tv Public Affairs Events CSPAN December 12, 2016 12:08pm-3:01pm EST
elections and all parts of the country. i'm not quite sure why we would be ill suited to do that. i also think it's the case that we might end up not with the more regionally-based third parties, which i think our advantage to buy the electoral college we might end up with more ideologically based third parties across th the nation, ad that would be something to consider. and finally in response to congressman johnson's question about what were the other considerations going on in the minds of the framers in addition to slavery? let me say two things in response to that. one is that there was this concern that a national election which madison supported by the way, a national election would not be logistically feasible and it would be hard to get candidates and known. that certainly is not an
objection which obtains today. i go back -- backed into didn't even have youtube. all sorts of things we could do today. but the other notable thing, this is my reading of the constitutional convention. other people may have read this differently, but in all of the discussions that take place among the framers as they are going back and forth to try to figure out how to choose a provision evidently know and they keep changing their minds, there is never, a concept that the people have a right to vote is never invoked. it's never mentioned. so we're talking about a very different political era. >> it's good that original intent is not something that we have relied upon around here. >> textually, it is important to note that the words right to vote now appear live times in the constitution. in the 14th a minute, section
two. in the 15th amendment and the 19th minute and the 24th unlimited and the 26th amendment. so it's precisely because of the legacy of slavery and racism at all sorts of stuff that the founders did not acknowledge that. they didn't have anything in the original constitution that persons are equal, only that states are equal and a cynic when you look for words like equal and right to vote. you will not find it in the original constitution but i promise you today when you look at your constitution, and here i get to pull out my copy in honor of kaiser khan and tell you that today those words right to vote for. not once but five times and equal appears there as well. >> can i refresh the panelists memories on some of the points that i've made that are better than respond to? and that is that elections have consequences. the electoral college skus those consequences to the extent that electoral college decides whether or not reconstruction
survives. it decides whether or not we have a massive change in our healthcare is done, how medicare is done. secondarily, the point made about the strength of a compact. i think you made the point but didn't answer the question directly as to whether or not it was withstand constitutional muster. if you have a new generation of voters who are literal in their thinking, which is one vote one person, how do you engage in any understanding of this fixture called the electoral college? i would appreciate the remaining three voters -- excuse me, panelists, would respond to those questions, or at least include those in your answers. thank you. >> mr. chairman and members, in response to congress women's lee's comments, i had a couple of of thoughts but when is i
want to let you know also that in arizona and arizona has to actually passed the national popular vote in the house bipartisan, 20 republicans and 20 democrats which i think was one of your questions a little bit earlier. i would differ as far as stating that the electoral college itself is skewing election outcomes, and i would point out that i think one fixed to the problem that we currently have, a difficult fix, is when you look at states like california, republican voters are disenfranchised when it comes to electing our president in california, an, and texas, democratic voters are disenfranchised they are. i would say that one potential fix is that we don't have a winner-take-all states, that any electors are then awarded proportionally to the votes of the cast. for example, california had at
least i think a third republicans who votes didn't really mean anything because no electors were awarded. i would like to remind members that the way that our system of governance, we are a republic of course and a representative form of government. you are represented here in washington. that when you think about it our house members are elected directly. originally our senators were elected and selected by our state legislators until the 17th amendment was enacted. our framers of the constitution actually had some different thoughts in mind when it came down different people were being selected. and then, of course, our legislators are selecting electors to represent the will of the states when it comes to the electoral college congress,, of course, i've heard some comments today about just the
system in general. the electoral college, from my understanding, comes from an english tradition. wasn't something our framers just nearly willing to kind of came up with. differen.different aspects of hr constitution were borrowed from other countries and other forms of government to see if they made sense. one comment, and not trying to be judgment or anything, but congress, if you voice some concerns about the way the electoral college behaves and works and whether it might be disenfranchised, it's been around a long time. so you think about her history as a nation, congress could have mustered up the two-thirds to pass them at any point. especially after the civil war if the electoral college and that system of selecting a
president was deemed to be some a biased. certainly after the civil war this is something that should have been looked upon and yet i think we only would talk about it when we run into a situation like we do in 2016 with our current election. thank you very much. >> mr. chairman, i had a few comments. >> yes, by all means. >> thank you. i will start by taking crack at congresswoman jackson lee's question around, particularly had we we explain our system to young people as a member of the vermont house i represented a great majority of university of vermont campus for the better part of 10 years, and registering voters was difficult. and when i would really tease out why that was, often case it was this feeling that my vote doesn't matter. or we run into students that live in pennsylvania or new
hampshire, and they would in a somewhat perverse way, no, no, no, i'm from pennsylvania, i must go there. we would say absolutely. you need to vote there. so just an oddity of our system. i think also others have asked what would a campaign, a national popular vote campaign look like? we are so fixed on waiting state x and y and that red and blue map, but if you are talking about getting the most votes in the country, it's no longer of particular interest to win the state. it is intense interest to run up margins in the states where you're going to win, and minimize losses in the states when you cannot prevail. so in new england we all watched new hampshire in 2012, they spent some $35 million campaign in new hampshire. they didn't spend a nickel and massachusetts, vermont, connecticut or rhode island.
that would change it would presumably be some kind of spreading out of those resources throughout new england. in a state state like vermont we deliver routinely the highest first or second highest percentage of any state for president obama in his election and in his reelection. you could not go to democratic headquarters and get -- 80 miles from my house across the connecticut river in new hampshire they were begging people to take them. it just illustrates how extremely and deliberately shut out at least 35-38 states are. in 2004 running. in 2004 running up to george w. bush is reelection, the white house and the campaign admitted that they been pulling for two years in 18 states. so in that era 3 32 states were not even of interest to their opinion. this is how shut out we are. a popular vote it becomes a absolutely about margins everywhere. you would try to minimize places
where you've been losing under winner-take-all it doesn't make any difference if users vermont or any state by 2% or 20%. you have lost the same price. at a popular vote is it about margins everywhere. democrats will say give me an x to 5000 votes because i want to offset the drumming and taking in alabama. if people are worried about recounts, you ought to be worried about them today. they are far more prevalent today and a much bigger problem today. prior to this election where five litigated counts, and, therefore, called into question results of our election. in those five cases, there was no question who had the most votes in the country. and after all, if there is 10 of us in mission and would vote on somethingsomething, we are far e likely to tie that if there are 1000 of us in this room. when you expand the franchise so that you treat every vote equal out of 130 odd million votes, the chances of a very close election go down.
right now we are carving the country up into 51 little pools as we saw in 2000 and we are seeing in other times. there was the question of who prevailed in florida in 2000. there was a question in that election who had the most votes in country. so as we grow the pool and would lump the country into one pool of voters, the chance of a recount is greatly diminished. should we need a recount in that case, congress does have authority to create uniform rules. states themselves of course do have rules, but it is a bigger problem, a bigger likelihood of having problems today pick a fact we seen problems with recounts. the timeline is very condensed, and it is a bigger you irritantf winner-take-all system that would be under national popular vote. finally mentioned this potential instability if you go the
contact route were states are changing their state law. to sum that is a great advantage. if there is some kind of unanticipated outcome, not of the election itself but of the process. of course it's easier than had we amended the constitutio conso undo an amendment. much easier to change state law back. but i will say that the idea of legislators have made this change, who are after all treating a system that far too many americans think already is the case, would have a hard time looking constituent and sing we really got to back away from the one person one vote system where the candidate with the most votes when the elections. go back to the old winner-take-all system that is part of the constitution. the political reality creates a great deal of stability through state action. but some segment, particularly my conservative colleagues in states very much favored keeping this power within the states.
and they like that it's a benefit that maybe people could decide to change their mind back out of the popular vote. >> mr. neil, did you feel, i would like to add that you attend as he did say something? >> a small comment. first, historically if we look at the three-fifths rule which mr. johnson referred to, if you look back, if you drill down into the constitutional convention, that was initially established as part of the formula for representation in the house of representatives, and for direct taxation. and it is arguable that along with a great copper mice, the connecticut compromise which set up the bifurcation between the senate and the house of representatives, without the three-fifths compromise the south might not have gone along. they might have withdrawn from the convention. so if the electoral college was tainted by association with this
initial three-fifths compromise, it was more by extension. as one of the other panelists pointed out accurately, late in the convention, the electoral college was a vast sake of good and it was something everyone could agree on. secondly with another historical reference with respect to representative jackson lee, it was arguably one of the great tragedies of american history because if you look at the progress of anticipation in self-governance by african-americans in the south after the civil war, there certainly seemed to have been -- the ex-confederate ex-confederae it but they actually worked with the african-american officeholders. and the hayes tilden compromise with the true federal troops who would enforce civil rights on the former states of the former confederacy. it also essentially gave a blank
check to jim crow for another 70 or 80 years, so i think your point is well taken. with respect -- one of the more interesting points made today was the possibility that the national popular vote initiative could be a halfway house, which might ultimately to direct popular election through constitutional amendment, which the panelists suggest was probably all to make the best goal. another interesting point is that i've watched over the years with respect to proposed amendments that deal with the electoral college. there is been an increasing interest among members, or was increasing interest, mr. green was always, always very active in this, that would enhance the authority of the united states government through its authority over the times, places and
manner of holding elections. some of the other panelists mentioned this here today as well. it is something that the states might complain about, but on the other hand, if it were, if there were to be a federal, greater federal role in the way our election are administered, conducted and perhaps financed, states might not arguably be so unhappy with that. finally, and that might also, you would really need i think as a pointed out by the other panelists, if you are going to have a national recount you are going to get some manner of doing it on a uniform basis across the country. because there are 50 different statutes on the books in the states right now and it's very difficult to do that. and finally with respect to constitutional amendment for direct popular election, electi, constitutional amendments as was said earlier are difficult to get through. my experience in studying the admin the process is that a
nimitz are either the result of a long building up of public support -- amendments -- until it becomes obvious that their national majority are in favor of it, or it can be the result of a catalyzing event such as with respect to the 25th amendment, the assassination of president kennedy. both of these factors are very helpful. the third factor is the attention and support of members of congress and the leadership in congress. for many years i used to say that if we ever had a so-called misfire, that it would probably be action in congress to push for a constitutional amendment. we had one in 2000. congress did respond. it was through the help america vote act which i don't think i heard making her today, and that that was her useful legislation to provide improved and enhanced federal standards and grants and aid to the states to improve
their election administration procedures, and particularly their hardware. so there has been work on this in congress, and it's a possibility, i can't speculate, that this catalyzing event year that we have seen may lead to further developments. >> mr. scott? >> thank you. this recount, one of the things about a state recount, if you have a recount you would assume both sides i going to be well represented. if you have a national recount in each date you may not, in fact, have both sides well represented as you might of different election laws, same-day registration. if you're running up the boat, they election laws can be extremely helpful. that's why one of the things you have suggested is it would have to meet national standards which would eliminate the voter suppression laws that some
states enact. but i would hope that we would get that straight before we would go to a popular so we wouldn't have some states doing the wrong recounts, changing their election laws to allow same-day registration and everything else, no counting, no certifying results that are absurd on their face. and then we are faced with having to accept that or, i don't know which, what you would do. but if we had the better mechanism in place first, then i think you would have something that would make sense. a couple of other things. we haven't heard, i haven't heard any comment about whether or not running up the score in one state would produce a better president than in the close states try to get from 49 to 51. which would produce the better candidate, particularly and a
swing state state where you have to get, you would have to cover half the country, you have to get to 270. you 70. you can get a popular vote running up the score in a region and holding your own and the rest. which is actually better. and finally one of the things that could be helpful in this is if you had a runoff. if you have a bunch of the candidates getting 25, 30%, whether or not you would have a runoff and with the cutoff be 50% or something lower? any comments? >> on those three questions, first, you're absolutely right, representative, that we will need national standards, not just for the recount but for the count and in effect for voting. because in an electoral college world, the state actually don't have a particular incentive to make it easy to vote.
