Lights, Camera, Subscriptions: State of the Video Marketplace (U.S. House Committee on Energy and Commerce, Subcommittee on Communications and Technology)

Hearing	Lights, Camera, Subscriptions: State of the Video Marketplace
Committee	U.S. House Committee on Energy and Commerce, Subcommittee on Communications and Technology
Date	September 13, 2023

 

Hearing Takeaways:

• The Current State of the U.S. Video Marketplace: Subcommittee Members and the hearing’s witnesses discussed how the U.S. video marketplace has experienced new market entrants, disruptive technologies, greater content availability, changing business models, and shifting consumer demands in recent years. They expressed particularly expressed interest in the current state of multichannel video programming distributors (MVPDs), which include cable, fiber, and satellite television providers, and the growing popularity of virtual MVPDs (vMVPDs), which provide television service over the internet. Examples of traditional MVPDs include Comcast and DIRECTV and examples of vMVPDs include Hulu + Live TV, FuboTV, and YouTube TV. They asserted that an understanding of these changes will be key for informing policymaking efforts within this space.
  • Growth in Video Streaming: Subcommittee Members, Mr. Gandler, and Mr. Schwantes specifically highlighted the growth of video streaming’s popularity amongst U.S consumers. They noted how video streaming providers had overtaken cable providers in terms of video viewership for the first time in July 2022 and predicted that this trend will continue for the foreseeable future. They noted how these video streaming services range in terms of price (and include advertising-supported free options) and stated that the cumulative impact of these video streaming services can be very expensive for consumers. Mr. Schwantes highlighted how a recent Consumer Reports survey had found that roughly half of U.S. households subscribe to four or more video streaming services.
  • Shrinkage of the Cable Industry: Mr. Spellmeyer noted that while cable television had been the core business of his organization’s (America’s Communications Association–ACA Connects) members in 1993, he testified that this was no longer true by 2019. He testified that his organization’s members are moving away from primarily focusing on video delivery and toward primarily focusing on broadband service delivery.
  • Increasing Content Costs: Subcommittee Members and the hearing’s witnesses expressed concerns over rising content costs and stated that the influx of video platforms into the U.S. video marketplace is driving up demand for content as content can be used to attract new customers. They stated that competition for content rights (particularly sports media rights) is driving up costs for platforms. They indicated that these higher costs are causing platforms to raise their prices for consumers, leave the video marketplace, or engage in carriage disputes with content providers (which can result in television blackouts). Mr. Spellmeyer remarked that rising content costs make it difficult for cable companies to add independent and startup networks to their offerings. He also noted how cable systems often face capacity constraints. He further highlighted how dominant content providers will often force cable companies to carry multiple channels as a condition for carrying more in-demand channels.
  • Increasing Programming Diversity: Subcommittee Democrats, Mr. LeGeyt, and Mr. Schwantes discussed how the growth of available content has resulted in more opportunities for underrepresented creators (including women and people of color). Rep. Tony Cárdenas (D-CA) and Mr. Schwantes expressed interest in ensuring the existence of sufficient Spanish-language options. Mr. LeGeyt highlighted how his organization (the National Association of Broadcasters) maintains the Broadcast Leadership Training Program to promote diversity in broadcast industry leadership. He further mentioned how the organization produces toolkits for journalists to support better reporting on racially sensitive issues.
  • The Importance of Local Broadcasting: Subcommittee Members, Mr. LeGeyt, and Mr. Schwantes highlighted how local television and radio broadcasters provide many important services, including election information, weather information, public safety alerts, and local school sports news.  Mr. LeGeyt estimated that roughly 40 percent of a local broadcaster’s operating budget is invested in local news and programming. Subcommittee Democrats, Mr. Scwantes, and Mr. LeGeyt further stated that local broadcasters play a key role in combatting online misinformation and disinformation.
  • Access to Capital Challenges for the Broadcast Industry: Rep. Robin Kelly (D-IL) and Mr. LeGeyt expressed concerns over how broadcasters face challenges accessing capital. Mr. LeGeyt stated that broadcast industry headwinds (both in terms of regulations and consumer trends) make lenders more hesitant to extend credit to broadcasters because the lenders have less confidence in the long-term viability of broadcasting. He also noted how an FCC license is not considered an asset for the purposes of collateral in a broadcaster transaction. He stated that the National Association of Broadcasters has worked to educate prospective lenders (especially in small markets) on the value and financial viability of broadcast investments.
  • Potential Impact of Artificial Intelligence (AI) on the Video Marketplace: Rep. Kat Cammack (R-FL) expressed interest in the potential use of AI applications within the video marketplace. Mr. Gandler testified that his company (FuboTV) plans to introduce AI and machine learning applications to provide more relevant programming recommendations for its users. Mr. LeGeyt remarked that AI could support local broadcasting through providing “hyper-localism” and script writing capabilities. He warned however that AI could exacerbate challenges related to the unfair monetization of content produced by local broadcasters. He also called it important for the images and likenesses of media personalities to be protected in an AI landscape. He further stated that broadcasters must have sufficient resources to fully vet the accuracy of news stories that are produced using AI systems.
• U.S. Video Marketplace Policy Issues: Subcommittee Members and the hearing’s witnesses expressed interest regarding whether and how Congress should modify the current laws and rules governing the video marketplace to account for the aforementioned changes.
  • The Cable Television Consumer Protection and Competition Act of 1992 (the 1992 Cable Act) and Retransmission Consent Fees: Subcommittee Republicans, Mr. Spellmeyer, Mr. Gandler, and Mr. Schwantes called on Congress to reexamine the 1992 Cable Act and argued that this law should not apply this law to vMVPDs. This law had (among many things) established the U.S.’s system for retransmission consent fees, which are the fees paid by video service providers to national and local broadcasters to air their content. They expressed opposition to calls for the U.S. Federal Communications Commission (FCC) to reopen a 2014 proceeding on applying the 1992 Cable Act to vMVPDs. Mr. Spellmeyer stated that the current retransmission consent fee framework causes consumers to experience inflated prices, television blackouts, and limited content package options. Mr. Gandler further expressed concerns over proposals that would require vMVPDs to negotiate retransmission consent fees with individual local broadcast stations. He argued that the time and resources necessary to complete such negotiations would force vMVPDs to only focus on major media markets. Mr. Schwantes suggested that Congress consider separating the retransmission consent negotiations for local broadcast channels from the retransmission consent negotiations for other cable properties. Mr. LeGeyt remarked however that retransmission consent fees are critical for enabling local broadcasters to invest in local programming. He called on the FCC to reopen its 2014 proceeding so that the Commission can better account for the impact of video streaming on local broadcasters.
  • Retransmission Consent Fee Collective Negotiation: Several Subcommittee Republicans highlighted how Congress had permitted small MVPDs to form buying groups to negotiate retransmission consent fees with large broadcast station groups as part of the Satellite Television Community Protection and Promotion Act of 2019 (STCPPA). Mr. Spellmeyer thanked Congress for providing small MVPDs with this ability to collectively negotiate retransmission consent fees. He commented that the upcoming retransmission consent fee negotiating cycle will enable policymakers and stakeholders to better assess the effectiveness of this collective negotiation ability.
  • Television Blackouts: Subcommittee Members and the hearing’s witnesses expressed frustration regarding the prevalence of television blackouts and their negative impact on consumers. Television blackouts are when content providers and video distributors fail to reach agreements on retransmission consent fees, which results in content not being made available to consumers for the duration of the disputes. Mr. Spellmeyer, Mr. Gandler, and Mr. Schwantes argued that local broadcasters have too much leverage in retransmission consent fee negotiations, which is increasing the prevalence of television blackouts. Mr. LeGeyt noted however that local broadcast stations never go off the air during carriage disputes and indicated that consumers can always access broadcast channels through antennas. He also stated that two companies (DISH Network and DIRECTV) have been responsible for nearly 90 percent of all retransmission consent fee negotiation impasses over the previous five years. Rep. Anna Eshoo (D-CA), Mr. Spellmeyer, and Mr. Schwantes expressed support for the Modern Television Act, which would reform the current regime governing retransmission consent fee negotiations to prevent television blackouts and permit “free market” contract negotiations between broadcasters and cable providers to occur under traditional copyright laws. 
  • A La Carte Pay Television: Several Subcommittee Members and Mr. Spellmeyer expressed frustration that consumers often must purchase video content packages including superfluous items and expressed support for permitting consumers to purchase video content packages containing fewer channels. Mr. Spellmeyer testified that his organization had long advocated for a la carte cable pricing models and indicated that programmers have consistently rejected these calls. Mr. Schwantes cautioned however that a la carte pricing models could threaten the continued viability of smaller and less popular channels. He explained that large programmers will often require a cable provider to accept many of their channels in order to carry their more popular channels. He commented that the retransmission consent fees paid for popular channels subsidize less popular channels.
  • Video Bill Fee Transparency: Subcommittee Ranking Member Doris Matsui (D-CA) and Mr. Schwantes expressed concerns over the prevalence of “junk fees” on video distributor bills and how these fees are often not clearly conveyed to customers. They expressed support for a FCC proposal to require video distributors to provide their total prices (inclusive of fees) clearly and prominently in their advertisements and consumer bills.
  • Review of Broadcast Transactions: Full Committee Chairman Cathy McMorris Rodgers (R-WA) and Mr. LeGeyt expressed concerns over the FCC’s current review process for broadcast transactions and specifically criticized the FCC’s review of the proposed Standard General-Tegna merger. They stated that these review practices create uncertainty, which can discourage potential broadcast industry investments.
  • Broadcast Station Ownership Restrictions: Subcommittee Chairman Bob Latta (R-OH) and Mr. LeGeyt criticized the U.S.’s current broadcast station ownership restrictions as burdensome. Mr. LeGeyt remarked that these restrictions are based on an outdated presumption that broadcast stations only compete against other broadcast stations and argued that these restrictions prevent broadcast stations from achieving sufficient scale to effectively compete with large technology platforms (which are not subject to the same restrictions). Rep. Eshoo and Mr. Spellmeyer argued however that there do exist “loopholes” that enable broadcasters to evade these restrictions through sidecar business models.
  • The FCC’s Minority Tax Certificate Program: Mr. LeGeyt called for the reinstatement of the FCC’s Minority Tax Certificate program to bolster minority broadcast station ownership. This Program provided tax advantages to media owners that sold their broadcast stations to minorities.
  • NextGen TV: Rep. Troy Balderson (R-OH) and Mr. LeGeyt expressed interest in the FCC’s rollout of NextGen TV, which is upgraded over-the-air (OTA) standard that will allow viewers to access 4K picture quality, immersive audio, more interactive programming, and “hyper-localized” weather and news for free. Mr. LeGeyt noted how NextGen TV has already been deployed in 70 markets and indicated that 65 percent of the U.S. can access some form of NextGen TV.
  • Broadband Availability: Subcommittee Members, Mr. Spellmeyer, and Mr. Schwantes highlighted how broadband infrastructure deployment will be key to enabling more Americans to access affordable content. Subcommittee Democrats, Mr. Spellmeyer, and Mr. Schwantes specifically expressed support for the FCC’s Affordable Connectivity Program (ACP), which provides subsidies to low-income Americans to purchase broadband service. They noted how the ACP’s funding will be exhausted soon absent Congressional action. Mr. Spellmeyer further cautioned the Subcommittee against revisiting Title II net neutrality regulation.
  • Children’s Content Availability: Rep. Debbie Dingell (D-MI), Mr. LeGeyt, and Mr. Schwantes emphasized how broadcasters play a key role in providing safe and educational children’s programming. Mr. Schwantes also expressed concerns over how the FCC had relaxed its rules for children’s content in 2019. Ms. LeGeyt argued however that these 2019 reforms had been beneficial in terms of enabling local broadcasters to provide children with programming in the appropriate forms, time slots, and lengths.
• AM Radio Mandates for Vehicles: Rep. Diana Harshbarger (R-TN) and Mr. LeGeyt also expressed support for the AM for Every Vehicle Act, which would ensure continued access to AM radio as a safety standard in automobiles.

