Hearings to examine media ownership in the digital age.

[Gavel sounds.] Good morning. We interrupt this program for a Senate Commerce Committee hearing on media ownership in the digital age. For over a century, broadcast media stood at the epicenter of American historical and cultural life. It brought the nation classics like I Love Lucy and shaped the music landscape with Elvis or the Beatles on the Ed Sullivan Show. Twitter being what it is, I watched the Beatles on the Ed Sullivan Show yesterday. And wow, they were young. It showed Americans the realities of war, the wonder of the Apollo 11 moon landing, and the defining political moments of their time, from the Nixon-JFK debate to President Reagan's clarion call to tear down this wall. Through these shared viewing experiences, broadcasters helped to embed iconic moments in the collective American consciousness. The media's power to frame events and shape public perception is substantial. So it is understandable why Congress placed limits on broadcast media ownership, intended to prevent a monopoly on programming and viewpoints. Indeed, for much of the last century, holding a broadcast license was often called a license to print money. With limited competition, station owners commanded massive audiences and steady profits. But that era has passed. Cable and satellite ushered in 24/7 news, while the internet and mobile technologies unleashed a wave of streaming services, news and entertainment sites, and social media, flooding American screens with endless content and fragmenting what were previously universal audiences. Today, broadcasters are fighting to stay competitive against media and tech companies with national and often global reach. This raises an important question: are long-standing broadcast media ownership rules still relevant in the digital age? And if so, to what extent? In recent years, some of these rules have been rolled back or eliminated. Whether more reform is needed or if today's status quo remains sound policy is what we will explore today. In the Telecommunications Act of 1996, Congress anticipated the rise of today's competitive market by directing the FCC to periodically review its broadcast ownership rules with an eye towards deregulation. That's what statute says right now. Every four years, the FCC was to decide whether to repeal or modify any regulation that no longer served the public interest. One rule, however, was deliberately set out: the national TV audience reach cap. In 2004, Congress specifically directed the FCC to set this cap at 39 percent of U.S. television households, and it has remained at the same level for 22 years. Now, as several major mergers loom, the FCC is considering lifting or eliminating this cap. Some argue that lifting the cap will allow broadcasters to scale, to invest more in local news outlets across the country, and to better compete with deep-pocketed tech companies. Others say lifting the cap will consolidate viewpoints and hand control over to newsrooms in New York and Hollywood, choking out local views. But more fundamental than the optimal policy is the law. It may be the case that the FCC cannot modify the 39 percent cap because Congress set that number in statute. I look forward to hearing these perspectives and more today. If there's one thing that's clear, it's this: current media ownership rules were written in a vastly different technological age. The days when broadcasters built a uniform global village across America's living rooms is over, as media has splintered into thousands of websites, TikTok accounts, podcasts, and other forms of content, each catering to its own niche audience. Yet even in this fragmented landscape, the media's ability to shape national discourse remains incredibly powerful, making questions about market concentration as important as ever. This hearing is designed to inform Congress in answering these questions. Should Congress revisit underlying statutes, and does the FCC have appropriate authority or flexibility to address today's evolving media landscape? I'm grateful to our witnesses for being here today to help us in this effort. And I now turn to Ranking Member Cantwell.

Thank you, Mr. Chairman, and thank you for calling the hearing and the witnesses to be here today. This is a subject that generally, I would say I care a lot about, and I do think that today we'll get into a pretty big debate about the amount of digital content now in advertising and controlling that market. I also think we'll hear a lot about why it's not a good idea for consumers to have so much content behind paywalls and them not being able to access it. I think the first two witnesses will agree on that. Not sure they're going to agree on other things, but they are going to agree there. This past Sunday, more than 100 million Americans watched the Super Bowl. Obviously, I'm very happy about my state of Washington and the Seattle Seahawks bringing home a second Lombardi Trophy.

On the over-under on whether you'd make it a minute before saying that, I had the under. Congratulations.

Thank you.

And you did it with the former Vikings quarterback to add to our pain, to add to our pain.

I want to say there was a lot of people helping the Seahawks. A lot of Texans, a lot of great job by your former quarterback. Yes. So, but right now, millions are also turning to the Olympics and watching that. And this brings communities together, this brings fans together, it brings our country together. But Mr. Chairman, as the media landscape becomes more fragmented every year, those shared experiences are becoming rarer. And as I said earlier, my concern about how much is being eaten up by tech companies in the broadcast model and how much is being put behind a paywall is very concerning. That is why several years ago, as ranking member of the committee, we put out a local journalism report, basically America's most trusted news source. And that is why my focus is what are we going to do to help keep that. From the report, it says modern economic literature views this through the lens of, quote, information economics or asymmetrical information, which is now recognized as the basic tenet of economics. Basically, what we're saying is if you don't have a lot of competition on information, you're not going to get perfect information. You're going to get distorted information. So, as the report says, in terms of economists across the political spectrum agree that increased reporting on local conditions leads to fairer prices for goods, a decline in local journalism and ensuring decreases in available information result in market inefficiencies. So, today, I'm here to fight for local journalism. If the Nexstar-TEGNA deal goes through, a single company will control 265 stations capable of reaching 80 percent of all the television households, more than double the current cap. And for nearly half of their audience, 100 million people, Nexstar would own two or more stations in a media market. Now, that concerns me. To me, that is not more local voices, that is fewer. So I want to see how we are going to deal with this kind of situation. We've invited Mr. Waldman, who in his testimony says that roughly 40 local journalists for every 100,000 Americans, today that number is eight. That was in 2002. That number is now down to eight. So the decline is not just limited to small outlets. Just this week, we saw massive layoff at the Washington Post. This includes cutting over half the journalists covering local DC news. So if flagship national institutions are struggling, imagine the pressure on small local stations and newspapers. So creating, in my opinion, the need for more stability and accountability, not less competition. So the important thing that we are here today to talk about is that local news is quite literally, in my opinion, the seed corn seed, if you will, for AI. You can't have perfect information if journalists aren't creating it. But yet, we know that AI is consolidating that data and all of that information, and if before they weren't compensating for that, now they certainly are perpetrating a business model that will make that even less clear. Mr. Waldman describes we are in a vicious cycle: less local news makes AI less accurate and it makes local news less viable. So we have to fix this. So that is why I introduced the bipartisan COPIED Act with Senator Blackburn to stop AI companies from using journalist content without their consent, why we support, and Mr. Waldman and I were just discussing, tax credit where states are using tax credits for local journalism as we have proposed. And AI companies should want a format where you are creating content and that that content is accurate and competitive in a nature that makes U.S. stack AI information more accurate than other countries. That to me seems the goal. So changes to the cap do not address the real structural problem and they risk reducing the diversity of local voices without solving the underlying problems of economics. So I look forward to hearing from our witnesses about the solutions that will help us grow local journalism for the future. Thank you, Mr. Chairman.

Thank you. I'd now like to introduce our witnesses for today. Our first witness is my friend Chris Ruddy, Chief Executive Officer of Newsmax, an American conservative news media organization. Our second witness is Curtis LeGeyt, President and Chief Executive Officer of the National Association of Broadcasters, where he advocates on behalf of America's television and radio broadcasters. Our third witness is Thomas Johnson, partner and co-chair of the issues and appeals practice at Wiley Rein LLP. He previously served as General Counsel at the Federal Communications Commission. Our final witness is Steve Waldman, founder and president of Rebuild Local News, a nonprofit focused on vitalizing local news across America. Mr. Ruddy, we'll start with you.

Mr. Chairman, Ranking Member Cantwell, and the members of the committee, my name is Chris Ruddy, I'm the CEO of Newsmax Media. Thank you for inviting me to testify about the important issue of broadcast media ownership. Newsmax reaches more than 50 million Americans regularly. We're a significant player in cable TV with the nation's fourth highest rated cable news channel. Forbes has described us as a news powerhouse. Our success is remarkable because the regulatory framework of the FCC favors media conglomerates and effectively blocks independent voices, both from the right and the left. There are 50 top cable channels in America. Newsmax is the only one operated by an independent media company. Every other channel is owned or created by a conglomerate. Newsmax success proves the system is broken and that this poses risks to competition, consumers, and even our democracy. We need more independent media, we need more competition, not less. Newsmax does not hold any broadcast licenses, but we are directly affected by TV consolidation. Large station groups hold enormous leverage over pay TV operators through retransmission fees, better known as retrans fees. These station groups can dictate prices and even determine what networks cable operators must carry. Nexstar provides a clear example. It owns about 200 stations today, many ABC, CBS, and NBC affiliated ones. If cable operators want to carry those stations, they have to pay Nexstar very high retrans fees. If they refuse, Nexstar can pull the plug, go dark, leaving viewers without the programming. Nexstar also insists that operators carry its cable channel NewsNation. Last year, Newsmax delivered five times the rating of NewsNation, yet operators were forced not only to carry NewsNation, but to pay license fees higher than that paid to Newsmax. Clearly, Nexstar's market leverage, you talked Senator Cantwell about the 80 percent reach they have, suppresses competition and harms consumers. The national television ownership cap was meant to protect against such abuses. In 1996, Congress established this cap into law, and later the cap was moved up to 39 percent. Only Congress may change the cap. Nevertheless, the FCC subverted the law by using the so-called UHF discount. Today, UHF stations reach 100 percent of households and no discount should be applied. Yet Nexstar used the discount to acquire Tribune and expand its national reach to 70 percent of U.S. households a few years ago, way above the 39 percent cap. They're not satisfied with that, and now they want 80 percent reach. And the industry, broadcast interests, wants to replicate Nexstar's model in the pursuit of power and money, to the detriment of the public interest. President Reagan first adopted the cap because it was dangerous to allow big networks to own stations in every market across the country. At that time, he set it at 25 percent. But since then, a bipartisan consensus developed that the public is best served by limiting TV ownership and preserving competition. This is why so many from both the left and the right oppose lifting the cap. CPAC, the National Religious Broadcasters, OAN, ZOA, and others have urged the FCC and Congress to keep the cap at 39 percent. Local TV is critical in providing community news. With the collapse of newspapers, television stands alone as the primary source of local reporting. Big tech does hardly any local news reporting. The TVB, Pew, and Knight studies all found that local broadcast news is the number one source for Americans seeking local news. Raising the cap means that two or three corporations will eventually own most stations in the nation and control almost all local news. This is why consolidation and the Nexstar deal is so dangerous. Consolidation is also about big money. Today, a broadcast license, as the Senator said, is a license to mint money. It's still true. Owning more licenses means more leverage over cable operators, more retrans fees, and bigger profits. We know that station groups cut costs by consolidating newsrooms. And reduced competition at the local level allows them to raise advertising rates. Retrans fees are significant and they account for more than 50 percent of broadcast revenues. Since 2010, retrans fees have risen more than 2,000 percent. 2,000 percent. If milk prices had risen at the same rate, a half a gallon of milk today would cost almost $40. Consolidation has been unbelievably profitable for Nexstar. Its EBITDA grew from 300 million in 2015 to close to 2 billion in 2024, almost a 500 percent increase. Sinclair, Scripps, and TEGNA show similarly strong profits. It is undeniable the FCC has already given Nexstar an excessive concentration of broadcast licenses. Now they want even more? The Nexstar deal works for Wall Street, but it doesn't work for Main Street. We see this as consumers pay for consolidation as their cable bills skyrocket. The affordability crisis, this is a contributor. National and local consolidation is not good. Just look at radio consolidation, which the FCC and Congress passed in the supported in the past. Today, three companies control all major radio licenses. They've gutted local program and they're all in financial trouble. I am told the FCC is racing to approve the Nexstar deal and will attempt to bypass the public process with a stealth approval at the bureau level. I urge Congress to insist that consolidation decisions of this importance must be voted on by the full commission, not by bureaucrats in secret. The TV industry is too important to be handed over to a small number of conglomerates. Congress set the cap, only Congress should change it after careful review. Newsmax stands ready to participate in that process. Thank you.