you get the same number if they electoral votes in 1910 whether you let women vote or not, whereas in a direct election uw clout if you let women vote. in the direct election world, it is true and it's a concern and i tried to address it as i thought through the ideas that making the national popular vote, you need daschle oversight because california my site a, let's let 17-year-olds vote. and texas as a, let's let 16-year-olds vote-year-olds vote. arkansas says let's let dogs vote. so you're going to need, this is a good think thing, not a bad thing to have a national law that you all would draft, implementing a national right to vote. because the founders did not have that phrase. you now have it five times. and the deep egalitarian ideas that all votes are counted equally and no vote, no voter is
more valuable than any other voter whether they are in a swing state are not swing state or urban or rural. that deep id will not be vindicated if you count votes equally but have different complete rules about who can vote and how they can vote. so you're going to need that up front. whether it's required or not by the interstate compact clause is what will make the system actually work. and to be admired in other countries do it. as to whether it is better to have candidates who are trying to rack up votes in their basis or just appeal to swing areas, that's basically the same issue, frankly, that exists in state spirit we could just count, we could say swing counties rather than swing states. do you try to calm in california, iraq at the vote in urban areas or do you instead of
a different kind of be aware you might not rack up as many votes there but you will lose fewer votes and anti-urban areas? and my claim is that we have many states that are quite diverse and they are big and they look like america whether we call them ohio or pennsylvania or california or texas. and our governors are just fine with one person one vote, uniform standard. but the system will change if we moved to that. we can't fully predict all the changes, but we can say we look at governors at a don't think they are a bad model. if you look at the rest of the world because no one else has they electoral college, no, no. state and international counterpart. that system seems to work pretty well for those places. >> chairman, i does what it was something in the record. you've been very indulgent wintertime. just a quick yes or no.
mr. chairman, i said at the beginning i think this has been a rewarding and instructive, constructive and particularly intellectually grounded in the constitution and otherwise caring. and i believe -- hearing. i believe it is important now that we are on our i think that the popular vote, if i have the count right, popular vote conflict between electoral college that we have official, import an ongoing hearings on the question of presidential elections, which include electoral college and the house and senate. can he get a quick yes and no from each? >> amen. >> verbal but down to the end. each -- >> congressional research service will support congress whatever decision -- >> i know they will. i forgot to limitations but
thank you for that. mr. chairman, i have a letter asking for those hearings. thank you. >> do you want to put it in the record? >> i would like to. thank you. ask unanimous consent. yield back. thank you, gentlemen. >> yes. is there some other comic we want to hear from before we close down? >> mr. chairman? >> okay. >> a brief comment about the notion of a way station. there are two giveaways and think about a way station to what is you'd see networks and he moved to any minute. my own view is to think of the interstate compact as a way of mobilizing political support for changing the system. and that if you got there he calls the neck channeled for an amendment. >> okay. yes, sir. >> mr. chairman, with regard to representative scott's comment, i understood it, you may be, to the effective do we end up with a better candidate at the end.
well, you look at this particular election cycle starting with 17 republican candidates and if they quit for democratic candidates, and it's really through that primary process that a party chooses the candidate. it's a party based process. and so the one thing i would voice, i consider myself a federalist and a constitutionalist, and i would be concerned that right now we have a u.s. justice department that can at times be very overreaching when it comes to stamping down the states and not necessarily treating as as sovereigns when it comes to our election laws and now we have our elections. and goodness, if the state of arizona has a policy that disenfranchises individuals or groups based upon any criteria,
you know, it's going to make headline news and we are not going to be able to move forward with that. we are going to be dealt with accordingly. the last thing i would want to see is that the federal government take away more of our sovereignty at the state level to run our business, when it comes to elections elections, te don't need to be micromanaged. and if there are grievances from individuals or groups because they feel we are being unfair, then those need to be brought out in the light of day. if we are making mistakes, whether accidentally on purpose, we need to correct those mistakes. thank you very much. >> did you want to close this down? >> i would be honored to, sir. one final comment in regard to representative scott's, his concern about the differentiation between state laws, tickled under a national popular vote. this is the system today and we
live with those results today. and i would argue they are very deep impact today. fact outsize influence today than it would otherwise. surely we would agree florida's use of the chad ballot in 2000 had enormous implications that the rest of the country to live with. sunday vote in ohio or lack there of has a major influence on our elections. voter id laws in wisconsin is going to ripple through the future of our country. when we routinely have a system that comes down to five to 12 battleground states and we live under a variation of those states laws, we are going to already see an outsize influence over state law. when you lump everybody together i would argue that it minimizes the impact of that variation. >> esther scott? >> referred, to the electoral college doesn't exist anywhere else.
actually it exists in the city of richmond, virginia, where you are elected mayor by carrying five of nine wards. spent on that note i want to thank the panelists for an actual discussion. there were seven of you initially, but this has worked out well. i also congratulate not only my colleagues, but my colleagues who were able to stay with us throughout the entire discussion, ms. lee and mr. scott, i thank you very much for being here today, for your contributions. and with that i declare this hearing adjourned. [inaudible conversations]
[inaudible conversations] >> congress has recessed for the holiday but the house has a nonlegislative pro forma session today at 3 p.m. eastern. the 100 15th congress convenes on january 3. the official election of the house speaker will take place on before that date. live coverage of the house activities on c-span. next monday the electoral college officially elects the president and vice president. they meet in their states and their vote by ballot. you can watch the process from springfield, illinois, harrisburg pennsylvania. that is next monday. last week in a "new york times"
op-ed, texas delegate wrote a republican presidential elector. what are the 538 people asked to officially choose the president of the united states. i do not think president elect should be disqualified for policy disagreements. i do not think they should be disqualified because they won the electoral college instead of the popular vote. however know i'm asked to cast a vote on december 19 for someone who chose daily is not qualified for the office. i pray my fellow electors will do their job and join me in discovering who that person should be. fifteen you to go i swore an oath to defend my country against all enemies foreign and domestic and on december 19 i will do it again. and more on the electoral college now as we look at a mobile police communications truck which is just around the corner from the shot and new trump tower. politico has this story as we look at the scene around trump tower.
10 members are demanding a briefing from u.s. intelligence officials on an ongoing investigation into donald trump's ties to russia. in a letter to director of national intelligence james clapper, they argue the required information ahead of december 19 we electoral college is set to meet to elect its next president. they require to know from the intelligence community whether there are ongoing investigations with dollar chunk of his campaign are the soviets and russians influence in the election. the scope of those investigations, how far those investigations may breac reach o was involved in those investigations. to read more at politico.com. >> [inaudible conversations]
john kelly to head the department of homeland security. the founder of the freedom caucus and senator joe mansion meeting separately with the president elected there with report saying the west virginia democrat is being considered for energy secretary. that meeting was scheduled for last friday but send it imagine remained in washington as the senate worked on short-term government funding. one of the setting up was formerly broken presidential candidate and trump rival carly fiorini. several media outlets reported she is being considered for director of national intelligence. she spoke with reporters after that meeting. >> how are you? >> we had a really productive meeting. was such an honor to meet with the present elected first like
to say he has really cool -- cool stuff and it's over all these athletes have given him this incredible memorabilia. i was thickly taken by shaq o'neills shoe which is huge. i guess it takes a champion to know what you have been. but in any event we got down to more serious business. and spent a fair amount of time talking about china as probably our most important adversary and a rising adversity we talked about hacking, whether it's a chinese hacking or purported russian hacking that we talked about the opportunity that the president-elect has to literally reset things, to reset the trajectory of this economy, to reset the role of government, to reset america's role in the world and how we are perceived in the world. and i think it is what he is getting such fantastic people in his administration. the high court of people he is named already said so much about his executive ability but also
best catch you could get for the cabinet. the lobby view of trump tower is available all day on our website, c-span.org. 18 dco randall stephenson said he is confident that companies proposed merger with time warner will benefit consumers in many ways including better price options. mark cuban, the owner of the nba dallas mavericks and a number of other telecommunications experts testified at a hearing last week. [inaudible conversations] >> welcome to the subcommittee on antitrust competition policy and consumer rights. before we start i would like to thank ranking member klobuchar for her staff in preparing for this hearing today.
i would also like to thank the chairman of the full committee, senator grassley for his support for the hearing. after i and send it to club which are, grassley and leahy give our opening remarks about this hearing, we will hear from our panel of witnesses and i will introduce those witnesses shortly and then we will have seven minute question rounds from members of the subcommittee. we are living in what some might describe as sort of a golden age of television. one tv writer recently commented that for the first time i've begun to feel like there may, in fact, be too much good tv, if that were possible. from "game of thrones" to house of cards and so many other programs across so many television networks and somebody different platforms. the quantity and quality of
programming content may well be greater today than it ever, ever has been in the past, or ever could have been predicted. the creativity, however, is not limited to content creators. networks and distributors also innovating to allow consumers to an unprecedented access to the content of choice. no longer are consumers limited to whatever bundle their local cable operator might have put together for them. dish, sony and directv all offer cable bundles of allowing consumers to stream live television over the internet. netflix, amazon, hbo, cbs among others allow consumers to purchase programming directly. and more innovation is on the horizon and coming at us very quickly. as many industry participants expect five g wireless technology to provide even more
competition to broadband and landline cable. opening up even more possibilities to content creators and to distributors. this brings us to the very reason why we are here today, to discuss the proposed acquisition of time warner by at&t. and ensuring this flourishing marketplace for creative content retains its vibrancy regardless of the outcome of this proposed acquisition. at&t is the second largest wireless carrier in the united states, and through its a directv and universe of subsidiaries the largest u.s. cable or satellite provider. time warner is truly the worlds third-largest television network in film, tv entertainment company. at&t announced it reached a deal to purchase time warner for 85,000,000,000 dollars. the proposed the proposed transaction would combine at&t's millions of wireless and pay
television subscribers with time warner's media lineup which includes cnn, tnt, hbo and warner bros. film and television studio. the companies claim this acquisition will result in significant benefits for consumers. the combined company will provide quote stronger competitive alternatives to cable and other video providers, and quote better value, more choices and enhance customer services for over the top and mobile viewing. additionally by controlling the customer experience from content creation through distribution, the combined company says he'llt will be able to innovate its advertising practices and introduce customized or targeted advertising providing both an approved customer experience and a significant competitor to digital advertising giants like google and facebook. this transaction involves no
horizontal overlaps. however if this fact into the antitrust analysis, then this would be a very seinfeld inherent hearing about nothing. although vertical vertical deals typically raise fewer concerns than do the horizontal counterparts, such deals nevertheless may still tend to substantially lessen competition. the key analysis takes place of course under the clayton act. the principal concern with the vertical integration is foreclosure or denying access of competing firms to suppliers and customers. a key question thus becomes what will the incentives and opportunities of the for the combined firm after the transaction takes place? many critics of the deal have posited all sorts of potential at the competitive abuses may take place, and that the combination of at&t and time warner could create at&t could
increase the price of or reduce access to time warner content, to rival television distributors, thereby not only raising its rifles costs but also make it directv products appear more attractive to consumers. this risk is tickling acute in the online video services market. over the past few years we have seen the development of products like slaying and like playstation view, which allow customers to watch a live stream of cable channels via the internet connection. and directv has just begun its own similar service called directv now. at&t's ownership of hbo, cnn, and the other must have television products of time warner could give directv now a significant competitive advantage over its competitors. at&t's ownership of these channels could also potentially forced directv as rivals into a
choice of higher prices or limited time warner content, knowing that many customers would migrate to directv if it's rivals refused to pay the higher time warner prices that they would have debate in that circumstance. the potential anti-competitive favoritism that the combined firm could bestow on its own products is not limited to price or access, but extends to the quality of the offerings as well. and it is really get to the siren song of zero rating whereby an wireless broadband distributor excludes particular data from counting towards its customers data consumption caps. zero rating appears to be customer friendly. content is free for a subscriber and helps them to avoid having to pay overage when they exceed the applicable data caps. however critics argue the reading transference internet