Hearing Witnesses:

1. Mr. David Gandler, Board Member and CEO, FuboTV Inc.
2. Mr. Curtis LeGeyt, President and CEO, National Association of Broadcasters
3. Mr. Jonathan Schwantes, Senior Policy Counsel and Manager of Special Projects, Consumer Reports
4. Mr. Grant B. Spellmeyer, President and CEO, America’s Communications Association—ACA Connects

Member Opening Statements:

Subcommittee Chairman Bob Latta (R-OH):

• He remarked that the video marketplace is “rapidly” changing and noted how the advent of internet connected televisions and devices have allowed for the launch of video streaming platforms.
  • He commented that these video streaming platforms provide new choices for consumers beyond an OTA antenna, satellite dish, and cable box.
• He stated that Americans no longer must adhere to a rigid television programming schedule and instead can choose where and when they watch television.
  • He commented that this development has redefined how consumers access entertainment, education, and information.
• He discussed how consumers now have “unprecedented” access to high quality content and noted how consumer preferences are changing as video streaming services have become an easy and affordable choice.
• He highlighted how video streaming providers had claimed the largest portion of U.S. video viewership for the first time in July 2022.
  • He indicated that streaming viewership had represented 34.8 percent of television viewership at this time while cable subscriptions had represented 34.4 percent of television viewership.
• He noted how a recently published report indicates that video streaming viewership now accounts for 38.7 percent of television viewership while cable viewership accounts for just 29.6 percent of television viewership.
  • He commented that this data indicates that consumers are moving toward video streaming and away from cable.
• He remarked however that the video marketplace’s regulatory environment has been largely unchanged, despite these shifts in viewership trends.
  • He noted how the 1992 Cable Act still provides the “bedrock framework” for television regulations.
• He stated that “burdensome” regulations (including media ownership restrictions, retransmission consent, and must-carry requirements) constrain cable companies, satellite companies, and broadcasters.
• He asserted that the U.S. must resist the temptation to impose further regulations on the video streaming industry.
  • He commented that the streaming marketplace (which is largely unregulated) has supported the flourishing of new platforms and has enabled these platforms to negotiate deals to better deliver content to consumers.
• He remarked that Congress should focus on deregulating the video marketplace rather than imposing archaic regulations onto a new and vibrant industry.
  • He also stated that Congress must work to support viewing choices for Americans while ensuring that local broadcasters can remain viable.
• He expressed interest in exploring the laws and regulations governing MVPDs (such as Comcast and DIRECTV) and vMVPDs (such as Hulu + Live TV, FuboTV, and YouTube TV).
  • He also expressed interest in exploring the differences between linear (i.e., scheduled) and nonlinear (i.e., on-demand) content and identifying outdated laws and regulations that fail to account for the current realities of the modern video marketplace.
• He remarked that this information will be key to enabling the Committee to enact laws that account for both current market realities and expected market developments.

Subcommittee Ranking Member Doris Matsui (D-CA):

• She discussed how video marketplace consumer preferences and business models are changing rapidly and stated that Congress must be cognizant of these changes.
• She noted how consumers are moving away from traditional pay television and moving toward video on demand (VOD) and other over-the-top (OTT) services.
  • She mentioned how some estimates indicate that 80 million households will eliminate their cable service plans by 2026.
• She stated that trends will have significant implications for the video marketplace and asserted that Congress will need to evaluate regulatory structures for this marketplace to protect consumers.
• She specifically expressed frustration over the ongoing problem of television blackouts (which refers to the non-airing of programming in a certain market).
  • She criticized television blackouts because they involve consumers paying for programming that is not delivered and commented that this problem would not be tolerated in any other industry.
• She further expressed frustration over the length and growing prevalence of television blackouts.
  • She noted how there had occurred over 1,000 estimated television station blackouts since 2010 and 230 television station blackouts in 2019 alone.
• She remarked that she would be “laser focused” on working to end television blackouts.
• She then discussed how the FCC is working to combat “bogus junk fees” on video distributor bills.
  • She noted how the FCC had proposed that video distributors provide their total prices (inclusive of fees) clearly and prominently in their advertisements and consumer bills.
• She asserted that consumers deserve accurate pricing information to make informed video decisions and expressed hope that the FCC can develop adequate price disclosure policies.
• She lastly remarked that the Committee must explore how local news stations are facing “incredibly challenging headwinds.”
  • She commented that local news stations provide many important services, including election information, public safety alerts, and local school sports news.

Full Committee Chairman Cathy McMorris Rodgers (R-WA):

• She discussed how the video marketplace is evolving rapidly and stated that Americans have more choice regarding how, when, and where they watch content (as well as what content they watch).
  • She commented that there had occurred a “profound” shift in people’s viewing habits, especially as streaming services have become more available and reliable.
• She stated that video streamlining platforms have “reshaped” entertainment habits, provided convenience, and diversified available content.
• She also remarked that these transformations in the video marketplace have introduced complex challenges for the entire media industry.
  • She noted how cable and satellite operators are continuing to lose a record number of subscribers, streaming platforms are spending billions of dollars on content in a very competitive market, Americans have experienced major television blackouts on cable networks due to failures from video providers and broadcasters to reach carriage agreements, and writer and actor labor union strikes have stopped production on film and television projects.
• She mentioned how Congress had passed the 1992 Cable Act and commented that this law had provided consumer protections and fostered competition in the U.S. cable and satellite industry.
• She remarked however that the video marketplace has changed significantly since the passage of the 1992 Cable Act and noted how the internet had enabled the introduction of video streaming services in the ensuing years.
  • She commented that this law had not been designed to address this new video streaming environment.
• She called on Congress to reexamine the 1992 Cable Act to ensure that innovation and competition are encouraged.
• She criticized proposals to merely expand the 1992 Cable Act to cover the video streaming industry and warned that this approach could kill this “flourishing” industry.
  • She commented that this approach would lock both online streaming platforms and traditional video platforms into outdated laws.
• She recounted how the FCC under the Obama administration had begun a process to expand legacy rules relating to MVPDs to new-internet based video streaming providers.
  • She expressed relief that this effort had not been finalized.
• She noted however that there have been recent calls for the FCC to reopen this rulemaking proceeding.
• She expressed opposition to this effort and mentioned how she and Subcommittee Chairman Bob Latta (R-OH) had sent a letter to FCC Chairman Jessica Rosenworcel cautioning the FCC against this effort.
  • She noted how the letter had asserted that the FCC lacks the legal authority to regulate video streaming services.
• She remarked that the FCC and Congress should not seek to apply decades old laws to modern and innovative technologies.
  • She emphasized that many of these technologies and their provided services had not been in existence when these laws had been enacted.
• She also asserted that Congress must be mindful of the “crucial” role that local broadcasters play in the media industry and stated that local broadcasters provide “vital” information to millions of Americans.
  • She commented that rural communities are particularly reliant on local broadcast services, especially when they have limited or no access to high-speed broadband and video streaming services.
  • She also highlighted how local broadcasters provide important safety information to the public and first responders during emergency situations.
• She expressed interest in using the hearing to identify actions that Congress can take to ensure that “outdated” regulations do not hinder competition and innovation within the video marketplace.

Full Committee Ranking Member Frank Pallone (D-NJ):

• He discussed how the video marketplace has experienced ongoing transformation in recent years and stated that these changes are “dramatically” impacting consumer options and content prices.
  • He commented that consumers can now have access to “endless” channels through a cable or satellite service or through a subscription service accessed via the internet.
• He noted how U.S. adults had spent more than six hours a day in 2022 watching video on OTA broadcast television, cable television, satellite television, video streaming services, and social media websites.
• He remarked that the numerous video options have led to competition, lower prices, and better awareness of consumer demands.
  • He mentioned how video distributors are purchasing “unprecedented” amounts of content, which have generated more opportunities for content creators (including women and people of color) and have created more choices for consumers.
  • He also noted how new competitive video streaming services have offered consumers the promise of saving money through only paying for their desired content.
• He stated that while the video industry remains robust and has benefited consumers, he noted how new market entrants, disruptive technologies, changing business models, and outdated statutes have “dramatically” altered the industry’s revenue streams.
  • He commented that these factors have resulted in a “precarious” moment with significant uncertainty.
• He lamented how the video marketplace is beginning to experience consolidation, rising prices, “junk fees,” and disappearing content.
  • He also noted how consumers are beginning to experience “subscription fatigue” as they may need to spend over $100 per month on multiple video streaming services to gain access to their desired content.
• He expressed concerns that television blackouts are rampant and that new gatekeepers are offering “take it or leave it” deals to content creators.
• He also emphasized that the modern video marketplace is dependent on broadband internet service and noted how many families cannot afford broadband internet service and/or do not have broadband service available in their communities.
  • He commented that the FCC’s ACP and the U.S. National Telecommunications and Information Administration’s (NTIA) Broadband Equity Access and Deployment (BEAD) Program can provide improved access to innovative video services.
• He then discussed how Americans still depend on broadcasters and cable providers for trusted local news, safe children’s programming, live events, and emergency information.
  • He also noted how newer online video streaming services still rely upon traditional channels to offer this content to consumers.
• He further expressed concerns over how consumers are increasingly turning to social media and online platforms that host user-generated content.
• He stated that these platforms have experienced a “dramatic” uptick in misinformation, disinformation, and content harmful to children.
  • He asserted that this content is often not truthful, erodes consumer trust, and jeopardizes democracy.
• He remarked that policymakers must prioritize the interests of consumers when overseeing the video marketplace.
  • He commented that while federal statutes and regulations have not kept pace with the evolving media landscape, he asserted that the U.S. should not jettison its current legal and regulatory framework for the video marketplace.

Witness Opening Statements:

Mr. Curtis LeGeyt (National Association of Broadcasters):

• He remarked that television and radio broadcasters offer an unparalleled value proposition and stated that these broadcasters are very trusted and loyal, offer the most in-demand sports and entertainment programming, and are freely available to all consumers.
  • He commented that these features make these broadcasters the most popular entertainment medium.
  • He noted how more than 181 million adults watch broadcast television each month and more than 227 million listeners tune into broadcast radio each week.
• He also stated that television and radio broadcasters play critical safety functions during periods of emergency when internet and cellular networks fail.
  • He highlighted how broadcasting had served as one of the few dependable sources of information during the recent Maui fires and noted how broadcasters had provided 24/7 updates on the fires, emergency supplies, and shelters.
  • He added that broadcasters have served critical safety functions during tornadoes and flooding events.
• He discussed how television and radio broadcasters compete in a “fierce” media landscape that has been “dramatically” reshaped by changes in technology and a significant increase in content options.
  • He noted how these broadcasters currently compete for audience, advertising money, and content rights with cable companies, satellite companies, podcasts, digital platforms, and large technology companies.
• He stated however that television and radio broadcasters remain uniquely subject to outdated rules governing their scale and scope, despite the aforementioned media landscape changes.
  • He highlighted how television broadcasters cannot have their audience reach exceed 39 percent of U.S. households and how radio broadcasters cannot offer more than five channels in one local market.
• He further stated that broadcast competitors have no obligations or incentive to provide local news, weather, sports, public affairs, or emergency information to their audiences.
  • He asserted that television and radio broadcasters offer a public service that their competitors do not replicate.
• He remarked that the U.S. must do more to ensure fair competition and continued consumer access to broadband television and radio service and recommended that the Committee urge the FCC to immediately take four actions.
  • He first called on the FCC to complete its 2018 quadrennial review and modernize its broadcast ownership rules to account for the rise and increasing dominance of digital media.
  • He secondly called on the FCC to refresh the record on its vMVPD proceeding to ensure that it reflects the impact of video streaming on viewer access to local stations.
  • He thirdly called on the FCC to create a more transparent, fair, and predictable process for reviewing broadcast transactions.
  • He lastly called on the FCC to continue its support for the rollout of NextGen TV.
• He also stated that the Committee should focus its legislative efforts on two pieces of legislation: the AM for Every Vehicle Act and legislation to reinstate the FCC’s Minority Tax Certificate program.
  • He explained that the AM for Every Vehicle Act would ensure continued access to AM radio as a safety standard in automobiles.
  • He also commented that the FCC’s Minority Tax Certificate program will help broadcasters to better reflect the diversity of the communities that they serve.
• He concluded that the success of television and radio broadcasters is attributable to the work of the broadcast industry and the U.S.’s legal framework for broadcasting.
  • He asserted that broadcasters provide a blend of local and national programming that is uniquely tailored to every local community.

