking local news.
▶ 0:51:30Mr. Ruddy: Raising the cap means two or three corporations will eventually own most stations in the nation and control almost all local news. This is why consolidation and the nexstar deal is so dangerous. Consolidation is also about big money. Today, a broadcast license, as the senator said, is a license to mint money.
▶ 0:51:58Mr. Ruddy: More licenses means more leverage over cable operators, more retrans fees come into bigger profits. We know station groups cut costs by consolidating newsrooms. They reduced competition at the local level, allowing them to raise advertising rates. The retrans fees are significant and they account for more than 50% of broadcast revenues. Since 2010, retrans fees have risen more than 2000%. 2000%.
▶ 0:52:29Mr. Ruddy: If milk prices had risen at the same rate and a half gallon today would cost almost 40 dollars. Consolidation has been unbelievably profitable for nexstar. They grew from $300 million in 2015 to close to 2 billion dollars in 2020 four. Almost a 500% increase. Sinclair, scripps, and tegna show it similarly strong profits.
▶ 0:52:55Mr. Ruddy: It's undeniable that next or has already been given an excessive concentration of broadcast licenses and now they want even more. The nexstar deal works for wall street, but it doesn't work for main street. We see this as consumers pay for consolidation as their cable bills skyrocket. The affordability crisis, this is a contributor. National and local consolidation is not good. Just look at radio consolidation, which the fcc and congress supported in the past.
▶ 0:53:28Mr. Ruddy: Today, three companies control all major radio licenses. They have got local programming. They are all in financial trouble. I am told the fcc is racing to approve the nexstar deal and will attempt to bypass the public process with a stealth approval at the bureau level. I urged congress to insist that the consolidation decisions of this importance be voted on by the full commission, not by bureaucrats in secret.
▶ 0:53:57Mr. Ruddy: The tv industry is too important to be handed over to a small number of conglomerates. Congress set the cap. Only congress should change it after careful review. Newsmax stands ready to participate in that process. Thank you.
▶ 0:54:12Chair Cruz: Thank you. Mr. legeyt.
▶ 0:54:17Mr. Legeyt: Good morning, chairman cruz, ranking member cantwell, members of the committee. I'm curtis legeyt and I'm proud to testify on behalf of the nab and our nearly 1300 free, local, over the air television stations that serve your community's every day. When the fcc first imposed national and local television ownership limits, franklin roosevelt was president.
▶ 0:54:42Mr. Legeyt: Now, nine decades later, the same rules still prevent broadcasters and broadcasters alone from owning more than two stations in any local market and from reaching more than 39% of american television households. These outdated regulations distort today's video and advertising marketplace. They advantage giant tech platforms, global streaming services, pay-tv providers, and national cable programmers while placing local broadcasters at a severe disadvantage.
▶ 0:55:14Mr. Legeyt: In a digital media marketplace dominated by google, youtube, netflix, amazon, apple, meta and tiktok, ownership restrictions that apply only to broadcasters are no longer rational or sustainable. They prevent broadcasters from achieving the scale necessary to compete for audience, programming, advertising revenues, and investment capital.
▶ 0:55:38Mr. Legeyt: As a result, your local stations remain hobbled by rules designed for the analog era, rules that directly undermine broadcasters' ability to provide our essential public service that remains free and universally accessible to all viewers.
▶ 0:55:55Mr. Legeyt: During recent crippling winter storms across vast swaths of the country, and during devastating floods in texas and washington state, it was local broadcasters, not global streamers or national pay-tv channels, that remained on the ground and on the air in those communities, providing life-saving information to their viewers. Beyond times of emergency, broadcasters are delivering the fact-based, most trusted journalism that keeps your constituents and communities informed and connected.
▶ 0:56:27Mr. Legeyt: Unfortunately, this local journalism is facing growing financial pressure. Fewer than half of television stations now report that their local news operations are profitable. Facing ever-rising news production costs and declining ad revenues, some broadcasters are simply unable to continue maintaining their own separate news operations.
▶ 0:56:47Mr. Legeyt: Without modernizing these ownership rules, local television news, the last bastian of truly local journalism and many local communities, will suffer the same fate as thousands of local newspapers. Some argue that allowing broadcasters to achieve greater scale would reduce local news. The data shows the opposite.
▶ 0:57:07Mr. Legeyt: Over the past decade, as broadcasters gained modest additional scale, the number of local news telecasts and hours of locally produced news, increased substantially. From 2011-20 20 three, local news telecasts increased by more than 40% and total hours of local news grew nearly 50%. Scale allows broadcasters to invest more heavily in journalism, not less. But it is not enough.
▶ 0:57:38Mr. Legeyt: Outdated rules also limit broadcasters' ability to provide viewers access to marquee sports and entertainment. Instead of subscribing to a new streaming service every time they want to watch a game, viewers overwhelmingly prefer to watch sports on broadcast television. However, keeping broadcasters artificially small makes it harder to compete for increasingly expensive sports rights against our unregulated stream rivals.
▶ 0:58:04Mr. Legeyt: Broadcasting share of your ship is less than half of our streaming competitors, and the decline will continue as premium sports content further migrates behind pay walls. In conclusion, localism is a vital but expensive american value. Competitively hobbled tv stations lacking sufficient resources will not provide quality elite local journalism, emergency information, valued sports, and programming that you were depend upon.
▶ 0:58:34Mr. Legeyt: For these reasons we urge congress to support the fcc's efforts to eliminate the outdated broadcast tv ownership restrictions that no longer serve the public interest. I want to personally thank the many members of this committee, as well as president trump, who have publicly supported us on this issue.
▶ 0:58:55Mr. Legeyt: Congress should flatly reject arguments from a single national program are subject to no similar restrictions and who invests zero dollars in your local communities. Thank you again for the opportunity to testify today. I look forward to your questions.
▶ 0:59:10Chair Cruz: Mr. johnson?
▶ 0:59:13Mr. Johnson: Chairman cruz, ranking member cantwell, members of the committee, thank you for the invitation to testify here today. This hearing is timely, as the fcc considers whether to appeal obsolete ownership rules in preventing local broadcasters from fairly competing in immediate environment dominated by the national networks, social media platforms run by big tech, and online streaming services whose content does not always reflect the views of everyday american communities across the
▶ 0:59:45Mr. Johnson: Country. Mr. chairman, as the former general counsel of the fcc during the first trump administration, one of my proudest moments was persuading the U.S. supreme court to take and ultimately decide by unanimous vote a case that upheld chairman hawley's landmark media ownership reforms for the digital age, including outdated prohibitions on broadcast cross-ownership. Now onto chairman carr's leadership, the fcc is continuing the important work of reviewing the agencies's remaining ownership rules.
▶ 1:00:15Mr. Johnson: In my view, all of these prescriptive rules are outdated and ought to be repealed.chief among these is the national television broadcast ownership cap. As general counsel, I defended the agency's bipartisan consensus that the agency has legal authority to eliminate that rule. And I continue to believe so today. The reason, Mr. chairman, is simple. As justices thomas and scalia have repeatedly said, when interpreting a statute we must start with the text.
▶ 1:00:46Mr. Johnson: The relevant text is straightforward. As I explain in more detail the letter that I submitted to the fcc and national cap record, on two occasions, 19 96 and 2000 four, congress chose the language, modify its rules, to instruct the commission to make a one-time change to its long-standing national ownership cap rule. The court of appeals in D.C.
▶ 1:01:10Mr. Johnson: Looked at the language in the 1996 act and concluded it was "only the starting point from which the commission was to assess the need for further change." if congress intended to eliminate that discretion, the court reasoned, "it need only to have enshrined the cap in the statute itself." only two years later in 2004 congress directed the commission to change the national cap level again but kept that modify its rules formulation in place.
▶ 1:01:40Mr. Johnson: That was not accidental. Congress had before it two bills that would have expressly codify the cap as the D.C. circuits suggested, but it adopted neither proposal. Congress's choice of words to direct a one-time rule change rather than impose a mandate, as it has in other parts of the communication act, even with respect broadcast policy. Those words matter. I believe the sec not only can modify the cap dutch fcc not only can modify the cap but should do so.
▶ 1:02:10Mr. Johnson: American still got their news and other programming from primarily one of the so-called big three broadcast networks. The fcc hoped that limits on audience reach would help ensure against those then-dominant voices monopolizing the marketplace. But advances in technology have turned that original rationale on its head. The networks increasingly distribute programming with their own streaming platforms, none of which are subject to the fcc's rules.
▶ 1:02:40Mr. Johnson: Ironically, a role originally intended to constrain the power of large networks now provides them with a competitive advantage over smaller, local stations. Meanwhile, more than half of americans today get their news and entertainment from streaming services, social media, virtuals like youtube tv for this first time, none of which are subject to the audience reach. Imagine a role where hulu or facebook could only reach 39% of the population. They would have to divest.
▶ 1:03:10Mr. Johnson: That's the world in which local broadcast lives. The broadcast stations have one advantage. As you mentioned, senator cantwell, they remain the source of news and information that american stress the most. Local newsrooms provide unbiased reporting, free ■from algorithmc bias and politicized environments that infect a lot of online discourse.
▶ 1:03:32Mr. Johnson: Eliminating the cap would provide stations with flexibility to take advantage of economies at scale to help them compete more effectively with today's modern media behemoths. It would also benefit viewpoint diversity. Affiliate groups that represent a broad cross-section of americans would have more leverage to demand programming from networks and streamers that reflect conservative and moderate values, not only the progressive values of content creators in places like hollywood and new york.
