Two Think Minimum Podcast Transcript
Episode 009: “The FCC and the New Telecom and Media Landscape:
A Conversation with Comm Daily Reporters Jonathan Make and David Kaut”
Recorded on June 7, 2018
Sarah: Hi and welcome back to TPI’s podcast, Two Think Minimum. It’s Thursday, June 7th, 2018, and I’m TPI Research Fellow, Sarah Oh. Today we’re excited to talk with two of the most knowledgeable journalists covering telecom policy, Jonathan Make and David Kaut, from Communications Daily. Jonathan is the editor of Communications Daily and in his spare time is president of the Society of Professional Journalists DC Pro Chapter. He has covered media, business and policy for most of his journalism career. He blogs at medium.com/@makeJDM and tweets @makejdm. David Kaut has been senior editor/reporter at Communications Daily since May of 2015. Before that he was a communications policy analyst at Legg Mason and Stifel Nicolaus from 2001 to 2014 and the telecom media beat reporter at BNA Daily Report for Executives from 1996 to 2001. I am joined today by Scott Wallsten, TPI Senior Fellow and President who will start off our conversation on the never ending story, net neutrality, and the related continuing resolution in Congress and whether Congress will ever get to bipartisan legislation. Scott, do you want to start us off?
Scott: Thanks Sarah. Thanks David and Jonathan for joining us today. Really happy that you could come. Actually I want to use the net neutrality topic to jump off to ask a different question. When we looked at the millions of comments that came in on net neutrality and compared them to 2010, we found using sort of basic textual analysis that the median comment was fairly polite. I’m saying comment, whether it’s pro or con, but that there was a much bigger spread. The tails got bigger in 2015. There were a lot more kind of crazy comments, very passionate comments on both sides. Do you think that is typical of the way the telecom debates have become now? Does it say something about how we approach telecom policy now or is net neutrality really just so different that it’s, you can’t generalize from it.
David: I think it’s more than that. I think net neutrality is in its own world. The vast majority of telecom debates are still way under the radar and we got a thing on the agenda for today at the FCC that affects consumers. I just met a consumer. My neighbor, who was very concerned about related issues. She has no clue what’s going on. But net neutrality, it’s gotten into the popular consciousness. You’ve got John, you know, the comedian, Oliver doing his thing that had something to do with it. I also just think the fact that the FCC has been trying to kind of thread the needle before, under Martin, under Genachowski and even Wheeler at the beginning. Then, you know, he got pressed by President Obama and the left to go for Title II, so that kind of pushed things more to the extremes. I remember Michael Powell before that had warned this is going to be World War III if you do that. So I think that net neutrality really is in its own boat. Clearly things have become generally more partisan because of the general political environment we’re living in. But I think that net neutrality really is kind of the kind of poster child for that partisanship.
Jonathan: Since this is a podcast, I’ll say I’m Jonathan, and I agree with my colleague Dave, one hundred percent. I think it’s a great question, Scott. You know, reading through a recent Freedom of Information Act request related to the FCC’s computer system problems during this very period started when John Oliver, uh, ran a full segment of his show devoted to that neutrality. Most of the FOIA information was about the FCC dealing with reporters during this time. It was a distributed denial of service (Ddos) attack? Or was it the fact that the FCC systems are unable to handle it? But the fact that that conversation was even being held and even that to reach into the popular consciousness a bit and not only thinks, and Oliver, I think that that signals the high profile of this issue. I’ve had multiple people observe just out in the country and in other spaces other than telecom policy that they’re aware, more people are aware of the name of this FCC Chairman then most of the others. I also want to emphasize that yes, a number of other FCC Chairmen, going back to Pal and Martin, did try to thread the needle in ways that were consistent with their political leanings. But we have seen this current FCC Chairman and the past one, go to either, not extremes, but go to different ends of the policy spectrum when it comes to net neutrality.