Mr. Grant B. Spellmeyer (America’s Communications Association—ACA Connects):

• He remarked that Congress could not have predicted the “tremendous” changes that would occur in the video marketplace when it had enacted the 1992 Cable Act.
• He stated that the 1992 Cable Act had resulted in content providers gaining “disproportionate leverage” over smaller cable providers and their subscribers.
  • He mentioned how his organization, America’s Communications Association–ACA Connects, was formed in 1993 to represent the policy interests of small and rural cable providers and indicated that the organization now has over 500 members that serve all 50 states.
• He noted that while cable television had been the core business of his organization’s members in 1993, he testified that this was no longer true by 2019.
  • He commented that this evolution had led his organization to change its name from the American Cable Association to America’s Communications Association–ACA Connects.
• He mainly attributed the shift away from video programming for his organization’s members to the “ever rising” cost of programming (especially sports content).
  • He commented however that consumers still have access to large amounts of content and indicated that his organization’s members are delivering this content to their consumers over “world class” broadband infrastructure.
• He stated that the U.S. must ensure that the rules governing the video marketplace operate fairly and rationally without anyone being able to exert “undue leverage.” 
• He remarked that the video marketplace has experienced permanent changes and testified that some of his organization’s members (both large and small) have already exited the video business.
  • He added that all of his organization’s members are “seriously considering” the possibility of exiting the video business.
• He noted how cable customers have largely funded the recent increase in video content and asserted that the impact of their impending exits from the video business will be profound for all parties, including providers, programmers, and local broadcasters.
  • He commented that Congressional action in this area will impact all of these parties.
• He then stated that Congress should approach existing programs, rules, and laws with a focus on ensuring that no player can exert undue leverage that results in harm to competition or consumers.
• He discussed how the U.S. possesses a healthy, functioning, and dynamic content (which is supported by broadband providers) and cautioned the Subcommittee against revisiting Title II net neutrality regulation.
  • He asserted that policymakers must consider the impacts of such regulation on smaller providers that lack leverage over large technology companies.
  • He warned that the failure to consider these impacts could destabilize the content marketplace, especially in rural markets.
• He further discussed how the rates, terms, and conditions for linear programs still impact many consumers, despite the current video marketplace transition to internet-delivered services and content.
• He stated that the “antiquated” retransmission consent framework causes consumers to experience inflated prices, television blackouts, and limited content package options.
  • He called on Congress to fix this retransmission consent framework.

Mr. David Gandler (FuboTV Inc.):

• He remarked that he had cofounded FuboTV to help consumers access difficult-to-find content and to capitalize on the media landscape’s transition to video streaming.
• He stated that consumers now have freedom when deciding how to access content and commented that the video content marketplace has become increasingly diverse and competitive.
  • He highlighted how this marketplace now includes traditional cable, satellite, and video streaming service options.
• He discussed how cable, fiber, and satellite television companies continue to offer content to consumers and noted how video streaming services enable consumers to access content on their computers, televisions, and mobile devices.
  • He indicated that these streaming services provide content in various formats.
• He also discussed how video streaming services like Amazon Prime Video, Disney+, and Netflix enable consumers to stream video selections from a content library.
  • He explained that these streaming services typically offer content on-demand, pre-recorded videos for consumers to watch at their leisure, and limited or no live content.
• He noted that while video streaming services like FuboTV, YouTube TV, and Hulu + Live TV are similar to traditional cable, satellite, and fiber companies in terms of the content that they offer, he asserted that these video streaming services are very different from traditional video distribution services.
  • He explained that these video streaming services aggregate hundreds of broadcast television stations and deliver these stations to consumers via the internet.
  • He also indicated that these video streaming services offer both live and on-demand content, including content from almost every local station in the U.S.
• He also stated that live television streaming platforms (including FuboTV) can be cheaper for consumers and highlighted how FuboTV does not require that consumers possess cable or satellite boxes.
  • He added that FuboTV does not require its customers to enter into long-term contracts.
• He remarked that television streaming platforms can provide cheap and convenient television streaming options for consumers because these companies are not subject to regulation that may undermine their ability to prioritize consumer preferences and to innovate.
  • He commented that the application of decade’s old regulation to streaming platforms would be ill-advised and unhelpful.
• He expressed concerns however that large station groups are advocating that the FCC adopt rule changes that would increase costs for consumers.
  • He indicated that these groups are seeking to force video streaming platforms to directly negotiate with them for content that they do not own.
  • He commented that these large station groups are seeking to revive a long dormant proceeding that had provoked an “overwhelmingly” negative public response.
• He also discussed how Nexstar Media Group and DIRECTV are currently engaged in a protracted dispute that has led Nexstar Media Group to pull its content from DIRECTV for several months.
  • He commented that this television blackout has caused major disruptions for consumers and noted how this blackout has prevented consumers from watching professional football games.
• He remarked that consumers “undoubtedly” benefit from FuboTV’s subscription model and noted how FuboTV subscribers receive a channel plan with applicable local news, weather, and sports content, as well as national networks.
• He stated however that FuboTV would not be able to provide this content to consumers if regulations require FuboTV to engage in individualized negotiations with local stations.
  • He commented that the time and staff resources necessary to complete such individualized negotiations would force FuboTV to only focus on major media markets, which would leave many local communities unserved.
  • He asserted that this would be a “profoundly detrimental change” to the current system where virtually any U.S. resident with broadband access can sign up for FuboTV and access their local television content.
• He also expressed doubts that FuboTV and other television streaming companies will be treated fairly in such negotiations and warned that this would result in harm to consumers.
• He stated that consumers desire the technological innovation, content selection, and competition provided under the current video streaming system.
  • He commented that this desire is evidenced by the high rate of consumers canceling their traditional pay television services.

Mr. Jonathan Schwantes (Consumer Reports):

• He discussed how the video marketplace has been “dramatically” disrupted and commented that the marketplace’s pace of change has accelerated within recent years.
  • He noted how traditional satellite and cable television companies have lost more than 25 million customers during the previous five years.
  • He also mentioned how video streaming services have signed up millions of subscribers and highlighted how Netflix alone has 75.5 million U.S. subscribers.
• He noted how some video streaming services provide live television and indicated that free OTA broadcasting still exists.
• He highlighted how video streaming services drew more subscribers than cable television for the first time ever in July 2022.
  • He added that video streaming has subsequently increased its share of the video marketplace to nearly 39 percent during the summer of 2023.
• He remarked that policymakers must understand that the way that consumers view content is just as important as how consumers receive content.
  • He commented that the proliferation of smartphones has enabled consumers to watch video content whenever they want and wherever they want.
• He stated however that the recent changes in the video marketplace would not be possible without the availability of affordable, fast, and reliable broadband internet services.
• He asserted that the combination of smartphones and sufficient computing power had enabled the internet to revolutionize the video marketplace.
  • He commented that these changes had created a market shift away from watching television at a set time and had empowered consumers to watch content on their own schedules.
• He remarked that the democratization of viewer choice had eroded the long-dominant business model of cable television, significantly altered consumer behavior, and fueled the changes under consideration at the hearing.
  • He commented that these changes have benefited consumers “on balance” in numerous ways.
• He stated that competition and greater consumer choice are positive developments and highlighted how there are now more choices and points of access for video content than ever before.
  • He mentioned how a recent Consumer Reports survey had found that roughly half of U.S. households subscribe to four or more video streaming services.
  • He added that this Consumer Reports survey had found that almost one in ten U.S. households subscribe to nine or more video streaming services.
• He discussed how most video streaming applications permit consumers to easily cancel their service at any point during a given month.
• He also noted how consumers only need a smartphone, smart television, or a special device that connects to a television (which can be under $50) in order to access video streaming applications.
  • He commented that this ability to cheaply access video streaming applications is much different than having to rent a set top box from a cable or satellite company.
• He stated however that subscribing to multiple video streaming platforms can be expensive and commented that consumers must be more cognizant of their total spending across multiple video streaming applications.
  • He also highlighted how many video streaming services have recently raised their prices.
• He then remarked that the greatest harm facing consumers in the video marketplace is the prevalence of television blackouts, which occur when a carriage agreement is not reached between a content provider and a video distributor.
  • He called television blackouts both disturbing and “anti-consumer” and noted how an estimated 1,000 blackouts had occurred since 2010.
• He asserted that television blackouts are always about money and universally harm consumers.
  • He highlighted the recent carriage dispute between Disney and Charter Communications and noted that this dispute had caused 15 million Charter Spectrum to be denied access to ABC, ESPN, and other Disney-owned channels for more than a week.
• He remarked that Congress should address the various challenges impacting the video marketplace (including television blackouts).
  • He indicated that his written testimony includes recommendations regarding this topic.

Congressional Question Period:

Subcommittee Chairman Bob Latta (R-OH):

• Chairman Latta remarked that the media marketplace has changed significantly since the enactment of the 1992 Cable Act. He noted how local broadcast television stations and cable television stations are required to operate in a regulated environment and now compete against unregulated video streaming services. He asked Mr. LeGeyt, Mr. Spellmeyer, and Mr. Gandler to project the outlooks for their respective industries if current law remains unchanged.
  • Mr. LeGeyt expressed concerns over the U.S. broadcast industry’s outlook if current law remains unchanged. He highlighted how television broadcasters must compete with unregulated video streaming services for audience, advertising dollars, and content rights. He noted how large technology companies are now aggressively competing in the media marketplace and taking a large portion of local advertising dollars. He also mentioned how consumers are moving away from cable and satellite television options, which has reduced retransmission consent fees for television broadcasters. He stated that the cumulative impact of these trends is less revenue for local television broadcast stations to invest in local news and information gathering. He suggested that these adverse trends could be offset through reforms to media ownership rules and FCC consideration of vMVPD impacts on the media marketplace.
  • Mr. Spellmeyer remarked that consumers and the cable industry will face a “real reckoning” if current law remains unchanged. He testified that his organization’s members are moving away from primarily focusing on video delivery and toward primarily focusing on broadband delivery. He commented that this focus on broadband delivery has fostered competition for both broadband and OTT services.
  • Mr. Gandler noted how FuboTV’s subscriber base has been growing by between 20 percent and 40 percent per year, which means that the company is paying significant retransmission consent fees. He also highlighted how FuboTV is subject to escalator clauses in its contracts, which has resulted in increased expenditures for the company. He noted how FuboTV carries over 800 stations and provides 99 percent coverage across the U.S. He testified that FuboTV had only experienced one channel blackout. He asserted that FuboTV has thus helped to drive revenue for local television broadcast stations. He then discussed how national broadcasters own much of the U.S.’s local news programming. He highlighted how local news is available on 100 million devices and stated that the U.S. has sufficient viewpoint diversity and broad access to channels.
• Chairman Latta then noted how television broadcast stations are currently prohibited from reaching more than 39 percent of U.S. households. He indicated however that video streaming services can reach any household with a broadband connection. He asked Mr. LeGeyt to indicate whether current laws and regulations (such as those pertaining to media ownership) provide a fair environment for the media marketplace.
  • Mr. LeGeyt answered no. He remarked that large technology companies have significantly disrupted the advertising marketplace. He asserted that the dominance of these large technology companies has effectively destroyed the newspaper industry. He stated that local broadcasters are filling this void for local news and highlighted how local broadcast stations support more than 50 percent of the U.S.’s newsroom staffing. He remarked that restrictions on the ability of local broadcasters to offer advertisers more scale limit the ability of local broadcasters to make further investments in their newsrooms.
• Chairman Latta then asked Mr. Spellmeyer to discuss how the cable industry is responding to changing demands from consumers that seek more flexibility and choice in their content consumption.
  • Mr. Spellmeyer noted how the cable industry faces increasing prices for programs and content. He stated that the cable industry only has three possible responses to these increasing prices: pass along price increases to consumers, go out-of-business, or engage in retransmission consent fee disputes.
• Chairman Latta acknowledged that his question period time had expired.

