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June 27, 2012
Dennis Wharton
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Testimony of Hearst Television President and CEO David Barrett on "The Future of Video"

WASHINGTON, DC -- Hearst Television Inc. President and CEO David Barrett testified this morning before the House Energy and Commerce Subcommittee on Communications and Technology in a hearing titled "The Future of Video."

Below is a transcript of his testimony as prepared for delivery.

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Good morning Chairman Walden, Ranking Member Eshoo and members of the Subcommittee. My name is David Barrett and I am the President and CEO of Hearst Television Corporation, which owns 29 television stations across the country. I'm testifying today on behalf of the National Association of Broadcasters.

You can tell from the makeup of this witness panel that the future of video is very bright. What differentiates television broadcasters from every other witness at this table is our unique commitment to serve our local communities and to operate in the public interest. Localism is our mandate and we live and breathe it every day. We supplement our local programming with the most popular shows, news, and sporting events to provide users with a variety and quality of content that is unparalleled by any other medium.

I can't talk about the future of video without talking about spectrum, which is the oxygen for the delivery of our over-the-air signals. With concerns over spectrum use intensifying, it's broadcast television that offers the most efficient use of spectrum to watch video.

The genius of television broadcasting is its "one to many" architecture. For high-demand programming like the Super Bowl, there is no limit to how many viewers can tune into the game. With the wireless "one-to-one" architecture, there is not enough spectrum on the planet to allow every viewer to watch the game on their smart phone. It's simply not possible.

So as a country we need to focus on the most efficient ways to deliver video to consumers, today and into the future. To meet the demand for mobile video, we are rolling out broadcast Mobile DTV. With a Mobile DTV device or adaptor, we can deliver local, full-motion digital broadcasts on multiple mobile devices, without the need for additional spectrum.

Because Mobile DTV relies on our existing broadcast over-the-air signal, we can offer high-quality video without running up consumer cell phone bills or exhausting the data caps Internet providers are imposing on their customers.

Other innovations, such as 3D, 4-K and ultra high definition, are also just around the corner.

These innovations highlight just how creatively broadcasters are using their digital spectrum now and into the future. As incentive auctions and broadcast repacking is initiated, it is imperative that the FCC's decisions do nothing to jeopardize our opportunity to bring these new and exciting services to life.

Our industry recognizes that consumers want the ability to view our programming on any device that has a screen. In order to make that a reality, without undermining our business viability, content producers need an assurance that programming will only be used with consent and compensation.

In the current television context, retransmission consent allows broadcasters and cable and satellite companies to negotiate in the free market for the value of the broadcast signal.

These negotiations are successful because both sides of the deal have skin in the game. Broadcasters benefit from the exposure to cable and satellite subscribers, and likewise, these video operators benefit from carrying our incredibly popular content.

I understand that my friends in the cable industry have suggested that cable bills are rising because of the costs of broadcaster programming. But history shows just the opposite. As you can see from the chart on the screen, cable price increases have consistently outpaced inflation for 11 of the last 12 years.

IIn actuality, it is the cable networks themselves that have been collecting the vast majority of carriage fees. This chart from SNL Kagan shows the disparity in fees paid to basic cable networks compared to the total paid for broadcaster retransmission. In 2012, cable paid broadcasters $2 billion in retrans, but paid basic cable networks almost $29 billion - that's over 15 times more. This is even more confounding when you consider broadcast ratings are six times higher than cable. In fact, approximately 96% of the top 100 shows are on broadcast television. Clearly, retrans payments are not the driver of increasing cable bills.

So how do we ensure that our broadcast content is accessible beyond these traditional platforms to the new video technologies evolving at a breakneck speed? As Congress noted in 1992, "broadcasters [must be allowed] to control the use of their signals by anyone engaged in retransmission by whatever means." New companies like Sky Angel are now part of the video marketplace, but it's unclear how the law will treat these new entrants. The FCC is currently considering the question of "what is a multichannel video program distributor?" This seemingly simple question has far reaching implications for our industry: who has program access? Who pays retransmission consent? We believe it makes sense for the existing retransmission consent and exclusivity rules to be applicable to new entrants.

As an industry that creates content, or acquires the rights to content, it is imperative that broadcasters have the right to negotiate over how our content is distributed. Congress should reject any erosion of the bedrock principles of retransmission consent and market exclusivity because they are essential to the system of broadcasting.

In conclusion, broadcast is a fundamental part of the future video ecosystem. We are at the gateway of our future and we see an exciting path ahead. Thank you for inviting me here today and I'm happy to answer any questions.

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