David: Maybe it’s no surprise that in this highly, highly partisan environment that we’re in, generally in Washington, which also has affected telecom, it’s just amped everything up and amped up the interest. There have been protests, some of which we’ve covered around the country, not just in Washington about net neutrality. I don’t know if that’s been a thing before, as much as it was, maybe we’ll get into it. There are even protests that we’re covering today, unrelated to net neutrality, but related to a broadcast deal, that also has risen a little bit in popular consciousness. Also, probably thanks to things like the John Oliver show.
Scott: Is that the Sinclair/Tribune merger, there’s a protest against?
David: There’s a protest at their annual meeting. The annual meeting just started.
Jonathan: Just one symptom, when I think back to the 2010 debate, there were a lot of Democrats on the Hill who pushed back against Genachowski when he pushed for Title II. I think it was up to 70 of them wrote a letter saying, “Don’t do this.” Those Democrats are largely gone. There were defeated. Those were blue dog-type Democrats. They were defeated in 2010 election. Then you had redistricting and census and all of that, and you just have a much more polarized House of Representatives and the country as a whole too.
On legislation, which I think was the end of your question, I’m not an expert on the legislative sphere. Although our publication and some of our reporters covered very closely, it’s unclear what it will take politically to get some sort of compromise, a grand bargain. It would almost potentially be part of a new Telecommunications Act, which would make it even more complicated on net neutrality on Capitol Hill, but it is very notable how many players in the industry, and Dave can answer this better, whether they’re all, or any of you actually could have, whether they are on all sides of the debate or whether it’s mainly only ISPs. But I do seem to recall that so many industry players are calling for legislation. These seem to be bona fide calls. You’re not going to have anything of course, this session. The next session will be very interesting too about the political makeup of both chambers.
Scott: I do think that’s a possibility. Maybe one of you guys could, could kind of address your thoughts on this, whether it’s a genuine proposition being put forward by industry. I want to say, including even at TPI most recent conference in Aspen that everyone’s saying stop the regulatory ping pong. I do think that there is some genuine sentiment by the major players for that. I think one of the big questions is now that there’s genuine sentiment on the ISP side, what about the platforms and did they somehow get roped into this? The revelations that we see, it’s amazing almost daily about privacy issues and breaches and all sorts of things that when you think about them are quite important and very much in the popular discourse. Not to mention the political discourse. Perhaps the more attention you see on, oh, “we have to regulate platforms,” it’s not just about ISPs that too, could possibly be part of the grand bargain. I mean I have no idea, but it seems like a lot of oxygen after the elections, after a new Congress gets seated and telecom policy could potentially revolve around these two interrelated issues.
David: I don’t think they’re necessarily opposed to legislation. [Platforms] just obviously don’t want to be regulated. They’ve actually talked about net neutrality and the Internet Association said we’re okay with doing legislation. They’re not just adamantly opposed to that. They’re obviously concerned about then them getting roped in on all sorts of other stuff beyond just what, you know, we’ve considered ISP net neutrality. I think the bigger problem right now is the Democrats basically before the election. It’s like they got an issue, why negotiate from a position of weakness, they’re going to pick up seats, even if they don’t take the House and the Senate. Maybe they do take the House. All of a sudden they have a lot more leverage.
Scott: One of the ways that I look at it with net neutrality is that it’s part of a debate that has been going on ever since there have been networks that have high fixed costs, which is, how do you price access to it? This is sort of what we’re calling that debate now. The reason to support legislation, it’s just because it’s harder to change legislation that it is to change regulation and you get some sort of stability, for a while. I think the right answer to this question changes as technologies change and so on. But it’s also the case that industry and any other group they want or they still want whatever’s going to be in their best interest naturally. People want legislation when they agree with who controls Congress, and not when they don’t. Now there’s something relevant in the potential continuing resolution. Does that not count as legislation?
David: Not really. [CRA] is just vetoing what the FCC did. You’re still in the ping pong type situation. It’s not like a new framework where this is the framework going forward. It’s the saying “no” to the FCC, what you just did, rolling back net neutrality, Title II, and we’re going to get rid of that. So, yes, technically it is.