Thank you. Mr. LeGeyt.

Good morning, Chairman Cruz, Ranking Member Cantwell, and members of the committee. My name is Curtis LeGeyt and I'm proud to testify on behalf of the NAB and our nearly 1,300 free, local, over-the-air television stations that serve your communities every day. When the FCC first imposed national and local television ownership limits, Franklin Roosevelt was president. Now, nine decades later, those same rules still prevent broadcasters, and broadcasters alone, from owning more than two stations in any local market and from reaching more than 39 percent of American television households. These outdated regulations distort today's video and advertising marketplace. They advantage giant tech platforms, global streaming services, pay TV providers, and national cable programmers while placing local broadcasters at a severe disadvantage. In a digital media marketplace dominated by Google, YouTube, Netflix, Amazon, Apple, Meta, and TikTok, ownership restrictions that apply only to broadcasters are no longer rational or sustainable. They prevent broadcasters from achieving the scale necessary to compete for audience, programming, advertising revenue, and investment capital. As a result, your local stations remain hobbled by rules designed for the analog era, rules that directly undermine broadcasters' ability to provide our essential public service that remains free and universally accessible to all viewers. During recent crippling winter storms across vast swaths of the country, and during devastating floods in both Texas and Washington state, it was local broadcasters, not global streamers or national pay TV channels, that remained on the ground and on the air in those communities, providing life-saving information to their viewers. And beyond times of emergency, broadcasters are delivering the fact-based, most trusted journalism that keeps your constituents and communities informed and connected. Unfortunately, this local journalism is facing growing financial pressure. Fewer than half of television stations now report that their local news operations are profitable. Facing ever-rising news production costs and declining ad revenues, some broadcasters are simply unable to continue maintaining their own separate news operations. Without modernizing these ownership rules, local television news, the last bastion of truly local journalism in many communities, will suffer the same fate as thousands of local newspapers. Some argue that allowing broadcasters to achieve greater scale would reduce local news. The data shows just the opposite. Over the past decade, as broadcasters gained modest additional scale, the number of local news telecasts and hours of locally produced news increased substantially. From 2011 to 2023, local news telecasts increased by more than 40 percent and total hours of local news grew nearly 50 percent. Scale allows broadcasters to invest more heavily in journalism, not less. But it's not enough. Outdated rules also limit broadcasters' ability to provide viewers access to marquee sports and entertainment. Instead of subscribing to a new streaming service every time they want to watch a game, viewers overwhelmingly prefer to watch sports on broadcast television. However, keeping broadcasters artificially small makes it harder to compete for increasingly expensive sports rights against our unregulated streaming rivals. Broadcasting's share of viewership is already less than half our streaming competitors, and this decline will continue as premium sports content further migrates behind streaming paywalls. In conclusion, localism is a vital but expensive American value. Competitively hobbled TV stations lacking sufficient resources will not provide quality local journalism, emergency information, valued sports and programming that your communities depend upon. For these reasons, we urge Congress to support the FCC's efforts to eliminate the outdated broadcast TV ownership restrictions that no longer serve the public interest. I want to personally thank the many members of this committee, as well as President Trump, who have publicly supported us on this issue. Congress should flatly reject arguments from a single national programmer subject to no similar restrictions and who invests zero dollars in your local communities. Thank you again for the opportunity to testify today. I look forward to your questions.

Thank you. Mr. Johnson.

Chairman Cruz, Ranking Member Cantwell, members of the committee, thank you for the invitation to testify here today. This hearing is timely as the FCC considers whether to repeal obsolete ownership rules that are preventing local broadcasters from fairly competing in a media environment dominated by the national networks, social media platforms run by big tech, and online streaming services whose content does not always reflect the views of everyday American communities across the country. Mr. Chairman, as the former General Counsel of the FCC during the first Trump administration, one of my proudest moments was persuading the U.S. Supreme Court to take and ultimately decide by unanimous vote a case that upheld Chairman Pai's landmark media ownership reforms for the digital age, including outdated prohibitions on newspaper and broadcast cross-ownership. Now under Chairman Carr's leadership, the FCC is continuing the important work of reviewing the agency's remaining ownership rules. In my view, all of these prescriptive rules are outdated and ought to be repealed. And chief among these is the national television broadcast ownership cap. As General Counsel, I defended the agency's bipartisan consensus that the agency has legal authority to eliminate that rule, and I continue to believe so today. The reason, Mr. Chairman, is simple. As Justices Thomas and Scalia have said repeatedly, when interpreting a statute, we must start with the text. And the relevant text here is straightforward. As I explain in more detail in a letter I submitted to the to the FCC in the national cap record, on two occasions in 1996 and 2004, Congress chose the language, quote, modify its rules, to instruct the commission to make a one-time change to its long-standing national ownership cap rule. The Court of Appeals here in DC looked at the language in the 96 Act and concluded that it was, quote, only the starting point from which the commission was to assess the need for further change. If Congress intended to eliminate that discretion, the court reasoned, quote, it need only have enshrined the cap in the statute itself. Only two years later in 2004, Congress directed the commission to change the national cap level again, but kept that modify its rules formulation in place. That was not accidental. Congress had before it two bills that would have expressly codified the cap, as the DC Circuit suggested, but adopted neither proposal. Congress's choice of words to direct a one-time rule change rather than impose a mandate, as it has in other parts of the Communications Act even with respect to broadcast policy, those words matter. Now, I believe the FCC not only can modify the cap, but it should do so. During the early days of the cap, as you mentioned, Mr. Chairman, Americans still got their news and other programming primarily from one of the so-called big three broadcast networks. The FCC hoped that limits on audience reach would help ensure against those then-dominant voices monopolizing the marketplace. But advances in technology have turned that original rationale on its head. Those networks increasingly distribute programming through their own streaming platforms, none of which are subject to the FCC's rules. Ironically, a rule originally intended to constrain the power of large networks now provides them with a competitive advantage over smaller local stations. Meanwhile, more than half of Americans today get their news and entertainment from streaming services, social media, and virtual MVPDs like YouTube TV for the first time, none of which are subject to this audience reach limitation. Imagine a rule that Hulu, Netflix, Facebook could only reach 39 percent of the population. They exceed those numbers today and would have to divest. But that's the world in which local broadcast lives. Broadcast stations do have one advantage, as you mentioned, Senator Cantwell. They remain the source of news and information that Americans trust the most. Local newsrooms provide unbiased reporting, free from algorithmic bias and politicized environments that infect a lot of online discourse. Eliminating the cap would provide stations with flexibility to take advantage of economies of scale to help them compete more effectively with today's modern media behemoths. It would also benefit viewpoint diversity. Affiliate groups that represent a broad cross-section of Americans would have more leverage to demand programming from networks and streamers that reflect conservative and moderate values, not only the progressive values of content creators in places like Hollywood and New York. Now, even without the cap in place, broadcasters involved in an acquisition would still have to undergo the same competition review at the Department of Justice as every other sector of the economy. Indeed, broadcasters uniquely have to undergo a separate public interest review at the FCC, which historically has considered issues like localism and viewpoint diversity that national cap proponents have talked about. In conclusion, good deals that would otherwise be blocked by the 39 percent cap could get approved, while bad deals would not. Or as President Trump put it this past weekend, letting good deals get done will result in, quote, more competition and at a higher and more sophisticated level between local affiliates and national TV networks. I again thank the com- ...committee. I look forward to your questions.

Thank you, Mr. Waldman.