▶ 1:04:02Mr. Johnson: Even without the cap in place, broadcasters involved in an acquisition would still have to undergo the same competition review at the department of justice as every other sector of the economy. Indeed, broadcasters uniquely have to undergo a separate public interest review at the fcc, which historically has considered issues like localism and viewpoint diversity that national cap proponents of talked about.
▶ 1:04:28Mr. Johnson: In conclusion, good deals that would otherwise be blocked by the 39 percent cap could get approved, while bad deals would not. As president trump put it this past weekend, letting good deals get done will result in more competition and at a higher and more sophisticated level between local affiliates and national tv networks. I again thank the committee. I look forward to your questions.
▶ 1:04:52Chair Cruz: Thank you. Mr. waldman.
▶ 1:04:56Mr. Waldman: Chairman cruz, ranking member cantwell, other committee members, on average, two newspapers close every week in the united states. 3500 have shut down in the last 20 years.
▶ 1:05:15Mr. Waldman: Perhaps most importantly in the last 20 years there has been a 75% drop in the number of local journalists in print, tv, digital. The consequences for communities are alarming. Studies show that areas with less local news have more corruption, more government waste, less civic involvement, less volunteering. People know a lot about national controversies but not all that much about local issues. With the mayor did.
▶ 1:05:45Mr. Waldman: Or even with the mayor's name was. There is one more thing that is a bit harder to measure but is so important. The vacuum is being filled by social media and national news, which are leaving communities more divided. As senator moran said last week about the plainville times national journalism has the habit of pulling us apart and the local journalism pulls us together. Yes, media consolidation is one of the causes.
▶ 1:06:15Mr. Waldman: Private equity firms in new york, for instance, acquired lots of newspapers and laid off the local reporters in the rest of the country. The primary cause is the internet. Advertisers shifted spending towards google, facebook, and tech platforms and used their market clout to restrict competition and provide less revenue to local publishers. Now comes another body blow, artificial intelligence. Ai will further deplete the revenue of local news outlets.
▶ 1:06:46Mr. Waldman: Ai companies will suck up the local news content to train and ground of the ai assistants, which then provide full answers instead of linking prominently off to the publisher websites peer the click through's are what have generated traffic and revenue for the local news outlets.
▶ 1:07:07Mr. Waldman: When the washington post announced its cuts, which included a 70 percent cut in the metro staff, they noted that their search traffic had dropped by half in three years. These drops in traffic are a conservative website -- are on conservative websites as well. Here is the horrible paradox of all of this. As ai erodes local news businesses, the hollowness intern will make it worse -- make ai worse.
▶ 1:07:36Mr. Waldman: Ai works well when it has massive amounts of data, but it really struggles when it is confronted with the condition called information scarcity. Local news suffers from that element exactly. Studies show ai routinely provides inaccurate information on local matters, and when malicious players are producing deepfakes and there are no local watchdogs, those will run rampant. To be clear, ai does offer tremendous opportunities to local newsrooms.
▶ 1:08:07Mr. Waldman: It really does. These nearly magical tools can help with local news outlets, do more coverage with less money. But the tech industry has to go further than that and help reverse the financial crisis, revenue crisis that it helped create. I think there are a few ways to think about that. First, ai companies must compensate local news organizations, including the small and medium-sized ones, for the content they use.
▶ 1:08:33Mr. Waldman: Many have me deals with big media chains, but so far they have left out thousands of smaller players. Second, we have the big controversies in energy over the construction of ai data centers. Well, there is an opportunity there too. An idea, have each data center contribute some money, a one-time donation, to a community foundation to create an endowment that would help pay for local reporters. Those reporters can do the follow-up.
▶ 1:09:03Mr. Waldman: Did the ai companies actually buy from local businesses as they said they would or hire locally? Or did they pay their way on electricity as they said? Finally, ai companies and social media platforms should pay, I believe, a mitigation fee to help finance the revival of community news.
▶ 1:09:22Mr. Waldman: Even a tiny fee could pay for something like senator cantwell's bill that would provide tax credits for the hiring of local news, or tax credits for small businesses that advertise in local news, which is an idea we are seeing republicans push in new hampshire and kansas right now. On the local tv ownership caps, our group has not taken a position on the question of if the fcc has the authority to do the caps on their own, but I would say this. First, I have some sympathy for both of these arguments.
▶ 1:09:52Mr. Waldman: It really is true that local tv news is incredibly important. In some places it is the only thing left. We really agree that this ought to be looked at through the prism of whether or not it helps local news. On the other hand, there's a lot of evidence that consolidation has gone and the other direction and hollowed out some.
▶ 1:10:12Mr. Waldman: My advice would be to look at that question through the prism of whether it is good or bad for local news and specifically look at whether it maintains or increases or reduces the number of local reporters and editors. Not the number of hours. If you have less local reporters and more hours, what you actually have is more superficial local news or more copying. Really, look at the capacity. I think that time is running out. We need to reverse this before nothing is left.
▶ 1:10:43Mr. Waldman: At heart, we need more human reporters living in the communities, accountable to and listening to their neighbors. For that revival to happen, the biggest technology companies must quickly step up as well.
▶ 1:10:58Chair Cruz: Thank you. Mr. ruddy, let's start with you. You said in your testimony that newsnation has more than five times fewer viewers than newsmax does, but newsmax, nonetheless, is paid substantially less for its content, even though it is producing five times more viewers. Those are striking numbers.
▶ 1:11:29Chair Cruz: What is the cause of that?
▶ 1:11:30Mr. Ruddy: Market leverage and market power. Newsnation is owned by nexstar. Nexstar owns, today, about 200 tv stations. They go in with cable operators to negotiate their agreements for those tv stations. They have incredible leverage because they have so many stations.
▶ 1:11:54Mr. Ruddy: Imagine if they are negotiating with spectrum charter, goes by the name of spectrum, and they have 50 stations in their various markets, and they want a certain retrans fees. When they are in negotiations they say, spectrum, you better pay us the rate or we will take the stations off your cable system. That could be devastating for a company like spectrum.
▶ 1:12:20Mr. Ruddy: They also say, we have a cable channel, and we want you to pay us a certain amount. If you don't pay us we can go dark on our broadcast stations. Nexstar is not the only company that does this. Abc-disney has espn and a number of channels. Fox has a whole number of channels. They all use and wield the leverage of their broadcast stations to get high fees for their cable channels.
▶ 1:12:49Mr. Ruddy: I am an independent media company. I don't have the leverage that these broadcast companies have. One of the reasons we have the cap was to reduce the leverage so they couldn't overpower the cable operators. This is why cable bills are up over 100 percent in recent years, because of the immense power that these companies have.
▶ 1:13:10Chair Cruz: Mr. legeyt, do you agree with Mr. ruddy, that it is market power that is resulting in higher fees being paid?
▶ 1:13:20Mr. Legeyt: Absolutely not. I represent at the national association of broadcasters nexstar' as broadcast interests. I cannot speak to newsnation. When I can say is this. When you look at the media landscape, we are distant stars in the solar system that is meta, google, apple, amazon, netflix.
▶ 1:13:46Mr. Legeyt: Right now, this administration is reviewing a deal that would merge two streaming behemoths, netflix-warner bros..
▶ 1:13:57Chair Cruz: Let me focus you on the specific question. Which is, do you agree that the numbers Mr. ruddy provided are accurate, that newsmax has roughly five times as many viewers as newsnation and that newsnation is paid more money than newsmax is? Are those numbers accurate in your understanding?
▶ 1:14:16Mr. Legeyt: I don't have the viewership numbers in front of me but I will stipulate to that if he is documenting those. I don't have any visibility into newsnation's programming fees. That's not publicly available.
▶ 1:14:28Chair Cruz: Assuming correct, dy explanation for why that would be the case other than market power? That explanation seems plausible to me. Is there another one other than leveraging the market power to extract those higher fees?
▶ 1:14:45Mr. Legeyt: I am focused on ensuring next or has a market power it needs to compete with big tech, which has siphoned away from nexstar and other broadcasters.
▶ 1:14:57Sen. Cruz: If you don't want to answer the question, let us move on to different question we had this is a question for both Mr. legeyt and Mr. ruddy. I agree local news is critically important. And both of your views, would eliminating or raising the media ownership cap strengthen or weaken local news and would it increase or decrease diversity of views on air?
▶ 1:15:22Mr. Legeyt: It would both increase competition for and production of local news and it would increase diversity of voices and the reason is simple that right now broadcasters are simply stifled in their ability to compete in this landscape. You have rules premised on the notion podcasters only compete against other broadcasters for advertising dollars, for audience, and for programming. We note that is not the case.
▶ 1:15:51Mr. Legeyt: Over the course of the last 20 years, 70% of the local advertising marketplace has been siphoned away from traditional media by big tech. We are competing for programming , nfl games with netflix and amazon, and we are competing with for audience with all of the streaming services according to nielsen in december, streaming viewership was nearly half of all television viewership. Broadcast, just 20%.
▶ 1:16:20Mr. Legeyt: The only way to invest in local news is to reverse this trend, gain some scale, and bring that revenue back to local broadcasting. That is going to benefit local communities.
▶ 1:16:30Chair Cruz: Mr. ruddy?
▶ 1:16:33Mr. Ruddy: I feel like I'm almost in a different universe than my prospective guest member here. Let's go through that, tb is doing well. They made almost $2 billion in 2024. They are projecting even bigger profits was this merger goes through. What is the aid they need to upend the congressional law? Why are they running around using to bureaucracy rather than going to congress?
▶ 1:17:03Mr. Ruddy: Because they know they have no support in congress and the public opinion polls show they have no support. He said two things. One, nexstar we know when they did the tribune merger and I think currently about 15 wobblies in every case, they combined the two stations newsrooms into one.