Scott: It’s more Congress playing the courts.
David: They’re basically vetoing what the FCC has done. So yes, technically it is legislation, but I don’t think people see that as the ultimate solution. It’s more like from a democratic perspective, it’d be, okay, this strengthens things for now.
Jonathan: Can we get to what Senator Nelson, now a couple years ago, said about a new title of the Telecommunications Act, Title X that doesn’t exist. It was a hypothetical. Can we get to what has come up a lot more recently? By Republicans, albeit in different flavors and in both chambers I believe about some net neutrality legislation.
Here’s the big question, what happens with the so-called fast lanes or specialized services? Because beyond that there is, as far as I can tell, huge agreement among lots of different stakeholders on what the rules of the road should be, much of which goes back to, the Powell FCC. It’s a couple of principles, five or so principles for net neutrality that for the most part, no player has talked about violating. Even when some of these companies are doing things around the edges, mostly that it would not have impinged on those principles which got this whole thing started in, just like when people talk about lifeline, a very different telecommunications policy and they say, well, Republicans did started it, the Reagan administration. When people do talk about net neutrality, one of the first FCC actions was by one Republican and then the next Republican went after Comcast, which started the very first court case. We’ve had what, three court cases and three rulings by the DC Circuit Court of Appeals.
David: They were two on one, but yes, we’ve essentially gone through three rounds.
Sarah: And another one coming. Actually there is one pending, right? For net neutrality. The Ninth Circuit moved the case to the D.C. Circuit.
David: Yeah. Well the Supreme Court, uh, no, but that is barely getting going. Yes, pending.
Jonathan: The AT&T Mobility case, a huge case, which there is so little popular understanding of it and Dave and a couple other people at Communications Daily have covered that one. One of our reporters went out to the oral argument last year. The thing is AT&T settled that case or said that they, I don’t think they’ve formally settled that, but AT&T settled that case which has to do with FTC authority. FTC authority is very important right now as we have moved from a Title I, as we move from a common carrier or back to an information service.
Scott: Let’s back up a little bit, it’s just sort of underappreciated the sense of how much it matters. Maybe somebody should explain a little bit about the case, what it is and why it matters.
Sarah: I can start us off. The AT&T Mobility case was in the Ninth Circuit. I think AT&T Mobility was arguing that the FTC does not have authority over their common carrier activities and they were making the claim that they’re common carrier status, oddly under Title II from the FCC, affords them protection from FTC jurisdiction on unfair practices.
David: Just one little wrinkle. What AT&T was arguing was, AT&T is still a common carrier for phone and traditional phone services. What they were arguing was that the FTC doesn’t have jurisdiction and there’s the Section 5 exemption for common carriers that the FTC doesn’t have jurisdiction over their non-common carrier activities. If broadband was no longer common carrier under the FCC’s Title I approach, then they were arguing FTC can’t even look at that because the FTC couldn’t look at it as long as it was Title II common carrier. But even when it was taken out of common carrier and Title II and put it in Title I, what AT&T wanted to argue was well you still can’t touch it because you can’t regulate our non-common carrier activities.
Jonathan: The important thing here, this is all about, I believe, data throttling of the very, very highest users, which has been, I won’t say a huge issue, but it has been one of the issues animating the net neutrality and other debates. Bandwidth caps and not just for wired, this was for wireless. This is for AT&T Mobility customers, but also for wireline customers. We tend to forget about them with all the focus on, instead of, we’re a block away from the FCC actually on the same block as the FCC, incentive auctions, that the FCC just concluded. We’ve another auction, I think that will start later this year. All of this is to repurpose spectrum for wireless broadband. But there’s also a huge number of people who are paying the Comcasts and Charters and Frontiers and other companies of the world for wireline service.
So, the question was, did AT&T properly notified its customers and adhere to its terms of service, which is a hook that the FTC has over all industries, when it throttled one percent or a very small portion of its customers. That case was decided by be a panel of the Ninth Circuit Court of Appeals in San Francisco, in favor of the FTC, then I believe the entire court, am I right?