service providers or wireless carriers from quote relatively neutral contents into gatekeepers. the fcc recently expressed concern that at&t zero rating practices quote may struck competition and harm consumers by constraining their ability to access existing and future mobile services, not a philly with at&t. -- not affiliated. critics say such concerns would only be exacerbated if at&t were able to bring time warner content under its fold, and under its ownership. however as the sec letter itself illustrates ho in regard to this merger, we also have a regulatory framework that is designed at least to minimize if not to eliminate any of the positive, many of the posited anti-competitive concerns that have been expressed. the issues raised by this deal are complicated, and like most
antitrust analysis, to the most antitrust analysis in a deal that is this big and that is of this complex, they aren't necessarily very fact intensive. the focus should remain on maximizing consumer welfare, and consumer welfare is in turn maximized when we focus on protecting competition, rather than protecting individual competitors from competition. the final determination regarding the competitive impact of the deal will be made by the department of justice. i believe we can make a valuable contribution to the conversation today by closely examining the questions raised by this unique and significant transaction. i look forward to hearing from and engaging with our uniquely talented and capable panel of
witnesses today, and covering any issues that might come up. send it to clover charm will now give her statement. >> thank you very much, mr. cha. thank you for holding this important hearing. like you, my initial statement here started out with examples of these great new offerings, and we seem to the same ideas because going to mention "game of thrones" or as you once called this hearing game of phones, right? instead i will now switch to west world to show a flexible ayin in this new era in washington. so examples of the content we are seeing from a variety of sources, hbo's westworld and the weather to netflix house of cards to espn's 30 for 30 documentary, we're seeing critically acclaimed and popular content coming from a wider range of networks and vide video-on-demand services. perhaps even more important than we see diverse voices being heard with networks representing different viewpoints and interests. this has been referred to by
both of us as the golden age of television. however it really is not quite accurate increasingly we stream shows on our computers, tablet and mobile phones rather than simply watching them on televisions. and consumers are relying on their broadband or wireless connections instead of their cable connections to receive that content. this competition is increased consumer demand for video content which has benefited the content creators according to the writers guild. there were 305 comedy and drama series during the 20 the 2015-26 season, compared to 204 in 2010-2011. earnings have grown by almost 50% in 570 million, 854,000,000 in the same time. but there are still problems. we know what they are because as u.s. senators we hear about them when constituents talk to us on
the street or call our offices. the cost of cable television continues to be a burden onto many consumers. according to a report released this morning by consumer federation of america, the typical household, which is in america now, to cell phones come one landline and a video internet bundle, spends about $2700 per year on these services but when you think think of a middle-class income, that is a chunk of change. we have seen this plot before. like a tired movie franchise, we can predict the ending before it begins. the promise of thriving competition collapses replaced by dominant firms with monopoly power. we saw it in radio and television with the development of centralized networks. and finally in cable with the rise of cable distributors and the local monopolies. this is a central question of this hearing, will this transaction accelerate the disruptive forces that will
increase competition, spur innovation, improve quality and lower cost? or is this one step on the road to a few dominant firms controlling content and distribution? one school of thought believes that vertical transactions in which a distributor content acquires a supplier rarely ever undermines competition. i reject that approach. whether an acquisition will harm consumers depends on factual investigation and careful analysis, noanalysis, not ideoll presumptions. the federal communications commission and the antitrust division of the department of justice have largely filed this practical approach in reviewing mergers and acquisition in this industry. in the interest of american consumers i hope the new administration continues that tradition. a tnt's acquisition of time warner combines one of the worlds largest wireless cable including a satellite tv and broadband providers with one of the world largest media and entertainment companies.
there are three broad questions i think we need to look at. first, will the acquisition increased at&t's incentive and ability to suppress competition? various distributes a video content have raised concerns that at&t will increase the prices that at competitive pace for time warner content, or deprive its competitors access to the content. independent content providers raised similar concerns. will at&t post transaction favor its own content over independent content? if pursued, such tactics could increase the cost that distributors charge consumers or undermined the development of innovative distribution model for even more troubling, the merger could stifle the diversity of viewpoints and focus offered by independent content providers. independent contract providers are responsible for much of the innovation and diversity in programming today but they
already base -- face a tough landscape having to negotiate with large distributors. .. launched direct tv now which allows customers to access direct tv's programming through the internet. these potential benefit need to be examined, but if this transaction is found to be anticompetitive the need to compete i not a justification. the solution for less competition is not even less competition. finally, if concerns exist with conditions remedied these problems? conditions have been used in the
comcast-nbc-universal merger. the is some disagreement about the effectiveness of the conditions. further there's growing skepticism the attempts to limit a company's conduct can ever work. mr. chairman, i received a statement from consumers union articulating their concerns about the transaction. i move this statement be included in the record and this is a very important transaction. i'm glad that we are taking a close look at it today and i look forward to hearing from the witnesses. >> thank you. those will be submitted into the record without objection. we're now going to hear opening statements from the chairman and ranking member respectively of the judiciary committee as a whole. this asubcommittee of that committee. chairman grassley. >> also, instead of saying at the end, i may have questions for the record because after
11:00 i may not be able to be here. i thank you, mr. chairman, for holding this hearing on the biggest transaction of the year, the proposed at&t-time warner merger. this deal would combine one of the nation's largest phone and internet providers with a media enter tape titan that owns hbo, cnn, tbs, tnt and warner brothers studios. by standing into media and entertainment, at&t strengthens its existing wireless,er in entity and paid tv business and also becomes a premiere content owner. the justice department, and possibly the federal communications commission, will determine whether to approve or reject this merger, and decide whether or what condition should be in order for the parties to proceed with the transaction. nonetheless, this committee's
oversight responsibilities is an important one, where the committee can flesh out potential issues and highlight possible impacts of the merger on the market and consumers. it's an understatement to say that this industry is undergoing tremendous change. people are constantly re-evaluating what, when, and where and how they access the media entertainment and content. technologies are quickly evolving, and delivery platforms converging. companies are improving their technologies so that customers can enjoy better and faster connectivity. innovation is creating more options, and allowing for multiple combinations. the creativity of programs content and device app is is flourishing to satisfy any and every consumer taste, younge and -- young and old. consumers are becoming
increasingly knowledgeable about content offers and data cop sums needs. no doubt this industry i going through a transformation at disruptive time and the consumers are enjoying the ride. we want to make sure content thrives and evolves to the benefit of all consumers, including rural communities like mine in iowa. more content choices and accessibility options, better quality and affordable prices, make for a happy consumer. at&t and time warner say that this vertical merger will in their words, benefit consumers, strengthen competition and encourage innovation and investment. end quote. they claim that by consolidating the assets of the two country -- two companies it will be able to
better compete nationwide and meet expectations of consumers. now, however, critics of the merger say this deal will have a negative impact on competition and innovations. there's concerns there that a combined at&t-time warner will block competitor access to popular time warner content. there's concern that a combined company will give preferential treatment, for example, favorable channel placement and zero rating pricing, to time warner's premium entertainment programming, then to the disadvantage of other content producers and particularly small independent producers. there's also concern about at&t time warner's ability to leverage their assets to negotiate better licensing arrangements or raise the price of their content to the
detriment of other distributors. there's concern about the merged companies' ability to employ bullying tactics, to dictate rates and terms to other networks. there's concern that this acquisition will concentrate too much pour in one conglomerate and concern about the merger's implication for a free and diverse media. this is something that i recently experienced because on weekends when i'm at the farm, i always watch channel 349 on direct tv. i found out that it wasn't there anymore. i asked why. and found out what is going on is an unfair contract negotiations. these are all serious concerns, which should be scrutinized carefully by antitrust regulators tasked with reviewing
this transaction. at the same time some warn that we should be careful about how the at&t-time warner deal should be examined because of the dynamic nature of the industry, complexity of the marketplace, and fast-paced innovation and changing consumer wants and demands. they question whether the current merger analysis methods are were suited to tackle this transaction and urge caution when -- secondly, they suggest that they may need to redefine market power and reassess how to an lies it in a fast, shifting industry with multisited platforms. with tech giants like google, facebook, amazon, netflix, and others, changing the way consumers access content, is legitimate to ask whether, as one aei scholar recently said,
quote, what looks straightforwardly anticompetitive in the old industrial merger models might not be so simple in the merger of modern media platforms, end quote. certainly the at&t-time warner deal warrants close and careful astronaut -- scrutiny because it raises concerns. we want to assure the propose elmer jerry does not allow unfair competition and yet we also need to be thoughtful, forward-looking analysis of the market that takes into account the complexities of modern interconnected media content and telecom platforms and relationships. ultimately we want to ensure that competition thrives in this critical market and we don't stifle innovation or deter emergence of cutting-edge
technologies that consumers demand. ultimately, we want to ensure that our policies don't lead to higher cost, fewer choices, and worse services for consumers. i look forward to our discussion today. thank you. >> thank you. senator leahy. >> i'm glad that senator lee and senator klobuchar are having the hearing. resist the temptation to go through the list of which shows i like the most and which things i use the most. i see too many people i know in the audience that i'm afraid i'll either make unhappy or happy depending on what i include or leave out, but i think it is an important hearing because the proposed -- whether
you oppose or support it -- have to agree that he opposed 85 -- almost $85.5 billion merger can dramatically transform our nation's media, to combine two titans of entry, and you have this kind of massive -- whether is it to better consumer process or privacy or paid tv, wireless, broadband industries? we have to look at that carefully. 130 million americans depend upon at&t for wireless access. last year they acquired direct tv's satellite decision service. and now it's going to acquire time warner's content.
these raise the question, the obvious question, about whether at&t could begin to act as a biased gate keeper for its own content and services. we know from the questions raised about the decision not charging wireless customers for data used to view direct tv on their phones. anticompetitive and anticonsumer actions by gatekeepers can be prevent under the fccs open internet rules to taken clear -- on the internet. and net neutrality a sures the network is -- innovation and free speech. strong net neutrality mitigates concerns bat proposed merger,
at&t's ability too harm con pet fors and consumers -- come petters and consumers about the net neutral rules appear to be under attack by the incoming administration. he has named three staunch net neutrality opponents to oversee the fcc transition. i think any weakness -- weakening of the rules are going to cause serious harm to consumers. harm that would only me exacerbated by what we assume would be further mergers in the industry. and harm is not limited to this transaction. impact all americans who rely on the free exchange of ideas and information on the internet. as chairman i'm going to submit
questions for the record. i have some duties involving appropriations at the moment, but i'm very concerned about this. now you are and i know senator klobuchar is. thank you. >> thank you, senator leahy. your questions and those to be smidted by chairman grassily and even else will bev submitted without objection. we'll now turn the witnesses. i'm going to introduce them and then we'll swear them in. start from my left and move to my right. randall stephenson is the chairman and ceo of at. he bass named to his current position 2002, sin then tat tat as investedded to become a global leader to businesses and consumers. hang on. going to make sure i don't mess yours up.
the entertainment, high speed internet and mobility to ip network services and the internet of things. mr. stephenson began his career with southwestern bell in 1982 in oklahoma. served as the company's senior executive vice president and chief financial officer from 2001 to 2004, and from 2004 to 2007 he was the chief operating officer some aopinioned to board of directors for at&t in 2005. the member of board of directors are emerson electrickics and boeing. mr. stephenson received his bs in accounting from the university of central oklahoma and his matter of acan't si from the university of oklahoma. check bewkes is chairman and ceo of time warner inc. he served on the board since 2007. elected ceo of the company january 2008.
part of being named chairman and ceo mr. bewkes served from -- chairman of the entertainment group to 2005. before joining the corporate management of time warner, mr. bewkes served as chairman and ceo of hbo and as president of ncoo of hbo. mr. bewkes serves on the boards of yale university and new york city and on the odd advisory board for the creative coalition. also a member of the business council. mr. bewkes has a ba from yale and mba from stafford. mark cuban an entrepreneur and investor, the owner of the dallas mavericks, landmark theaters and magnolia pictures and the chairman of the hdtv cable network, he is one of the main shark investors in shark tank.