▶ 1:17:23Mr. Ruddy: That is the only way they make money and their projections on the merger, they are saying because of the consolidation, they're going to have $300 million in savings and most half of it, 35 million, comes from local programming consolidation. Only local programming, local tv stations to his local news. That is pretty much the whole thing. That is where this is all going. They can make fortunes and it is local news that suffers.
▶ 1:17:54Chair Cruz: In 2023, I criticized then fcc chairwoman jessica rosen were sold for delegating to the media bureau and to demonstrate of law judge a decision on the standard general acquisition -- at the time, I wrote with my house counterpart congress woman cathy mcmorris rodgers, "first, to keep the condition accountable to congress and the public, the full commission vote is required
▶ 1:18:24Chair Cruz: For certain matters, particularly those involving significant legal or policy consequences, designated multibillion-dollar transaction such as the standard general transaction for an hearing is precisely the type of serious decision for which commissioners must take responsibility." this is a question for all of you, do believe the fcc should have a commission level vote on the nexstar techno merger?
▶ 1:18:50Mr. Ruddy: Special because they are subverting what tonga said. Mr. johnson worked for ajeet pine. He said several times you -- he did not like the law but he said, his words, the law must be obeyed.
▶ 1:19:16Mr. Ruddy: The chairwoman under the recent administration nixed the nexstar dissing it violated the 30 not present cap. Brendan carr was the ranking republican at the time and he offered a concurring opinion but did not dispute that.
▶ 1:19:34Chair Cruz: Mr. legeyt? Mr. legeyt code was certain to support the full commission voting to raise the national ownership cap.
▶ 1:19:44Chair Cruz: Mr. johnson?
▶ 1:19:47Mr. Mr. Johnson: Under the communications act, senator, the commission has discretion to decide whether with very limited exceptions whether decide something at the bureau or commission level, even when something is decided at the bureau level, there are mechanisms for review for the full commission as well as alternately in court.
▶ 1:20:05Chair Cruz: Mr. waldman?
▶ 1:20:06Mr. Waldman: In general, issues of this should be at the commission level.
▶ 1:20:11Chair Cruz: Ranking member cantwell.
▶ 1:20:13Sen. Cantwell: Mr. chair, I want to weigh in on that particular point before I start my question. I definitely believe the fcc should have a commission level, if they're going to take action -- I'm not making a statement as to whether they have that power or not, I am subleasing if they do, should be at a commission level. I think chairman carr practically prejudiced himself in an information process that is supposed to be independent if he has already made a decision for it I don't like that. But let's start with something maybe we can agree on.
▶ 1:20:45Sen. Cantwell: Do the witnesses think right now -- look at these viewpoints and last week I was where Mr. waldman was. On this hand and that handprint what is it we really want to provide? And so I am for elevating this larger context that big tech just has too much power. Do they? Mr. ruddy?
▶ 1:21:07Mr. Ruddy: I think consolidated big tech is an danger to the public interest. I think there should be more a petition in big tech across the board.
▶ 1:21:18Sen. Cantwell: As it relates to now preserving local journalism? And how much of the business model -- I mean, if it cord cutting problem, Mr. legeyt basically has a big moneymaker for himself right now, which I am for.
▶ 1:21:36Sen. Cantwell: I am for broadcast sports not because the seahawks won, but because I do not want my consuming public to have to pay to see content they can just watch advertising to see. I wanted to be cheaper. I am for not allowing these people to put so much content behind a pay wall and making consumers pay out the nose for it. Anyway. On this point, and we need to do something here so we have more level playing field?
▶ 1:22:07Sen. Cantwell: Are they the bigger issue here?
▶ 1:22:08Mr. Legeyt: No, I think local news is almost entirely by
▶ 1:22:13Broadcast Tv --Mr. Ruddy: No, I think local news is him is entirely broadcast by tb. We need to protect the competition.
▶ 1:22:22Sen. Cantwell: Mr. legeyt is telling you this is his moneymaker right now. He is getting eaten alive on this because of what is happening. Because of the digital advertising revenue.
▶ 1:22:35Mr. Ruddy: They have not made the big case that big tech has hurt their businesses. Their businesses have grown 500% in the past decade. How do you explain that it is all during the big tech period?
▶ 1:22:48Sen. Cantwell: Believe it or not, I'm going to agree with you in a minute but on this point, I don't. I think the point is -- ok, does anybody else with the comment on this quickly because of another question? >> big tech is entirely undermining the advertising model for local broadcasting.
▶ 1:23:05Sen. Cantwell: Mr. johnson?
▶ 1:23:09Mr. Johnson: I think by eliminating some of these rules, you give the affiliates better bargaining power, negotiating at the table. So they can in their discussion with big tech, they can say, we want more local control over programming.
▶ 1:23:24Mr. Waldman: Absolutely. Big tech is a big part of the reason for the undermining of the local news business model for television and local news and it is about to happen again with ai.
▶ 1:23:35Sen. Cantwell: Mr. legeyt's key point is that -- look, I've helped the broadcasters on good faith protections for broadcasters. I have actually sided with the broadcasters on these issues that now we are hearing complaints about.
▶ 1:23:54Sen. Cantwell: In this world where the cord cutting and streaming media is leading to this, I'm not sure I believe that consolidating people so that you could then own three television stations in one media market and basically decimate that media market without competition is the way to go. I have a concern, Mr.
▶ 1:24:12Sen. Cantwell: Waldman, to your question, which is you are asking us a question to consider, but I'm asking it back, why would I want to support -- undressing had to have three television stations in every media market, but I do want diversity. Why would allow for more consolidation when our biggest problem has been concentration? Why would I go for that? Why would I go for this merger if in fact you're going to basically hand over more concentration, less diversity?
▶ 1:24:45Sen. Cantwell: If that means somebody is going to do general programming, give me --Mr. legeyt, you made a good point about the number of eyeballs, the power of growing. Additional did grow even with broadcasters. But that doesn't mean that we had all the local content or the diversity so isn't this the crux of the issue, basically you're going to be able to own more media markets and concentrate -- own three television stations and basically decide how to blow them up and give me general programming from new york, which
▶ 1:25:15Sen. Cantwell: I don't what?
▶ 1:25:16Mr. Legeyt: Senator cruz quoted president reagan a while ago. I would quote him on another point which is trust but verify. Yes, in some cases, mergers might lead more local news. But the evidence is that in many cases, it goes the other way. It cuts local news.
▶ 1:25:36Mr. Legeyt: If congress considers loosening these caps at all, it should be contingent on commitments that they maintain or increase the number of local reporters.
▶ 1:25:46Sen. Cantwell: Interesting. Crx. We can't be just -- to make consumers to pay more. I can't be for that. I do think we have to also point out that I really don't want so much concentration of this marketplace.
▶ 1:26:13Sen. Cantwell: 80% or whatever it is ownership by these big corporations who then just generalize content out to my news stations. That is 90's been healthy for any of us in the ecosystem. >> the nationalist bennett coalition did a poll in december, democratic pollster and found over 70% oppose the nexstar merger and consolidation. Less than 7% supported it.
▶ 1:26:42Sen. Cantwell: A recent republican poll, public opinion strategy found, again, 75% opposition to consolidation, only 7%. This is a bipartisan --.
▶ 1:26:53Sen. Cantwell: I generally support more diversity and voices. We have to figure out how we are going to get there. Mr. chairman, thank you.
▶ 1:27:03Chair Cruz: Center capital.
▶ 1:27:06Sen. Capito: Thank you for being here. I have been listening to the debate, interestingly, diverse opinions. I'm trying to think of my constituents listening to the same debate. I live in a small state, west virginia that has nexstar stations and others. Going back to the storm we just had two weeks ago, what is everybody watching? There watching her local broadcaster.
▶ 1:27:37Sen. Capito: They want to find out what roads are closed, what schools are closed, what we can anticipate coming forward. We all laughed about when you get older, like I am, you are all watching the weather channel all the time or the weather of your local -- this is really important for local broadcasting.
▶ 1:27:55Sen. Capito: I agree with senator cantwell, the sports aspect of it is a huge aspect for a small state because we can't access sometimes if you don't buy the big 12 network, you can't watch west virginia university play, which is like our protein. We're not like the chairman that has all kinds of teams in his estate. Were super bowl winners like their ranking -- I'm trying to get in good with both of them, if you can tell.
▶ 1:28:22Sen. Capito: If I am sitting in I have just experienced -- I am watching this hearing, I'm going to give a talk which of you because I'm interested, how would your position help those people that desperately need to have that local programming in times of emergency, whether outages, and all other political news and everything? How -- I will start with Mr. ruddy.
▶ 1:28:46Mr. Ruddy: Let's imagine in one of those markets in your state, senator, nexstar owned 2-4 at the major stations. 30 markets across the country, they will have that type of dominance. We know in 15 already, they just merged the newsrooms.
▶ 1:29:06Mr. Ruddy: If you go to the nbc channel for instance, which they might have as an affiliate and you see they are covering the hospital and what is happening at the hospital as a result of the tragedy or natural disaster, and then you watch the cbs station which they also own and have the same reporter at the hospital but they don't have the resources because they combined newsrooms, they are not at the school which some kids were injured let's say.
▶ 1:29:37Mr. Ruddy: They save money but you have less content, less diversity of news. And that is the danger of both local consolidation and national consolidation.
▶ 1:29:49Sen. Capito: Let me ask Mr. legeyt.