David: The court reversed [the lower court], and the [Ninth Circuit] panel sided with AT&T, which threw in doubt the FTC jurisdiction, the three judge panel. Then the en banc, broader court sided with the FTC unanimously it was like 10 or 11 to nothing. Now what’s happened is AT&T said, we’re not going to appeal to the U.S. Supreme Court. They’re still working on settling the underlying data throttling dispute with the FTC, but they basically threw the FTC a bone, said, okay, we’re not going to appeal. I think there were smart. They realizing, look, FTC is going to be out there at least on some of your stuff. You don’t want to pick this fight with them because they’re going to be overseeing. This is the framework that the chairman of the FCC has developed. So why are you going to fight them on this?
Scott: Where does this leave what the FTC would consider acceptable behavior?
David: We’ll have to see. You’re getting into the nuts and bolts and details of what is deceptive and unfair, we’ll find out. It’s not very clear. There hadn’t really hadn’t been any big cases, I don’t think. Obviously for the last two years since they did the Title II, three years, Title II, and then before that it hadn’t really bubbled up much there. This was still largely seen as an FCC matter. So they are relying very heavily on the FTC.
Scott: It is true with the entire history of common carrier type regulation, we’re trying to decide what “reasonable” means.
Jonathan: In this case it won’t be what’s reasonable. It’s what’s “unfair and deceptive.”
Sarah: If I remember the fact pattern correctly, it was these grandfathered unlimited plans that were unlimited wireless on like 3G and then AT&T was upgrading to LTE and like the one percent of people with the unlimited plan on their old phones were then transferred to new plans, grandfathered in with their unlimited plans. Then AT&T limited their unlimited plans without telling them.
Jonathan: They throttled [them]. Which many people agreed to quite willingly and of course is no violation. You get a certain number of gigabits and once you see that, you’ll be throttled. That they did that without telling people is the issue. Then, the fact is, it may have been even less than one percent. I’m sorry. We’re not that familiar with the case. There may even be, 10 or 20,000 customers that can be a tiny number of customers that can suck up a lot of the capacity.
Scott: So we’re worried about the case treating the one percent unfairly?
Jonathan: We’ll flip the script there. Right.
Scott: By the way, I just want to point out, you can tell that in addition to having a PhD, Sarah has a JD and you can tell that because she said “fact pattern.”
Jonathan: That’s great, more than an economist. One other thing I want to throw out there because we are at an economist think tank, you guys do a number of white papers on this and industry details of or the impact on spending by major telecommunications companies – whether they are common carrier, what some would call utility regulation of broadband service, or whether there is much lighter-touch regulation, traditional regulation of a broadband service, which is the regime we are in in a couple days.
How does [regulatory change] impact spending? We read most of the different studies that come out from think tanks and groups and all sides of this debate and it’s very hard to have a takeaway from them. I just want to bring up the economics and it seems like we didn’t really know.
Scott: I think that’s right. Companies set their investment plans pretty far in advance and their base level of investment isn’t going to change a lot. What we care about, always, is what’s on the edges, on the margins, and there are so many things going on that it’s hard to tell. The big changes [in the economic studies] were with AT&T and that all depends on how you allocate their costs across Mexico and DirectTV and so on.
Jonathan: And they’ve got huge spectrum outlays there.
Scott: Exactly. I think these things [regulations] take a long time to manifest and they can also affect investment in ways other than just up or down. You can change what you invest into.
David: My opinion on this whole net neutrality, I think it’s not as bad on either side. I think both sides tend to exaggerate how bad it is and we kind of have something more closer in the middle somewhere. But you know, if you got rid of all net neutrality regulation, companies still do have some incentive to treat their consumers well. If you have Title II regulation, this has been around for decades, they’ve figured out how to deal with it and it wouldn’t be as bad. Both sides use it to their maximum advantage.