in 18959 mr. cuban and todd wagger started audio net, combining newt to all interests in indiana hoosier basketball and webcasting. with a singer server aweow net became broadcast.com. and then it grew too 330 employees and 13.5 million $in revenue for the second quarter. in 1999 broadcast.com was wired buy i by yahoo. general kim elman is the president and ceo of public knowledge. previously served as director of the internet freedom and human rights project at the new america foundation. and is chief counsel for the u.s. department of justice's anti-frustrate department. he served as vice president for federal and international affairs and is chief council and staff director for the antitrust
committee and legislative director for the consumer federation of america. mr. kimmelman began his career as a consumer advocate some staff attorney for public citizens congress watch. mr. kimmelman is a graduate of brian university and has a jd from the university of virginia where he received the fellowship. he was also a nullbright fellow and presently served as senior fellow at the silicon flat iron senator for law, technology and entrepreneurship at the university of colorado and senior associatings with global partners digital. emmett is a filmmaker and founder of philanthropist and author living in beverly hills california. the president and chief creative officer of a television network focusing on film, fashion, and international style.
founder over -- miss szziman is a writer, plusser and director, her latest film, "foot steps" debuted on showtime and is on the advisory board of the seven al tropic arm of the state department as well as the board of trustees of children's institute international. a chair person of abc love, adoption brings children love. before we beginning i'd like to swear in the witnesses and so if you would all stand and raise your right hands. do you somewhat the testimony you're bo at the time 0 provide will be at the truth, the whole truth, and nothing by but the truth? thank you. mr. stephenson, you're first, and you may begin. >> i appreciate the opportunity to talk about the benefits of
combining at&t's distribution with the world class content of warner brothers, hbo and turner, and we believe the benefits are straightforwards and they're substantial. they will get more choices and lower priced option, and that means more nationwide competition against the cable could is in each state. what this merger is not about is consolidation. either in media or telecom. at&t is a communications company. we distribute content. time warner is a media and entertainment company. they create content. and this is a classic vertical merger and eliminates no competitor from any market. in fact it increases competition, particularly against the cable companies. and our intent is to disrupt the existing paid tv model. we want to get the most content to the most people at the lowest prices. we want consumers to pay for
their content once, and then watch it anywhere, at any time. every episode, every season, on whatever device they choose. but disrupting entrenched business models is hard and generally takes both steps. in combining scaled distribution with scaled content creation is such a step and when one company accelerates innovation, everyone accelerates innovation. and faster innovation and content delivery will naturally accelerate deployment of the 5g mobile networks with greater than 1 g speeds. it's important to recall that we launch ode the world residents first iphone on a 2g network. it has demand for the iphone good more bandit sledded the u.s. -- accelerated the demomentum've 3g and then 4g
mobile networks and this drove two network upgrades in course of five years. and we're about to experience this again. direct tv now and other planned innovations with time warner are 5g services going to be launched on 4g networks and just as we witnessed with the iphone we expect 5g deployments to accelerate and not just for at&t. we think it will accelerate across the industry. creating even more competitors for cable. this is exactly what we believe consumers want. new, lower priced options, and the power to decide themselves. in and a good example is our new direct tv now product we launched last week. this is 100 channels start agent $35, streamed to any device. the customer has no contract requirements, no credit check, no installation, no set top box, and the price includes the data
charges for mobility at&t customers. and during our first week in the market the uptake of the service exceeded all expectations. and as predicted, the industry has already begun responding. just last week shortly after we announced this product, cbs added the nfl to it's all-access streaming service as no additional cost. innovation by one invery my begets innovation by all. i'm talked about what will change because of this merger and i want to quickly talk about what will not change. at&t will continue to be a leading investor in america. we have invested more in the united states than any other company. each of the past five years. you should expect that to continue. we'll continue to do our part in keeping america the global leader in two specific areas. innovation and deployment of advance communication networks and creating content, people want to watch.
it will encourage and support independent journalism. we will not withhold content to disadvantage somebody else. time warner was built on a platform of broad distribution of its content into every home and it would be illogical for u.s. us to change that. you should expect at&t to continue doing what we have always done, that's distributing a wide array of diverse, high quality content across all of our platforms. so in conclusion, this merger is going to drive investment, it's going drive innovation in industry that we believe is begging for both of those, so mr. chairman, i thank you for the opportunity and look forward to your questions. >> thank you, mr. stephenson, mr. bewkes. >> chairman, thank you, ranking member and members of the subcommittee. thank you for inviting me. i'm jeff bewkes, chairman and ceo of time warner. i appreciate the opportunity to talk to you this morning about why a combination with at&t not
only makes sense for time warner, but also is good for consumers. no short, combining able to warner's video can't with at&t distribution will accelerate the development and delivery of next to generation of video services, providing consumers with greater choice, convenience, value and, importantly, better affordability. before i talk more about that, let me briefly tell you've about time warner. since 2009, we have been focused on producing and distributing video content, film, television, and video games. at the wholesale level across a wide range of outlets, flo treatises, warner brothers, home box office and turner broadcasting. we do not own any cable, satellite, telephone, broadband or wireless distribution business, and as a video con ten to our success is on achieving the broadest distribution and embracing innovative ways for
consumers to enjoy what we have to offer. warner brothers is a great example of this. the leading television studio in hollywood because the most talented producers, directors and writers, come to us to make their shows. the reason why is they know that warner will find the best home for their shows on any network or of the top service. warner supplies shows to every broadcast network, while also producing for basic cable networks, premium cable services, including hbo, showtime, and receiverses like netflix and hulu. warner is making it possible for viewers to watch the full season of its shows, on demand, on broadcast networks. those principles of broad distribution and innovation hold true at hbo, whose success depends on reaching and engaging viewers, whether they subscribe
to a pay tv service or only have broadband. that's why we launched hb ooh now which offers programming without thed in e need for a paid 2v psychiatrics, turner must distribute the networks and depend on subscription and advertising revenue across all platforms and devices. that's why turner is licensing is networks to bundles offered by dish, sony, direct tv, and hulu. we're proud of what time warner has accomplished but today we are competing for consumers' attention, not a just with other tv networks but with everyone from netflix to amazon, youtube and facebook. great content is not enough. you need to deliver great consumer experiences, and that's what joining withat&t will allow us to do. we'll continue to work with all distributors, both with combining with at&t will make it easier and faster for us to innovate for consumers.
including offering more choice in network bundles with great interfaces, great on-demand content and interactive features, more only the top service likes hbo now, more short form content, particularly on broadband and mobile. currently when we try to introduce inknow vacations for consumers, we also need to roll the distributor by distributor as negotiations that take place only every few years. we enter duesed tv everywhere in june of 2009, based on the simple idea if you subscribing to a paid tv service you ought to be able to watch your favorite programs not just on tv and on the tv set but on any connected twice of your choice, at no extra charge. it's now seven year later and tv everywhere still is not fully embrace bed acable distributors. by combining withss we can
accelerate the process of introducing inknow vacations on a nationwide basis and we can have more flexibility to adjust to changing consumer expectations. providing consumers with more choices and better experiences, at more attractive prices. while spurring industry-wide competition and inknow vacation. that is why we believe this transaction is right for our company and good for consumers. thank you. i'll be happy to answer questions on any of these points. >> mr. cuban. >> i'm mark cuban and have been an active entrepreneur in many fields, having started on invested in more than 200 companies, creating thousands of jobs. proud of the fact a tv show i'm part of, shark tank, inspired million odd potential entrepreneurs every week. this media world changed. back in 1995 a partner and i
started a could i called audio net. we were one of if not the very first first streaming content aggregator and distributor on the net. back then the biggest come pet temperatures to streaming were radio and tv. the world has changed quite a bit since then but maybe not in ways that are obvious. historically tv had been the dominant medium. we had -- we always used to wonder wife we spent so much time watching tv. when asked why tv, my answer was always the same. tv is the best alternative to boredom, the closest we can come to doing in while thinking we're doing something. always our go-to way to kill time. those days are gone. in the past, we went to our media. we came home, turned on the tv, plopped down on our favorite chair and couch and villaged out. today our media comes to us, how content comes to us is changing
almost daily and has become an important subject. today our best alternative to boredom comes from an app. fire up an app, no matter where the world you are,s is how we kill time. the idea that tv is the dominant content delivery mechanism no long iris valid. instead were consume content from facebook, instagram, snap chat, messenger, what's app, and from virtual reality companies. combine these apps reach more than 1.5 billion users a month and can deliver any kind of continent any manner the consumer would like to receive, bed met wyoming, video, vr, post, add, you name it to populations around the world in american that dwarfs television. facebook is in a dominant position for content delivery. imagine what facebook and their respective competitive landscape
would look like if they had not acquired instagram, rip, or what's app. if those were separate companies competing the content world would look much different and be far more competitive. facebook may be the biggest player not not either on ol' content provider. snap chat is the best alternative for bore dome with the millenials. we see the extreme of selfies and more take over our kids lives. for thoseuper than hey snap chat -- microsoft's mindcraft, with over 100 million useres. i can tell you from personal experience punishment for any ten-year-old is take away this video -- tv is losing viewers to netflix, amazon with prime and twitch and acquired property,
apple with music, beats as an acquired prosecutor, and finally, google with youtube, an acquired property. and google is the ultimate programming guide through search. given our time con trains i'll pick another time to discuss the impact of having only two companies, google and apple, that act as sole gatekeeps to the app echo system. if hey not mentioned at&t or time warner yet because neither is in any sort of dominant position. by themselves at&t and time warner will have a very difficult time controlling their own destinies, let alone trying to influence a mark. thismer jess is not only one of survivalar and opportunity but one that is needed by consumers. we need more companies with the able to compete with apple, google, microsoft, amazon, and facebook. delivering content to consumers in this app-driven world is not easy. it is very expensive and difficult. apple, google, amazon, microsoft, and facebook, are five of the seven most valuable companies by market cap in the
world and all have established dominant positions. that's exactly what the time warner alaska -- i would the time warner acquisition for at&t is an important strategic content acquisition. alone it would be difficult if not impossible to for either 20 compete. together it will still be difficult bit that have a chance continue crease consumer choice. i've run out of time but like to also say that each of the largest content companies i've met so far, facebook, google, microsoft and apple, present much, if not all their content algorithmically. atley with tv wet be to pick the channels we want rather than have our feed tell us what we want. thank you. look forward to answering your questions. >> thank you. mr. kimmelman. >> thank you, mr. chairman. senator klobuchar, members of the sub committee, on behalf of public knowledge, and consumer federation of america i
appreciate the opportunity to testify. eye asked the report we released could be put in the record. know it looks like great bedtime reading to you by the size. >> no option. >> but i start here because this is about a description of the last 20 years of activity in this industry, which i think is relevant to look at this morning as you consider the impacts of the merger, the leadership of the committee pointed out the point pros and significant cons of this. i raise this because what it shows is that the $2,700 that consumers are paying per month, there are lot of issues also 20 why that number is so big. during that 20 years, there're times when lax antitrust overtight aloud mergers of cable and content toys and telephone companies. times when there was limited regulation and what we conclude is looking -- comparing the
privacies consumers are paying with the actual competitive costs were probably being overcharged by at least $45 per month. your con city tunes -- con state students for the services because there are too fewer players already in these markets. they're massively concentrated. so, in that context, adding firms that have more than 131 wireless subscribers nationwide. 25 plus percent of all tv viewers through satellite and wire, bundled services with market power, and the wonderful content that mr. bewkes described with time warner, raises very significant questions for consumers. they've talked about all the wonderful things they could do. i want to highlight, they are excellent companies that have begun to compete more aggressively in the over the top market. they're doing really good things for consumers.