▶ 1:29:52Mr. Legeyt: Mr. ruddy's narrative is a comparative one but it is fiction. That is not what is happening in local communities. You know this well. Wowk, which nexstar owns, is as committed a local station as exists in the country. Some of the combinations that were talking about in local markets, they are the equivalent of one printing press being able to produce two newspapers.
▶ 1:30:20Mr. Legeyt: What we have shown over the last decade and those markets where consolidation has occurred, is that it means more local news and it needs more local journalists. Certainly, scale can mean some efficiencies when it comes to corporate overhead but we as local broadcasters don't win if you're not producing the best local news and committees across the country.
▶ 1:30:44Mr. Legeyt: If we just become another nationalized media, we are losing that battle with apple plus, with amazon prime. That is not where nexstar or any other local broadcast group is going to win in this media landscape. The data shows that as we are able to get more revenue, whether it is from advertising or whether it is from retransmission consent that that is being plowed back into local journalism and also ensuring we can provide expensive sports on broadcast television.
▶ 1:31:15Sen. Capito: Mr. johnson?
▶ 1:31:18Mr. Johnson: Having spent a year out in west virginia working for general morrissey back in 2017, I think it is very important west virginia communities get represented in these debates over media ownership. I think there are two ways in which we are moving some of these prescriptive ownership rules will help west virginia communities.
▶ 1:31:38Mr. Johnson: First of all with respect to local news stories as you say, the economies of scale that you introduce when you have larger station groups, that allows local affiliates to be more nimble. If there is a natural disaster. Pressing local news issue. They can often redirect resources to make sure there are 24/7 coverage of whatever it is going on.
▶ 1:32:03Mr. Johnson: The other thing is, it gives affiliates more leverage at the bargaining table both with the national networks and with streamers and online platforms or oftentimes right now the networks really have the biggest seat at the table. So you are asking questions like, and we have more local programming in west virginia? Can we have more controlling over programming? That will ensure those stations represent west virginia values and not just california values.
▶ 1:32:31Sen. Capito: Mr. waldman?
▶ 1:32:34Mr. Waldman: One of the this hearing is broadcast consolidation rules, but that is not the only factor that is going to affect whether you have local news in west virginia. We do also need to look at the bigger picture here. Which is big tech. What is about to happen, what is starting to happen with ai and all the other ways we can strengthen the local news environment.
▶ 1:33:00Mr. Waldman: We see around the country a flowering of new startups and efforts to help with local news from improving the business model, more philanthropy, helping but at the end of the day, I don't think we are going to get to what we need without big tech playing a role and public policy playing a role with creative solutions that will strengthen news in west virginia and other places.
▶ 1:33:24Sen. Capito: I think the local broadcasting is absolutely essential to retain. When I see what is happened to our states newspaper, we are down to five day -- without being too critical of the newspaper -- a lot of it is national stories that are two days old. So I don't want to see that happen to her local affiliates. I want to protect that the best way I can. I appreciate the hearing. Thank you.
▶ 1:33:52Chair Cruz: Thank you. Senator kim.
▶ 1:33:56Sen. Kim: Thank you for coming out here. Mr. ruddy, I wanted to follow up on something you talked about. You talked about the retransmission fees and talking about the challenges there in terms of costs. I'm trying to think about this in terms of my constituents, the consumers, and what is raising their costs. When you're talking about the retransmission fees, how much of that do you believe is being pushed onto the consumers in terms of the costs going up? Mr.
▶ 1:34:26Ruddy: I think ultimately, almost all of it goes because they have to pay the cable -- the cable operators have to pay that to the tv broadcast groups. They need to make a profit so they are going to have to pass those -- most of those costs over. We are seeing it in the cable bills, which have gone up enormously. The reduction of content, removal of channels.
▶ 1:34:58Ruddy: Again, so few independent media voices because they will tell me that cable operators, we don't like news mix trade we don't have any money left for you because we have to pay the retrans fees or pay companies that have very little ratings, high fees because of their market leverage of their broadcast outlets. It is not good for consumers.
▶ 1:35:21Sen. Kim: I'm trying to think how we articulate what is happening to the consumers so the media consolidation is leading to these retrans fees increasing due to the leverage that these companies now have and that is being passed on to the consumers. Is that the argument you're putting together here?
▶ 1:35:41Mr. Ruddy: A little more than that. What we find is the bigger the station group or network, the more leverage they have, the higher fees. So when nexstar went above the cap several years ago and went to 70%, it was like a boon to the company. That is where they went up from, 300 million inebitda almost 2 billion. They are so greedy that they now want to go to 80% because they know they will have even more market leverage.
▶ 1:36:11Mr. Ruddy: Now you are seeing other companies in the broadcasting industry wants everyone to have this industry. Ultimately, who gets, screwed, frankly, is the consumer. We have to pay those bills and it is market manipulation, market abuses that are causing this.
▶ 1:36:27Sen. Kim: Mr. legeyt, I want to bring you in on this, I wanted to ask you about another thing Mr. reddy said and then I will go back to what we just talked about. He was talking about how this consolidation goes forward, he believes there will be really just two or three companies that really just dominate the space.
▶ 1:36:46Sen. Kim: I understand what you are saying about the competition with the tech companies, but in terms of what happens if we sort of game out what happens if we lift up this cap, do agree we are going to see two or three companies dominating nationally?
▶ 1:37:02Mr. Legeyt: I can't see the future that regard but I can tell you the status quo is untenable. I think it is important to acknowledge here that these restrictions, 39% cap, those -- that is an x anti restriction meaning before you can even get to the merits at the fcc or the justice department of making the case for your transaction, you are not at the table if you are proposing a transaction that
▶ 1:37:32Mr. Legeyt: Violates these restrictions. What the nab is advocating for is for those ex anti restriction is to be removed. Over the last three years, industrywide, retransmission consent revenues have actually decreased year over year. Local news is funded --.
▶ 1:37:50Sen. Kim: Could you say it again?
▶ 1:37:52Mr. Legeyt: The fees that are being represented, we have this enormous market power to extract, have actually decreased year over year over the last three years. The reason is simple, we are competing with google, apple, netflix, amazon for audiences. Our audiences have fragmented. Local broadcasters are competing against google and facebook for advertising dollars.
▶ 1:38:18Mr. Legeyt: So this narrative, and chairman cruz mass with the question earlier so I want to state my answer unequivocally, nexstar does not have market power. They are competing against global behemoths for both audience, advertising, programming rights. No broadcaster has market power in this media landscape.
▶ 1:38:39Sen. Kim: Thank you. I know my time is running out but Mr. waldman, I'll ask a question for the record of picking a back to me later, but about what we talked about earlier about my state of new jersey, the news deserts we continue to have, the difficulties. I am really trying to get a sense of painting the picture of what would happen to my state, the market that already struggling to be able to find local news and be able to have people in new jersey understand what is going on in their community. We can follow up with that later. I will yield back.
▶ 1:39:10Chair Cruz: Senator moran print
▶ 1:39:14Sen. Moran: Thank you for holding this hearing. Mr. legeyt, let me start with what you just indicated in your response to the senator. What we're are talking about is the threshold? There are still other factors that come into play that would allow for any acquisition or merger to occur but at first it has to be allowed by the standard from this threshold.
▶ 1:39:39Mr. Legeyt: That is correct.
▶ 1:39:45Sen. Moran: Those items within protect a petition, it and other things?
▶ 1:39:50Mr. Legeyt: The fcc still has the ability to review and assess if it is in the public interest on a case-by-case basis. The justice department will examine the procompetitive and anticompetitive impact of any proposed transaction. Nothing that we are advocating for in terms of eliminating these decades-old restrictions will change that authority to review transactions on a case-by-case basis. Supper moran Mr.
▶ 1:40:16Mr. Legeyt: Johnson, -- supper moran Mr. johnson, would you expand on the history of the fcc's actions in updating the national cap? Why elimination of the national cap is necessary for continued local broadcasters?
▶ 1:40:40Mr. Johnson: I appreciate the question. The fcc has been adopting ownership rules and some version of the national cap since the fdr era pursuant to its general rulemaking authority to adopt rules to carry out the purposes of the communications act in the public interest. Congress has never disputed has that general authority to adopt ownership caps.
▶ 1:41:04Mr. Johnson: In fact, on two occasions by directing the commission to modify its rules to sit a different cap level, the commission -- excuse me, congress essentially ratified, yes, fcc, have the authority to adopt these kinds of rules and here we based on the current marketplace realities that the rules should be set at a different level. So congress made that determination in 1996. The D.C.
▶ 1:41:31Mr. Johnson: Circuit judge as I said, it took a look at the text of the statute and said based on any argument the fcc came in and said, we don't have to make any adjustments. Or we can't make any adjustments to it. The court said, no. In fact, this language retains your discretion to modify the cap to a different rule, to a different amount.
▶ 1:41:53Mr. Johnson: Two years later, only two years later in 2004, congress again changes the statute that keeps the key formulation modify its rules in place. Showing that congress and fact did not intend to take off the table future fcc changes to the rules. There was a house bill and senate bill and both would have expressly enshrined the in the law. As a D.C. circuit judge suggested.
▶ 1:42:22Mr. Johnson: There is another statute four years before 2004 in which congress explicitly told the commission, you cannot change the minimum separation distance between broadcast channels and less until congress further acts . So congress knows how to take away fcc discretion when it wants to to use that clear language, but it did not do so here. In my view, the fcc retains that discretion.
▶ 1:42:47Sen. Moran: Tell me what the world looks like with that cap being increased and to me what the world looks like if they cap isn't increased.