Scott: The stock market, and stock price studies, bear out what you’re saying. It’s a little dangerous to rely on what we call event studies because, as we say, so little data and so much noise. But Bob Crandall did a paper on net neutrality, sort of identified every place where there was, what you might consider to be, a surprise announcement about net neutrality one way or another, and you would expect, if that neutrality with looking less likely that the ISP would benefit and it looks more likely to companies that are favored, better quality would benefit, and vice versa. Nothing, he found nothing.
David: I remember other barriers. There are so many other variables or time lags and everything, and it gets baked in.
Scott: The other possibility is that, like you said, [regulation] just doesn’t matter that much [for stock prices].
David: I used to work at Legg Mason and Steve Nicholas. Investors, you know, were interested in [regulation] up to a point, but when you go through all these rounds, at some point they get numb to it and they just say, well, tell me when something really happens.
Sarah: Comedy Central’s stock price has gone up.
Jonathan: That is so true. Right now, Time Warner too, which actually gets us into some of the merger topics – we have some huge pending telecommunications mergers coming up.
Sarah: Should we talk about pending mergers?
Scott: Yes, let’s talk about mergers.
Sarah: Oh my.
Scott: There are three mergers or pending mergers that are all interesting for different reasons. One is Sinclair/Tribune, which for the [stock] market, it doesn’t matter because they’re not really worth anything. The market value of Facebook changes by multiples of what these two companies are worth, but still a big deal for other reasons.
Then there’s AT&T/Time Warner and that it matters because, well it matters because these companies are big companies and it’s a vertical merger. If the Justice Department were able to block it, that’d be a big deal.
Then there’s this other one where Disney is trying to buy 21st Century Fox. And Comcast would prefer that they buy 21st Century Fox. Comcast is also trying to buy Sky and [Rupert] Murdoch has some interest in Sky and the European and the British regulator said that they [would scrutinize a merger]. At this point I’m not sure who’s trying to buy what and what the regulators think who should own it? It’s very confusing.
Sarah: And T-Mobile/Sprint, right?
Scott: Of course. So, out of all of that, what do you guys want to focus on?
David: We’ll see whatever comes to fruition. Obviously T-Mobile/ Sprints is coming at us. AT&T/Time Warner, we should find out next week with the judge. That’s a very key pivotal moment and I think the betting generally is that [the court] is not going to just say, “DOJ, you’re right.” We don’t know, but I would say the odds probably favor AT&T on that one. But could the judge say, well, you know, negotiate some conditions or something. DOJ doesn’t want to do behavioral conditions. They’ve been there, tried that, with Comcast/NBCU, and it didn’t work out that well. We just have to wait and see what the judge says. That’s coming up next week.
T-Mobile/Sprint, you know, at best it seems 50/50. A lot of analysts think it’s a little less than 50 /50 because basically, DOJ and the FCC warned them off back four years ago for particular reasons back then, because they were heading into auctions, they wanted these guys be competitive.
David: There’s probably, among the career people, still resistance because they say we got great competition and we blocked A&T/T-Mobile and look what happened. T-Mobile became a stronger competitor and everything’s great. So why do we give that up? The way to look at it from my perspective is, they’ve got to be convinced by the companies that they’re going to have enough competition. They’re going to create new competition to fix services somehow through 5G and all that.
I would put that is like a little less than 50/50, then on all that other stuff on the Comcast and, who was the other one that I forget, Disney? Let’s see who actually wins that. You get into that type of debate where, who’s going to buy who, you get into personalities and price. Price is obviously huge, but you know, who’s going to pay what, and people disagree on price. Let’s see what emerges from that one. Sinclair/Tribune, I guess I’ll leave that one to Jonathan.
Jonathan: All these transactions as potential transactions are fascinating on their face. We also have what happens to know the future of CBS and Viacom. That’s probably less contested in the policy arena. But it’s highly, highly, highly contested in the business arena. I agree with Dave often about corporate governance issues and pricing issues and also regulatory certainty issues.