that is wonderful, aspirate company -- as separate companies, contracting with each each other and others if the question forpet trust review is will that offend? they've described what they have done very well and we applaud it as benefits to consumers. but will that really continue? with these enormous assets coming together, and in a market where there are very few players, ask the your con state opportunities how many brotherhood provider's tv provide providers that ick give them the full panoply of services? how many there. i appreciate mr. cuban's points but the last time i looked google and facebook weren't charging me more than $200 a month to get those apps. to get their content. and the last time i looked, you al may remember the -- remember
when you as teenagers or your kid spent an hour on the phone? talking to friends, do they do that anymore? no. snap chat, apps. it's voice service that has gone here. but that is not the same as professional quality video that mr. bewkes' company prices. that's something different. and every one of those companies mr. cuban referred to, relies on the fundamental infrastructure, the plumbing of the internet and telecommunication system, that is controlled by very few companies. two dominant cable, two dominant phone, including at&t. it is that market power that concerns us. and is this just hypothetical or possible? well, the department of justice and fcc have already found that in of in comparable transactions when you combine content with
market power there are enormous innocenttives to favor yourself and harm come pet temperatures, look competitors, raise prices to rivals and this deal is even bigger. that was a regional cable monopoly. this is nationwide satellite tv distribution nationwide wireless. incentives even greater. in that environment, the bottom line is we urge law enforcers to reject this merger unless they can absolutely show that these competitive harms will not arise, that there are actual paths to increase benefits to consumers and absolutely show they truly have the regulatory tools in an environment where it appears regulations will be withdrawn and oversight limited. this is not just about money, mr. chairman, member of the subcommit year, it is the diversity i tonight programming owned by different people over
different platforms that fuel or democracy. no said it better than the president-elect. we urge enfors not to take risk with a transaction that gee harmful to the democratic process and consumer's pocketbooks. >> thank you. >> chairman lee, ranking men lobe tour, and members of the subcommittee, want to thank you for inviting me to testify today about the impact of the proposed at&t-time warner merger on minority channels, cultural diversity, gender diversity, and independent programmers. my names daphna edwards and have spent the last 250 years of my -- 25 years of my life coming here toed a advocate on behalf of women and children.
i'm here today as the founder, president, and chief creative officer of a woman-ownedded, 24-hour, award-winning television network dedicated to curated films, high fashion, international lifestyle, and environmentally profound programming. the independent network that trying to make a difference in media industry. it's designed to lift the image of women. it's defined by he quality content. originally we launched from direct tv in 2012. it's available on verizon, frontier, and reaches million 0s of consumers. it's a true independent. we economies not to be part of the bundle because doing so would undermine what it is, and would stifle our creativity.
also a minority-owned channel, one of the only two networks majority owned by a woman. the other one is oprah winfrey and she i distributedded be score. independent programmers their risk-takers that provide innovate temperature content. today, 90% of the content and tv is controlled by six conglomerates. the industry is currently structured to shout our new separates -- shut out the entrants which are mostlyin's and keep channels like ours from making and it providing competition to incumbents in the industry. independent programmers understand very well the pressures that -- face from client content providers. but more consolidation is not the answer. in the current state of the media industry, the survival of
independence is at significant risk risk of. fur fur consolidation would be catastrophic to divertsty, and additionally silencing minority and women-owned voices. at&t claims that vertical integration is not harm. ful. the fact its it gives at&t both the means and the incentive to discriminate against independents. for example, our company competes with many cable networks. turner classic movies being one of them, which is opened by time warner. direct tv's own research showed that two-thirds of tcm's local viewers watch our network. in a knopp vertically i integrated market competition between our company and tcm is in the best interests of the country but when at&t owns time warner, shutting out competitive
channels is not only easier but cheaper. such loss falls upon the american people. at&t argues that ott distribution offers sufficient tings for independents. but relying on ott is a one-way ticket to bankruptcy. like other independent network is negotiate i deals but it's the most effective way to develop awareness, brand recognition, and consumer demands. the ott market is a maze of confusion and lots of contempt that is not organized. approximately 20 percent of television households are cord cutters because of the intolerance of -- to keep the copycat programming.
the remain 80% should not be denied programming that meets their needs and interests. ott revenue alone would never allow independent networks compete with income incumbent channels and at&t controlled the distribution to more than 172 million cable, internet and meal subscribe you'res and can utilize a variety of techniques to favor itself own content and disadvantage independent networks. these concerns are real. att is thunder investigation by the justice department for unfair tactics against programmers. in fact independent programmers are only offer channel on at&t if they sign a pay for play tv deal with direct tv. that is what happened to our company. look at the panel if testifying today.
supposed to recent a broad cross-section of the strifeout dominated by white men. the idea that opportunity is looking for women and minorities in believed is not hype theft cal. it is clearly symbolize is by this dais. women or the majority of the population, controlling 14 trillion in wealth, two-thirds of the countries waste and 70 to 80% of all household spending ex-yet only two networks are opened and controlled by a woman, women deserve presence in the media. the airways, at&t utilizes belongs to the american people. bestowed mom them by the people, for the people, and at&t has a fiduciary responsibility to utilize this resource in the best public interests. that obligation includes creating opportunities for
cultural diversity and democracy of voices. certainly at&t's doing everything in its power to avoid the review by the fcc, the one agency that could review this merger, through public interest lens. so the question of policymakers is this. does a company that will go to any lengths to avoid public interests scrutiny really care about democracy and cultural diversity, the survival of independents, risk taker or ininnovation. the american consume will be worst off from further consolidation in the industry. with learned anything from this last election, the american people are angry about the growing divide between the haves and the halve-nots. independent programmers are in the have-nots in the media landscape. diversity of content is in the public's best interests.
okay. i have things to say if you'd like to ask questions. >> thank you. >> sorry. >> thank you. okay, i will now kick off the questioning. mr. stephenson, i'd like to start with you, going to ask you a simple question. will this merger -- assuming it's carried out to completion -- will it result in lower prices for consumers and if so, how and why? >> i was asked that exact same question in front of this committee a couple of years ago when with were working on the direct tv transaction, and i represented that, yes, it would bibi virtue of innovation, we could bring lower price capabilities to the consumer, and literally -- >> which wasn't the exact same question. it was a different context. >> a very similar transaction in that the lower prices would be a result of the innovation that would follow and win a year,
year and a half of the transsatisfaction closing the innovation has follow, and in fact there have been two significant innovations. direct tv customer you can stream all of that cob tent to your mobile device no charge. and we launched last week, direct tv now, little over a year since we closed the transaction, 100 channel at $35 it's in significant innovation that did result in lower prices to the consumer and in $35 includes the mobile streaming. so, as you put two companies together, under one um will be lay la -- this is -- umbrella, you can speed innovation lie young never do's lengths and direct transactions. directives a classic exam how that hopes. we are talking about doing is taking the innovation in direct tv now to a whole different place and a whole different level because our ambition is to ensure the customer pays for their content only one time.
because today a customer pay fours their content. if they want to watch on a mobile device they have to pay for it again via an app. if the forget to watch a show and want look at it on over the top means they'll have to pay for it again. or objective is to give the ability to watch it anytime, anywhere, on any device. think that will result in lower prices and lower cost to the consumer. >> mr. kimmelman, what's your response to that? mr. stephenson tells us it result in lower prices. >> in the direct tv deal, which we had concerns with but which were addressed by regulator independent the antes trust officials there were clear efficiencies of putting together a bundle that a satellite company could not do on its own for transmission. couldn't really offer both video and broadband. so i am extremely pleased to see the companies responding to that and take agenda advantage of those
efficiencies to lower prices. don't see those here in this transaction. they could contract to do the same things he is talking about, as wonderful innovation without the risks of the merger. >> m-cuban? what's your reaction to the answers given with mr. kimmelman -- >> that's not really my wheel house. >> i'd like to turn to you on a slightly different question. i first want to ask you -- i'm encouraged to hear that time warner's business model based on bad transportation for content. other companies have taken a different approach. netflix, example, has been a successful company. it's got a market cap but $52.9 billion, and so that's a viable option to take a different approach. different approach. can you tell me how time warner weighs broad distribution versus
exclusive content? how do you balance those? >> sure. >> in relative attractiveness. >> um, we have been able to build our networks, cnn, hbo, tnt, cartoon network, only because we have broad distribution and if we were to -- we've never done this -- if we were to not offer our networks over any of the cable, satellite, telecom or over the top platforms that are now the place where increasing numbers of americans are choosing which one to get their tv service through, we would be cutting off meaningful revenue for our company. there's no incentive for us to do that. that's first. secondly, we invest a lot of modify in making these brands relevant. cnn, hbo. if you think about -- we'd be doing that in a manner where we would be hurting the very investment we're making and having the brands mean something. third, there's a considerable amount of advertising support
behind the turner networks, including cnn. if we didn't have full coverage we can't sell advertising effectively to advertisers. fourth, it's very important and it's essentially the life blood of our company to be able to attract the best talent, the best directors, newest movie idea. these come from independent producers. they come to us because we have the resources and the distribution reach to put their product in every home. if we we didn't have that we wouldn't be able to get the next hit show, the next hit movie. those are essentially the reasons why we would never even think of doing this, and then a final point, which gene you might want to comment on, we owned time warner cable for 20 some odd years, either a big piece or minority piece and we managed it. ed never occurred to us to do anything either restrictive or different in terms of price
position, packaging, access to networks, for that company when we owned it, versus what we then did after. so, there's just simply no incentive for us to do it, and in fact there's no ability for us to do it. it would hurt our business. >> there's no incentive. could those incentives change over time? couldn't those incentive result done the road of you taking a different pass. >> no, senator. can't see a case -- i'd invite anybody their propose one where that would make any seasonal at all. >> mr. kim elman is shaking his head. >> i certainly are in the point and his distribution of his best interests and that's bat nbc said when they were being combined with come 'cause. in a careful that he will the antitrust division did not find when the companies merged that those incentives were the same. and that there were opportunities, and while time warner cable was, what,
15 million subscribers and certainly it made no sense to limit time warner content to just 15 million, here you have 25 plus million from at&t, satellite and video, and more than 130 million now wireless, with that customer base, you have to look at the real combined incentives. this isn't time warner entertainment, time warner's incentive. this is the merged at&t with content, and i just think the antitrust officials need to look carefully ate those. >> i see my time is expired. we'll go next to senator klobuchar. >> thank you very much, measure chairman if want to start with mr. stephenson, with your initial question about the prices for consumers and i know you folks have done the last deal with direct tv and -- just to be clear, on this acquisition do you believe it's going to
lower priceses for customers to direct tv, broadband services and mobile services? if you want to take each one. >> i can and intend to represent to you that by virtue of innovation with time warner, and going head-to-head against the cable providers, with new products and new capables, that we will bring the consumer better price options than what they have today. to take each one of those apart i find difficult, because the consumer has gone into a place where they're not procuring each one of those independently. that's the reason for the way we're pricing direct tv now. think about what we are trying to do. we are going against a cable provider to compete. you've buy tvs service from a cable provide ever and spend 50 to 1 had didn't per month. regardless of what you watch it does not pay. itself you sleep with the of on all night long it doesn't change what pay. we have to bring a mobile service, and we're come poeting
with a mobile service that has the same characteristic, could you make it where the consumer does not think about how much they're leaving the content on? as we work with time warner and think about new formed of content, cloud based dvrs and put those capabilities into our product offering, bring are more value to the consumer, giving them the ability to use video over the mobile device just like they do when they're watching cable tv. that's a huge value to the consumer. >> mr. kim elman, you your any report coming out a day, 46 per month that cable subscribers paying. how does that fit into what mr. stephenson was saying, this is the new kind of offering that could help bring the prices down. >> it extremely welcome in the marketplace to see the direct tv now offering and challenging cable, which no one traditionally has gone out of their historical telephone region or cable region to
challenge i'm other. all good. that's all premier jerry. applaud that. the present is what happens when you combine all of these assets? and that's the fear. and again, it may be a wonderful product, mr. stephenson says pay once. sounds grate, but if it's what happens to others who want to get on that service? if reality zero rated are they all going to get on? what happens to others who want too offer a different product? are they all going to be able to get time warner content under the same terms and conditions or up bundled. so there a variety of competitive arms in comparison 0 what way they want to offer. >> want it to talk about the issue that mr. cuban raised. it's a competition with the new environment, facebook and google and we'll have a hearing on some of these broader communications issues next year. that is my little -- okay, so,
on this generally, how too you see this when mr. cuban says they need this to be able to comet in this new world but b it you point out they're not paying money for google or facebook apps. >> i would urge the committee to look at every place there is market power in the sector. there could easily be that in the online distribution, on the platform -- among the platform toys. when i was at the depth of justice we looked at transaction involving google and ita and we were prepared to challenge it. it was airline services online, software that we thought would foreclose competition in that market. and cop sent a -- consent agrees was work out. here we have very few ways to are the consumer to get to they're apps, other services and at&t is one of the dominant gate keepers to get there.