▶ 1:42:58Mr. Waldman: We have heard testimony that has set in the past when you've had consolidation it has led to more local news. We have heard testimony say in the past when we have had more consolidation, it is led to less local news. The reality is, both things could happen. And if so we are talking about with the fcc's authority is, it is not just about the cap it is also about the very definition of localism. We can't keep playing lipservice to localism.
▶ 1:43:30Sen. Moran: That goes back to the point that Mr. legeyt was making about there is more to come regardless of what he cap is. The fcc determines -- makes a determination about whether a merger or an acquisition is in the best interest.
▶ 1:43:47Mr. Waldman: That's true. I would feel more comfortable if the fcc in making those determinations was centering local news, the fate of it and how many local reporters there are in a community. Because if mergers were really looking at that, I think we would be pointing at a much better direction.
▶ 1:44:10Sen. Moran: That is a task perhaps members of congress who care about local news can make that case to the fcc, which is really an issue perhaps somewhat separate from the topic of whether or not to increase the cap.
▶ 1:44:23Mr. Waldman: Or congress can declare statutorily the health of local news is part of the core definition of localism that should be at the heart of any merger discussion.
▶ 1:44:35Sen. Moran: Nice to know there's someone who still thinks congress can legislate.
▶ 1:44:40Sen. Cantwell: Senator rosen.
▶ 1:44:45Sen. Rosen: I want to thank you for being here and as one person who loves our local news, I will say this is a really important issue. At the heart of each and every one of our communities, right? I want to say the media environment has changed dramatically since caps were first established and since congress last change some in 2004.
▶ 1:45:11Sen. Rosen: While the ownership cap may need to be revisited to better align with today's media markets, I want to be crystal clear, just because large corporations like nexstar and tegna want to merge, doesn't mean they can simply ignore the laws congress is put in place. For there to be a merger that results in ownership about the 39% cap, congress would have to change the law. I'm going to put my first question to Mr. waldman.
▶ 1:45:38Sen. Rosen: This is not the first large media merger or media merger attempt we've seen in recent years, right? As a mergers like nexstar and tegna have happened, what is been the impact on local jobs, consumer prices, local newsrooms? What happens if there are no other, well, if there aren't multiple newsrooms in one market? What happens to our local news?
▶ 1:46:08Sen. Rosen: What happens to the flavor of our communities? Not just jobs or union jobs or jobs -- the fabric of our communities?
▶ 1:46:15Mr. Waldman: In some circumstances, you will have two tv stations and to consume and it looks like there are two different operations and maybe even competitors when it is actually there using the same news broadcaster come the same content. Part of what happens with consolidation is to have the mirage of diverse voices but the reality of less and less original reporting.
▶ 1:46:43Mr. Waldman: On the question of whether or not removing the caps would lead to more situations like that or less, the evidence is more in the category that it is going to lead to less. You give someone money, it doesn't determine what they're going to spend it on.
▶ 1:47:01Mr. Waldman: If local news stations or station groups have more clout and more scale, there might be some that would use that for local news but there's certainly no guarantee of that and the evidence is actually in the other direction.
▶ 1:47:16Mr. Waldman: So you end up in places like nevada where if you look at the whole local news ecosystem, of the repetition of the local tv, at the newspaper's decline, and the result is like 75% drop in the number of reporters in nevada.
▶ 1:47:37Sen. Rosen: I think it is very sad for our communities and for everybody who lives there. I want to move my next question to Mr. legeyt. Want to mitigate the negative impact of the rules changes because the fcc and congress establish media ownership caps to protect consumer prices, to protect media diversity, protect jobs in journalism. I believe it is important foundation only to our democracy.
▶ 1:48:02Sen. Rosen: I recognize it as a media landscape changes, congress should reevaluate whether the rules need to be updated. Things always change. My question, if congress changes or removes the ownership cap, how can we ensure we keep media affordable for consumers, protect our local newsrooms, journalist jobs, give them the independence to focus on stories that matter to the neighborhoods, to the local community?
▶ 1:48:30Sen. Rosen: And just improve media diversity in those independent voices that really focus on what matters? And if the current rules in place are not working today, how do we protect the values? What is our alternative?
▶ 1:48:43Mr. Legeyt: First, we need a level set with where we are today in local broadcast. If they are measured as a standalone, meaning local stations independent in each market irrespective of who owns them, more than half of local broadcast newsrooms in this country are currently standalone not profitable. That number is worsening every day.
▶ 1:49:10Mr. Legeyt: The only way to ensure that communities across this country, many markets where individual stations would not be viable in terms of their own providing local news crime is to give those owners some scale so that an take those efficiencies and plow them into local newsrooms. I think we are being prejudiced here in this debate by what has happened in the newspaper industry. Certainly, that is a cautionary tale.
▶ 1:49:36Mr. Legeyt: But in broadcast, the data shows the exact opposite. Where over the last 10 years, where broadcast groups had been able to gain more scale it has actually resulted in more local news. As Mr. waldman alludes to, if you don't want to measure that success by hours of local news, let's look at our newsrooms, the employment and our newsrooms themselves. We are employing more than 27,000 people in broadcast newsrooms.
▶ 1:50:05Mr. Legeyt: That is more than our print counterparts, are digital news counterparts. Podcasters truly are the last bastion of local journalism. -- podcasters truly are the last bastion of local journalism. Those numbers increased after the first trip administration took actions to relax those crossownership rules.
▶ 1:50:25Mr. Legeyt: Those broadcast newsrooms even following the scale, some of the transactions that were done in the wake of those rule changes seven years ago, we continue to grow our newsrooms. It has only been over the last three years that the numbers have flattened out a little bit. I am looking forward to more scale that eliminating this capital allow so we can to do you just can continue to grow those numbers.
▶ 1:50:52Sen. Rosen: Finding that balance will be up to all of us. Thank you for being here.
▶ 1:50:56Sen. Cantwell: Senator young.
▶ 1:51:01Sen. Young: Thank you. I think our witnesses for being here today. There are number of reasons why I regard this hearing as important. If members of my community don't have access to their local news, it can be an impediment to useful information and decisions they make, the actions they take .
▶ 1:51:31Sen. Young: Our sense of community can be undermined if we don't have access to information or sense of solidarity with our neighbors. I think what is most at stake is our democracy. If I don't know what is happening in the local planning meeting, if I don't know what is happening in the school board, if I don't know where moneys are being invested locally as it relates to road projects, it is hard for me to cast informed votes at the ballot box.
▶ 1:52:01Sen. Young: It is hard for me to meaningfully engage in democracy at the local level. Mr. waldman, you have spoken to this issue of localism. Could you take the predicate I have laid and unpacked a bit more say in the next 30 seconds or so why this hearing is so important to you and should be important to my constituents?
▶ 1:52:25Mr. Waldman: On some level, there is really concrete harms, literally more government waste and corruption, less knowledge about things. But it is also about community. And cohesion of community. What we are seeing now is local news has contracted, it has led to more polarization. That is because you don't have the news about the things that find us together.
▶ 1:52:51Mr. Waldman: Whether it is the high school sports team or the new theater experience or that inspiring teacher that just passed away that you learned about, these are things that make people instead of looking at their neighbors as cartoon characters, caricatures, sexual neighbors.
▶ 1:53:06Sen. Young: We have this twisted phenomenon, strikes me as twisted, come to regard as just the way things are where even local news is becoming nationalized. A national narrative. Completely unhealthy. Superficial I should add in terms of how we look at some local issues.
▶ 1:53:32Sen. Young: It sells short our citizens as we try and provide them the feedstock to be engaged members of the community. If they don't have access, we don't have access, to engage in local issues.
▶ 1:53:52Mr. Waldman: There is a study that came out yesterday that points to this paradox which is people feel like it is easy to get information about national news and harder to get news about their own neighborhood.
▶ 1:54:07Sen. Young: I thought it was important to cover that for my constituents and for others because I think we make a mistake if we just regard this as an issue for business people and investors. It is that. It is a very important consideration. But we also need to be able to debate the merits and demerits of ownership decisions and caps within the context of community. Mr.
▶ 1:54:35Sen. Young: Legeyt, if the status quo as it relates to the ownership cap, something we have discussed at some length here, were to remain the same, what would be the impact to local broadcasters 10 years down the road and what would that mean to my constituents in the state of indiana?
▶ 1:54:53Mr. Legeyt: Just to follow on from your initial remarks, what local stations are doing, what local broadcast stations are doing in your community throughout indiana is providing that local trusted news, bringing community's when other forms of media are monetizing division. We are combating misinformation. That is what local broadcasters do best.
▶ 1:55:20Mr. Legeyt: We don't have a business if we are not exceptional in the service we are providing in local communities. If you were to look market by market across the country, the number one station in this markets is the station that is most devoted to those community services. That is what we are fighting for today is that trusted local journalism. But it needs scale. I alluded to it previously and in my testimony but today is a standalone.
▶ 1:55:49Mr. Legeyt: More than local -- more than half local broadcast news are no profitable. We are dealing with netflix and amazon. We need scale in order to better compete. And that scale is going to pay for that localism, that investment in communities that is expensive.
▶ 1:56:10Mr. Legeyt: No one else in media has boots on the ground when that storm rolls through both in anticipation, during the storm, and the aftermath to help the communities rebuild. We need scale to compete with these nationwide paid tv providers. Otherwise, we cannot find that journalism and we certainly cannot pay for from your sports like the super bowl and keep them on broadcast.
▶ 1:56:36Sen. Young: I am already over my time but I would love to ask all of you questions in this forum. Thank you, adam chair. -- thank you, madam chair.