One reason that a Comcast, I believe so far has not been successful in getting a deal to acquire much of 21st Century Fox and some of or all of its European assets, which includes Sky, which is possibly the biggest satellite TV provider in Europe, is the perceived regulatory issues. In the eyes of some, how the US District Court judge here in Washington on Tuesday rules on AT&T buying Time Warner could affect some of these other deals, we don’t know.
Sinclair is a rather large owner of TV stations across the country buying Tribune Media, not a particularly large owner of TV stations. It’s just that they are in bigger markets. The deal is worth a couple of several billion dollars. That’s compared to over $100 billion for AT&T/Time Warner and very roughly $50 billion for each, for some of these other deals we’re talking about. [Sinclair/Tribune merger] has taken on all sorts of different shapes and dimensions. You have seen some conservative media perhaps for self-serving industry reasons, who are against the deal. You certainly have seen many Democrats against it. That merger is still pending after maybe about a year after it was announced at the FCC.
Jonathan: DOJ still hasn’t acted on it and again, [Sinclair/Tribune] as one of these deals that is $4 billion in market capitalization, compared to Facebook and Apple companies with, you know, $400 to $700 billion worth of market value is, wouldn’t even be remarked on in most specialty financial press in the world.
But this deal has taken on a lot of dimensions of not so much fake news, but has media become too commoditized? Are these sharing agreements that different TV stations have, where they’re hearing similar content, is that kind of fooling consumers where there really isn’t the competitive abundance that they might be, might be perceived to be?
Scott: Let me ask you a little bit more about that. Most of the work that I know of about – the evolution of the changes in the news markets – is that, national and international news are basically doing okay. There are lots of outlets and new business models going online, but local, state news are decimated, right. Does the Sinclair/Tribune deal fit more into this local problem? Is that where it really becomes something that we think about rather than just conservative news?
Jonathan: Most assuredly, “localism,” has been, not “the,” but “a,” focus of the FCC, for a very long time with media ownership and other proceedings and even a report that doesn’t get a lot of notice now. There was a very comprehensive report about the future of the media industry and how they’ve gotten to where it was with the vis-a-vis localism done several years ago, showing the large declines in newspaper reporters and the lessening number of competitors for the highly local news. I think [Sinclair/Tribune] taps into that. Although we’re not, we as reporters, are not out there to advocate any view as someone who has only ever been a journalist, has only ever wanted to be a journalist and who has, friends and loved ones who are journalists, it is kind of scary about the shrinking jobs, particularly at the newspapers and what that’s meant. So yeah, I think that feeds into it. I think the betting or the conventional wisdom still is that this transaction will be approved. The question is how many stations will Sinclair have to sell and also very important to this transaction and in what manner does it need to divest them and can have an arm’s length relationship between itself and these stations or it does it need to fully cast them aside?
David: And there’s a DC Circuit case, right? It goes to how these TV stations are counted for cap purposes. That comes into play to complicate things because you got the UHF discount.
Jonathan: Which has to do with, across the industry, what percentage of audience can any owner of TV stations reach? That goes right to this localism issue. Will that cap be raised? It certainly is not going to be lower. There was a huge fight back about almost 15 years ago over what that cap would be in Congress, and the FCC. We’re back right there.
David: Congress raised [the cap] from 35 percent to 45, or wait, no, the FCC raised it from 35 to 40 percent I think. Then Congress brought it back to 39 percent, because they wanted at least allow Murdoch and Fox to do one deal, the deal they were doing. Michael Powell at the Chairman’s Dinner said, “This year, we learned the difference between democracy and fascism is 6 percent.” I thought it was one of the great lines because the change from 45 to 39. That was the difference between democracy and fascism.
Jonathan: All this is being revisited as we speak. To the people concerned about localism, they perceive that this will have a major impact on it. It’s important to note this is not just about one transaction or one set of companies.
Scott: Of course the House cares about localism a lot because they want to be on the news.
David: You better do your lightening round because [the podcast producer is] about to give you the hook.
Scott: Just one more thing though. You started to talk about how you personally feel about the state of journalism. Where is this market going? We have state capitals generally not covered now, but we still see, specialized publications like Comm Daily, as far as I know, doing pretty well. Because that’s news everyone in certain areas need. Are we looking more at very focused publications as opposed to general news? Just where do you see this going?