>> mr. cuban. >> on the surface the direct tv now is an example. if apple decided they didn't want to distribute it, they have nothing. they have google decided they accountant want to distribute it or give it some make tom people would have a hard time findings, they have no boston there they can't control their open destiny. it's out of heir hands. >> i want to end her on the content side. ...
which means they cannot survive the back because they're not part of the bundled package? >> not just that. because they're not given the bandwidth to be able to access i.if they are they are sent to siberia. and the reality is the mvpds are concerned any of those independents may become must-have content because then they will have negotiating pow power. my friend mr. cuban has negotiating power because he owns a sports team. the reality is that one of the highest executive directv said point blank when the male sports business. so you do with independents that are so much of the content, that the public wants and is interested in. and they're not getting access to the public. and that's wrong. it's wrong for democracy. >> speaking as sports, mr.
stevenson, in your testimony you say program is more valuable when distributed just when i says possible. however in fl sunday ticket is only available through directv. during the comcast universal merger, the sec decided that emerged company would have incentives for limited distribution of its content indiscriminate against independent content providers. i want to make sure i defend your position. are using mergers that schneck can never raise antitrust concerns or that in this particular situation there is not an issue, and how you answer this, there's a lot of concern here about with at&t owning content at the same time as distribution, that there would be discrimination. >> i'll try to take the question apart to make sure answer it fully. the nfl is probably a classic example of a content owner who
pretty much determines and dictates how content is distributed. they are very strong. they had a great product and they parse the content up significantly, and we pay them for whatever rights we can get from them. they kind of, not kind of. they determine how the content is distributed. we don't. we distributed to our customers for what we pay. it's that something we just exclusion i put it out there because what the nfl is contracted with us to do. i want to make sure understood the second part as to a vertical merger, do i think this is a cookie-cutter -- >> right. >> i don't think there's such a thing, tickle in in the world of antitrust. i believe this particular merger when you put it together, you see before the merge and after the merger the competitive market looks identical. the distribution market looks identical to the content creation market looks identical. there is no overlaps.
so it is a classic vertical merger. the department of justice will look at this. to the extent there are concerns we believe in the remedied with conditions. as a relates to the comment about independent programmers, i'd like to quickly respond. if there is concern about axis of independent programmers to the consumer, the one model that does not work and we are given string that is the present model. the present model needs destruction. it needs a different model. that's what you're trying to do with both this transaction and the prior transaction we did. the reality is when we acquire content from content owners there is a medium by which, we want the top content they own, they say to take that plus the other six channels you possess. that is what -- its net anybody trying kind of exclusionary. it is filling up the program guide with peripheral stuff that you have to take it want to get the primary content that a content owner wants. directv now is step one.
acquiring time warner is step two. directv now is how we are skinning down a lot of that peripheral stuff getting a smaller bundled the consumer wants. that's what we can grab an opportunity to keep doing more and more of this in the future. >> just last, a response from tranfour, you could foresee the would be some of these bundles that would not at all sports spin of course. in fact there is a huge segment of our market that wants a bundle that doesn't include sports. sports is probably the biggest driver of the content cost in the bundle today. to the extent we want to meet a certain price point with a certain segment of her customers, getting sports is the way he dropped the content cost and get a lower price point in the market. >> except for the nba, dallas games. [laughter] okay, thank you. >> senator hatch.
[inaudible] >> i'm happy to host him so on -- and my colleagues as well. this is an important hearing and an important subject with considering today. i'd like to begin by quoting briefly from an op-ed published yesterday in forbes audibly frames how we should approach the subject of today's hearing. the central question in any merger review is how the transactional impact consumer welfare. because at&t and time warner are not competitors, concerns about increased market power or an loss of competition, the sorts of -- in large mergers, apparently do not apply. rather, the pertinent inquiry is whether at&t ownership of time warner content will lead to exclusive dealing, improper favoritism or other acceptable
consumer choice and reduce surface quality. we should evaluate the parties claims the merger will benefit subscribers by, for example, expanding the amount of available content that doesn't count against monthly data caps. i hope these principles can guide our discussion today and ask in and in this consent a copy of the op-ed that i read from will be entered into reco record. >> without objection. >> at&t will have an incentive to favor time warner content over not a valid content, or to withhold or threaten to withhold time warner content from competing broadband providers. i'd like you to spell out your argument for me. why wouldn't it make economic sense at&t to use its ownership of time warner content to raise prices or attempt to freeze out competitors? why would it make economic sense
for at&t to degrade service fee for non-affiliated service content? >> i will start with why we would have no incentive to preference, if i could could paraphrase, i think i understood correctly, the time warner content over others. i think it's important to understand and i thought a lot about this, we are paying including the debt, over $100 billion for time warner, investing a lot of our shareholder money to acquire this content. it's very, very unique content and you heard earlier the business model of how he built a business that is what 100,000,000,000 dollars which is quite a feat in and of itself. the business models found in the premise for attracting talent, for attracting investors into content, the functional premise of that is wide and broad distribution of the content into every home, take any notice states of america. while one could argue and i'm sure the justice department look at this closely, while one could argue it might advantage our
distribution business to somehow give proprietary access to time warner, it would make no sense to $100 billion business we are according to do that. it would impair the value of that business dramatically. i received a big education from jeff on this. the clint eastwood, the steven spielberg will not bring the talent and their capabilities to a company like this that is limiting the distribution of that content. it is a fundamental basis of the value of the company. i don't see first of all the economic rationale nor do i see from our standpoint the customer rationale. because at at&t if you go back to the distribution side we have built our franchise on a very open model. if there's content that the consumers demand and want, we wanted out there. we have little value if we start limiting access to content. we are what we call an open-source company. we are not smart enough to know
everything the consumer wants, whether it be an app, a smart phone device, or content that we tried to open our network up to all and accommodate all who want to come in and let the customer choose what they want. so limiting the content our customers can get in this day and age of the internet is handedly for a description company not a smart business move. >> thank you. let me just ask this question to mr. stevenson and mr. bewkes. i'd like to zero in on the benefits of consumers. how specifically will this merger benefit consumers? i'd like you to share specifics him not generalities and to give an example, mr. stephenson and your tests when you talk about directv now. how will this merger help you deploy directv now, and i will service benefit consumers? >> thank you. directv now, it took directv acquisition to make that a
reality, to get a relationship with content players and the ability to gain the rights, the content rights to distribute their content to mobile devices. that's how directv now became a reality. what we essentially acquired from the content owners was only thatthat, the ability to distrie the content. to the extent we want our customers to be able to store the content. once they pay for it they would like to store it. we call it a clouse mates dvr. to the extent that our customers would like to be able to take that content and interact with their friends on social media with that content. they would like that. we gained none of those rights in these negotiations to bring directv now to market. as we look towards the day after this closes and we have ownership of the time warner content with ownership, you can begin to do those kinds of things. we can give our customers the ability to store time warner content. we can give them the ability to
interact socially on "game of thrones" and westward and so forth, that they cannot do today. we are convinced just like with the directv now, once we got certain players to come on board, others begin to come come on board. i am convinced that model will play out again. as we begin to integrate with time warner content giving our customers unique capabilities, other content creators will follow. >> in your testimony, let me ask this question of you. in your testimony you say that tv ever an issue to be launched in 2009 hasn't grown the way you hoped that it would. how will this merger help you deliver more content to more consumers more quickly? and above and you i ask, how will this merger affect the price is consumer survey? >> thank you. i think the way that it would advance that effort, which is to put video on demand capability
on all our networks, then we hoped that would drive competition to every network that you have on your television dial the on demand. so you could watch whatever network you want whenever you want. you don't pay again to do it. you have increasing numbers of shows, so if you find a show in the middle of the season you can go back and watch the first one and you should be able to watch it on your ipad or mobile device without further charge. we instituted that change and offered it for no charge whatsoever seven years ago. we announced it with comcast back in that day, and we hope that all the distributors, table with take that up and offer to consumers across every channel on the dow, just the way hbo had done again for no extra charge in the nineties, and it's the way netflix or youtube works today. here we are seven years later.
in many parts of the country if people were listening to this they would say i don't have this in my home. i'm not used you going to channel four and looking at nbc are watching effects on demand. because if you look at the directv now offering, we've been saying very publicly for five years, we think that consumers need interfaces that works the way netflix, extend or d, the way at&t one works where it's easy to find shows, easy to search across networks, it's easy to do all of that. and again at no extra charge. we think by putting this competitive offering into the market where you have full view building on all these networks in your directv package, and at a price that is basically, it is either half or less than half of the prevailing price in the country, that's going to force competition boat at the distributor level, all the other
cable and telephone and satellite companies and is going to force come position at the network level where other networks that have held it back looking the price increases out of it realize that ought to just grant it and give people a better deal. >> thank you. thank you, mr. chairman. >> senator franken? >> thank you, mr. chairman. i ever confused about something, this basic premise that hbo, for example, attracts its count because because it has the widest possible distribution. no, i don't think that's what -- as i remember, it was not very high quality and it was actually exclusive. so it's the opposite. in other words, when the sopranos was on you had to pay
to get the sopranos, and everybody wanted to see the sopranos. so this idea, which is of this basic premise, that everybody went to hbo because we guaranteed everybody would see you, inc. true. -- inc. true. so i just don't get that. now, mr. bewkes, you are recently quoted in the "new york times" article responding to my concerns about how they can might at&t-time warner could prioritize its own content and restrict other distributors access to it, you quickly dismissed those here saying engaging in such behavior would not be in the companies best interest and quote, it would be like selling toothpaste and not putting it in dewayne reed. it doesn't make any sense. that's your quote. i'm not sure if your analogy that makes any sense. it's not like selling toothpaste
and not putting it in duane reade. hbo isn't a toothpaste. it's like cvs or could be cvs manufacturing the greatest toothpaste in the world and not letting duane reade salad. or more to the point, it's like selling "game of thrones" and not letting comcast subscribers watch it or very likely you will get to answer the question i i after ask it -- >> i'm sorry. [laughter] >> okay? making comcast pay more for the privilege of having "game of thrones" or the rest of the lineup. i want to be clear what we're talking about. should this deal be approved, nothing is preventing a combined
at&t-time warner from going to any of its competitors in the pay-tv market and charging double for access to "game of thrones," or the combined, the company consent to restrict access to the programming in town and way for competitors customers to flock to directv or hbo streaming services. i don't think these hypotheticals are outlandish at all. you would have every reason to do this if you could. if that would make more money, and this is also to mr. stephenson, you would have, you could make more money for at&t in the long run. this is the incentive that's created either merger. so, mr. bewkes, i know you are eager to answer this. do you agree that a combined at&t-time warner with greater leverage when negotiating program carriage with other
content distributors as a result of this deal, and do you agree that a combined at&t-time warner would have a financial incentive to use this leverage for its benefit? >> okay. i -- >> there was a long pause of there. >> i don't agree. i think would not have the incentive nor would it have the ability to do that. it may require a back-and-forth but let me try to answer the first part. no, we don't, all networks, whether it is nbc putting on the show blind spot spot, the show n nbc. it's exclusive to nbc. that's we had to could watch it. if you want to watch -- >> you didn't have to pay to get nbc. >> yes, you did. you had to subscribe the 80- the
to $20 of network these so nbc could get paid that way. if you are talking in the case of hbo, netflix, showtime, those are a little different. >> there's a distinction between hbo and nbc, right? >> yes. >> hbo costs you money. you had to pay for that. nbc came with, free with the package, whatever package you had that used to be able to watch every tv show for free. >> right. we all remember that term, showtime, hbo, netflix, where you have as a viewer a choice to either pay to have a note or not pay to have it and you held it when you decide to buy that network for the month, you can get the shows on that network, house of cards are netflix, billions on showtime, "game of thrones" on hbo. those are premium services. there's no advertising. if you don't like the content
because of its nature, you do not have it in your house. it's quite a different business. but what i was saying at the analogy is right on the toothpaste, is it would make no sense and, in fact, we could go into it, do not sell hbo on the comcast cable system, on the verizon cable system. it would make no sense not to offer it. >> what it makes sense for at&t to use as leverage to charge comcast more? >> no. because we don't have the market power to do something like that, either at at&t or at hbo. the market is way too competitive for that sort of thing. and remember also -- >> i really think mr. kimmelman might disagree with you. >> there is no history of anyone pulling out something like that, and this company is sorely not big enough at either end to do that. >> mr. kimmelman, any thoughts?