Thank you, Chairman Cruz, Ranking Member Cantwell, and other committee members. On average, two newspapers close every week in the United States. 3,500 have shut down in the last 20 years. And perhaps most importantly, in the last 20 years, there's been a 75 percent drop in the number of local journalists. That's in print, TV, digital. And the consequences for communities are really alarming. Studies show that areas with less local news have more corruption, more government waste, less civic involvement, less volunteering. People know a lot about national controversies, but not all that much about local issues, what the mayor did this year, or even what the mayor's name was. And there's one more thing that's a bit harder to measure but so important is the vacuum is being filled by social media and national news, which leave communities more divided. As Senator Moran said last week about the Plainville Times, national journalism has the habit of tearing us apart, community journalism pulls us together. Yes, media consolidation is one of the causes. For instance, private equity firms in New York acquired lots of newspapers, then laid off the local reporters in the rest of the country. But the primary cause is the internet. Advertisers shifted spending toward Google, Facebook, and other tech platforms and then used their market clout to restrict competition and provide less revenue to local publishers. And now comes another body blow, artificial intelligence. AI will further deplete the revenue of local news outlets. AI companies will suck in the local news content to train and ground the AI assistants, which then provide full answers instead of linking prominently off to the publisher websites. And those click-throughs are what have generated the traffic and the revenue for the local news outlets. When the Washington Post announced its cuts, which included a 70 percent cut in the metro staff, they noted that their search traffic had dropped by half in three years. And by the way, these drops in traffic are at conservative websites as well. But here's the horrible paradox of all this. As AI erodes local news businesses, that hollowness in turn will make it worse, will make AI worse. AI works well when it has massive amounts of data, but it really struggles when it's confronted with the condition called information scarcity, and local news suffers from that ailment exactly. Studies show AI routinely provides inaccurate information on local matters. And when malicious players are producing deepfakes and there are no local watchdogs, those will run rampant. And to be clear, AI does offer tremendous opportunities to local newsrooms. It really does. I mean, these nearly magical tools can help local news outlets do more coverage with less money. But the tech industry has to go farther than that and help reverse the financial crisis, the revenue crisis that it helped to create. And I think there's a few ways to think about that. First, AI companies must compensate local news organizations, including the small and medium-sized ones, for the content they use. Many of them have made deals with big media chains, but so far have left out thousands of smaller players. Second, we have the big controversies and energy over the construction of AI data centers. Well, there's an opportunity there too. Here's an idea: have each data center contribute some money, a one-time donation to a community foundation to create an endowment that would help pay for local reporters. And those reporters can do the follow-up. Did the AI companies actually buy from local businesses as they said they would, or hire locally, or did they pay their way on electricity as they said? And finally, AI companies and social media platforms should pay, I believe, a mitigation fee to help finance the revival of community news. Even a tiny fee could help pay for something like Senator Cantwell's bill that would provide tax credits for the hiring of local news or tax credits for small businesses that advertise in local news, which is an idea we're seeing Republicans push in New Hampshire and Kansas right now. Now, on the local TV ownership caps, our group has not taken a position on the question of whether or not Congress, FCC has the authority to do the caps on their own, but I would say this. First, I actually have some sympathy for both of these arguments. You know, it really is true that local TV news is incredibly important. In some places, it's the only thing left. And so we really agree that this ought to be looked at through the prism of whether or not it helps local news. On the other hand, there really is a lot of evidence that consolidation has gone in the other direction and actually hollowed out some newsrooms. So my advice would be to look at that question through the prism of whether it's good or bad for local news and specifically look at whether it maintains or increases or reduces the number of local reporters and editors, not the number of hours. Because if you have less local reporters and more hours, what you actually have is more superficial local news or more copying. So really look at the kind of capacity. And I think time is running out. We need to reverse this before nothing's left. We at heart need more human reporters living in the communities, accountable to and listening to their neighbors. And for that revival to happen, the biggest technology companies must quickly step up as well.

Thank you. Mr. Ruddy, let's start with you. You said in your testimony that NewsNation has more than five times fewer viewers than Newsmax does, but that Newsmax nonetheless is paid substantially less for its content even though it is producing five times more viewers. Those are striking numbers. What's the cause of that?

Market leverage and market power. NewsNation is owned by Nexstar, and Nexstar owns today about 200 TV stations. And they go in with the cable operators to negotiate their agreements for those TV stations. They have incredible leverage because they have so many stations. So imagine if they're negotiating with Spectrum, Charter goes by the name of Spectrum, and they have 50 stations in the various markets and they want a certain retrans fee. So when they're in negotiations, they say to Spectrum, you better pay us the rate, otherwise we're going to take the stations off your cable system. And that could be devastating for a company like Spectrum. And then they also say, we have a cable channel and we want you to pay us a certain amount, and if you don't pay us, we can go dark on our broadcast stations. Nexstar's not the only company that does this. ABC Disney has ESPN and a whole number of channels. Fox has a whole number of channels. And they all use and wield the leverage of their broadcast stations to get high fees for their cable channel. I'm an independent media company. I don't have the leverage that these broadcast companies. So one of the reasons we had the cap was to reduce the leverage so that they couldn't overpower the cable operators. And this is why cable bills are up over 100 percent in recent years because of the immense power that these companies have.

Mr. LeGeyt, do you agree with Mr. Ruddy? Do you agree that it is market power that is resulting in higher fees being paid?

Absolutely not. I represent at the National Association of Broadcasters Nexstar's broadcast interests, so I can't speak to NewsNation. But what I can say is this: when you look at the media landscape, we are distant stars in the solar system that is Meta, Google, Apple, Amazon, Netflix. Right now, this administration is reviewing a deal that would merge two streaming behemoths, right? Netflix, Warner Brothers. And I point that out...

Mr. LeGeyt, let me focus you on the specific question that I'm asking, which is do you agree that the numbers Mr. Ruddy provided are accurate, namely that Newsmax has roughly five times as many viewers as NewsNation and that NewsNation is paid more money than Newsmax is? Are those numbers accurate in your understanding?

So I don't have the viewership numbers in front of me, but I will stipulate to that if he's documenting those. And I don't have any visibility into NewsNation's programming fees. That's not publicly available.

Then let me ask, assuming those data are correct, do you have any explanation for why that would be the case other than market power? That explanation seems plausible to me. Is there another one other than leveraging the market power to extract those higher fees?

I'm focused on ensuring that Nexstar actually has the market power it needs to compete with Big Tech, which has siphoned away from Nexstar and other broadcasters...

You don't want to answer that question. That's okay. Let's move on to a different question. And this is a question for both Mr. LeGeyt and Mr. Ruddy. There's been a lot of discussion about local news. I agree local news is critically important. In both of your views, would eliminating or raising the media ownership cap strengthen or weaken local news, and would it increase or decrease diversity of views on air? Mr. LeGeyt.

It would both increase the competition for and production of local news, and it would increase diversity of voices. And the reason is simple: that right now, broadcasters are simply stifled in their ability to compete in this landscape. You have rules premised on the notion that broadcasters only compete against other broadcasters for advertising dollars, for audience, and for programming. And we know that that is not the case. Over the course of the last 20 years, 70 percent of the local advertising marketplace has been siphoned away from traditional media by Big Tech. We are competing for programming, NFL games with Netflix and Amazon, and we're competing for audience with all of these streaming services. According to Nielsen in December, streaming viewership was nearly half of all television viewership, broadcast just 20 percent. So we're competing against behemoths. The only way to invest in local news is to reverse this trend, gain some scale, and bring that revenue back to local broadcasting, and that is going to benefit local communities.

Mr. Ruddy, same question.

Well, I almost feel like I'm in a different universe than my respected guest or member here. But let's go through that. TV is doing well. Nobody's denying. They made almost $2 billion in 2024. They're projecting even bigger profits once this merger goes through. So what is the aid that they need to do to upend the congressional law? Why are they running around using the bureaucracy rather than going to Congress? Because they know they have no support in Congress and the public opinion polls show they have no support. He said two things. One is Nexstar, we know when they did the Tribune merger, ended up with 15, I think they currently about 15 duopolies. In every case, they combined the two stations' newsrooms into one. That's the only way they make money. In their projections on the merger, they're saying because of the consolidation, they're going to have $300 million in savings and almost half of it, $135 million, comes from local programming consolidation. The only local programming local TV stations do is local news. That's pretty much the whole thing. So that's where this is all going. They can make fortunes and it's local news that suffers.

Final question. In 2023, I criticized then-FCC Chairwoman Jessica Rosenworcel for delegating to the Media Bureau and to an administrative law judge a decision on the Standard General acquisition of Tegna. At the time, I wrote with my House counterpart, Congresswoman Cathy McMorris Rodgers, quote, "First, to keep the Commission accountable to Congress and the public, a full Commission vote is required for certain matters, particularly those involving significant legal or policy consequences. Designating a multi-billion dollar transaction such as the Standard General Tegna transaction for an ALJ hearing is precisely the type of serious decision for which Commissioners must take responsibility." This is a question for all four of you. Do you believe the FCC should have a Commission-level vote on the Nexstar-Tegna merger? Mr. Ruddy.

Well, especially because they're subverting what Congress said and it was a congressional issue. You know, Mr. Johnson worked for Ajit Pai when he was Chairman. Ajit said, he was Trump's Chairman at the time, he said several times it was congressional law. He didn't like the law, but he said we had to, his words, "the law must be obeyed." Chairwoman Rosenworcel under the recent administration nixed the Nexstar deal saying that it violated the congressional law of the 39 percent cap. Brendan Carr was the ranking Republican at the time and he offered a concurring opinion that did not dispute that.

Okay. Mr. LeGeyt.

The NAB doesn't advocate on any specific transaction, but we certainly support the full Commission voting to raise the national ownership cap.

Mr. Johnson.

Under the Communications Act, Senator, the Commission has discretion to decide whether, with very limited exceptions, whether to decide something at the Bureau or Commission level. Even when something is decided at the Bureau level, there are mechanisms for review before the full Commission as well as ultimately in court.

Mr. Waldman.

We haven't taken a position on that, but in general, issues of this importance should be at the Commission level.

Thank you. Ranking Member Cantwell.

Well, Mr. Chairman, I want to weigh in on that particular point before I start my question. I definitely believe the FCC should have a Commission-level, if they are going to take action. I'm not making a statement as to whether they have that power or not. I'm simply saying if they do, it should be at a Commission level. And I think that Chairman Carr has practically prejudiced himself in an information process that's supposed to be independent if he's already made a decision. So I don't like that. I don't like that. But let's start with something maybe we can agree on. Do the witnesses think that right now, I mean, because I look at these viewpoints, I'm kind of, last week I was where Mr. Waldman was. I was like, on this hand and that hand, and what is it we really want to provide? And so, you know, I'm for elevating this larger context that Big Tech just has too much power. But I don't know. Do they have too much power in this marketplace? Mr. Ruddy.