Subcommittee Ranking Member Doris Matsui (D-CA):

• Ranking Member Matsui noted how the recent carriage dispute between Disney and Charter Communications had caused one of the largest television blackouts in recent memory. She asked Mr. Schwantes to indicate whether changing market dynamics have increased the frequency of television blackouts.
  • Mr. Schwantes answered affirmatively. He stated that the loss of local broadcaster advertising revenues to large technology companies is driving many television blackouts. He also discussed how the 1992 Cable Act obligates cable companies to carry local broadcast television channels. He stated that this obligation provides local television broadcasters with significant leverage in their negotiations with cable companies. He stated that cable companies will pass along their increased retransmission consent fees to their customers as broadcast television fees. He described these broadcast television fees as “junk fees” and noted how these fees are often excluded from advertised cable prices. He asserted however that television blackouts are worse than broadcast television fees.
• Ranking Member Matsui then applauded the work of KCRA-TV in her Congressional District and commented that this television station provides high quality local journalism. She asked Mr. LeGeyt to discuss the role that free local OTA television and radio broadcast stations play in promoting equitable access to information.
  • Mr. LeGeyt remarked that local broadcasting is unique because it is freely available to any consumer that wishes to access it over the air. He criticized the phrase “television blackout” as inaccurate and emphasized that local broadcast stations never go off the air. He noted that local broadcast stations may fail to reach a carriage agreement with a cable or satellite provider seeking to repackage the station’s programming and sell the programming in a bundle to consumers. He reiterated however that the local broadcast station will remain on the air during these carriage disputes. He highlighted how these local broadcast stations provide critical information during periods of emergency when cellular networks fail. He further remarked that these negotiating impasses between local broadcast stations and cable and satellite providers are “last resorts.” He noted how most contractual carriage negotiations are concluded successfully without disruptions.
• Ranking Member Matsui asked Mr. LeGeyt to discuss the function that OTA television and radio broadcast stations play during periods where natural disasters compromise internet-based communications.
  • Mr. LeGeyt emphasized that television and radio broadcast stations remain on the air during natural disasters to provide critical information to communities. He also highlighted how these broadcast stations support natural disaster recovery efforts.
• Ranking Member Matsui then discussed how the FCC had recently announced a proposal to require price transparency from video distributors. She commented that this proposal would help to prevent “sticker shock” and provide consumers with better information regarding the true cost of a video service. She expressed support for this proposal. She asked Mr. Schwantes to describe how video distributor fees are often obscured from consumers and advertising materials.
  • Mr. Schwantes remarked that the telecommunications industry has a long history of itemizing fees. He noted how some of these itemized fees involve taxes and government programs, such as the FCC’s Universal Service Fund (USF). He also discussed how the 1992 Cable Act had provided cable companies with the ability to itemize their own fees (which he referred to as company-imposed fees). He highlighted how these company-imposed fees are not included as part of a video distributor’s advertised prices. He mentioned how Consumer Reports had reviewed 1,000 cable bills in 2018 and had found that company-imposed fees had contributed an additional 24 percent to advertised cable bill prices. He commented that this figure has likely grown in subsequent years.
• Ranking Member Matsui acknowledged that her question period time had expired.

Full Committee Chairman Cathy McMorris Rodgers (R-WA):

• Chairman McMorris Rodgers expressed concerns over the FCC’s decision to issue a Hearing Designation Order for the proposed Standard General-Tegna merger. She stated that this decision had killed the creation of the largest minority-owned and women-led broadcast company in U.S. history. She expressed concerns that the FCC will harm local broadcasters if it continues to pursue these types of policies. She asked Mr. LeGeyt to address how the FCC’s approach in the Standard General-Tegna merger would impact future broadcast industry mergers and local broadcasters.
  • Mr. LeGeyt remarked that he is “very focused” on encouraging investments into local broadcasters. He asserted that certainty at the FCC as to whether a proposed transaction can receive a timely approval vote will be key for attracting prospective investors to the broadcasting space. He expressed concerns that the FCC’s recent actions in the proposed Standard General-Tegna merger could have a “chilling effect” on investments into local broadcasters.
• Chairman McMorris Rodgers then discussed how there has been a recent uptick in television blackouts and mentioned how her constituents are currently experiencing one such blackout. She asked Mr. LeGeyt and Mr. Spellmeyer to provide an overview of the retransmission consent negotiation process between broadcasters and cable providers. She also asked Mr. LeGeyt and Mr. Spellmeyer to identify the greatest challenges that need to be overcome to reach carriage deals between broadcasters and cable providers.
  • Mr. LeGeyt first emphasized that most retransmission consent negotiations are resolved without any impact on viewers. He described it as a “worst case scenario” for all parties if these negotiations impact viewers. He called it paramount for local broadcasters to have the ability to reinvest in local programming and commented that retransmission consent revenues support these reinvestments. He noted that while retransmission consent negotiations are often framed as small cable providers negotiating against large television station groups, he stated that these negotiations can also involve small television broadcasters negotiating with large cable providers. He asserted that these negotiations ensure that local broadcasters can reinvest in their programming.
  • Mr. Spellmeyer remarked that the U.S. must fix the retransmission consent negotiation process and commented that the 1992 Cable Act enables television blackouts to occur. He noted how most retransmission consent negotiations are resolved and do not result in television blackouts. He stated however that television broadcasters can dictate prices in these negotiations, which leads cable providers to impose fees on their customers. He warned that these continued asymmetric negotiations between broadcasters and cable providers will result in cable providers no longer serving as video providers.
• Chairman McMorris Rodgers lastly asked Mr. Gandler to discuss FuboTV’s experience working with local broadcasters to carry local broadcast content on its video streaming platform.
  • Mr. Gandler mentioned how FuboTV carries over 800 local broadcast television stations. He described FuboTV’s negotiations with local broadcasters as “very easy” and stated that FuboTV has worked to avoid television blackouts. He recounted however that a former top executive at Nexstar Media Group (which owns numerous local television stations) had publicly stated vMVPDs account for less than 10 percent of the company’s distribution revenue and that the company’s distribution revenue accounts for approximately half of its total revenue. He noted how this executive had stated that Nexstar Media Group could more easily engage in carriage disputes with FuboTV because FuboTV is the smallest vMVPD that Nexstar Media Group engages with. He also discussed how retransmission consent fees can be very significant and often support investments outside of local programming. He highlighted how Nexstar Media Group has acquired the CW Network, which is focused on syndicated content. He also remarked that FuboTV has been transparent with its customers regarding its fees and stated that the company does not impose “junk fees” on its customers. He acknowledged however that FuboTV does impose a regional sports network (RSN) fee on its customers. He also highlighted how FuboTV provides prospective customers with a free trial period and sends these customers a reminder near the end of this period.
• Chairman McMorris Rodgers interjected to note that her question period time had expired.

Rep. Darren Soto (D-FL):

• Rep. Soto first expressed relief that Disney and Charter Communications had been able to resolve their carriage dispute. He then discussed how his region of central Florida is the U.S.’s seventh largest media market and highlighted the importance of local programming content. He remarked that the U.S. must work to preserve local content, access to content, diversity of content, and affordability of content considering recent developments within the video marketplace. He expressed support for the FCC’s ACP and commented that this Program supports these objectives. He then asked Mr. LeGeyt and Mr. Spellmeyer to comment on the significance of the recent Disney and Charter Communications deal for future deals between broadcast television stations and cable providers.
  • Mr. LeGeyt remarked that the recent Disney-Charter Communications deal demonstrates that the retransmission consent negotiation process is functioning. He highlighted how local television broadcast stations had always remained available to cable customers throughout the Disney-Charter Communications carriage dispute through antennas. He also emphasized that Disney and Charter Communications had reached a quick resolution. He remarked however that challenges underlying the Disney-Charter Communications carriage dispute demonstrate how much video streaming services are disrupting the current video marketplace. He also stated that this carriage dispute demonstrates the need for local television broadcasters to be accessible on video streaming services.
  • Mr. Spellmeyer called the Disney-Charter Communications carriage dispute settlement a “promising development” for the video marketplace. He stated however that retransmission consent negotiations are fundamentally about market power. He noted how Disney and Charter Communications are both similarly situated companies. He indicated however that most cable companies are much smaller than Charter Communications and therefore lack the same amount of negotiating leverage in their carriage disputes with broadcasters.
• Rep. Soto discussed how video streaming has experienced rapid adoption in recent years. He noted that while video streaming has reduced costs, he expressed concerns regarding video streaming’s impact on content creation. He asked Mr. Gandler and Mr. Schwantes to comment on the appropriate balance between cost and content creation in the context of video streaming.
  • Mr. Gandler remarked that FuboTV is not directly involved in the issue of content creation and explained that FuboTV acquires its content through licensing relationships. He also stated that market forces have been effective in ensuring that consumers maintain access to content during carriage disputes between broadcasters and cable providers. He highlighted how Charter Communications had offered all of its customers access and promotional pricing for FuboTV during its recent dispute with Disney. He also mentioned how Disney had offered Charter Communications customers with promotional pricing to use Hulu + Live TV during this dispute.
• Rep. Soto noted that his question period time had expired.

Rep. Gus Bilirakis (R-FL):

• Rep. Bilirakis discussed how cable companies are facing rising costs to acquire content and pressures to obtain more content options than their competitors. He asked Mr. Spellmeyer to indicate whether these dynamics result in less available money for new market entrants and independent linear channels. He further asked Mr. Spellmeyer to discuss how these smaller players compete in the video marketplace and how these dynamics impact the diversity of content.
  • Mr. Spellmeyer remarked that rising content costs makes it difficult for cable companies to add independent and startup networks to their offerings. He also noted how cable systems often face capacity constraints. He highlighted how dominant content providers will often force cable companies to carry multiple channels as a condition for carrying more in-demand channels. He stated that these demands limit the ability of cable providers to carry new channels and harm consumers. He then discussed how telephone, cable, wireless, cellular, and satellite companies can now all provide content to consumers and commented that this dynamic constitutes a major change in the video marketplace.
• Rep. Bilirakis then mentioned how Hurricane Idalia had recently impacted his Congressional District. He thanked his Congressional District’s local broadcasters for helping to keep his constituents safe before, during, and this natural disaster. He asked Mr. LeGeyt to indicate whether large technology companies are providing similar safety services during natural disaster events.
  • Mr. LeGeyt remarked that large technology companies are not providing similar safety services during natural disaster events. He expressed appreciation for Rep. Bilirakis’s acknowledgement of the role that local broadcasters play in protecting communities both during and after natural disaster events. He expressed concerns that the changing video marketplace landscape will significantly impact the availability of local media options. He noted how Mr. Spellmeyer had testified that many smaller cable companies have either exited the cable business or are considering exiting the cable business. He also noted how Mr. Gandler had indicated that FuboTV has entered the video marketplace in response to increased consumer demand for streaming. He further highlighted how YouTube TV has become the U.S.’s fifth largest linear pay television provider. He remarked that the FCC must consider whether local broadcasters can continue to provide critical safety services during natural disaster events in a video marketplace where video streaming is proliferating.
• Rep. Bilirakis then discussed how Congress has worked to support the ability of small market participants to compete in the video marketplace. He highlighted how Congress has permitted small MVPDs to collaborate on their retransmission consent agreements in 2019. He asked Mr. Spellmeyer to address whether this policy had benefited small MVPDs. He also asked Mr. Spellmeyer to identify the barriers that small MVPDs face.
  • Mr. Spellmeyer thanked Congress for allowing small MVPDs to work through the National Content & Technology Cooperative (NCTC) to collectively negotiate retransmission consent agreements under the STCPPA. He noted how the last retransmission consent agreement negotiation cycle had occurred only several months after the STCPA’s passage, which makes it difficult to assess the effectiveness of this collective negotiation provision. He indicated that the next retransmission consent agreement negotiation cycle will occur very soon. He commented that this next cycle will enable policymakers and stakeholders to more fully assess the effectiveness of this collective negotiation provision. He stated that while this collective negotiation provision is helpful, he noted that retransmission consent fee prices have continued to increase. He highlighted how many of his organization’s members only serve one or two counties and stated that these cable providers are committed to supporting local programming. He asserted that Congress must address structural problems within federal telecommunications law and challenges arising from technological changes.