▶ 1:56:49Sen. Cantwell: Sen. klobuchar:. I was at a hearing on judiciary. I guess I will start with you, Mr. legeyt. I leave the journalism competition preservation act to ensure that broadcasters and news publishers can negotiate for fair compensation with the big tech platforms, including some generative ai platforms. So it is becoming to me more and more important to go forward with this.
▶ 1:57:21Sen. Cantwell: And we know there has been profiting off news content across the board. The national association of broadcasters has said this legislation would level the playing field by enabling fair negotiations and increasing investment in local newsrooms. Weiss is so critical for local news to empower news creators to negotiate their fair share of advertising revenue with big tech plant forms? I leave that bill in the past was senator kennedy.
▶ 1:57:45Mr. Legeyt: Over the course of the last two decades, and I think this is in item everyone on this panel can agree with, the big tech platforms have siphoned billions of dollars out of local communities, more than 70% of the ad market place has gone from traditional media over to big tech. That is undermining our ability to fulfill that local obligation that has been the topic of today's hearing.
▶ 1:58:16Mr. Legeyt: The jcpa is an extremely meaningful way to allow for leveling the playing field. Allows to negotiate fair compensation when our content is accessed through this platforms and increasingly the generative ai platforms. But that lack of skill is also a symptom of what we are talking about here today, which is that broadcasters lacked that scale to compete with these global behemoths in every context.
▶ 1:58:45Mr. Legeyt: An important first step is for the fcc to update these broadcast ownership rules which would allow us to better compete with the tech platforms as well.
▶ 1:58:58Sen. Klobuchar: Thank you. Along these lines as you know, senator cruz and I passed our bill the takedown act regarding nonconsensual porn. We've seen so many suicides of kids over this. We pass it the president signed it into law this last year. The next step to me is the deepfake bill that senator coons, blackburn, tillis and I have put forward that would establish rules of the road to give artists, musicians, and when control of their own voice.
▶ 1:59:29Sen. Klobuchar: In a previous hearing told a story about how people create a deepfakes of local news broadcasters. Could you talk, will I know this is a little off the focus but not ask her because all of this stuff is making it harder for the real news to get out there, the effect of this and the need for some rules on ai?
▶ 1:59:45Mr. Legeyt: Thank you. I'm happy to talk about it because it is existential. A local broadcaster is only as the trust we have in our local communities. And of these deepfakes, especially of local news anchors on our radio stations, local voices, risk undermining trust.
▶ 2:00:06Mr. Legeyt: We are significant supporters of your no fix legislation and look forward to working very closely together and advocating to get that over the finish line because it is absolutely essential to ensure maintaining that trust on local stations as opposed to what is going on online.
▶ 2:00:28Sen. Klobuchar: Mr. waldman, we have seen ai developers injury to licensing agreements with some of the largest publishers. I am concerned that smaller papers, which we still have a number of them in minnesota, that lack resources to protect the intellectual property are not benefiting from similar deals. What role should companies that profit from ai models that use news content plate and ensuring journalism newspapers are fairly compensated?
▶ 2:01:00Mr. Waldman: I sure that there have been deals with big corporate media but medium and small size players have been left out. The ai company said they are too small.
▶ 2:01:11Sen. Klobuchar: Didn't the usa today to a study showing some of the smaller markets that were getting things stolen? Stolen more because there is no way for them to access that so instead of making agreements with them, they are taking the content?
▶ 2:01:27Mr. Waldman: The papers of the tv stations don't have the resources to fight it. If they don't know how to track it. Yes, there --.
▶ 2:01:34Sen. Klobuchar: I know this from checking like you go to a small town where there is a flood and have tons of stuff wrong all the time.
▶ 2:01:45Mr. Waldman: That is a great riddle. Local news is degrading and ai's making it worse potentially and that will make ai worse. Because ai needs to have accurate local information.
▶ 2:01:58Sen. Klobuchar: How can we ensure smaller newspapers are paid for their content by ai companies?
▶ 2:02:05Mr. Waldman: One is bills like yours or other efforts to require that local folks are treated evenly and that they have the ability to organize collectively. I would also say you want to look at things like mitigation fees placed on big tech companies that could be used to finance legislation that support local media.
▶ 2:02:28Sen. Klobuchar: Did you put your thumb up Mr. ruddy? Or your hand up?
▶ 2:02:32Mr. Reddy: No, I'm sorry, someone waved to me. One of the photographers. I figured I would way back most of it I figured I would wait back.
▶ 2:02:43Sen. Klobuchar: Very good. Republicans and democrats are willing to talk about this so there is been a lot of conservative news organizations that are able to work on this and just to sit there to me, the potential outside this merger that ai potential, we do legislation that we make sure we are evening -- I believe senator fischer is up for questions.
▶ 2:03:07Sen. Fischer: Thank each are here today. The hearing is trying to explore what is needed from congress and its oversight of the fcc to update the video marketplace. What I see are imbalances, special between the broadcasters and big tech streaming services.
▶ 2:03:32Sen. Fischer: The commission must also be mindful of the big picture ripple effects of modernizing the outdated regulations. Mr. legeyt, broadcast ownership caps were originally adopted to promote viewpoint, diversity, localism. I know that chairman touched on this topic as well, but I would like to add a little nebraska color in here. Well?
▶ 2:04:04Sen. Fischer: I get extra time now. >> [inaudible]
▶ 2:04:11Sen. Fischer: It is like 67 in nebraska today. We had a large broadcast group and they closed off the scotts bluff new station knep in early 2024. It was one of the very few broadcast stations, tv stations that we have in the panhandle of nebraska.
▶ 2:04:35Sen. Fischer: Looking at small location stations like knep, with lifting the broadcast cap raise or lower their chances of survival?
▶ 2:04:46Mr. Legeyt: It would increase her chances of survival. There are markets all across the country. We have local broadcasters 210 different media markets. Not all of them are washington, D.C., or even omaha. You are talking about very small markets where the economics is a standalone just don't necessarily exist to support a local newsroom.
▶ 2:05:13Mr. Legeyt: What we have seen is that in those instances where broadcast owners have been able to gain some scale, you are seeing more journalism happening in those communities, more production of local news, and it benefits her constituents.
▶ 2:05:30Sen. Fischer: Thank you. Today, the policies of caps and retransmission consent I think they're very entitled in practice that we see. We know ownership caps limit how large broadcast group can get. We also know retransmission consent gives value to scale. Mr. ruddy, should congress view those two policies as operating intention?
▶ 2:05:57Sen. Fischer: If so, what guardrails, if any, would be necessary do you think to prevent any unintended consequences if the ownership limits were lifted?
▶ 2:06:10Mr. Ruddy: Senator, it is pretty clear we have talked about nexstar having already they bypass the cap. They are at 70% reach in there making a fortune. They get among the highest retrans fees among anyone in the industry I'm told. They're doing about $2 billion in profits. Again, it is all of these big groups. They are not alone.
▶ 2:06:37Mr. Ruddy: We have tegna has made $893 million ebitda profits, scripts almost $600 million. There is this discussion by the broadcast industry, untenable situation. What -- they have given no data that they are being heard -- hurt in these markets and that the licenses are not worth anything.
▶ 2:07:04Mr. Ruddy: The other thing that we keep hearing on the big tech issue from it I am concerned about consolidation but I don't understand why brendan carr at the fcc says, well, we should have the tv industry to fight the big tech, create more consolidation as free-market people, we should not be, I believe, trying to bolster when industry against the other. We should be holding big tech accountable and more competition.
▶ 2:07:28Sen. Fischer: Mr. legeyt, you look like you want to answer.
▶ 2:07:32Mr. Legeyt: What we are asking for at the fcc is not to help when industry versus another. This is to allow us to compete. These are artificial restrictions on a broadcasters ability to gain national scale and gain some local scale that don't exist on any of our other competitors in the media landscape. This is about creating broadcasters viable so we can invest in that local news and so we can invest in that must sports programming.
▶ 2:08:01Sen. Fischer: Mr. johnson, if these limits were relaxed, how do you think that is going to affect consumer prices, local station metonymy? Do you have any evidence -- autonomy? Do you have any evidence?
▶ 2:08:24Mr. Johnson: I think it would be good. The fcc has looked at this on multiple occasions, at least three occasions, which I'm aware of, that economies of scale brought by larger station groups tend to benefit the values the commission looks at, public interest analysis, including competition, including localism.
▶ 2:08:46Mr. Johnson: What I would like to see is affiliates having a larger role at the bargaining table in their negotiations with major networks or in negotiations with streamers with right now those negotiations are dominated by the major networks. I would like them to be able to bargain for more ability to preempt national programming that might not reflect the values of people in different communities across the country.
▶ 2:09:11Mr. Johnson: I would like them to be able to reflect for more ability to choose what syndicated program are we airing. I think you open up those possibilities more when you remove some of these artificial restrictive limits. Do you regulate up or down?
▶ 2:09:35Mr. Johnson: I don't think the answer is you impose a 39% cap on the streamers that is decades-old market realities based on a snapshot in time back in the 1990's or early 2000's. Let's put everyone on the same playing field, continue to have competition review at the doj. Still have public interest review at the fcc. That will give these broadcasters and local stations a chance to survive and thrive.
▶ 2:10:00Sen. Fischer: Mr. legeyt, if I could hopefully get a short answer, back to the retransmission consen fees that are there, do believe the increased all caps consolidation would have no material effects on the consent fees or do you think that such effects would probably exist but should be tolerated? Where are you on that?
▶ 2:10:27Mr. Legeyt: I'm focused on the value that retransmission consent provides to local communities and local viewers. It is those dollars that are being plowed into local journalism. Without retransmission consent, there is no business model for local journalism so that is my focus.
▶ 2:10:46Sen. Fischer: Thank you.