Well, I think that consolidated Big Tech is a danger to the public interest. I think there should be more competition in Big Tech across the board and there should be...

I meant as it relates to now preserving local journalism and how much of the business model. I mean, I think here you have a cord-cutting problem. Mr. LeGeyt basically has a big money-maker for himself right now, which I'm for. I am for broadcast sports. Not because the Seahawks won. I'm for broadcast sports because I do not want my consuming public to have to pay to see content they can just watch advertising to see. I want it to be cheaper. So I'm for not allowing these people to put so much content behind a paywall and making consumers pay out the nose for it. So anyway, so I just on this point, do we need to do something here so that we have more level playing field? Are they the bigger issue here?

No, I think that local news is almost entirely by broadcast TV. Big Tech creates almost no original local news.

But Mr. LeGeyt is telling you this is his money-maker right now and he's getting eaten alive on this because of what's happening, because of the digital advertising revenue in the...

They haven't made the case. I'm sorry to say, Senator, they have not made the case that Big Tech has hurt their businesses. Their businesses have grown 500 percent in the past decade. How do you explain that? That's all during the Big Tech period.

Believe it or not, I'm going to agree with you in a minute, but on this point, I don't. Okay. And so I think the point is, okay, does anybody else want to comment on this quickly because I have another question?

Look, Big Tech has entirely undermined the advertising model for local broadcast.

Okay. Mr. Johnson.

I think by eliminating some of these prescriptive rules, Senator, what you do is you give the affiliates better bargaining power negotiating at the table so they can, in their discussion with MVPDs, with Big Tech, they can say we want more local control over programming.

Mr. Waldman.

Yes, absolutely. Big Tech is a big part of the reason for the undermining of the local news business model for TV and local news, and it's about to happen again with AI.

Right. So Mr. LeGeyt's key point though is that he basically, and look, I've helped the broadcasters on good faith protections for broadcasters. I've actually sided with the broadcasters, you know, on these issues that now we're hearing complaints about. But again, in this world where the cord-cutting and streaming media is leading to this, I'm not sure that I believe that consolidating people so that you could then own three TV stations in one media market and then basically decimate that media market without competition is the way to go. And so I have a concern, Mr. Waldman, that that is where you to your question, which is you're asking me, us a question to consider, but I'm asking it back. Why would I want to support, now I'm not saying you have to have three TV stations in every media market, but I do want diversity. And why would I allow for more consolidation when our biggest problem has been concentration? Why would I go for that? Why would I go for this merger if in fact you're going to basically hand over more concentration, less diversity? And if that means somebody's going to do general programming and give me less, and Mr. LeGeyt, you made a good point about the number of eyeballs, a power of growing, because like digital did grow even with broadcasters. But that doesn't mean that we had all the local content or the diversity of voices. So isn't this the crux of the issue that basically you're going to be able to own more media markets and concentrate the own three TV stations and then basically decide how to blow them up and give me general programming from New York, which I don't want?

Which we are seeing more of. And you know, Senator Cruz quoted President Reagan a while ago. I would quote President Reagan on another point, which is trust but verify. Yes, in some cases, mergers might lead to more local news. But the evidence is that in many, many cases, it goes the other way, that it cuts local news. So if you're going to be if Congress considers loosening these caps at all, it should be contingent on commitments that they maintain or increase the number of local reporters.

Okay, interesting. I mean, this is the crux here. We can't be for a merger just to get bigger to fight Big Tech on their eating up sports revenue, which they're putting behind a paywall that makes consumers pay more. I can't be for that. But I do think that we have to also, you know, point out, Mr. Ruddy, that like we I really don't want so much concentration of this marketplace by 80 percent or whatever it is ownership by these big corporations who then just generalize content out to my news stations. I that's not even healthy for any of us in the ecosystem.

The National Hispanic Coalition did a poll in December, Democratic pollster, that found over 70 percent oppose the Nexstar merger and the consolidation, only about less than 7 percent supported it. A recent Republican poll, Public Opinion Strategies, found again 75 percent opposition to consolidation, only 7 percent. So this is a bipartisan...

Well, I I definitely support more diversity in voices. I'm not we got to figure out how we're going to get there. So but anyway, I appreciate Mr. Chairman. Thank you.

Thank you. Senator Capito.

Mr. Chairman, thank all of you all for being here. I'm around the corner here. I've been listening to the debate, very interesting, obviously diverse opinions. I'm trying to think of my constituents listening to the same debate. I live in a small state, West Virginia, that has Nexstar stations and others. And I'm going back to the storm that we just had two weeks ago. What is everybody watching? They're watching their local broadcaster. They want to find out what roads are closed, what schools are closed, what we can anticipate coming forward. And you know, we all laugh about when you get old like I am, you know, you're all watching the weather channel all the time or the weather of your local weather. This is really important for local broadcasting. I agree with Senator Cantwell, the sports aspect of it is a huge aspect for a small state because we can't access, you know, sometimes if you don't buy the Big 12 network, you can't watch West Virginia University play, which is like our pro team. We're not like the Chairman that has all kinds of teams in his state. So or Super Bowl winners like the Ranking Member. I'm trying to get in good with both of them if you can tell. So if I'm sitting there and I've just experienced and I'm watching this hearing, I'm going to give it to all four of you because I'm interested to see how you would how would your position help those people that desperately need to have that local programming in times of emergency, weather outages, you know, and all other political news and everything. How would and we'll start with Mr. Ruddy.

Okay. Well, let's imagine in one of those markets in your state, Senator, Nexstar owned two to four of the major highly rated stations because in 30 markets across the country, they will have that type of dominance. And we know that in 15 already, they just merged the newsrooms. So if you go to channel to the NBC channel, for instance, which they might have as an affiliate, and you see that they're covering the hospital and what's happening at the hospital as a result of the tragedy or the natural disaster, and then you watch the CBS station, which they also own, and they have the same reporter at the hospital, but they don't have the resources because they combined newsrooms, they're not at the school, which some kids were injured, let's say. So they save money, but you have less content, less diversity of news. And that's the danger of both local consolidation and national consolidation.

Okay. Let me ask Mr. LeGeyt to answer that.

Thank you, Senator. Mr. Ruddy's narrative is a compelling one, but it's a fiction because that is not what is happening in local communities. You know this well, WOWK, which Nexstar owns, is as committed a local station as exists in the country. And some of the combinations that we're talking about in local markets, they're the equivalent of one printing press being able to produce two newspapers. What we are what we have shown over the course of the last decade in those markets where consolidation has occurred is that it means more local news and it means more local journalists. Now, certainly scale can mean some efficiencies when it comes to corporate overhead, but we as local broadcasters don't win if we're not producing the best local news in communities across the country. If we just become another nationalized media, we're losing that battle with Apple Plus, with Amazon Prime. That's not where Nexstar or any other local broadcast group is going to win in this media landscape. And the data shows that as we are able to get more revenue, whether it's from advertising or whether it's from retransmission consent, that that's being plowed back into local journalism and it's also ensuring that we can provide expensive sports on broadcast television.

Alright. Mr. Johnson.

Well, thank you for the question, Senator. Having spent a year out in West Virginia working for General Morrisey back in 2017, I think it's very important that West Virginia communities get represented in these debates over media ownership. I think there's two ways in which removing some of these prescriptive ownership rules will help West Virginia communities. First of all, with respect to local news stories, as you say, the economies of scale that you introduce when you have larger station groups, that allows local affiliates to be more nimble. If there's a natural disaster, a pressing local news issue, they can often redirect resources to make sure that there's 24/7 coverage of whatever it is that's going on in a way that smaller independent stations sometimes cannot. The other thing is it gives affiliates more leverage at the bargaining table, both with the national networks and with streamers and online platforms, where oftentimes right now the networks really have the biggest seat at the table. So that you're asking questions like can we have more local programming in West Virginia, can we have more local control over programming? That's going to ensure that those stations represent West Virginia values and not just California values.

Alright. Thank you. And then Mr. Waldman, you want to take a swing at that?

You know, I think in addition to what others have said, I would say I know the topic of this hearing is the broadcast consolidation rules, but that's not the only factor that's going to affect whether you have local news in West Virginia. And so we do also need to look at the bigger picture here, which is Big Tech and what's about to happen with or starting to happen with AI and all the other ways that we can strengthen the local news environment. You know, we see around the country a flowering of new startups and efforts to help with local news, improve their business model, more philanthropy helping. But at the end of the day, I don't think we're going to get to what we need without Big Tech playing a role and public policy playing a role with creative solutions that will strengthen news in West Virginia and other places.

Yeah, I mean, I think that local broadcasting is absolutely essential to retain. When I see what's happened to our state's newspaper, we're down to five day without being too critical of the newspaper, a lot of it's national stories that are two days old. And so I don't want to see that happen to our local affiliates and I want to protect that the best way that I can. So I appreciate the hearing. Thank you, Mr. Chairman.

Thank you. Senator Kim.

Yeah, thank you all for coming on out here. Mr. Ruddy, I wanted to follow up on something you had talked about. You had talked about the retransmission fees and talking about the challenges there in terms of cost. I'm trying to think about this in terms of my constituents, in terms of the consumers, and what is it raising their cost. So I wanted to ask you, when you're talking about the retransmission fees, how much of that do you believe is being pushed onto the consumers in terms of the cost going up?

I think ultimately almost all of it goes because they have to pay, the cable operators have to pay that to the TV broadcast groups. And so they need to make a profit, so they're going to have to pass those most of those costs over. And we're seeing it in the cable bills, which have... ...gone up enormously. And the reduction of content in cable, there's been removal of channels. Again, there are so few independent media voices because they'll tell me, the cable operators, we like Newsmax. We don't have any money left for you because we have to pay the retrans fees, or they have to pay companies like NewsNation that have very little ratings, high fees because of their market leverage of their broadcast outlets. So it's not good for consumers.

So you're saying that media, I'm trying to think through how do we articulate what is happening to the consumer. So the media consolidation is leading to these retrans fees increasing due to the leverage that these companies now have, and that's being passed on to the consumer. Is that the argument that you're putting together here?