Rep. Anna Eshoo (D-CA):

• Rep. Eshoo remarked that the U.S. has a significant television blackout problem and asserted that Congress must address this problem. She commented that television blackouts harm consumers and called these blackouts unfair. She stated that the statutes and regulations governing retransmission consent fee negotiations are outdated and commented that these policies contribute to the prevalence of television blackouts. She mentioned how she had introduced the Modern Television Act in the previous two Congresses with Rep. Steve Scalise (R-LA). She expressed her intention to reintroduce this legislation in the current 118th Congress. She explained that the Modern Television Act would reform the current regime governing retransmission consent fee negotiations to prevent television blackouts and would permit “free market” contract negotiations between broadcasters and cable providers to occur under traditional copyright laws. She reiterated her hope that Congress can take action to address the problem of television blackouts. She asked Mr. Schwantes to discuss how the Modern Television Act would impact retransmission consent fee negotiations and benefit consumers.
  • Mr. Schwantes mentioned how Consumer Reports has supported the Modern Television Act. He remarked that copyright law would serve as a superior basis for contract negotiations between broadcasters and cable providers. He stated however that the Modern Television Act would not prevent television blackouts from occurring. He expressed support for the Modern Television Act’s baseball-style arbitration approach and commented that this provision would enable television stations to remain on air for 60 days during a carriage dispute. He also noted how many cable providers are being asked to carry a content provider’s full suite of channels in order to carry the most popular channels. He suggested that Congress consider separating the retransmission consent negotiations for local broadcast channels from the retransmission consent negotiations for other cable properties. He reiterated his support for using copyright law as the basis for contract negotiations between broadcasters and cable channels. He commented that this approach is more suitable for the modern video streaming market.
• Rep. Eshoo then noted how Mr. Spellmeyer’s written testimony had referred to “loopholes” that allow for broadcasters to purchase more than one of the top four television stations in a local market. She asked Mr. Spellmeyer to discuss how these “loopholes” and the resulting consolidation in local television markets contribute to television blackouts. She also asked Mr. Spellmeyer to identify other ways that television station consolidation harms consumers.
  • Mr. Spellmeyer remarked that broadcasters seek to acquire more television stations to increase their market power (which they can later abuse). He discussed the prevalence of sidecar business models in the broadcast industry in which a party owns a broadcaster but does not control the broadcaster according to the FCC’s definitions. He asserted that Congress must intervene to address these problems. He stated that the FCC cannot address these problems on its own and commented that FCC’s actions would likely be subject to extensive litigation. He expressed support for the Modern Television Act and commented that the retransmission consent fee negotiation process has only become worse in recent years.
• Rep. Eshoo indicated that she would submit additional written questions for the hearing’s record for the witnesses to respond to.

Rep. Tim Walberg (R-MI):

• Rep. Walberg discussed how the video marketplace has changed “dramatically” in recent years and stated that consumers now have more options to customize their video selections based on price, content, connection, and other features. He attributed the current plethora of available video options to limited government interventions and a vibrant free market. He commented that Congress should be working to further improve the video marketplace for consumers. He then noted how retransmission consent fees are often cited as the reason that MVPD prices are much higher than vMVPD prices. He asked Mr. LeGeyt to explain what is driving the rising cost of retransmission consent fees.
  • Mr. LeGeyt remarked that local broadcasters are competing with “behemoths” for expensive content, advertising dollars, and viewers. He noted that the current regulations governing broadcasters are premised on the idea that broadcasters only compete with one another in local markets. He asserted that this regulatory approach does not account for the fact that broadcasters now compete with parties outside of their local markets. He remarked that retransmission consent fees are critical for enabling local broadcasters to reinvest in creating local programming. He highlighted how the time spent by broadcasters on local news coverage across U.S. markets has increased by 78 percent over the previous decade. He also stated that broadcasters are facing rising costs and increased competition, which further underscores the importance of retransmission consent fees for supporting investments in local news. He further asserted that local news is key to fighting disinformation on social media.
• Rep. Walberg asked Mr. Spellmeyer to address how the price of content from broadcasters has changed in recent years relative to the cost of other programming. He also asked Mr. Spellmeyer to indicate whether it is more expensive for cable providers to carry broadcast content relative to other channels.
  • Mr. Spellmeyer noted how one of his organization’s mid-sized cable provider members pays $27 per month in retransmission consent fees across the four major broadcast networks, which he described as “substantial.” He indicated that he did not know how much cable providers pay for content from other content providers. He noted however that the same mid-sized cable provider member’s aggregate programming expenses were $80 per month. He also stated that certain channels (such as ESPN) may be particularly expensive for cable providers to acquire. He commented that sports programming drives overall programming costs “to a considerable extent.”
• Rep. Walberg then noted how FuboTV (as a vMVPD) is subject to different retransmission consent rules than traditional MVPDs. He indicated however that many vMVPDs (including FuboTV) still carry local broadcast channels. He asked Mr. Gandler to explain the retransmission consent fee negotiating process for vMVPDs.
  • Mr. Gandler remarked that FuboTV’s retransmission consent fee negotiating process is complicated.  He discussed how FuboTV negotiates with the four largest media companies that own the broadcast networks and indicated that these media companies act as a proxy in FuboTV’s retransmission consent fee deals. He testified that the escalator clauses in FuboTV’s contracts are “multiples” ahead of the inflation rate. He concluded that FuboTV’s retransmission consent fees are very high.

Rep. Tony Cárdenas (D-CA):

• Rep. Cárdenas discussed how consumers now have an unprecedented number of options for accessing media content. He stated that video streaming options have supported the proliferation of diverse content. He noted how 43.6 percent of Latino audiences had watched television via streaming in 2022 (as compared to 35 percent of the general audience). He stated that this increased uptake of video streaming services among Latino audiences demonstrates the value of having diverse and inclusive content in a variety of languages (including Spanish) accessible across multiple platforms. He remarked that policymakers must acknowledge current shifts in consumer content consumption patterns and ensure that consumers have flexibility and choice in terms of how they consume media. He asked Mr. Schwantes to discuss the options that Americans now have for consuming local news programming and video content.
  • Mr. Schwantes noted how digital video recorders (DVRs) are ubiquitous in the traditional MVPD environment, which enables consumers to record local news programming and watch it on their own schedules. He also noted how there are applications on video streaming applications that enable consumers to watch local news stations across the U.S. He stated that local broadcasters provide important content and help to protect against misinformation.
• Rep. Cárdenas asked Mr. Schwantes to discuss how the increased popularity of video streaming services has impacted access to affordable non-English language programming.
  • Mr. Schwantes discussed how Univision offers Vix, which is a Spanish language video streaming platform. He noted how Vix has both a free version (which is advertising supported) and a paid version (which does not have advertising). He highlighted how Vix contains a wide variety of Spanish language programming, including children’s programming, sports, and foreign content. He commented that Vix provides great value for its consumers. He also discussed how other video streaming platforms offer Spanish language options and subtitles.
• Rep. Cárdenas asked Mr. Schwantes to project whether video streaming will have greater or fewer multi-language programming options in the future.
  • Mr. Schwantes stated that while video streaming will likely have more multi-language programming options in the future, he asserted that the availability of these options will depend on broadband internet service availability. He commented that affordable broadband internet service is critical to a functioning video streaming marketplace. He expressed support for the FCC’s ACP and stated that this Program will enable low-income Americans to access broadband internet service.
• Rep. Cárdenas mentioned how Congress has recently taken significant actions to expand broadband service and expressed hope that Congress will take additional actions on this topic. He then acknowledged that his question period time had expired.

Subcommittee Vice Chair Buddy Carter (R-GA):

• Vice Chair Carter discussed how different sports leagues are obtaining significant media rights deals, which is causing these leagues to experience disruptions. He asked Mr. Spellmeyer to discuss how the rising costs of sports media rights are impacting cable companies.
  • Mr. Spellmeyer remarked that the rising costs of sports media rights are directly driving increases in cable costs. He explained that the sports leagues demand high media rights fees from broadcast and cable networks and that these networks in turn demand high retransmission consent fees from cable providers. He commented that cable providers face a “take it or leave it” proposition when negotiating these fees. He also noted how cable providers are contractually barred from disclosing their retransmission consent fee payments. He stated that cable providers would like to disclose retransmission consent fees on their bills so that customers could understand the true costs of channels. He also expressed support for an a la carte cable business model where cable consumers could select which channels they want. He emphasized that content providers are forcing cable companies to bundle their channels into package deals.
• Vice Chair Carter asked Mr. Spellmeyer to clarify whether he is asserting that the National Football League (NFL) is causing cable companies to face high costs.
  • Mr. Spellmeyer commented that the NFL is experiencing growing revenues as evidenced by increasing player salaries and NFL team valuations.
• Vice Chair Carter then asked the witnesses to indicate whether broadcasters, cable companies, and vMVPDs should be subject to the same regulatory framework.
  • Mr. LeGeyt first stated that sports rights are also driving up programming costs for broadcast television and radio networks and affiliates. He noted how the disaggregation of viewing makes content that must be viewed in real-time increasingly valuable to advertisers. He emphasized that most people watch sports in real-time. He then noted how the current regulatory framework has enabled local broadcasters to negotiate retransmission consent fees with traditional pay television and satellite companies. He asserted that this regulatory framework has resulted in “tremendous” investments in local content and local news programming. He stated that the FCC should consider whether some elements of this regulatory framework should be applied to the video streaming space.
  • Mr. Spellmeyer remarked that the U.S. should provide a “level playing field” for broadcasters, cable companies, and vMVPDs and asserted that the video marketplace requires antitrust oversight. He stated that Congress should carefully work to reform the laws governing the video marketplace. He warned that Congress’s failure to act on this issue will result in rising video content prices, the continued prevalence of television blackouts, and a lack of choices for consumers.
• Vice Chair Carter acknowledged that his question period time had expired.

Rep. Lizzie Fletcher (D-TX):

• Rep. Fletcher stated that many of her constituents have indicated that current video content package options often include items that they do not want. She suggested that these constituents might desire video content package options that include a smaller number of channels. She asked Mr. Spellmeyer to comment on the prospects of a la carte cable pricing models.
  • Mr. Spellmeyer testified that his organization had long advocated for a la carte cable pricing models and indicated that programmers have consistently rejected these calls. He noted that one key element of the recent retransmission consent dispute between Charter Communications and Disney had involved the desire of Charter Communications to offer a la carte pricing. He stated that Charter Communications had made “some progress” in these negotiations through having Disney agree to offer a couple of cable packages with fewer channel options. He indicated however that Charter Communications is not a member of his organization and commented that his organization’s smaller members have limited negotiating leverage with content providers.
• Rep. Fletcher then asked Mr. Schwantes to identify video marketplace policy reforms that Congress should not pursue. She also Mr. Schwantes to recommend policy issues that Congress should prioritize in addressing the video marketplace.
  • Mr. Schwantes first remarked that Congress should not apply the 1992 Cable Act to vMVPDs (such as FuboTV and YouTube TV). He commented that the 1992 Cable Act had not contemplated the significant growth of the internet and would therefore be inappropriate for governing vMVPDs. He remarked that less video marketplace regulation could be beneficial so long as there exists agreement on certain common principles. He indicated that these common principles include privacy protections, price transparency, children’s programming, diversity, and media ownership caps. He highlighted how broadcasters and cable providers are currently subject to privacy protections while vMVPDs are not subject to such protections. He then discussed how the 1992 Cable Act had created the concept of a basic cable package and indicated that the basic cable package was supposed to include local channels and public access channels. He noted however that the broadcast television fee in some markets is now higher than the basic cable fee and questioned the affordability of basic cable plans.