>> just very concerned, again, nbc, these are wonderful businessmen. i understand their goal. nbc said the exact same thing. i will just say the enforcers found that one of these incentives. they impose limitations or would a blocked the transaction. this is even larger. and i will -- >> did they live up to the condition? >> some but there been a lot of problems. companies like mr. bewkes company would not have the tools. there are limitations which we can get into but there is clear to been a history of this kind of favoritism and discrimination. i will just mind you, bipartisan congress in 1992 stepped in and required cable to sell its products, tv networks, where they were burgled integrated to satellite in order to allow satellite to get access to the product. you could've made this an argument why would we want to have more people getting it?
because it was a competitor to cable. i'm not worried about comcast not getting time warner in this instance. i worried about the online distribution that would compete with at&t, that is going right now, not being able to get exactly what it needs to be a real competitor. >> i'm hoping it will be a second round of questions? thank you very much. i'm over my time but but i just to say, i remember that people flocked, talent flocked to hbo because it was a premium channel. the people had to pay to go there. >> may i respond? i just want to make a point. anybody though, in household in america, and today any person with a mobile device can subscribe to hbo. that was the point were trying to make. it's not exclusive.
it's brought distribution -- >> talking about now. i'm talking up what build the franchise of hbo hbo, and it waa completely different premise than what mr. bewkes was presenting in his opening. i just wanted to make that point that it was not, what attracted great talent to hbo was, it was a different model and what build that franchise was a completely different model. we will get you, i want to get to some of the questions later. >> senator perdue? >> thank you, mr. chairman. in my business career is seems to me this economic miracle that we've enjoyed over the last certainly 70 years, 75 years five years was built on innovation, capital formation and the rule of law. this concept we're talking about, this vertical integration, why the weight is not a consolidation. that's very clean and when you do remember that in the committee. this economic miracle was built on transactions just like this in other industry. vertical integration is nothing
new. size today doesn't necessarily relate to dominance. when you talk about innovation and technology changes in this industry particularly, the consumer has benefited from the aggregation of ability to deliver as mr. stephenson said in his opening comment, they want to but the most content to most people at the lowest cost. that's called capitalism. if they don't they will not be able to compete. you said something earlier that really resonated. you commented about watching tv. and watching junkets to do and how they consume input is totally different than when we all grew up. i think sometimes being in the city is like watching tv. you think you are doing but you're really not doing much. [laughter] i hope that it will be a little different. i want to get your perspective because you are in a unique position to have a unique perspective on this transaction. i would've thought you would a been a witness for an anti-position against this deal.
i want to talk about your hdnet and the rogue watched you had in getting your content out there. are you concerned about the combination, the size of this deal harming your ability to be creative and innovative? >> i own access tv and hdnet movies. access tv star office hdnet which was the first all high-definition tv network. it was absolutely independent and we continue to be independent. let me also add something senator klobuchar suggested that because i own the dallas mavericks that would improve my ability to get carriage for access tv. time warner cable is the incumbent cable network in dallas, and i have not been able to get carriage there. so i faced the challenges i also own magnolia pictures which is a movie distribution company. landmark theaters which has 300 screens and it's geared towards independent movies and have
produced, and produce movies through a company called 2929 distribution. twenty-nine distribution. some of the movies were in ron, the smartest guys in the room and good night good luck. good night and good luck is an example, we were not big enough to distribute it so we worked through warner bros. to get full distribution. we have to compete. as an independent network, i feel the pain that ms. ziman feels. at access tv we give ourselves as music network gears towards 45 plus. we don't like to tour advertisers that but that's who watches more tv. it's a challenge for us to get distribution. but with the new methods of distribution like directv now and others, sling in particular, particular, that has opened the door. in the past the distribution was constrained as ms. ziman mentioned because of bandwidth.
so now with new methods of distribution there's ne new hop, more hope for independent networks like ours. i think this merger opens those doors. as an example on directv now, access tv is distributed in their $35 bundle. hdnet movies is not. we've got to do a better job to convince them to carry us. that onus is on me. so to your point earlier it's very competitive. it's a free market still in a lot of respects, and i think this commendation opens doors. i think they recognize now that bandwidth is more available through online offerings. they can support more independent networks, more minority owned networks. reaching a certain happen. the combination of them owning content, there's a lot of things will look at online content and television distribute content and we say why don't they do that?
it makes perfect sense for us to have remote dvr or other features. as a content owner it's like i would love to offer those features but until the big guys start doing it and set the precedent, as little guys don't get offered. these new presidents that i think will push the way for better services and more consumer friendly services and really expand the billet for independent networks to compete. >> thank you. mr. bewkes, could you talk about what factors they add friction to your ability dashing this is before the deal, as you exist today. what causes friction to your ability to innovate, and that with this merger help your content developers provide better and quicker and cheaper content for at&t consumers? >> thank you, senator. the main friction now is that we have to put our networks through the existing cable satellite
distribution plant, which had a certain technological ability to it. only recently dated have the ability to do video on demand. and increasingly we are competing against video being delivered over broadband only that has full two-way video-on-demand and where the broadband services have the direct retail data of what you are watching, who you are, where you are buying your stuff. so it implicates advertising and subscription. what we've been trying to do is, and we did with hbo first and then with turner second, but we really haven't been successful in the broad white better chance we have all got in her homes. we tried tried to make our channels all video on demand in a way where you could go as the viewer and search back and forth, watch full seasons, really get the same, because more and more networks and content available, you need to be able to search for the way you do on netflix or on an apple
tv, that kind everything. most of the distribution companies, particularly cable companies, have not uniformly offered that. the way american consumers get a change in her habit about something as important as television is it has to be consistent across all the channels and it has to be national. we think if we can get this going, competition with lower prices, better smaller bundles, more effective advertising can bring more competition in all of these areas. we don't obviously, and we can't, determine what all the other media companies do pick we don't have that big of a market share. if we could put a competitive innovation in the hands of consumers we think consumers liking it can give those changes to be universally adopted. i would give us a chance against these giant technology companies that buy their own definition have massive global escape. >> thank you, mr. chairman. i have other questions i would
like to submit to the witnesses in writing. >> senator blumenthal. >> thanks, mr. chairman. thanks for having this year income and thanks to you all for being here. i have serious concerns about this transaction. yet to be convinced that the benefits outweigh the harms to competition and possibly to consumers. it is a vertical merger. it doesn't take out a competitor but it potentially has seriously negative impacts on competition and on consumers. and it is different from the nbc-comcast merger, which as was pointed out, has had problems itself and had to be modified by regulators. it involves wireless. it's a national platform and involves more than one platform. but speaking very bluntly what i think, what any of my colleagues
think, may make no difference whatsoever. because donald trump has said he's going to block this merger. and i take him at his word. [laughter] are right. [laughter] we operate as an act here. [laughter] i know that, mr. stephenson, you have met with the child transition team -- trump transition team. have you met with the child transition team? >> no, i have not. >> what remains on the record is the provision of you have states should say the future president has said he's going to block this merger and he said it emphatically and unequivocally and he has said it because and i quote, it's too much concentration of power in the hands of too few, in court.
a classic antitrust analysis. from the president-elect. now, i'm a strong supporter and i may agree with the donald trump. what concerns me is the reason that he gave, an additional reason, which is that he is very unhappy with the cnn news coverage. and for a public official to use the blonde, heavy instrument of law enforcement to try to silence or to change coverage by a new department of any company is for me absolutely abhorrent. would you agree? >> you are referring to me?
i'm sorry spin i'm asking you, mr. stephenson and mr. bewkes. >> i'm a novice in the world of politics so i struggled to engage at that level. my expectation was when we announced this deal and is today that the department of justice will be the one reviewing this transaction and making the determination whether it is competitive or not and is a competitive under the law. our expectation is to present the fact. we believe there will be procompetitive and proconsumer. so i will leave it at that. >> mr. bewkes? >> yes. i entirely agree with what mr. stephenson just said. in terms of the independence of our journalism, and hope all all the other journalistic outlets, with always vigorously defended that for decades, when we had time and while we have seen in. we intend to continue defending and being an independent journalistic voice.
echoing the watches us may have their own opinion about whether we succeed in being objective. we try hard every day and we will continue to do that. >> you understand what troubles me is that the president-elect has said that his justice department will enforce a different standard of law, depending on what kind of coverage his administration receives. will you commit that your news coverage will in no way be influenced or impacted by what the president of united states says about this transaction? >> yes. >> mr. stephenson? >> yes, sir, of course of course. >> wouldn't you agree with me, that for anyone in the department of justice or any law enforcement agency to threaten or use more vigorous or
aggressive law enforcement in effect in retaliation for news coverage of that doesn't please that public official would be an abuse of power? >> i would come if you're asking me. >> i'm asking you and i will turn to other members of the panel as well, but you with the the ones who will be making decisions about cnn. and by the way, the president has made similar kinds of remarks about nbc and about the "washington post" in terms of the enforcement of laws potential against them, the president-elect. >> may i make a comment? >> please do. >> i don't think we should be selective about retreating here or -- re- tweaking or restating thathe various comments, that te is elected officials or those running for office made upon the announcement of this merger. because there were comments made
by candidates on all sides, including mr. sanders, mr. kane, saying they were against the merger again before any of them have the information. what randall and i are saying is that we are confident that once everyone, including the questions you have raised today here's the facts and has the appropriate competitive analysis on this, that it will be seen and concluded by everyone everyn with the concerns you stated that this will have procompetitive effects that will benefit both competitive structures, diversity of voices and consumer price alternatives. we believe it and we think we can prove it. >> i just want, i want to make clear that my point here is a fat, not that other candidates may have commented or not about this merger, it is perfectly
appropriate for a public official or a candidate to comment on the merits of antitrust enforcement. but to threaten more vigorous or adverse enforcement against a particular company, because he doesn't like the news coverage is a threat to the first minute. that's the fundamental point. i'i believe in strong antitrust enforcement. i welcome president elects interest in this area. i find absolutely aboard the threat against a news organization based on its content of more vigorous or adverse enforcement against it simply because of a dislike of that coverage. and i welcome your commitment that his statements will have absolutely no impact on the
content of cmis -- cnn's coverage. i hope the same will be true of nbc and "washington post" because this kind of potential abuse of power is a threat to fundamental liberties way larger than the issues were discussing right here. >> senator tillis? >> senator tillis, you are up to that. >> i want to get back to the merger and the potential acquisition. and actually i would like to start, mr. bewkes or mr. stephenson, if you could briefly explained to me how this directv now product that you are offering and distributing through at&t network, how you may enter into other relationships with other
wireless providers to accomplish the same thing, and have with those transactions look? >> yes, thank you, senator. actually, we stole the concept for directv now with free data included from prior deals that we had done. in fact this premise of free data with directv now actually goes back decades. the first instance was 1-800 when you called sears and roebuck. sears and roebuck picked up the tab for the long-distance service. that drove long-distance prices down over time. all of a sudden everybody start using that type of facility to get people to call the franchise. what, then in 2008 is amazon launched a really groundbreaking product called the kindle. we did a deal with amazon where they actually come when you delivered a book to the kindle you pay $10 for your book. that included the data charge.