But a little bit more than that. What we find is the bigger the station group or network, the more leverage they have, the higher fees. So when Nexstar went above the cap several years ago and went to 70 percent, it was like a boon to the company. And that's where they went up from $300 million in EBITDA to almost $2 billion. And they're so greedy, they now want to go to 80 percent because they'll know they have even more market leverage. And now you're seeing other companies in the broadcasting industry wants everyone to have this opportunity. Ultimately, who gets screwed, frankly, is the consumer, right? We have to pay those bills. And it's market manipulation, market abuses that are causing this.

Mr. LeGeyt, I wanted to bring you in on this. I wanted to ask you about another thing that Mr. Ruddy said, and then I'll go back to what we just talked about. He was talking about how if this consolidation does go forward, he believes that there will be really just two or three companies that really just dominate this space nationally. I understand what you're saying about the competition with the tech companies, but at least in terms of just what happens if we sort of game out what happens if we lift up this cap, do you agree that we're going to see sort of two to three companies kind of dominate nationally?

I can't see the future in that regard, but I can tell you that the status quo is untenable. And I think it's important to acknowledge here that these restrictions on the 39 percent cap, those are an ex ante restriction, meaning before you can even get to the merits at the FCC or the Justice Department of making the case for your transaction, you're not at the table if you are proposing a transaction that violates these restrictions. So what the NAB is advocating for is for those ex ante restrictions to be removed. I also think it's important to acknowledge here that over the last three years, industry-wide, retransmission consent revenues have actually decreased year over year. Local news is funded by two...

Can you say that one more time just so I get it right?

For the across the broadcast industry, the retransmission consent fees that is being represented we have this enormous market power to extract have actually decreased year over year over the last three years. And the reason is simple. We're competing with Google, Apple, Netflix, Amazon for audiences. Our audiences have fragmented. Local broadcasters are competing against Google and Facebook for advertising dollars. So this narrative, and Chairman Cruz asked me the question directly earlier and so I want to state my answer unequivocally: no, Nexstar does not have market power. They are competing against global behemoths for both audience, advertising, for programming rights. No broadcaster has market power in this media landscape.

No, thank you. Look, I know my time's run about, but Mr. Waldman, I'll just ask you a question for the record if you can get back to me later, but just about what we had talked about earlier about my state of New Jersey, the news deserts that we're continuing to have, the difficulties. I'm really just trying to get a sense and painting the picture of what would happen to my state, to the market that already is struggling to be able to find local news and to be able to have people in New Jersey understand what's going on in our community. So if you don't mind, we can follow up with that later. Just thank you. With that, I'll yield back, Mr. Chair.

Thank you. Senator Moran.

Chairman, thank you. Thank you to you and the ranking member for holding this hearing. Mr. LeGeyt, let me start with what you just indicated in your response to the Senator. So this, what we're talking about is the threshold. The actual determination, there's still other factors that come into play that would allow for an acquisition or a merger to occur if it first has to be allowed by this standard, this threshold.

That's absolutely correct, Senator.

And those items would then protect competition, would be among other things that would be considered.

The FCC still maintains the authority to review every transaction and assess whether it is in the public interest on a case-by-case basis. The Justice Department will examine the pro-competitive and anti-competitive impact of any proposed transaction. Nothing that we are advocating for in terms of eliminating these decades-old restrictions will change that authority to review transactions on a case-by-case basis.

Mr. Johnson, call on you as your in your previous capacity. Would you expand on the history of the FCC's actions in updating the national cap? Where does the FCC derive its authority to change the cap, and why elimination of the national cap is necessary for continued health of local broadcasters?

Thank you very much, Senator. I appreciate the question. So the FCC has been adopting ownership rules in some version of the national cap since the FDR era, pursuant to its general rulemaking authority to adopt rules to carry out the purposes of the Communications Act in the public interest. And Congress has never disputed that it has that general authority to adopt ownership caps. In fact, on two occasions, by directing the commission to modify its rules to set a different cap level, the commission, excuse me, Congress essentially ratified: yes, FCC, you have this authority to adopt these kind of rules, and here we think, based on the current marketplace realities, that the rule should be set at a different level. So Congress made that determination in 1996. The D.C. Circuit, as I said, it took a look at the text of that statute and it said, based on an argument that the FCC came in and said we don't have to make any adjustments or we can't make any adjustments to it, the court said no, in fact, this language retains your discretion to modify the cap to a different rule, to a different amount. Two years later, only two years later in 2004, Congress again changes the statute but keeps that key formulation, modify its rules in place, showing that Congress in fact did not intend to take off the table future FCC changes to the rules. In fact, there was a House bill and a Senate bill, both of them would have expressly enshrined the cap into law, as the D.C. Circuit suggested. There was another statute four years before 2004 in which Congress explicitly told the commission you cannot change the minimum separation distance between broadcast channels unless and until Congress further acts. So Congress knows how to take away FCC discretion when it wants to, to use that clear language, but it didn't do so here. And so in my view, the FCC retains that discretion.

Thank you. Mr. Waldman, tell me what the world looks like with a cap being increased, and tell me what the world looks like if a cap is not increased.

Well, you know, we've heard testimony that's said in the past when you've had consolidation, it's led to more local news. And we've heard testimony saying that in the past when we've had more consolidation, it's led to less local news. The reality is both things could happen. And so when we're talking about what the FCC's authority is there, it's not just about the cap, it's also about the very definition of localism. We can't keep playing lip service to localism.

Let me interrupt you and say that goes back to the point that Mr. LeGeyt was making about there's more to come regardless of what the cap is. The FCC determines the makes the determination about whether a merger or an acquisition is in the best interest of...

Yes, that's true. And I would just say that I would feel more comfortable if the FCC in making those determinations was centering local news, the fate of it, and how many local reporters there are in a community. Because if mergers were really looking at that, I think we'd be pointing in a much better direction.

So that is a task that perhaps members of Congress who care about local news can make that case to the FCC, which is really an issue perhaps somewhat separate from the topic of whether or not to increase the cap.

Or Congress itself can declare statutorily that the health of local news is part of the core definition of localism that should be at the heart of any merger discussion.

Nice to know that there's someone who thinks that Congress could still legislate. Thank you.

Senator Rosen.

Well, thank you, Ranking Member Cantwell, and I want to thank Chairman Cruz for holding the hearing. All of you for being here. And as one person who loves our local news, I will say this is a really important issue and at the heart of each and every one of our communities, right? Because and I just want to say the media environment's changed dramatically since media ownership caps were first established and since Congress last changed them in 2004. While the ownership cap may need to be revisited to better align with today's media market, I want to be crystal clear: just because large corporations like Nexstar and Tegna want to merge, it doesn't mean they can simply ignore the laws that Congress has put in place. In order for there to be a merger that results in ownership above the 39 percent cap, Congress would have to change the law. So I'm going to get my first question to you, Mr. Waldman. This isn't the first large media merger or media merger attempt that we've seen in recent years, right? So when massive mergers like Nexstar-Tegna have happened, what's been the impact on local jobs, consumer prices, our local newsrooms? And what happens if there are no other, well, if there aren't multiple newsrooms in one market, what happens to our local news? What happens to the flavor of our communities and not just our jobs, our union jobs, our jobs around, but again, the fabric of our community?

Well, you know, you see sometimes in certain circumstances you'll have two TV stations and to a consumer it looks like there's two different operations and there's they may be even competitors when it's actually they're using the same news broadcast, they're using the same content. So part of what happens with consolidation is you have the mirage of lots of diverse voices but the reality of less and less original reporting. And you know, whether on the question of whether or not removing the caps would lead to more situations like that or less, you know, the evidence is more in the category that it's going to lead to less. You give someone money, it doesn't determine what they're going to spend it on. And if local news stations or station groups have more clout and more scale, there might be some that would use that for local news, but there's certainly no guarantee of that and the evidence is actually in the other direction. And so you end up in places like Nevada where if you look at the whole local news ecosystem, you have the repetition of the local TV, you have the newspapers declining, and the result is like a 75 percent drop in the number of reporters in Nevada.

And I think it's very sad for our communities and for everybody who lives there. I want to move my next question to you, Mr. LeGeyt, because I want to mitigate the negative impact of the rules changes because the FCC and Congress established media ownership caps to protect consumer prices, to protect media diversity, protect jobs in journalism. It is again, I believe, really important foundationally to our democracy. And I recognize that as a media landscape changes, Congress should of course reevaluate whether the rules need to be updated. Things are always changing. So my question to you again, Mr. LeGeyt, is if Congress changes or removes the ownership cap, how can we ensure that we keep media affordable for consumers, protect our local newsrooms, our journalists' jobs, give them that independence to focus on stories that matter to the neighborhoods, to the local community, right? And just improve media diversity in those independent voices that really focus on what matters? And if the current rules in place aren't working today, how do we protect the values? What's our alternative?

Senator, thank you for the great question. I think first we need to level set with where we are today in local broadcast. If they are measured as a standalone, meaning local stations independently in each market irrespective of who owns them, more than half of local broadcast newsrooms in this country are currently as a standalone not profitable. And that number is worsening every day. So the only way to ensure that communities across this country, many markets where individual stations would not be viable in terms of their own providing a local news, is to give those owners some scale so that they can take those efficiencies and plow them into local newsrooms. I also think we're being prejudiced here in this debate by what's happened in the newspaper industry, and certainly that is a cautionary tale, but in broadcast, the data shows the exact opposite where over the last 10 years where broadcast groups have been able to gain more scale, it has actually resulted in more local news. And as Mr. Waldman alludes to, if you don't want to measure that success by hours of local news, let's look at our newsrooms, the employment in our newsrooms themselves. You know, we're employing more than 27,000 people in broadcast newsrooms. That's more than our print counterparts, our digital news counterparts. Broadcasters truly are the last bastion of local journalism. Those numbers actually increased after the FCC in the first Trump administration took some actions to relax those cross-ownership rules. So those broadcast newsrooms, even following the scale some of the transactions that were done in the wake of those rule changes seven years ago, we continued to grow our newsrooms. It's only been over the last three years that the numbers have flattened out a little bit. I'm looking forward to more scale that eliminating this cap will allow so that we can continue to grow those newsroom numbers.