▶ 2:10:48Chair Cantwell: Senator merkley.
▶ 2:10:51Sen. Merkley: And senator markey as well. This merkley markey thing.
▶ 2:11:00Chair Cantwell: We have been joined by senator markey. Who is a good friend and colleague. I'm so glad you're here today.
▶ 2:11:13Sen. Markey: I am glad the senate commerce committee is holding today's hearing on media consolidation because throughout my career, I have been very skeptical of media consolidation because I believe localism is essential to our democracy.
▶ 2:11:38Sen. Markey: When ownership is local, journalism is local and decision-making moves further away, communities lose coverage, kind ability, and trust. That was two decades ago when I was opposing consolidation and it is still true today. Right now we are facing a real crisis in local journalism. Newsrooms are shrinking. Reporters are losing their jobs, entire communities are becoming news deserts.
▶ 2:12:04Sen. Markey: At the same time, we are hearing calls to solve this crisis by eliminating the federal communication commissions national ownership rule and allowing even more consolidation at the national level. That would be a mistake. We need a much broader conversation about this. Just as eliminating the national ownership cap won't solve local journalism crisis, neither will protecting the status quo.
▶ 2:12:32Sen. Markey: Especially as new technology such as artificial intelligence continue to undermine the news industry's business model. Today I want to focus on one core question, how do we actually fix the local news crisis? Revive local journalism? Mr. waldman, you and your organization have been working on this issue for years.
▶ 2:12:54Sen. Markey: Do you agree local journalism is strongest when news outlets are deeply rooted in the communities they serve with reporters physically present and accountable to local audiences?
▶ 2:13:05Mr. Waldman: Absolutely. It works best. It builds trust. It is more accurate, more fair.
▶ 2:13:12Sen. Markey: When consolidating -- considering different approaches to local news crisis, including enabling greater media consolidation, do you agree those policies should focus on getting her journalists on the ground covering local communities?
▶ 2:13:28Mr. Waldman: That should be at the center of the debate is whether or not there are enough journalists in those communities .
▶ 2:13:36Sen. Markey: I agree. I think we need to start considering ideas how the government can invest in local journalism. The states are ahead of federal government here. In person, the rollcall is on and I'm going have to run over there.
▶ 2:14:05Sen. Markey: We had to pursue solutions that actually rebuild local reporting capacity. That means that as people are talking about media consolidation, we also have to ensure that it is not going to affect -- enemies identifying -- I've beeng -- I've beenn
▶ 2:14:35Sen. Markey: Investing in local journalism with a strong role for the states as laboratories of democracy to distribute funds to local news organizations to hire local journalists because if we are serious about saving local news, than the money needs to go to journalists who do the shoe leather reporting and are not scared to ask tough questions rather than simply increasing the size average of large media companies. I look forward, Mr.
▶ 2:15:03Sen. Markey: Chairman, to working with you on these issues. I think this is a very important discussion for us to have. For that I yield back because I really have to run over chair
▶ 2:15:17Cruz: To the floor.
▶ 2:15:17Chair Cruz: Sinner moran.
▶ 2:15:20Sen. Moran: You save the best for last. Is that what you said? [laughter]
▶ 2:15:29Chair Cruz: You may extend your remarks at your leisure.
▶ 2:15:36Sen. Moran: You are all in the media or entertainment broadcast. As we approach the end of this hearing, give me a reason why the cap should or should not be increased.
▶ 2:15:55Mr. Waldman: Our group has not taken a position on whether they have the authority --.
▶ 2:16:00Sen. Moran: Feel free to.
▶ 2:16:02Mr. Waldman: If you look at liberalizing the cap, don't just assume that scale will lead to more local news. If you believe that is a possibility, then require it. Require the liberalization is tied to guarantee that it will lead to more hiring of local reporters.
▶ 2:16:22Mr. Johnson: I have dealt with a similar issue in oh's general counsel at the fcc under chairman pye. We repealed these prescriptive net neutrality rules that were industrywide applied to everyone from internet service provider of every shape and size print the problem with descriptive rules is -- prescriptive rules as they quickly become outpaced by technological change.
▶ 2:16:47Mr. Johnson: This 39% number is pegged at what networks look like, broadcast ribs would like 20, 25 years ago before this whole explosion of online streaming content. In order to have a prescriptive rule, you need to have pervasive evidence of market failure. We don't have that here. You need a scalpel instead of a sledgehammer. If there is competition concerns, let's handle that to the department of justice, the fcc's interest review not these outdated rules.
▶ 2:17:18Mr. Legeyt: Organizing these ownership rules including elimination of the national cap is existential for the future of local broadcasting. Our industry is competing for advertising dollars with google and facebook global behemoths. We are competing for audience and for programming with netflix and amazon. Simply put, we are doing it with one hand tied behind our back because we can't even gain scale nationally to allow us to compete in those markets.
▶ 2:17:47Mr. Ruddy: Senator, several reasons, one is congress set the mandate, the former commissioner just said, overwhelming number of commissioners said it into law. Brendan carr signed a concurring opinion saying it was law. They don't cite any legal experts that I'm hearing from you could just change it by bureaucratic act of the fcc.
▶ 2:18:15Mr. Ruddy: We have been sold a bill of goods. The fcc was mandated to do these public tv licenses to serve the local communities. In my mind, there has to be a tremendous emergency for this to all be waived so the big three or four big companies can own all of these licenses. So far, the broadcasters is not told the senate any data that provides they are in crisis. In fact, nexstar made $2 billion.
▶ 2:18:43Mr. Ruddy: The top seven tv station groups all made pretty much in excess of $500 million in ebitda in 2024. They are inventing this because they know they can make billions of dollars by waving the rule. It does not serve the public interest competition or the diversity of voices that the public would like, especially with local news.
▶ 2:19:07Sen. Moran: I will turn it back to Mr. chairman.
▶ 2:19:09Chair Cruz: Thank you senator moreno. I will recognize senator lujan and point out senator moreno the observation this was leaving the best for last. [laughter]
▶ 2:19:25Sen. Moreno: I don't know what you're up to, Mr. chairman, but I appreciate that. [laughter]
▶ 2:19:32Sen. Moreno: I knew you're coming in.
▶ 2:19:35Sen. Lujan: Mr. ruddy, when chair carper appeared I asked if the fcc was an independent agency and he responded "it is not formally independent. Frankly, his answer is surprising giving his willingness to do the presidents bidding I would say.
▶ 2:19:56Sen. Lujan: As a matter of fact, the fcc's website stated it was an independent agency until I asked him the question and while I thought chairman carr was the decision-maker at the fcc, clearly he is not because someone who is over there, they change the website.
▶ 2:20:12Sen. Lujan: That aside, a few days ago, the president posted on treat social regarding the nexstar-tegna merger, "get that deal done." chairman responded on x, "president trump is exactly right, the national networks by comcast and disney have amassed too much power. For years they've been pushing this hollywood and new york programming all of the country with no real checks.
▶ 2:20:40Sen. Lujan: Let's get it done and bring real competition to them." my question is, are you concerned about chair carper's willingness to rubberstamp this? Let me going to say or certainly agree I think in your file testimony that congress is the one that established 39% threshold here but my question is, are you concerned about chair carr's willingness to rubberstamp this merger.
▶ 2:21:09Mr. Ruddy: You make good points. Even as an independent agency come they should be listening to president, members of congress, and others and should take that into account in their decision-making. He is not alone at the commission as you know, there is another member and hopefully there will be another democratic member soon and another republican member. I think chairman carr has not given the present good advice.
▶ 2:21:36Mr. Ruddy: On the face of it he says he wants to use competition by allowing massive consolidation so we move from seven tv companies to two or three. How does that increase competition? The purpose of competition and deregulation is to lower prices. What we are seeing is in closed market, only four major licenses in every market, that they increase prices because have so much market dominance in power. It makes common sense.
▶ 2:22:04Mr. Ruddy: I believe that the chairman has been inconsistent. For example, I think he was right to criticize jimmy kimmel. I don't believe in the censorship on jimmy kimmel but I think that he will say that I'm involved in this comic-con frame to be fired, because he says it is in the public interest. At the same time, he is saying the public interest doesn't matter and we should allow three or four companies to own all of the licenses.
▶ 2:22:35Mr. Ruddy: I think there should be consistency. I think you should encourage all of these major networks that when it comes to politicized comedians come they should show balance. I think it is unfair we have had several that I just bashed president trump for the past 15 years without response. I think the answer is not censorship. It is a balanced interest for the public interest. That is what these licenses are about.
▶ 2:22:59Mr. Ruddy: I think the merger of nexstar has already proven it is bad for consumers, the prices have gone up, passed on cable fees that has led to the decimation of newsrooms in markets where they own more than two stations. Before they did their merger with tribune back a few years ago, they had 16,000 employees. Within one year, they went down to 12,000 employees.
▶ 2:23:23Mr. Ruddy: If you are a journalist working for nexstar, you should be starting to post your resume if this merger goes through. It will be thousands of jobs. Ultimately, again, it is a local communities that get hurt because of the lack of news diversity.
▶ 2:23:40Sen. Lujan: The president recently expressed his support for the nexstar-tegna deal yet was silent on the ownership cap. Have you talked to president trump about the tv ownership cap?
▶ 2:23:52Mr. Ruddy: I have in the past but not since he made that post.
▶ 2:23:56Sen. Lujan: Can you share what he said?
▶ 2:23:58Mr. Ruddy: He was very emphatic back in november he posted to treat social that bigger media is not good, that less media -- less bigger networks is better, and that he supported essentially the ownership cap. In the nexstar deal, he makes no reference to the ownership cap. I believe nexstar is already in violation of the cap, at 70% reach. They want to go to 80%.