amazon bait at&t directed that data charge. that's a concept which took directv now. recchi is paying the chart for the data to the mobility business. that is our lowest wholesale rate available in the marketplace today to directv, to amazon, to any big, any big, small medium-sized company that wants to do the same approach can we are convinced just like 800 service truck long-distance prices down, this will also drive video prices down as people begin to leverage the same capability. >> i think that's right. mr. cuban, i almost hesitate to speak with a hoosier after the devastating loss of the tar heels a week or so ago but i'm going to anyway. [laughter] in your opening comments you are really talking about the destructive nature of other content providers today. i saw you shake your head on a couple of occasions. i think what we're trying to do, your comments can do suggest you are trying to skate to where the puck is going to be. a lot of this discussion is
where the puck is today. >> without question. >> if we don't look ahead then some of these premier providers are going to be hamstrung against other ones, against other disruptive forces that could ultimately i think it creates a consolidation and an upward pressure on prices. would you agree to? >> yes, sir. there's already consolidation. when i went to the list of facebook, amazon, all the content, the primary comment they offer came through acquisitions. what's happening now though is they are not acquiring big companies like time warner. they are acquiring disruptive companies that are choosing not to go public for hundred million dollars or a billion dollars. that's how their computing. i'll give you a perfect example of how the nature, and it's silly but have an age of content is changed. i wanted to test facebook live to see what kind of audience i could get. i took my breakfast, empty
plate, one pepper on it, put up facebook live, and within a minute i had 1500 live viewers here within 30 minutes i had 10,000 live viewers. okay, maybe that's just facebook life, it's new. i went i went to a new facebook called lightly. i was with my kids. i try to keep up with this. my kids are going down the slide into the lake. i just put it on them. on lively within 20 minutes i had 35,000 live viewers. for an independent network, 35,000 live simultaneous viewers is huge. that's changing the nature. cnn, a great program is two point 5 million viewers watching it at a given point in time. that's nothing on facebook live compared, and other platforms. it's changing what we want to admit or not. it's having significant impact. the big challenge is getting people to watch tv. that's going to be, with all
these things you are hoping to find new ways when people go back and somewhat to try watching tv again, and that will increase. i think we sit with nba, the nfl on all sports content. >> i think something else one of my colleagues mentioned was, first off, if i take a look at hbo. hbo became a premier channel not because they charge people to watch it but because they have extraordinarily good content. extraordinarily good content that people who are willing to pay a premium for. but there's a lot of times when i am channel surfing which happens late at night when i'm back, i don't get get to channel surf as much when i'm home because my wife controls the remote. why am i going to all these and am i paying for them? nbc is not free. abc is not free. they all negotiating some baseline clause they go into your baseline cable bill and i
would like to reach a point in time where i have the freedom to have options, a sports lists option testing sports lists option seems like a set place but some options why don't nestle have channels i consider extreme space-bar\space bar my viewing habits. from time to time i will pay a premium if i want to go and access content. that may be on the chill that i would not regularly want to pay for because i don't have a need or desire to that. that's the model we're getting too. i think if we don't as a matter of, i will leave it to the antitrust division of the department of justice to ask you the right questions to make sure you are not waiting in any antitrust areas. but if we as a body resist, if we just continue to focus on where the puck is versus where the puck is going to be in terms of content delivery, and this industry 10 years from now, that i think we're going to disadvantage some real innovators. there's a legitimate issues that
need to be addressed but we need to be very, very careful or we're going to cause some of the leading innovators in the world not to go to innovate because constraints we are putting on people using old world models to assess where the new horizons are for content delivery. thank you. >> senator flake? >> thank you, mr. chairman. thanks for having this hearing. it's been in lightning. i'm trying to do this all through the lens of my own kids. i have two married kids, newly married, who with no more sign up for directv or dish or broadcast than they would get a landline in their home. that's just not something they would consider. they might try to crib off of my directv, find out the password and use it, but they would never think of that. and that's why mr. zimmerman,
you talk about this, the competitive angle, seems like an excellent argument you are giving that would've been more appropriate 10 years ago or 15 years ago. but it doesn't seem to be where the puck is a certain where the puck is going. i think we are to consider more to the competition really is, that this isn't traditional antitrust competition among broadcast medium. but among the edge of providers. mr. cuban, you talk in your statement about the real competition. do you want to talk more about that, about who the real competitors are? >> i mean, every app competes for our time now. as i mentioned when the look for something to do, a way to kill time, we look at our phone.
all you have to do is look at the rise of snap chat, the rise of lively lively, the rise of ia grandma. that's what consumes our attention. kids don't go to tv anymore. you mention your children. i have a seven year old i went to help coach his a small team. none of them knew the rules because none of them ever watch tv and watch baseball like we grew up doing. they didn't know the rules for football. i can't even bribe my son to go to a cowboy game. that's just not how it is. but if i take away his mind craft videos, he throws a hissy fit. our consumption habits change as we age, and i'm sure they will for all my kids, but at the same time on demand in hand viewing through streaming is how people consume content. it's going to be a challenge. i think they face additional charges from a tech perspectiv.
randall mentioned by g coming along and i think it will cater sooner rather than later. there will be people cutting the broadband court. just like you mentioned, your kids never would've thought to buy a landline. i can do believe there will be a point in time where we won't think about wired broadband as being commonplace. that's going too great a whole new list of challenges. technology marches on whether we like it or not. i think we can't look backwards and look at historical norms in order to predict the value of this merger. >> when senator blumenthal talked about incoming president, talking about going to enhance this merger simply because of the size of it, how does this size of the merged company, how does the size compare to the real competitors were talking about, some of the edge companies? any figures of there? there? mr. randall. >> yes, senator. if you put our two companies together, the combined market
count tipping on the date you look at the market is 300, 350,000,000,000 dollars. the dollars. the companies marquess referenced whether it be google, facebook, apple, these companies have market caps that are about two times that size. as we talk about size and the significance of sites in d like this i think we have to recalibrate what size means in this new world. because without have the sites of most of these companies that are really providing the competitive threats to our core businesses today. >> mr. kimmelman come in response to that in terms of our we discussing what the market is or was a few years ago? >> i totally concur in your assessment. my kids do the same thing as yours. i think we should skate to where the puck is and we should look what the market is going. i would just note, on the margin young people are doing different things. 90% plus of the revenue comes from a lot of the traditional
sources, and the companies will skate to where the puck is. they will try to control as much of that new distribution as possible. on the online platforms i i totally agree, there is a lot of attention but what we used to do on phones, a lot of kids are on snap chat from what we used to do in terms of listening to records is now itunes. it's not that tv has disappeared or video doesn't matter. it's people are doing it in new forms. i'm all for looking at who the other players are but none of them charge me $200 a month to get access to the online content. that's where your kids get it, and if they're mooching off of your dreck tv that is probably why they don't want to pay $200 a month to get all this stuff. so somebody is paying and it's what to make sure it is a fair price, but there is no question that the online platforms are going to be big players, but they don't control that wired,
wireless, even if it is not wired via broadband, they don't control it into our homes. you can probably only get it from a couple of players. that's where there is a trust problem. that's what is a control problm that we want the enforcers to look at. >> who is paying for content? isn't really relevant to the competitive nature of these kind of mergers? mr. cuban? >> if you are not paying for the content, you are the content. you are being sold and advertising is paying for. i'd also say, like my 10-year-old daughter doesn't daughter doesn't have a cell phone account but she has a a phone. she gets access to wireless through wi-fi at various distribution points. she knows where they are and she goes, i'm talking outside the home. so the notion that a wireless provider is the only way to access this content isn't necessarily the case anymore, and those options are expanding rapidly.
i would also say that fleury witches and at the monitoring company just came out this week and said for nontraditional tv type content, all consumers are consuming 133 minutes, more than two hours, per day of non-tv like a content on their phones. the world is changing and how we consume is changing. it's not driven by pure mobile. >> thank you, mr. chairman. >> thank you, senator flake. we are going to start a second round of questions eric mr. stephenson, let's go back to you. section five of the ftc act as you are aware permits the ftc to take action to prevent quote unfair or deceptive acts or practices in or affecting commerce. however, that provision contains a carpet. it contains an exception for common carriers.
as i'm sure you are aware u.s. court of appeals for the ninth circuit recently extended this exception to cover even aspects of at&t and its activities that are non-carrier activities. is it your position that time warner's business will become exempt from section five of the ftc act, if this transaction is approved and kicks in? >> i'm not a lawyer, so i will try to address your question as best i can. obviously with the net neutrality provisions, at&t is our privacy standards and so forth are under the purview of the fcc. as with time warner, arise at the same issue of buying aol, buying yahoo!. so comcast and nbc get the same confusion with a content company under the purview of the ftc, a
common carrier per se zone of the purview of the fcc. it is confusing. i would suggest that this is an area perhaps where congress really should consider taking at bring some clarity. it's not that we have regulation gaps in this area. we have regulation overlaps and it is a bit confusing. i would actually encourage perhaps maybe some legislative effort to address this issue. >> and i get that. i get that we have regulars and overlap. we are not talking overlap. we're talking a gap, talking about a carveout. i would imagine you would have to agree that if that were the case, if the exemption for section five currently enjoyed by at&t also extended to time warner is this transaction were completed, that would be cause for concern by something i assume you would acknowledge that? >> i believe the law is that if they keep the own time warner they would come under the sec's
purview in terms of regulating these issues. >> okay. i've got another light of questions i'd like to extend both to you, mr. stephenson, and to mr. bewkes jointly. so when comcast and nbc completed their merger back in 2011, you recall there were some concerns expressed by cnbc and others. or rather concerns expressed by bloomberg and others relative to cnbc, and there were conditions put in place to guarantee that bloomberg would have access. it ended up taking three years of litigation to bring that about. shouldn't we be concerned about the possibility that any conditions put in place here designed to guarantee access to
your network might not be followed in much the same way that this required three years of litigation, expensive, time-consuming litigation, occurred in the wake of this other merger? >> i've been asked a lot about conditions imposed on other companies in this regard, and i'm not knowledgeable about the ability of those companies to comply with those conditions. i will tell you we've had several mergers were conditions have been imposed on us. you would find our track record in adhering to those have been very strong. i would also suggest the department of justice has not seem to have any lack of resources in pursuing areas with the belief we were out of compliance with conditions. i fully expect if any conditions are implied to this particular transaction, we would comply with those just as we have every other transaction. >> do you have anything to add
to that, mr. bewkes? >> yes. the same is true in the history of time warner. we had a merger with aol were some agreements on carriage of other networks are made and they were followed with no incident. and then in the turner and time warner merger we had conditions which also were followed without incident. so our record is without, and there's no instance in which we did not comply with any conditions we had in our various mergers. >> of course i'm not talking about your companies in particular but your companies in particular are the ones who want to be, one company right now. you can understand why some people would express this concern, and you do own some news entities and there are other news entities that have expressed concerns they might be blocked out for one reason or another either through pricing models or as a result of where you locate them, what number