Well, thank you. Finding that balance, it's going to be up to all of us. So thank you all for being here. Madam Chair.

Senator Young.

Thank you, Madam Chair. I thank our witnesses for being here today. There are a number of reasons why I regard this hearing as important. If members of my community don't have access to their local news, it can be an impediment to useful information and the decisions they make, the actions they take. Our sense of community can be undermined if we don't have access to information, our sense of solidarity with our neighbors. But I actually think what's most at stake is our democracy. If I don't know what's happening in the local planning meeting, if I don't know what's happening in the school board, if I don't know where moneys are being invested locally as it relates to road projects, it's hard for me to cast informed votes at the ballot box. It's hard for me to meaningfully engage in democracy at the local level. Mr. Waldman, you've spoken to this issue of localism. Could you just take the predicate I've laid and unpack a bit more, say in the next 30 seconds or so, why this hearing is so important to you and should be important to my constituents?

Well, you put it very eloquently. I mean, on some level there's really concrete harms, literally more government waste and corruption, there's less knowledge about things, but it is also about community and cohesion of community.

Let me interrupt you and say that goes back to the point that Mr. LeGeyt was making about there's more to come regardless of what the cap is.

Exactly. What we are seeing now as local news has contracted, it's actually led to more polarization. And that's because you don't have the news about the things that bind us together.

And we have this twisted phenomenon, it strikes me as twisted, others have I think come to regard it as just the way things are, where even local news is becoming nationalized, fitting into a national narrative. Completely unhealthy, superficial I should add in terms of how we look at some local issues, and it sells short our citizens as we try and provide them the feedstock to be engaged members of the community if they don't have access, we don't have access, I'll personalize it often, to engage in local issues.

There was a study that came out just yesterday that pointed to exactly this paradox, which is that people actually feel like it's easy to get information about national news and harder to get news about their own neighborhood.

So this is, I just thought it was really important to cover that for my constituents and for others because I think we make a mistake if we just regard this as an issue for business people and investors. It is that, it's a very important consideration, but we also need to be able to debate the merits and demerits of ownership decisions and caps within the context of community. So Mr. LeGeyt, if the status quo as it relates to the ownership caps, something we've discussed at some length here, were to remain the same, what would be the impact to local broadcasters 10 years down the road, and what would that mean to my constituents in the state of Indiana?

Thank you, Senator. And just to follow on from your initial remarks, what local stations are doing, what local broadcasters are doing in your community throughout Indiana is providing that local trusted news, bringing communities together when other forms of media are monetizing division. We are combating mis- and disinformation. That's what local broadcasters do best, and we don't have a business if we are not exceptional in the service we're providing in local communities. If you were to look market by market across the country, the number one station in those markets is the station that is most devoted to those community services. So that is what we are fighting for today is that trusted local journalism, but it needs scale, right? As I alluded to previously and in my testimony, but today as a standalone, more than half of local broadcast newsrooms in this country are not profitable. We are competing for advertising dollars with Google and Facebook, global behemoths. We're competing for eyeballs with Netflix and Amazon. We need scale in order to better compete, and that scale is going to pay for that localism, that investment in communities that is expensive. No one else in media has boots on the ground when that storm rolls through, both in anticipation, during the storm, and then in the aftermath to help the communities rebuild. And we need scale to compete with these nationwide pay TV providers, otherwise we can't fund that journalism and we certainly can't pay for premier sports like the Super Bowl and keep them on broadcast.

I regret I'm already over my time, but I would love to ask all of you questions in this forum. Thank you, Madam Chair.

Thank you, Senator Young. Senator Klobuchar, are you ready?

Yes.

Okay, great. Senator Klobuchar.

Thank you all. I'm sorry I missed some of it. I'll catch up. I was at a ranking member on a hearing in Judiciary. So I guess I'll start with you, Mr. LeGeyt. As you know, I lead the Journalism Competition and Preservation Act to ensure that broadcasters and news publishers can negotiate for fair compensation with the big tech platforms, including some generative AI platforms. So it's becoming to me more and more important we go forward with this, and we know there's been profiting off of news content across the board. The National Association of Broadcasters has said that this legislation would level the playing field by enabling fair negotiations and increased investment in local newsrooms. Why is it so critical for local news to empower news creators to negotiate their fair share of advertising revenue with big tech platforms? As you know, I lead that bill with in the past with Senator Kennedy.

Thank you, Senator, for the question. Over the course of the last two decades, and I think this is an item that everyone on this panel can agree with, the big tech platforms have siphoned billions of dollars out of local communities. More than 70 percent of the ad marketplace has gone from traditional media over to big tech, and that's undermining our ability to fulfill that local obligation that's been the topic of today's hearing. The JCPA is an extremely meaningful way to allow for leveling that playing field, allow us to negotiate fair compensation when our content is accessed through those platforms and increasingly through the generative AI platforms. But that lack of scale is also a symptom of what we are talking about here today, which is that broadcasters lack that scale to compete with these global behemoths in every context. And an important first step is for the FCC to update these broadcast ownership rules, which would allow us to better compete with the tech platforms as well.

Okay, thank you. Sort of along these lines, as you know, Senator Cruz and I passed the passed our bill, the Take It Down Act, regarding non-consensual porn, both AI-created and actual. We've seen so many suicides of kids over this, and we passed it and the President signed it into law this last year. The next step to me is the DEEPFAKES bill that Senators Coons, Blackburn, Tillis, and I have put forward that would establish rules of the road to give artists, musicians, anyone control over their own voice. In a previous hearing, you told about a story about how people had created deepfakes of local news broadcasters. Could you talk while I know this is a little off the focus, but not actually because all of this stuff is making it harder for the real news to get out there, the effect of this and the need for some rules on AI?

Thank you, Senator. I'm happy to talk about it because it's existential. A local broadcaster is only as good as the trust that we have in our local communities, and these deepfakes, especially of local news anchors on our radio stations, local voices, risk undermining that trust. So we are significant supporters of your NO FAKES legislation and look forward to working very, very closely together and advocating to get that over the finish line because it is absolutely essential to ensure maintaining that trust on local stations as opposed to what's going on online.

Thank you. Mr. Waldman, we've seen AI developers enter into licensing agreements with some of the largest publishers: New York Times, Associated Press, Wall Street Journal. I'm concerned, however, that smaller papers, which we still have a number of them in Minnesota, that lack resources to protect their intellectual property are not benefiting from similar deals. What role should companies that profit from AI models that use news content play in ensuring journalists and newspapers are fairly compensated?

I share that concern. There have been deals with big corporate media, but medium and small-sized players have been left out. And the AI companies have said they're too small.

Didn't USA Today do some study that, you know, going off script here, always trouble, but just showing that it's some of the smaller markets that were getting things stolen more because there's no way for them to access that, so instead of making agreements with them, they're taking the content.

It's easy. The papers or the TV stations don't have the resources to fight it, they don't know how to track it. And so yes, they're being...

And the AI companies don't have the data on some of the smaller stuff. I know this from checking, like you go to an area, a small town where there's a flood and there's they just have tons of stuff wrong all the time.

Well, that's the great riddle here is that local news is degrading, AI is making it worse potentially, and that will make AI worse, you know, because AI needs to have accurate local information.

So how can we ensure, last question, that smaller newspapers are paid for their content by AI companies?

Well, one is bills like yours or other efforts to require that local folks are treated evenly and that they have the ability to organize collectively. I would also say that you'd want to look at things like mitigation fees placed on big tech companies that could be used to finance legislation to support local media.

Did you put your thumb up, Mr. Ruddy? Or your hand up?

No, I'm sorry. I was just somebody waved to me. One of the photographers. I figured I'd wave back.

Okay, that's a very good move. All right. Very good. Well, I just I mostly just think we need to think of this. There have been a bunch of Republicans and Democrats willing to talk about this. There's been a bunch of more conservative news organizations that we've been able to work on this. And just to sit there, to me, the potential of outside of this merger issue, the AI potential here too, if we do legislation that we make sure we're evening the playing field. I believe Senator Fischer's up for questions.

Thank you, Senator Klobuchar. And thank you to our witnesses who are here today. The hearing's trying to explore what's needed from Congress and its oversight of the FCC to update the video marketplace. What I see are clear competitive imbalances, especially between the broadcasters and big tech streaming services. Congress and the commission must also be mindful of the big picture ripple effects of modernizing the outdated regulations. Mr. LeGeyt, broadcast ownership caps were originally adopted to promote viewpoint diversity and localism. And I know that the Chairman touched on this topic as well, but I'd like to add a little Nebraska color in here.

Yeah.

I get extra time now.

...I will very simply. And there are markets all across the country. We have local broadcasters in 210 different media markets. Not all of them are Washington, D.C. or even Omaha. You are talking about very, very small markets where the economics as a standalone just don't necessarily exist to support a local newsroom. And what we have seen is that in those instances where broadcast owners have been able to gain some scale, you are seeing more journalism happening in those communities, more production of local news, and it benefits your constituents.

Thank you. Today the policies of broadcast ownership caps and retransmission consent, I think they're very entangled in practice that we see. We know that ownership caps limit how large a broadcast group can get. We also know that retransmission consent gives value to scale. Mr. Ruddy, should Congress view those two policies as operating in tension? And if so, what guardrails, if any, would be necessary do you think to prevent any unintended consequences if the ownership limits were lifted?

Senator, the it's pretty clear we've talked about Nexstar having already they bypassed the cap. They're at 70 percent reach and they're making a fortune, right? And they're getting it they get among the highest retrans fees of anyone in the industry I'm told. And they're doing about $2 billion in profit. And again, it's all these big groups and there's not they're not alone, right? We have Tegna is made $893 million in EBITDA profits, Sinclair $800 million in 2024, Scripps almost $600 million. There's this discussion here by the broadcast industry they keep saying this untenable situation. What's the they have given no data that they are being hurt in these markets and that the licenses are not worth anything. And the other thing that we keep hearing on the big tech issue, which I'm very concerned about big tech consolidation, but I don't understand why Brendan Carr at the FCC says, well, we should help the TV industry to fight the big tech, create more consolidation. As free market people, we shouldn't be as I believe trying to bolster one industry against the other. We should be holding big tech accountable and more competition.