Jonathan: I have said this before, on public panels and other venues, journalism right now and for quite a while now has been facing a kind of Tale of Two Cities issue which you rightly pointed out. The specialty media which we ourselves are a part of in Washington D.C., has some very, very healthy pockets.
Jonathan: Certainly we’re fortunate that our publication and our sphere has a lot of competition. To bring things even closer to home, I have studied and been involved in many different aspects of journalism, of specialty journalism. I’ve never seen any area as competitive as this area. Now that’s serving a particular audience. Actually in this area, you have free, and low priced, and expensive. You have all sorts of different options. That is because there is an economic interest in a large industry that, according to some accounts for one-seventh or one-sixth of the GDP of the country. On the other side is the local news where there isn’t any one constituency often demanding high quality journalism and the technological change that we’ve seen gave a whole new realm of companies the ability to kind of siphon off a lot of the maybe monopoly or something thereabouts profits that local newspapers were experiencing. Just to end things and to bring it back to localism.
Jonathan: One area that’s been somewhat healthy, and that’s why we’re talking about a deal, is Sinclair/Tribune. That’s why we’re talking about “what will the limits be” on what percentage of the country any one TV station owner can reach from TV. TV has been fairly healthy and radio less so, but also radio still has a captive audience for those who are still listening to radio. The numbers, when you look at like the weekly engagement, on radio, are still at least according to radio industry, are still quite high. The problem there though from this localism perspective is often the news has become more centralized, commoditized, and there might be a little bit less resources to put into it. But in terms of the corporate profits, the advertising and whatnot, that seems relatively healthy. It’s not like the Denver Post where I started with my career a long time ago as a freelancer. That paper almost cannot exist anymore. It is so small and that is the only newspaper serving a fast growing region, a wealthy region, a diverse region with multiple millions of people. There are like 60 journalists at that one paper alone, which used to face competition from another newspaper. There used to be, 300 or 400 journalists.
David: One of the problems for newspapers is traditionally they’re delivered by hand and that in the electronic world, it’s hard to compete. Whereas at least for the TV/radio guys, you’re sending it out by the airwaves or over a cable. I remember 10 years ago, I forget Marc Andreessen or somebody, one of the gurus, said, “look, newspapers as a paper are going away, they’ll only be a few that maybe survive because they’re so big and the economics of distributing them still work, but in almost all markets it’s just going to get too expensive to actually physically deliver newspapers daily.” It’s taken a little longer than he thought. That was 10 years ago, and he said 10 years they’ll all be gone. Well, here we are, there’s still quite a few around. In big cities, 250,000 is the minimum [subscriber count] you got to have. I’ve seen that number bandied about. It’s probably not exact, but when you start getting down below that, the economics just don’t work to pay all these people to deliver the papers.
Scott: Papers still try to bundle the physical paper with the digital edition. It’s almost like you have to pay extra to not get the physical paper thrown in your yard.
Jonathan: We personally have been talking about, you may have even posted on Facebook, how you consume the Washington Post. We’re fortunate that in this city there is a pretty healthy amount of journalism competition.
David: That’s where the President’s been great for the Washington Post, the New York Times, a few others.
Jonathan: I’ll play them one final plug actually. If you’re really interested in how some of the dynamics that we’re talking about play out at a national organization, you can read my blog, I just reviewed it. Showtime just had, or I think is actually in the middle of televising, a four-part documentary on how the New York Times covered the first 365 days of Trump. If you’re interested in the media and what it takes to write a story, it’s a very nice crash course in that, albeit at the very opposite end of the spectrum, which is where there’s still a lot of demand from a very wide audience. Unfortunately that is no longer the norm. Used to be. But it’s no longer the norm.
Sarah: Great, so I’ll leave it there. We’ll wrap up this episode of Two Think Minimum. Thank you so much Jonathan and David for coming and we appreciate it. Thanks.