Rep. John Joyce (R-PA):

• Rep. Joyce discussed how the video marketplace has changed significantly since Congress had last addressed video policy. He then mentioned how television blackouts are adversely impacting his constituents and noted how 350,000 of his constituents currently lack access to their CBS affiliate. He lamented how this television blackout impacts the ability of these constituents to receive critical weather alerts and local journalism. He asked Mr. Spellmeyer to recommend policy reforms that could prevent the occurrence of television blackouts and provide sustainable access to local news.
  • Mr. Spellmeyer first remarked that all video marketplace participants should have “equal footing” during retransmission consent fee negotiations. He also stated that consumers should be protected from increasing broadcast fees, which he largely attributed to the increasing costs of sports programming. He further stated that policymakers prioritize consumer choice (including a la carte cable pricing) when making reforms to the video marketplace. He remarked that these aforementioned recommendations would help to prevent television blackouts. He acknowledged that while consumers experiencing a television blackout can access broadcast channels using traditional television antennas, he commented that most consumers do not possess such antennas.
• Rep. Joyce then discussed how the cost of fiber broadband infrastructure can impact the cost of content. He indicated that these broadband infrastructure costs include pole attachment fees, the need to deploy broadband infrastructure that traverses railroads, and access to federal rights of way. He asked Mr. Spellmeyer to indicate whether broadband infrastructure permitting and regulatory relief would be “essential” to the cable industry.
  • Mr. Spellmeyer answered affirmatively. He testified that his organization’s members have grown their number of connected homes by one-third over the previous five years. He emphasized that this growth had occurred during a pandemic. He remarked that the top concern of his organization’s members is not retransmission consent fees and is instead the cost of access to rights of way and broadband infrastructure deployment. He thanked Rep. Joyce for recognizing this issue.
• Rep. Joyce then asked Mr. LeGeyt to identify the federal regulations that particularly harm the U.S. broadcast industry.
  • Mr. LeGeyt criticized the current rules that prohibit television broadcasters from having their audience reach exceed 39 percent of U.S. households. He noted how television broadcasters must compete for audience with online platforms (including YouTube and Facebook) for advertising dollars and commented that ownership caps stifle the ability of television broadcasters to compete in the marketplace. He also acknowledged that while the U.S.’s retransmission consent system may be imperfect, he asserted that this system has enabled local broadcasters to invest in local programming and local content. He warned that the elimination of this system would threaten the continued viability of local television broadcasters. He stated that the consumer shift away from cable and satellite options toward vMVPDs will impact revenues for television broadcasters. He asserted that the FCC must address this issue.
• Rep. Joyce acknowledged that his question period time had expired.

Rep. Debbie Dingell (D-MI):

• Rep. Dingell discussed how local broadcasters provide critical journalism and emergency alerts and often support their communities through hosting community service projects, job fairs, and food drives. She also stated that broadcasters have long provided the “gold standard” in children’s content. She noted how the children’s content that airs on broadcast stations must adhere to certain safety standards. She noted how the rise of video streaming has resulted in a proliferation of children’s content. She expressed concerns that some of this children’s content on video streaming platforms contains disturbing imagery, limited educational value, and excessive commercials. She also noted how many families lack broadband service access, which limits their ability to access new online children’s content. She indicated that many of these families rely upon traditional content platforms (such as broadcast and cable television) to access children’s educational programming. She highlighted how Michigan public television stations had altered their entire programming schedules during the height of the COVID-19 pandemic to reach families without broadband service and provide them with age-appropriate educational programming. She asked Mr. Schwantes to discuss the current state of children’s programming and to provide advice for parents navigating the children’s programming landscape.
  • Mr. Schwantes expressed agreement with Rep. Dingell’s description of broadcasters as providing the “gold standard” in children’s content. He noted how the U.S. has maintained rules regulating children’s programming since the 1990s (which are known as the Kid Vid rules). He lamented how the FCC had relaxed these Kid Vid rules in 2019. He explained that these policy changes had included an allowance for children’s programming to air earlier, the elimination of requirements that children’s programming be 30 minutes in length, and the elimination of the educational/informational (E/I) trust mark on children’s programming. He also expressed agreement with Rep. Dingell’s concerns that children’s content on online streaming platforms is often suboptimal. He noted how a Common Sense Media survey had found that 80 percent of parents allow for their children to watch YouTube and that the majority of these parents had reported their children consuming objectionable material on YouTube. He further noted how there exist regulations governing advertising that airs on broadcast television networks during the airing of children’s programming. He thanked Rep. Dingell for raising concerns over the current state of children’s programming.
• Rep. Dingell asked Mr. LeGeyt to discuss the commitment of broadcasters to providing high quality educational programming to local communities.
  • Ms. LeGeyt remarked that a “core tenant” of local broadcasting is a commitment to families. He expressed confidence that his young children can watch safe programming from local broadcasters during weekend mornings and after school. He stated that broadcast programming content serves as a “strong” alternative to concerning online content. He then remarked that the 2019 reforms to the Kid Vid rules had been beneficial in terms of enabling local broadcasters to provide children with programming in the appropriate forms, time slots, and lengths. He noted how content viewing patterns for children have changed and commented that these 2019 reforms will enable local broadcasters to better serve the children’s audience.
• Rep. Dingell reiterated her interest in addressing children’s programming issues.

Rep. Rick Allen (R-GA):

• Rep. Allen remarked that the video marketplace has changed significantly since the passage of the 1992 Cable Act. He then recounted how he had personally been impacted by a recent television blackout and described this episode as very frustrating. He expressed interest in the role that sports media rights play in causing such blackouts. He then discussed how public trust in the national media is decreasing and noted how nearly three-quarters of U.S. adults believe that the media is driving political polarization. He also mentioned how almost half of Americans say that they have little or no trust in the media’s ability to report news fairly and accurately. He further noted how spending on political advertising is expected to exceed $10 billion in 2024 (which would be a three-fold increase from 2016). He highlighted however that Americans continue to exhibit high levels of trust in local journalism. He expressed interest in working to promote competition in the video marketplace and remove redundant regulations while protecting local journalism. He asked the witnesses to address how the video marketplace would change if Congress were to apply its current regulatory approach for traditional cable services to the entire video marketplace.
  • Mr. LeGeyt called on the FCC to consider the changes in viewer habits and assess the impact of these changes on localism. He stated that the video marketplace’s current regulatory system has some important elements. He specifically commented that the current retransmission consent system has enabled broadcasters to reinvest in local programming. He stated however that there are also some regulations that remain outdated. He specifically criticized broadcast station ownership caps and commented that these caps hamper the ability of broadcasters to compete with large technology platforms.
• Rep. Allen interjected to note that his question period time is limited.
  • Mr. Spellmeyer remarked that the application of traditional cable regulations to the entire video marketplace would cause price increases and consumer confusion.
  • Mr. Gandler also remarked that the application of traditional cable regulations to the entire video marketplace would drive price increases. He stated that this approach would require vMVPDs to reach retransmission consent agreements with both national broadcasters and their local affiliates. He highlighted how all of these retransmission consent deals are set up to expire right before the start of the football season.
  • Mr. Schwantes remarked that the application of traditional cable regulations to the entire video marketplace would cause price increases and more frequent television blackouts.
• Rep. Allen acknowledged that his question period time had expired.

Full Committee Ranking Member Frank Pallone (D-NJ):

• Ranking Member Pallone discussed how U.S. video consumption is at all-time highs and stated that the Committee must prioritize the interests of consumers when developing video marketplace reforms. He asked Mr. Schwantes to identify the practices in the video marketplace that impact consumer satisfaction (both positively and negatively). He also asked Mr. Schwantes to provide recommendations for ensuring that video services are affordable for all consumers (including low-income consumers).
  • Mr. Schwantes highlighted how consumers now have access to an unprecedented amount of content. He noted how consumers have 2.7 million programs to watch on linear and video streaming platforms. He also highlighted how there exist many video streaming platforms with diverse content packages. He expressed concerns however over the growing prevalence of “junk fees” in the cable television market. He attributed these “junk fees” to increasing broadcast television retransmission consent fees. He lamented how these fees are not included in the advertised prices for cable packages. He also highlighted the prevalence of television blackouts. He then discussed the importance of broadband service in supporting the video marketplace. He stated that the U.S. must ensure that broadband service remains affordable and commented that the FCC’s ACP supports this objective. He also noted how there exist many advertising-supported video streaming applications and commented that consumers should consider these applications. He further highlighted how there exist digital antennas that can enable people living near urban areas to obtain high quality broadcast television for free.
• Ranking Member Pallone then discussed the role that broadcast stations play in providing high quality local journalism. He expressed concerns that many online and social media platforms are causing the spread of misinformation and disinformation. He highlighted how broadcasters are subject to public interest obligations to promote localism, competition, and diversity. He commented that these obligations have led him to trust local broadcasters more than unregulated social media companies. He asked Mr. Schwantes and Mr. LeGeyt to indicate whether the public interest standard for broadcasters is partially responsible for broadcasters remaining among the most trusted news sources in the U.S.
  • Mr. Schwantes answered affirmatively. He noted how broadcasters have a public interest obligation that dates back to the Communications Act of 1934 to serve their local communities with trusted journalism.
  • Mr. LeGeyt thanked Ranking Member Pallone for acknowledging the public interest obligations of broadcasters. He asserted that these public interest obligations are central to the mission of local broadcasters. He remarked that local broadcasting is the most equitable platform in that it is free and available to all consumers (regardless of socioeconomic status). He discussed how broadcasters provide trusted information, as well as entertainment and sports. He asserted that broadcasters provide the greatest content value proposition to consumers and that their offerings for local communities are unparalleled.
• Ranking Member Pallone then noted how Mr. Gandler had asserted that video streaming companies can be more consumer centric and that FuboTV offers price transparency, contract-free service, and no junk fees. He noted however that there are also concerns that the current video streaming service marketplace is unsustainable. He mentioned how FuboTV had recently imposed a RSN fee on its customers to cover the costs associated with providing local sports coverage. He asked Mr. Gandler to indicate whether the current streaming service business model is sustainable.
  • Mr. Gandler first highlighted how FuboTV offers prospective customers free trials so that they can test the service. He also testified that FuboTV offers reminders to customers prior to the conclusion of free trial periods so that the customers can avoid switching to a paid service plan. He further stated that FuboTV prominently highlights its RSN fees once it determines the location of a customer. He then remarked that the video streaming market is very strong and contains a variety of different service options at different price points (including free options). He noted that video streaming customers can readily consume content and easily switch their services. He stated that the bundled content package remains important and mentioned how the average FuboTV customer watches over 100 hours of programming per month. He commented that most consumers like to have all of their programming content in a central location.

Rep. Troy Balderson (R-OH):

• Rep. Balderson discussed how several vMVPDs have begun to offer “skinny bundles” that provide their customers with a small number of live television options. He commented that these vMVPD offerings can provide consumers with more choices and that consumers are taking advantage of this flexibility. He asked Mr. Spellmeyer to explain why some traditional MVPDs do not have similar offerings. He also asked Mr. Spellmeyer to identify actions that can promote consumer choice and competition in the video marketplace.
  • Mr. Spellmeyer remarked that his organization’s members have long called for a la carte pricing and “skinny bundles” from programmers. He stated that content providers have repeatedly rejected these calls. He stated that his organization’s members are often located in small and rural communities, which reduces their negotiating leverage. He noted however that Google owns YouTube TV, which provides YouTube TV with more negotiating leverage with content providers. He remarked that a la carte pricing and “skinny bundles” do benefit consumers and expressed support for these approaches.
• Rep. Balderson then mentioned how the Columbus, Ohio media market (which serves a large portion of his Congressional District) has five local broadcasters that are broadcasting their content on high definition (HD) channels and NextGen TV. He noted how Mr. LeGeyt’s testimony had stated that NextGen TV can provide new opportunities and benefits for both television stations and consumers. He asked Mr. LeGeyt to discuss the viewer benefits of NextGen TV and to provide an update on the current status of the transition to NextGen TV.
  • Mr. LeGeyt applauded the current rollout of NextGen TV and explained that NextGen TV is an upgraded OTA standard that will allow viewers to access 4K picture quality, immersive audio, more interactive programming, and “hyper-localized” weather and news for free. He remarked that the ability of broadcasters to provide a high-quality viewer experience is critical for ensuring their competitiveness with large technology companies. He noted how NextGen TV has already been deployed in 70 markets and indicated that 65 percent of the U.S. can access some form of NextGen TV. He commented that this transition to NextGen TV is complicated because it requires participation from the broadcast industry, the consumer electronics industry, and consumer groups. He expressed the support of the National Association of Broadcasters for the FCC’s recent launch of its Future of TV initiative that is supporting the national transition to NextGen TV.
• Rep. Balderson then mentioned how the FCC had issued a 2014 Notice of Proposed Rulemaking (NPRM) regarding vMVPDs. He noted how Mr. Gandler had warned that the adoption of the FCC’s 2014 proposed rules would increase costs for FuboTV and similar services and that these costs would be passed along to consumers. He asked Mr. Gandler to explain how regulating vMVPDs as MVPDs would increase costs and to estimate how these increased costs would impact FuboTV and consumers. He acknowledged that his question period time had expired and requested that Mr. Gandler submit his response to this question for the hearing’s record.