Mr. LeGeyt, you look like you want to answer.

What we're asking for at the FCC is is not to help one industry versus another. This is to allow us to compete. You know, these are artificial restrictions on a broadcaster's ability to gain national scale and to gain some local scale that don't exist on any of our other competitors in the media landscape. This is about creating broadcasters viable so that we can invest in that local news and so that we can invest in that must-have sports programming.

And Mr. Johnson, if if these limits were were relaxed, how do you think that's going to affect consumer prices, local station autonomy, and do you have any evidence that would guide how you're assessing this?

Sure. Well, in my view, I mean, I think it's going to be good for local station autonomy and ultimately for consumer prices. I mean, the evidence shows and the FCC has actually looked at this on multiple occasions, at least three occasions of which I'm aware, that economies of scale brought by larger station groups tend to benefit the values that the commission looks at in its public interest analysis, including competition, including localism. What I would like to see is affiliates having a a larger role at the bargaining table in their negotiations with major networks or in negotiations with streamers, which right now those negotiations are dominated by the major networks. I'd like them to be able to bargain for more ability to preempt national programming that might not reflect the values of people in different communities across the country, right? I'd like them to be able to reflect for more ability to choose what syndicated programming are we airing. So I think that you open up those possibilities more when you remove some of these artificial restrictive limits. I mean, the kind of one of the questions raised by this back and forth is when you have this old ossified 39 percent ownership cap, do you regulate up or regulate down? I don't think the answer is you impose a 39 percent cap on the streamers that's pegged to decades-old market realities based on a snapshot in time back back in the 1990s or early 2000s. It's let's put everyone on the same playing field, continue to have competition review at the DOJ, you're going to still have public interest review at the FCC. That's going to give these broadcasters and these local stations a chance to survive and to thrive.

And Mr. LeGeyt, if I could just get a hopefully a short answer from you back to the retransmission consent fees that are there. Do you believe that the increased broadcast consolidation would have no material effect on that consent fees or do you think that such effects would probably exist but should be tolerated? Where are you on that?

I'm focused on the value that retransmission consent provides to local communities and local viewers. It is those dollars that are being plowed into local journalism. Without retransmission consent, there is no business model for local journalism, so that is my focus.

Okay. Thank you very much. We've been joined by Senator Markey. You're recognized.

And you've been joined by Senator Markey as well. [Laughter.] This Merkley-Markey thing is very confusing. We have been joined by Senator Markey, who is a good friend and colleague. I am so thrilled you are here today. I had Congressman Merkley-Markey for years and I thought I escaped it when I came over to the Senate. So thank you. So I'm glad that the Senate Commerce Committee is holding today's hearing on media consolidation because throughout my career I have been very skeptical of media consolidation because I believe localism is essential to our democracy. And when ownership is local, journalism is local. When decision-making moves further away, communities lose coverage, accountability, and trust. And that was true decades ago when I was opposing consolidation and it's still true today. And right now we're facing a real crisis in local journalism. Newsrooms are shrinking, reporters are losing their jobs, entire communities are becoming news deserts. And at the same time, we're hearing calls to solve this crisis by eliminating the Federal Communication Commission's national ownership rule and allowing even more consolidation at the national level. That would be a mistake. We need a much broader conversation about this because just as eliminating the national ownership cap won't solve the local journalism crisis, neither will protecting the status quo, especially as new technologies such as artificial intelligence continue to undermine the news industry's business model. So today I want to focus on one core question: how do we actually fix the local news crisis? Not grow national media empires, but revive local journalism. So Mr. Waldman, you and your organization have been working on this issue for years. Do you agree that local journalism is strongest when news outlets are deeply rooted in the communities they serve with reporters physically present and accountable to local audiences?

Absolutely. Local news in local hands works best. It builds trust. It's more accurate. It's more fair.

When policymakers are consolidating considering different approaches to the local news crisis, including enabling greater media consolidation, do you agree that those policies should focus on getting more journalists on the ground covering local communities?

Exactly. That should be at the center of the debate is whether or not there are enough journalists in those communities.

And I completely agree with that. And I think we need to start considering ideas for how the government can invest in local journalism. The states are ahead of the federal government here, and I know that you have examples from Illinois and Kansas that demonstrate that. Unfortunately, the roll call is on right now and I'm going to have to run over. But for those of us who care about local papers and broadcast stations, the responsibility is clear. We have to pursue solutions that actually rebuild local reporting capacity. And that means that as people are talking about media consolidation, we also have to ensure that it's not going to accelerate the disappearance of local journalism jobs. And it means identifying and advancing new ideas to solve the local journalism crisis. And that's why I've been working on legislation to invest in local journalism with a strong role for the states as the laboratories of democracy to distribute these funds to local news organizations to hire local journalists. Because if we are serious about saving local news, then the money needs to go to journalists who do the shoe-leather reporting and aren't scared to ask tough questions rather than simply increasing the size or reach of large media companies. So I look forward, Mr. Chairman, to working with you on these issues. I think this is a very important discussion for us to have. And with that, I yield back because I really have to run over and make the roll call on the floor. Thank you.

Thank you. Senator Moreno.

Thank you, Mr. Chairman, for acknowledging you saved the best for last. I appreciate that. Right? Is that that's what you said? [Laughter.] You may extend your remarks at your leisure. Perfect there. Perfect. All of you are in the media entertainment and broadcast business, whether directly or indirectly so. As we approach the end of this hearing, give me the 20 to 30-second reason why the cap should or should not be increased, starting with you, Mr. Waldman.

Well, I think our group actually hasn't taken a position on whether or not they have the authority to do that.

You can feel free to.

But I would say this, that if you look at liberalizing the cap, don't just assume that scale will lead to more local news. If you believe that's a possibility, then require it. Require that liberalization is tied to guarantees that it will lead to more hiring of local reporters.

Thank you. Mr. Johnson.

Senator, I dealt with a very similar issue when I was general counsel of the FCC under Chairman Pai. We repealed these prescriptive net neutrality rules that were industry-wide applied to everyone, every internet service provider of every shape and size. The problem with prescriptive rules like these media ownership rules is that they quickly become outpaced by technological change. This 39 percent number is pegged at what networks look like, broadcast groups look like 20, 25 years ago before this whole explosion of online streaming content. We in order to have a prescriptive rule like that, you need to have pervasive evidence of market failure. We don't have that here. You need a scalpel instead of a sledgehammer. If there's competition concerns, let's handle that through the Department of Justice, through the FCC's existing public interest review, not through these outdated prescriptive rules.

All right. Thank you. Mr. LeGeyt.

Modernizing these ownership rules, including elimination of the national cap, is existential for the future of local broadcasting. Our industry is competing for advertising dollars with Google and Facebook, global behemoths. We are competing for audience and for programming with Netflix and Amazon. And simply put, we are doing it with one hand tied behind our back because we can't even gain scale nationally to allow us to compete in those markets.

Mr. Ruddy.

Well, Senator, I think there's several reasons. One is Congress set the mandate. Michael O'Rielly, the former commissioner, just said overwhelming number of commissioners said it's law. Ajit Pai had said it's law. Brendan Carr had signed a concurring opinion saying it was law. They don't cite any legal experts that I'm hearing from that are saying that you could just change it by a bureaucratic act of the FCC. We've been sold a bill of goods. The FCC was mandated to do these public TV licenses to serve the local communities. In my mind, there has to be a tremendous emergency for this to all be waived so that big three or four big companies can own all of these licenses. And so far, the broadcast industry has not told the Senate one any data that provides that they're in crisis. In fact, Nexstar made $2 billion. If you look at all the other companies, the top seven TV station groups all made pretty much in excess of $500 million in EBITDA in 2024. There is no crisis. They're inventing this because they know they can make billions of dollars by waiving the rule. And it doesn't serve the public interest, competition, or the diversity of voices that the public would like, especially with local news.

All right. Well, thank you. I'll turn it back over to the Mr. Chairman. Thank you.

Thank you, Senator Moreno. And I will recognize Senator Lujan. And I will point out that Senator Moreno made the observation that this committee was leaving the very best for last. Senator Lujan.

Mr. Chairman, I don't know what you're up to today, Mr. Chairman, but Bernie, I appreciate that, sir. I knew you were coming in. Thank you, Mr. Chairman. Mr. Ruddy, when Chair Carr appeared before this committee, I asked if the Federal Communication Commission was an independent agency. And he responded, quote, "It is not formally independent." Now, frankly, his answer isn't surprising given his willingness to do the president's bidding, I would say. As a matter of fact, the FCC's website stated that it was an independent agency until I asked him the question. And while I thought Chairman Carr was the decision-maker at the FCC, clearly he's not because someone that was over there, they changed the website. That aside, a few days ago, the president posted on Truth Social regarding the Nexstar-Tegna proposed merger, quote, "Get that deal done." And Chairman Carr responded on X, quote, "President Trump is exactly right. The national networks like Comcast and Disney have amassed too much power. For years they've been pushing this Hollywood and New York programming all over the country with no real checks. Let's get it done and bring real competition to them." Now, my question is, are you concerned about Chair Carr's willingness to rubber-stamp this merger? And let me just go on to say that I certainly agree that I think in your filed testimony that Congress is the one that established the 39 percent threshold here. But my question is, are you concerned about Chair Carr's willingness to rubber-stamp this merger?