▶ 2:24:26Mr. Ruddy: I think the president -- I think the president makes a lot of good decisions and he does when he is fully informed. I think chairman carr has not informed him and advised him well on this issue. I have a disagreement with chairman carr very significantly and I think he is not playing by common sense rules, which is the of companies leads to more competition and lower prices.
▶ 2:24:51Sen. Lujan: Mr. chairman, I have questions that I will submit to the record because of time. One thing I will share based on your response, Mr. ruddy, if you watch the hearing, so how chairman carr was critical of president biden. He said president biden made one bad decision after another.
▶ 2:25:14Sen. Lujan: Well, if I had him in front of me, I would remind him one of the worst decisions he made was dominating brendan carr to the fcc. Thank you for your time.
▶ 2:25:23Chair Cruz: Thank you. Since there is apparently a virtue in being last -- I'll take the chairman's prerogative to do so. I want to go back to a question I opened with and I want to ask a specific yes/no. We talked about whether the fcc should make this decision at a commission level vote or not.
▶ 2:25:52Chair Cruz: Several answers that any decision to change the ownership cap should be at the commission level vote. I want to ask each of you yes or no, should the fcc have a commission level vote on the nexstar-tegna merger?
▶ 2:26:03Mr. Ruddy: It should be commission level vote with the full public process.
▶ 2:26:08Mr. Legeyt: I don't have a position on that.
▶ 2:26:12Mr. Johnson: Transparency, Mr. chairman, my firm represents nexstar in this deal. I want to set up for the record. I am not speaking for the client. My personal view, my answer is the same, net of commission discretion under the comedic patients act.
▶ 2:26:29Walden: Yes.
▶ 2:26:29Chair Cruz: Two dodges. Ok. Let's get to the substance of the law. There is a disagreement about whether the fcc can change the 39% cap. Let's review what section 629 of the 2004 consolidated appropriations act did the telecommunications act broadcast ownership rules. It changed the national television cap in the statute from 35% to 39%.
▶ 2:26:58Chair Cruz: It gave businesses two years to come into compliance with a 39% limit. It barred the fcc from using its forbearance authority to waive the cap. And it expressly excluded the 39% cap from being part of the fcc's established regulatory review process. This is a question for both Mr. ruddy and Mr. legeyt.
▶ 2:27:23Chair Cruz: Yes or no, on the day after the enactment of this 2004 law, the fcc have the statutory authority to adopt rules that set the national television audience cap to say 42% or 50% or was the fcc instead found to follow that 39% cap fixed by statute?
▶ 2:27:45Mr. Ruddy: Recent congress set it at 39% is the fcc after the 1996 act tried to raise it 45% and they said, wait, you can't do this. There was basically bipartisan support for the 39%. I don't believe they have the authority and several legal scholars have said they don't. I'm not a legal expert, but it appears pretty black and white that they set it and it should be remain law.
▶ 2:28:13Chair Cruz: : the after the 2024 law was passed, could the fcc have set the cap at some number of essentially higher than 39%?
▶ 2:28:21Mr. Legeyt: Legally, possibly. As a matter of practicality, given it was appropriations directive from congress, no. Importantly --.
▶ 2:28:32Chair Cruz: How legally possibly?
▶ 2:28:35Mr. Legeyt: Because congress did not set the third & cap and statute. They directed the fcc to adjust the regulations from 35% to 39% cap for it it is not codified in statute.
▶ 2:28:50Chair Cruz: How do they direct them to make it 39%?
▶ 2:28:53Mr. Legeyt: To the appropriations act you referred to.
▶ 2:28:57Chair Cruz: And that is not statute?
▶ 2:28:59Mr. Legeyt: The language of the act directed a modification. Of the regulation.
▶ 2:29:07Chair Cruz: Did he say in a modification or say modified to 39%?
▶ 2:29:11Mr. Legeyt: Modified at 39% but importantly it did not remove the fcc's authority which had previously been upheld by the D.C. circuit judge to modify that number going basis.
▶ 2:29:24Chair Cruz: It did exclude the 39% cap from being part of the established regulatory review process.
▶ 2:29:31Mr. Legeyt: It did. It modified the requirement that the fcc reviewed the cap but it did not remove the affirmative authority on an ongoing basis to review it. An important difference.
▶ 2:29:45Chair Cruz: Next question, the nab's position is the fcc could use the authority to get around that cap which are presumably the same authority as the fcc had and could have used in 2004-2005 change the cap. Put another way, the nab's position on the 39% ownership cap is that which is not prohibited is permitted. This is a question for both Mr. ruddy and Mr. legeyt.
▶ 2:30:12Chair Cruz: If we assume congress did not clearly bar the fcc from using his general authority to change the statutory cap, is there any legal limit to what the fcc can do with the cap?
▶ 2:30:25Mr. Legeyt: No, there's not.
▶ 2:30:28Mr. Ruddy: Again, I'm not a lawyer, but if a court would rule the fcc was not bound by the 2004 law, I'm assuming it could create a new cap number as it had in the past. I do believe that 2004 law is binding in a matter of legal statutes.
▶ 2:30:48Chair Cruz: Mr. legeyt, the fcc, the day after the law was adopted, decide the ownership cap could be 100% of U.S. households, could it choose 0%?
▶ 2:31:06Mr. Legeyt: The fcc as an administrative agency honestly needs to go through a period of notice and comment an appropriate administrative procedures, but nothing in the act would prohibit the fcc from doing so.
▶ 2:31:23Chair Cruz: So it is nab's position in the day after the statute passed that said change it at 39% from the fcc could have come in and said,. . We are changing into 100%.
▶ 2:31:35Mr. Legeyt: I think it is unrealistic that process could take place in a single day but again, --.
▶ 2:31:46Chair Cruz: They could immediately then raise it to 100?
▶ 2:31:50Mr. Legeyt: I would like to follow up on the question because I think in the context of an appropriations directive, orvis lee, were talking about a fiscal year directive to the fcc so realistically, whether they had that authority on the next day, I would like to dig into that a little bit more. But there is no question that the fcc maintained the authority to review the cap on an ongoing basis following the passage of that law.
▶ 2:32:14Chair Cruz: You'll have an opportunity to follow-up on that. We will have written questions for the record and I would welcome a more fulsome response. These are important Mr. ruddy and difficult questions. Mr. ruddy, same question, could the fcc have decided after the 2004 law passed that the ownership cap should not be 39% but rather it should be 100%? >> it sounds like it would be rather ridiculous that they just flouted what congress voted and put into statute.
▶ 2:32:44Chair Cruz: Again, you have commissioner after commissioner, chairman after chairman, mentioned earlier, pye repeatedly said that cap was law, matter of law, that he did not like it but he could not change it and in his words we had to obey the law.
▶ 2:33:02Chair Cruz: The chairwoman made an opinion against nexstar in one of their transaction saying they violated a congressional law and that congress only could change it and brendan carr was the ranking member at the time offered a concurring opinion and did not disagree with that.
▶ 2:33:21Chair Cruz: I think you have a consistent trail here where logic -- I encourage the broadcast industry if they really want this change, it is so important for them, go to the people's house, go to the congress and the senate, make the argument that they should do this. But they don't want to do this. They want to use bureau level, the bureaucrats -- they don't even want to respond. Why can't we have an open process? Why are the broadcast servers so afraid for the commission to look at this and they would have no opinion on it?
▶ 2:33:51Chair Cruz: Have transparency on this matter.
▶ 2:33:52Chair Cruz: Final question, if the fcc decides that it has the authority to set aside the statutory cap of 39% and to raise it substantially above what the statute says, what is the likelihood that decision will be challenged in litigation ? What is a reasonable estimate for how long that litigation will take and what the consequences that litigation will be?
▶ 2:34:19Mr. Ruddy: I am prepared to litigate the matter. I believe it is just a blatant of congressional law. I think it is a very dangerous thing that basic industry group that stands to make billions of dollars and just circumvent what congress has set. That the public overwhelmingly supports my position in the current law, they would like less consolidation and they went more diversity in media.
▶ 2:34:47Chair Cruz: Mr. legeyt, you get the final word, which given the committees word, means you are the best here.
▶ 2:34:53Mr. Legeyt: Thank you. I think if history is a guide here, every modification the fcc has made to its churches has been challenged in court on one side or the other. I would certainly expect that here as well. I would ask that judicial review be expedited because this is an existential crisis for local broadcasters.
▶ 2:35:16Mr. Legeyt: Our competitive landscape is one in which broadcasters are competing with one hand tied behind our back because of the scale of these global tech companies netflix, amazon, google, facebook. They are siphoning away our advertising revenue. They are pulling away our viewers.
▶ 2:35:38Mr. Legeyt: And the only way we can invest in local communities like yours and continue to do the invaluable work being done across the many markets in your state is with more scale. I made the point separately but I want to leave the committee with this that if judged on an independent standalone basis, more than half of the broadcast newsrooms in this country are not profitable. They would not exist a businesses.
▶ 2:36:04Mr. Legeyt: The only way we can continue to serve communities in the 2010 markets in this market is -- 210 markets in this market, the rules which are not -- nine decades old, last reviewed over 20 years ago, this media landscape is reshaped and we need to compete.
▶ 2:36:25Chair Cruz: I want to thank the witnesses for testimony. This hearing I think was quite helpful to the committee. Centers will have until the close of business on february 17 to submit questions for the record. The witnesses will have until the close of business on march 3 to respond to those questions. This concludes today's hearing. The committee stands adjourned.