Rep. Yvette Clarke (D-NY):

• Rep. Clarke discussed how broadcast networks, cable and satellite providers, and online video distributors offer both linear and nonlinear programming through a variety of platforms beyond a traditional television set. She expressed concerns however that a few multinational corporations control many of these platforms and commented that these corporations have outsized influence over consumers. She expressed interest in ensuring that the video marketplace has diverse and independent voices and called it important for this marketplace to include perspectives from different racial, ethnic, gender, socioeconomic, and cultural backgrounds. She stated that a diverse media landscape can create economic opportunities for historically marginalized communities and support the ability of citizens to make informed decisions. She remarked that Congress must support policies that encourage diversity in media and expressed her intention to introduce legislation on this topic in the coming weeks. She then discussed how broadcasters are often at a competitive disadvantage as technology companies and large conglomerates can use video streaming services as loss leaders to compete for market share. She stated that broadcasters serve as trusted sources for local news and provide communities with important safety services during periods of emergency. She asked Mr. LeGeyt to address how his testimony’s suggested FCC reforms can impact media diversity in terms of both content and ownership. She also asked Mr. LeGeyt to identify the greatest obstacles to increasing diversity across the media landscape.
  • Mr. LeGeyt remarked that diversity is a priority for the National Association of Broadcasters. He highlighted the organization’s advocacy efforts for the reinstatement of the FCC’s Minority Tax Certificate program, which would incentivize sales of broadcast stations to diverse owners. He also mentioned how the organization runs its Broadcast Leadership Training Program to support diversity in the broadcast industry’s leadership. He further noted how the organization produces toolkits for journalists to support better reporting on racially sensitive issues. He stated however that these efforts will all be for nothing if the broadcast industry is not viable. He remarked that the U.S. must enable broadcasters to gain sufficient scale so that they can compete with video streaming platforms and social media companies. He noted how local broadcasters are unique in that they are subject to ownership restrictions and commented that these restrictions discourage investments within the industry. He also stated that there exists uncertainty regarding the FCC’s review process for broadcast transactions, including the timelines for these reviews and whether the reviews will culminate in a vote. He further commented that this uncertainty discourages potential investments within the broadcast industry.
• Rep. Clarke indicated that her question period time had expired. She requested that the other witnesses provide their views on the obstacles to increasing diversity across the media landscape in writing for the hearing’s record.

Rep. Diana Harshbarger (R-TN):

• Rep. Harshbarger discussed how the U.S. has very old regulations governing the video marketplace and commented that these regulations burden traditional television providers. She stated however that video streaming services appear to “flourish” in an unregulated market. She also noted that there exists no transparency surrounding retransmission consent fees. She expressed support for an a la carte pricing model for programming. She asked the witnesses to indicate whether the video marketplace requires price transparency and consumers require freedom of choice regarding programming.
  • Mr. Spellmeyer answered affirmatively to both questions.
• Rep. Harshbarger then remarked that the U.S. must maintain robust broadcasting infrastructure so that it can respond to emergency situations (such as the recent Hawaii wildfires). She mentioned how she lives in a rural area and called broadband service imperative for rural residents to access video streaming services. She also stated that the U.S. must ensure that Americans have access to AM radio in their vehicles.
  • Mr. Schwantes discussed how there do not exist many independent channels and highlighted how Disney owns a large number of channels. He stated that many large programming companies (like Disney) will require a cable provider to accept many of their channels as a condition for carrying their more popular channels (such as ESPN). He commented that the retransmission consent fees paid for popular channels therefore subsidize less popular channels.  He noted that there is a fear that an a la carte pricing model might threaten the continued viability of smaller and less popular channels.
• Rep. Harshbarger indicated that her question period time had expired.

Rep. Ann Kuster (D-NH):

• Rep. Kuster discussed how her Congressional District is currently experiencing a television blackout of a local broadcast station. She noted how this local broadcast station provides important weather information, traffic updates, emergency alerts, and news programming. She indicated that this television blackout is the result of a business contract dispute and commented that customers are the ultimate victims of television blackouts. She noted how Mr. Schwantes had stated that television blackouts have increased in prevalence in recent years. She asked Mr. Schwantes to indicate whether the increased prevalence of television blackouts suggests that the current structure of the video marketplace is no longer serving customers.
  • Mr. Schwantes described television blackouts as disturbing and “anti-consumer” and asserted that the U.S. must address these blackouts. He stated that while there is no “silver bullet” for addressing television blackouts, he suggested that a 60-day mediation period for retransmission consent fee disputes could help to prevent television blackouts. He remarked that programmers and cable and satellite providers have much to gain and much to lose in retransmission consent fee negotiations. He commented however that consumers are ultimately harmed whenever these negotiation disputes occur.
• Rep. Kuster emphasized that television blackouts can be dangerous to consumers because they can prevent consumers from obtaining vital information during extreme weather events. She commented that television blackouts harm local broadcasters, cable providers, and consumers. She then remarked that local broadcasters are facing significant challenges in terms of rising costs and consumers moving toward non-traditional video platforms. She asked Mr. LeGeyt to address how the U.S. can ensure the continued viability of local broadcasters.
  • Mr. LeGeyt noted how local broadcasting relies upon two revenue streams: advertising and retransmission consent fees. He stated that digital platforms (including Google and Facebook) have come to dominate the advertising market, which reduces revenue opportunities for local broadcasters. He remarked that the current retransmission consent fee system has enabled local broadcast television stations to make investments in local news (rather than rely upon national programming for their news content). He commented that the U.S. is unique in the world regarding the local news capabilities of its television broadcast stations. He then remarked that the FCC should consider how the growth of video streaming impacts localism. He also stated that the FCC should consider whether there are elements of the current regulatory regime governing cable and satellite providers that ought to be applied to video streaming or whether an entirely new regulatory regime should be established. He then acknowledged that Rep. Kuster’s Congressional District is experiencing a television blackout and noted that the broadcast station involved in this dispute is still freely available on an OTA basis. He also emphasized that two companies (DISH Network and DIRECTV) have been responsible for nearly 90 percent of all retransmission consent fee negotiation impasses over the previous five years.
• Rep. Kuster added that local broadcasting is very important in her state of New Hampshire given how the state hosts the first U.S. presidential primary every four years.

Rep. Russ Fulcher (R-ID):

• Rep. Fulcher discussed how local broadcasters are subject to certain regulatory restrictions, including ownership caps on stations, requirements to air certain types of programming, and rules governing permissible programming. He asked Mr. LeGeyt to identify regulatory restrictions on local broadcasters that should be reformed or eliminated.
  • Mr. LeGeyt described the media ownership restrictions governing local broadcasters as “vestiges of a bygone era.” He asserted that these media ownership restrictions are based on an outdated premise that broadcasters only compete with other broadcasters for viewership and advertising dollars. He remarked that broadcasters need the flexibility to acquire greater scale so that they can compete with large technology platforms (such as Google and Facebook). He also stated that the current regulatory framework governing the relationship between local broadcasters and cable and satellite television providers has “unquestionably” resulted in investments in local news and entertainment. He stated that the FCC must consider ways to ensure that principles of localism are maintained as video streaming becomes more popular.
• Rep. Fulcher asked Mr. Spellmeyer to respond to the previous comments.
  • Mr. Spellmeyer remarked that cable customers cannot continue to serve as the sole supporters of local broadcasting. He noted how broadcasters depend on retransmission consent fees from cable providers to support their operations. He warned that broadcasters might no longer be able to collect these fees from cable providers considering the cable industry’s decline.
• Rep. Fulcher posited a hypothetical elimination of all federal regulations governing cable rates and services provided to consumers. He asked Mr. Spellmeyer to indicate whether the elimination of these regulations would make cable television more competitive.
  • Mr. Spellmeyer remarked that the elimination of federal regulations governing cable rates and services provided to consumers would make cable television more competitive. He commented that this approach would constitute an improvement over the status quo.
• Rep. Fulcher then asked Mr. Gandler to comment on policy proposals that would permit smaller MVPDs (i.e. MVPDs with fewer than 500,000 subscribers) to participate in buying groups. He asked Mr. Gandler to indicate whether such buying groups would help in terms of negotiation.
  • Mr. Gandler expressed support for policy proposals that would permit smaller MVPDs to participate in buying groups. He mentioned how FuboTV has between 1.2 million and 1.3 million customers in North America. He noted that FuboTV cannot join the NCTC because that cooperative is facilities-based. He also stated that programmers and broadcasters seek to take advantage of FuboTV’s small size. He remarked that permitting FuboTV to participate in a buying group (particularly for cable programming) would be “very helpful.”
• Rep. Fulcher also asked Mr. Gandler to explain his concerns over proposals to have online video providers and video streaming platforms negotiate with broadcasters over content that the broadcasters do not own.
  • Mr. Gandler noted how there are four broadcasters that control the programming rights for the most popular sports. He stated that requiring online video providers and video streaming providers to negotiate retransmission consent fees with broadcasters will further increase sports media rights prices.

Rep. Robin Kelly (D-IL):

• Rep. Kelly expressed her disappointment over how parts of her Congressional District are experiencing a television blackout involving several local broadcast stations and DIRECTV. She emphasized that her Congressional District is not unique in its experience with television blackouts and stated that television blackouts have become increasingly common. She expressed hope that a resolution to the television blackout within her Congressional District can be reached so that her constituents can regain television access to network programming, live sporting events, local news, and other relevant local content. She also called it essential for video marketplace participants to maintain diverse and inclusive content so that the content meets the needs and demands of communities. She asked Mr. LeGeyt to discuss the National Association of Broadcasters’s initiatives to support diversity in broadcasting and to create opportunities for women, people of color, and other underrepresented communities. She expressed particular interest in the National Association of Broadcasters’s Broadcast Leadership Training Program.
  • Mr. LeGeyt thanked Rep. Kelly for highlighting the National Association of Broadcasters’s initiatives to support the broadcast industry’s diversity in broadcast and expressed pride in these initiatives. He discussed how the Broadcast Leadership Training Program seeks to develop the next generation of broadcast industry leaders. He explained that this one-year long program exposes participants to various aspects of the broadcast industry (including sales, finances, and programming). He stated that the Broadcast Leadership Training Program seeks to support career mobility for minority workers and workers interested in acquiring broadcast stations.
• Rep. Kelly asked Mr. LeGeyt to indicate how many of the Broadcast Leadership Training Program’s alumni have subsequently acquired broadcast stations.
  • Mr. LeGeyt indicated that he could provide Rep. Kelly with this ownership data. He stated that a “substantial number” of the Broadcast Leadership Training Program’s alumni have gone on to own broadcast stations or have become executives at their companies.
• Rep. Kelly also asked Mr. LeGeyt to discuss the capital access challenges within the broadcast industry.
  • Mr. LeGeyt remarked that access to capital remains a “huge problem” for the broadcast industry. He discussed how the broadcast industry is currently undergoing a significant transition and commented that there exists uncertainty regarding how the FCC will review proposed transactions (which can discourage investments in broadcast stations). He also indicated that the continued growth of large technology companies creates uncertainty regarding the competitiveness of broadcasters. He commented that broadcast ownership caps can impede the ability of broadcast station groups to obtain sufficient size and scale to compete with large technology companies (which can also discourage investments in broadcast stations). He stated that the aforementioned broadcast industry headwinds make lenders more hesitant to extend credit to broadcasters because the lenders have less confidence in the long-term viability of broadcasting. He further noted how an FCC license is not considered an asset for the purposes of collateral in a transaction. He stated that the National Association of Broadcasters has worked to educate prospective lenders (especially in small markets) on the value and financial viability of broadcast investments.
• Rep. Kelly asked Mr. LeGeyt to indicate whether the FCC’s Minority Tax Certificate program should be reinstated.
  • Mr. LeGeyt answered affirmatively.
• Rep. Kelly then asked the witnesses to indicate whether Congress should modernize the policies governing the video marketplace.
  • Mr. LeGeyt answered affirmatively.
  • Mr. Spellmeyer answered affirmatively.
  • Mr. Sandler answered no.
  • Mr. Schwantes answered affirmatively.