Well, you make a lot of good points. I do believe it's an independent agency. And even as an independent agency, they should be listening to the president, members of Congress, and others. And they certainly should take that into account in their decision-making. He is not alone at the commission, as you know. There's another member and hopefully there'll be a Democratic another Democratic member soon and another Republican member. I think Chairman Carr has not given the president good advice. I mean, on the face of it, he says that he wants to increase competition by allowing massive consolidation so we move from seven TV companies to two or three. How does that increase competition? The purpose of competition and deregulation is to lower prices. But what we're seeing is when you in a closed market, there's only four major licenses in every market, that they increase prices because they have so much market dominance and power. It makes common sense. I believe that the chairman has been inconsistent. For example, I think he was right to criticize Jimmy Kimmel. I don't believe in the censorship on Jimmy Kimmel. But I think that, you know, he'll say that I'm involved in this. I'd like he's calling for him to be fired because he says it's in the public interest. These are public licenses. But at the same time, he's saying the public interest doesn't matter and we should just allow three or four companies to own all the licenses. I think there should be a consistency. I think he should encourage all of these major networks that when it comes to politicized comedians, they should show balance. And I think it's unfair that we've had several that have just bashed President Trump for the past 15 years without response. But I think the answer again is not censorship and it's a balanced interest for the public interest. That's what these licenses are all about. And I think the merger of Nexstar has already proven it's bad for consumers. Their prices have gone up, passed on to cable fees. It's led to the decimation of newsrooms in markets where they own more than one, two stations. You know, when before they did the merger with Tribune back a few years ago, they had 16,000 employees. Within one year, they went down to 12,000 employees. If you're a journalist working for Nexstar, you should be starting to post your resume if this merger goes through. It's going to be thousands of jobs. But ultimately, again, it's the local communities that get hurt because of the lack of news diversity.

Well, to your point on that, sir, the president recently expressed support for the Nexstar-Tegna deal, yet was silent on the ownership cap. Have you talked to President Trump about the TV ownership cap?

I have talked to him in the past. I have not talked to him since he made that post.

Can you share what he said?

But but let's go back. He was very emphatic back in November. He posted to Truth Social that bigger media is not good, that less media, less bigger networks is better, and that he supported essentially the ownership cap. In the Nexstar deal, he makes no reference to the to the ownership cap. I believe that Nexstar is already in violation of the ownership cap. They're at 70 percent reach. They want to go to 80 percent. I think the president I think the president makes a lot of good decisions. And he does when he's fully informed. I think Chairman Carr has not informed him and advised him well on this issue. And I have a disagreement with Chairman Carr very significantly. And I think he's not he's not playing by common sense rules, which is more diversity of companies leads to more competition and lower prices.

I appreciate that, sir. Mr. Chairman, I have other questions. I'll submit them into the record because of time. The one thing that I'll also share based on your response, Mr. Ruddy, that I didn't get a chance to share with Chairman Carr. As if you watch that hearing, you see how Chairman Carr was very critical of President Biden. He said President Biden made one bad decision after another. Well, if I had Chairman Carr in front of me again, I would remind him that one of the worst decisions he made was nominating Brendan Carr to the FCC. Thank you for the time.

Thank you. Since there is apparently virtue in being last, I will take the chairman's prerogative to do so. I want to go back to a question that I opened with and I want to ask a specific yes-no. We talked about whether the FCC should make this decision at a commission-level vote or at a bureau-level vote. And several of the answers said any decision to change the ownership cap should be at the commission-level vote. I want to ask each of you yes or no: should the FCC have a commission-level vote on the Nexstar-Tegna merger? Mr. Ruddy.

It should be a commission-level vote with the full public process.

Mr. LeGeyt.

I don't have a position on that.

Mr. Johnson.

So in transparency, Mr. Chairman, my firm represents Nexstar in this deal. I just want to say that for the record. I'm not speaking for the client. From my personal view, the answer is the same. That's a matter of commission discretion under the Communications Act.

Mr. Waldman.

Yes.

Two yeses, two dodges. Okay. Let's get to the substance of the law. There is a disagreement about whether the FCC can change the 39 percent cap. Let's review what Section 629 of the 2004 Consolidated Appropriations Act did to the Telecommunications Act broadcast ownership rules. It changed the national television cap in the statute from 35 percent to 39 percent. It gave businesses two years to come into compliance with the 39 percent limit. It barred the FCC from using its forbearance authority to waive the cap. And it expressly excluded the 39 percent cap from being part of the FCC's established regulatory review process. This is a question for both Mr. Ruddy and Mr. LeGeyt. Yes or no, on the day after the enactment of this 2004 law, did the FCC have the statutory authority to adopt rules that set the national television audience cap to say 42 percent or 50 percent, or was the FCC instead bound to follow the 39 percent cap fixed by statute? Mr. Ruddy.

The reason Congress set it at 39 was that the FCC after the '96 Act tried to raise it 45 percent by fiat. And they said, wait a minute, you can't do this. And they there was basically bipartisan support for the 39 percent. So I don't believe they have the authority and several legal scholars have said they don't. And so I'm not a legal expert, but it appears pretty black and white that they set it and it should be remain law.

Mr. LeGeyt, the day after the 2024 law was passed, could the FCC have set the cap at some number substantially higher than 39 percent?

Legally possibly, but as a matter of practicality, given that it was an appropriations directive from Congress, no. But importantly...

So you say legally possibly. How legally possibly?

Because the because the because Congress didn't set the 39 percent cap in statute. They they directed the FCC to adjust their regulations from 35 from a 35 to 39 percent cap. It is not codified in statute.

How did they direct them to make it 39 percent?

Through that Appropriations Act that you just referred to in 2004.

And an Appropriations Act is not statute?

The the the what the language of the Act did was that it directed a modification of the regulation.

But did it say any modification or did it say modify it to 39 percent?

Modify to 39 percent, but importantly, it did not remove the FCC's authority, which had previously been upheld by the D.C. Circuit, to modify that number on an ongoing basis.

Well, it did explicitly exclude the 39 percent cap from being part of the established regulatory review process.

It it did. It it modified the requirement that the FCC review the cap, but it did not remove the affirmative authority on an ongoing basis to review it. That's a distinction with an important difference.

Next question. The NAB's position is now the FCC could use other authorities to get around that cap, which presumably are the same authorities the FCC had and could have used in 2004, 2005 to change the cap. Put another way, the NAB's position on the 39 percent ownership cap is that that which is not prohibited is permitted. This is a question for both Mr. Ruddy and Mr. LeGeyt. If we assume that Congress did not clearly bar the FCC from using its general authority to change the statutory cap, is there any legal limit to what the FCC can do with the cap? Mr. LeGeyt.

No, there's not. The FCC as an administrative agency obviously needs to go through a period of notice and comment and appropriate administrative procedures, but nothing in the Act would prohibit the FCC from doing so.

So it is NAB's position the day after the statute passed that said change it to 39 percent, the FCC could have come in and said we're changing it to 100 percent.

I think it's unrealistic that that APA process could take place the in a single day. But again...

They initiate the process and it takes the time it does and they could immediately then raise it to 100. Is that your position?

Senator, I'd like to follow up on the question because I do think in the context of an appropriations directive, obviously you are talking about a fiscal year, a directive to the FCC. So realistically whether they had that authority on the next day, I'd like to dig into that a little bit more. But there's no question that the FCC maintained the authority to review the cap on an ongoing basis following the passage of that law.

Well, you will certainly have an opportunity to follow up on that and we're going to have written questions for the record and I would welcome a more fulsome response. These are are important and difficult questions. Mr. Ruddy, same question. Could the FCC have decided right after the 2004 law was passed that the ownership cap should not be 39 percent but rather it should be 100 percent?

It sounds like it would be rather ridiculous if they just flouted what Congress voted and put into statute. And again, you have commissioner after commissioner, chairman after chairman, I mentioned earlier Ajit Pai, who was President Trump's first chairman, repeatedly said that the cap was law, a matter of law, that he didn't like it but he couldn't change it and that his words we had to obey the law. Chairwoman Rosenworcel made a opinion against Nexstar in one of their transactions saying they violated a congressional law and that the Congress only could change it. And Brendan Carr was the ranking member at the time, offered a concurring opinion and did not disagree with that. So I think you have a consistent trail here where logic and I would really encourage the broadcast industry if they really want this change, it's so important for them, go to the people's house, go to the Congress and the Senate, make their argument that they should do this. But they don't want to do this. They want to use the bureau level or the bureaucrats at and they don't even want to respond. Why can't we have an open process? Why are the broadcasts so afraid for the full commission to look at this and they want to have no opinion on it? Have transparency on this matter.

Okay. Final question. If the FCC decides that it has the authority to set aside the statutory cap of 39 percent and to raise it substantially above what the statute says, what is the likelihood that that decision will be challenged in litigation and what is a reasonable estimate for how long that litigation will take and what the consequences of that litigation will be? Mr. Ruddy and then Mr. LeGeyt.

I am prepared to litigate the matter. I believe that it's just a blatant violation of congressional law and I think it's a very dangerous thing that they that a basically industry group that stands to make billions of dollars can just circumvent what Congress has said that the public overwhelmingly supports my position and the the current law that they would like less consolidation and they want more diversity in media.

And Mr. LeGeyt, you get the final word with... ...which I guess given the committee's rule means you're the best that is here.

[Laughter.] Thank you, Mr. Chairman. I think if history is a guide here, every modification that the FCC has made to its ownership restrictions has been challenged in court on one side or the other, so I would certainly expect that here as well. But we would certainly ask that that judicial review be expedited because this is an existential crisis for local broadcasters. Our competitive landscape is one in which broadcasters are competing with one hand tied behind our back because of the scale of these global tech companies: Netflix, Amazon, Google, Facebook. They are siphoning away our advertising revenue, they are pulling away our viewers, and the only way we can invest in local communities like yours and continue to do the invaluable work being done across the many markets in your state is with more scale. I mean, I made the point separately, but I want to leave the committee with this: that if judged on an independent standalone basis, more than half of the broadcast newsrooms in this country are not profitable. They would not exist as standalone businesses. The only way that we can continue to serve communities in the 210 markets in this country is to have some scale to do so, and elimination of these rules, which are nine decades old, last reviewed more than 20 years ago, this media landscape's been completely reshaped and we need to compete.

Okay, I want to thank all the witnesses for their testimony today. This hearing I think was quite helpful to the committee. Senators will have until the close of business on February 17 to submit questions for the record. The witnesses will have until the close of business on March 3 to respond to those questions. This concludes today's hearing. The committee stands adjourned. [Gavel sounds.]