Rep. August Pfluger (R-TX):

• Rep. Pfluger discussed how most cable customers have access to hundreds of television channels through their cable and satellite television packages and likely consume a small fraction of these available channels. He asked Mr. Spellmeyer to discuss how his organization’s members viewed this situation and a la carte cable television pricing proposals.
  • Mr. Spellmeyer remarked that content providers will not allow cable providers to offer cable television packages with fewer channels and noted that these content providers will force cable providers to take their full suite of offered programming. He stated that this situation limits the ability of cable providers to meet the needs of their consumers and expressed support for increasing the availability of smaller channel packages.
• Rep. Pfluger then asked Mr. LeGeyt to indicate the percentage of retransmission consent fees that are used to support investments in local content and the percentage of these fees that are passed along to the major broadcast networks.
  • Mr. LeGeyt testified that the allocation of funds received from retransmission consent fees can vary significantly based on the station group and the particular broadcast network. He noted however that roughly 40 percent of a local broadcaster’s operating budget is invested in local news and programming.
• Rep. Pfluger asked Mr. LeGeyt to identify how the federal regulatory system for the video marketplace can be improved to either promote more options or lower costs.
  • Mr. LeGeyt noted how broadcasters are facing increasing costs related to content creation (including local content creation) and sports rights. He remarked that the retransmission consent regime established under the 1992 Cable Act has enabled local broadcast stations to reinvest in their local news and programming. He stated that the FCC must consider how consumer shifts from cable television to vMVPDs will impact the ability of broadcasters to invest in local content. He called on the FCC to refresh the record related to the Commission’s 2014 vMVPD proceeding.
• Rep. Pfluger then noted how media companies can be involved with content creation, distribution, and production. He asked Mr. LeGeyt to indicate whether the FCC’s current cross-ownership rules are still necessary considering the recent consolidation within the online video marketplace.
  • Mr. LeGeyt remarked that the FCC’s current cross-ownership rules are no longer necessary and asserted that none of the FCC’s current broadcast ownership rules remain relevant. He stated that these rules are premised on the notion that local broadcasters solely compete with other local broadcasters for audience and advertising dollars. He called this premise no longer valid. He also highlighted how broadcasters must now compete against large technology companies for content.
• Rep. Pfluger then asked Mr. Schwantes to identify the top priorities for consumers in the U.S. video marketplace and to discuss how current laws impede consumer choices within the video marketplace.
  • Mr. Schwantes remarked that consumers are intertested in the cost of video options and in having choice among video options. He stated that the regulations stemming from the 1992 Cable Act are not suitable for video streaming services and called on policymakers to update the laws and rules governing the video marketplace.
• Note: Rep. Pfluger’s question period time expired here.

Rep. Marc Veasey (D-TX):

• Rep. Veasey remarked that a robust local news ecosystem is “vital” for ensuring freedom of expression and a strong democracy. He expressed concerns regarding the current sustainability of the U.S.’s local news ecosystem. He further asserted that local news is key to combating misinformation. He then noted that while video streaming options have increased competition, expanded consumer choice, and reduced consumer costs, he stated that consumers must have robust and affordable broadband service to take advantage of these options. He lamented that many consumers cannot afford broadband service. He indicated that while the FCC’s ACP helps to address these broadband affordability challenges for many Americans, he indicated that Program’s funding will soon be exhausted. He commented that Congress’s failure to replenish the ACP’s funds will make it more difficult for 21 million Americans to obtain broadband service. He asked Mr. Spellmeyer to discuss the importance of extending the ACP’s funding.
  • Mr. Spellmeyer remarked that the FCC’s ACP has served as an “important lifeline” for many of his organization’s members and their customers. He indicated that approximately 75 percent of his organization’s member companies have participated in the ACP. He noted that the ACP will soon exhaust its funding and that 20 million U.S. households currently rely upon the Program. He urged Congress to carefully consider the ACP. He also warned that Congress’s failure to extend the ACP would result in broadband service shutdowns and transition challenges for many Program participants. He elaborated that the U.S. may need to address prior balances for many ACP participants and transition these participants to different broadband plans in the event that the ACP is not extended.
• Rep. Veasey then reiterated his comments regarding the importance of local news and its ability to combat misinformation. He asked Mr. LeGeyt to discuss the important role that local broadcasters play in U.S. elections. He also asked Mr. LeGeyt to address how local broadcasters help to combat online misinformation.
  • Mr. LeGeyt thanked Rep. Veasey for acknowledging the importance of local broadcasters. He remarked that local broadcasters serve as the primary sources of trusted local information throughout the U.S. (especially considering the decline of the U.S. newspaper industry). He noted how the broadcasting industry had increased the size of its newsrooms by 78 percent over the previous decade. He called these investments “absolutely essential,” especially for minority communities that are more likely to experience broadband service challenges and be targets of disinformation campaigns. He stated that local broadcasters provide these communities with vetted information on important policy issues, political candidates, and election processes (including the time, place, and manner of elections).
• Note: Rep. Veasey’s question period time expired here.

Rep. Neal Dunn (R-FL):

• Rep. Dunn remarked that the competition between video content platforms to maintain customers has increased costs for consumers. He highlighted how there exist many video content providers that offer short-term packages for their customers that can be canceled abruptly. He called this development beneficial (especially given the tendency of content to migrate on and off video content platforms). He also raised concerns over increasing prices within the subscription television marketplace and suggested that these increasing prices may be due to over regulation. He expressed interest in having the U.S. adopt a technology neutral regulatory approach for the video marketplace. He asked Mr. Gandler to provide his thoughts regarding this approach and to comment on the potential design of such a regulatory system.
  • Mr. Gandler remarked that FuboTV only provides video and does not bundle its video with any other service (such as broadband or telephony). He noted how consumers can easily add and drop FuboTV’s service and how FuboTV offers a variety of content packages. He stated that FuboTV is technology neutral and described the company as a software platform. He elaborated that FuboTV users can access their FuboTV accounts across a variety of devices.
• Rep. Dunn asked Mr. Gandler to confirm that FuboTV supports the deregulation of the video marketplace.
  • Mr. Gandler confirmed that FuboTV supports the deregulation of the video marketplace.
• Rep. Dunn then discussed how there has occurred a significant increase in video content costs (particularly surrounding retransmission consent fees). He noted how these higher costs are often passed along to consumers. He asked Mr. Spellmeyer to indicate whether these higher costs restrict the ability of cable providers to carry diverse viewpoints from independent programmers that are unaffiliated with broadcast networks.
  • Mr. Spellmeyer stated that these higher costs consume resources that could otherwise be devoted to independent programming.
• Rep. Dunn interjected to note how his Congressional District is prone to hurricanes and stated that his constituents therefore depend on emergency alerts. He asked Mr. LeGeyt to discuss the role that broadcasters play in supporting the emergency alert system.
  • Mr. LeGeyt emphasized that broadcast stations are free and always on and described these stations as “lifelines” during emergency situations. He then stated that while some deregulation of the video marketplace may be beneficial, he asserted that it would be premature for Congress to pursue video marketplace reform legislation. He noted how the FCC can examine current video marketplace regulations and make several policy changes on its own.
• Rep. Dunn interjected to note that his question period time had expired.

Rep. Kat Cammack (R-FL):

• Rep. Cammack noted how Mr. Gandler had stated that FuboTV plans to introduce AI products meant to enhance the consumer experience. She asked Mr. Gandler to discuss these planned AI products.
  • Mr. Gandler remarked that FuboTV is very focused on the consumer experience and noted how FuboTV measures consumer engagement with its products to assess this experience. He indicated that FuboTV households use FuboTV products for roughly 100 hours of programming per month. He testified that FuboTV plans to use AI and machine learning to better index its programming so that it can better understand consumer viewing patterns. He stated that this indexing will support consumer discovery of additional programming, which will be beneficial as FuboTV offers more channels. He testified that FuboTV is not constrained in its ability to offer channels.
• Rep. Cammack commented that AI will likely have a “profound” impact on future programming. He asked Mr. Gandler and Mr. LeGeyt to discuss the benefits and risks that AI poses to the video marketplace.
  • Mr. Gandler remarked that AI will empower consumers to better decide what they want to see. He commented that this is different from social media, which has algorithms that decide what consumers see. He posited an AI application where a user could ask a platform to see all relevant video clips of a given public figure.
  • Mr. LeGeyt remarked that AI could support local broadcasting through providing “hyper-localism” and script writing capabilities. He commented that these AI-enabled script writing capabilities may enable broadcast stations to deploy more of their news employees to engage in reporting (which cannot be performed by AI systems). He warned however that AI could exacerbate challenges related to the unfair monetization of content produced by local broadcasters. He also called it important for the images and likenesses of media personalities to be protected in an AI landscape. He further stated that broadcasters must have sufficient resources to fully vet the accuracy of news stories that are produced using AI systems. He expressed his organization’s interest in working with Congress to address these issues.
• Rep. Cammack asked Mr. LeGeyt to comment on the liability risks associated with having video streaming services use AI systems.
  • Mr. LeGeyt reiterated his assertion that the image and likeness of media personalities must be protected in an AI landscape. He stated that broadcasters must work to ensure that AI does not foster consumer confusion that can undermine public trust.
• Rep. Cammack stated that her question period time had expired and indicated that she will submit additional questions for the hearing’s record.

Rep. Bill Johnson (R-OH):

• Rep. Johnson first expressed concerns regarding AI technology and commented that this technology can pose safety concerns for consumers. He then mentioned how Congress had permanently extended the Satellite Television Extension and Localism Act Reauthorization (STELAR). He noted how Congress had reaffirmed the value of having local broadcast channels available to viewers in their local markets. He also noted how STELAR’s permanent extension had permitted small cable television providers to negotiate together with large broadcast station groups. He asked Mr. LeGeyt to discuss how local broadcast stations should interact with video streaming services. He also asked Mr. LeGeyt to discuss the biggest threats facing local broadcasters.
  • Mr. LeGeyt first thanked the Committee’s work to permanently extend STELAR in 2019. He stated that Congress’s extension of this law had reaffirmed the importance of retransmission consent in enabling local broadcasters to invest in local programming and news. He testified that National Association of Broadcasters members had not formed a consensus position on how current video marketplace rules should apply to video streaming services that are meant to replace cable (such as FuboTV). He remarked that the FCC should refresh the record regarding its open proceeding on vMVPDs and to consider the application of its current rules to the growing video streaming industry.
• Rep. Johnson then remarked that Congress should consider ways to deregulate the video marketplace to foster a fairer and more competitive environment. He noted how Mr. Spellmeyer had raised concerns over current retransmission consent rules (particularly regarding their impact on smaller cable providers) and how these rules may be driving television blackouts. He noted how Congress has permitted small MVPDs (which are defined as those serving no more than 500,000 subscribers nationally) to form buying groups to negotiate retransmission consent fees with large broadcast station groups. He asked Mr. Spellmeyer to indicate whether this ability for small MVPDs to form buying groups has been effective.
  • Mr. Spellmeyer answered affirmatively and thanked Congress for providing this authority. He noted that the initial retransmission consent fee negotiations stemming from this authority had occurred very shortly after STELAR’s 2019 extension and commented that these negotiations had produced “some positive results.” He stated that cable companies are now engaging in a new cycle of retransmission consent fee negotiations. He acknowledged that these negotiations pose some risk of television blackouts and expressed his desire to avoid such blackouts.
• Rep. Johnson then asked Mr. Gandler to discuss FuboTV’s strategies for attracting and retaining subscribers in a competitive video marketplace with various streaming options.
  • Mr. Gandler remarked that FuboTV’s market competitiveness is ultimately dependent on its product. He mentioned how FuboTV is the market leader among live television service providers in terms of customer satisfaction according to J.D. Power. He stated that FuboTV has focused on developing a desirable technology that can provide value to its consumers. He indicated that FuboTV works to highlight the number of channels that its users can access and offer pertinent content based on consumer viewing patterns.