there are other public policy considerations that should lead you to subsidizing the cable industry-you are trying to hit the market, not do other things? Mr. RAY. We were just trying to reach a fair, reasonable marketbase value for those signals. Mr. FRANK. You are confident that you have the tools available to make decisions that approximate the market? Mr. RAY. Absent subpena power; yes, sir. Mr. FRANK. Absent the subpena power? Mr. RAY. We do not have subpena power, which handicaps us some. Mr. FRANK. If you had subpena power, you think you would then be able to arrive at market decisions or close to what the market would do? Mr. RAY. It is a difficult task, but yes. Mr. FRANK. I would ask that you submit for the record, and by that time your briefs will be filed, I assume-I would like an explanation of how you go about deciding to what extent you approximate the market. I would be interested in a description of that procedure and just an analysis of how you get there. Mr. RAY. Well, sir, we have submitted for the record our final decision, determination. It is already part of this record, and we also intend to submit the brief that will be filed between now and the 10th regarding the merits of our case. But if there is still any further information that you desire, we will be happy to provide you with what information you desire, sir. Mr. FRANK. You think the brief will be important to argue-the brief will be saying that this is what the market would have done? Mr. RAY. I think the briefs will give you more clarification than what you already have in our final determination. Mr. FRANK. Well, I will reserve the right to ask for more after we have seen the brief. Thank you. Mr. RAY. Thank you. Mr. KASTENMEIER. From the Chair's standpoint I challenge whether or not you are supposed to determine the market value of these rates or not. You are supposed to determine a fair rate. I yield to the gentleman from California. Mr. BERMAN. No questions. Mr. KASTENMEIER. Well, we have just a minute or two. I see enormous problems out of some of the Tribunal's decisions. The quantums of fee increases are such that inevitably they are going to cause us problems. As you know, my view is that you are not supposed to set policy, you are supposed to adjust rates, and you are not supposed to find market rates. We do not need a compulsory license if it is just to determine the market rate. Mr. Chairman, to take the juke box industry from $8 to $50—and I have no brief for the juke box industry-but the quantum leap does not suggest a strong statutory base. Of course, the net result is that we in Congress will be besieged by people all over the country who have complaints. In the case of cable distant signals, subscribers to these cable systems find that their systems are not carrying distant signals because the rates were increased nearly 40 percent from something much, much lower than that. Would you not agree that if the patterns change significantly as a result of your rate adjustments that you have achieved something more than merely the adjustment of rates? You have modified viewer habits and you have forced major economic reconsiderations within an industry. This was really not intended under the law? Mr. RAY. Sir, may I make one comment? Mr. KASTENMEIER. Yes. Mr. RAY. And maybe a clarification, regarding the market value. I think perhaps what I was attempting to say was that in the many factors under consideration, one of the factors was to try to establish-when I was talking about a market-base value I was talking about a cable marketplace under the compulsory language. It is what systems would pay for comparable programs under the cable thing, not in the commercial marketplace. Mr. KASTENMEIER. We appreciate your appearance here this morning, Mr. Ray. That concludes today's hearing. We will meet again at 9:30 on Wednesday next for another oversight hearing. The committee stands adjourned. [Whereupon, at 11:45 a.m., the subcommittee was recessed, to reconvene at 9:30 a.m., Wednesday, March 9, 1983.] January 7, 1983 ADDITIONAL MATERIAL Mr. Thomas C. Brennan Copyright Royalty Tribunal Washington, D.C. 20036 Dear Chairman Brennan: This letter concerns your decision of November 19, 1982 (47 Fed. Reg. 52146) adjusting the rate of royalty payments for the secondary transmission of television broadcast signals by cable systems. As you know, I was the Chairman of the subcommittee of the House Judiciary Committee which authored the Copyright Revision Act of 1976 and the manager of the legislation on the House side. That Act created a compulsory license covering the carriage of broadcast signals by cable systems. The royalty rates written into that Act were to be adjusted from time to time by a new administrative body, the Copyright Royalty Tribunal, of which you are presently the Acting Chairman. In fashioning the compulsory license we were mindful of the fact that copyright liability for the carriage of broadcast signals was being imposed on cable systems for the first time. Therefore, the payment scheme was carefully crafted to ensure adequate payment to the owners of copyrighted material while at the same time not disrupting the provision of cable television service to the public. In my view the Tribunal's recent rate adjustment decision is totally inconsistent with these goals. The revised rates Page two Mr. Thomas C. Brennan effectively reverse a recent decision made by the In addition, the Tribunal's decision did not adhere to certain obvious guidelines inherent in the Copyright Act. Perhaps the most significant is the fact that the statutory rate schedule envisions a declining marginal value for each extra distant broadcast signals. The flat 3.75 percent figure per distant signal arbitrarily reverses this determination. I would direct your attention to the House Report accompanying the legislation (No. 94-1476) which states, on page 176, "It is the intent of the Committee, however, that the Copyright Royalty Commission not be viewed or used by the parties of interest as a forum to accomplish what they were unable to accomplish before the F.C.C." Sincerely, Robert W. Kastenmeier Chairman, Subcommittee on Courts, Administration of Justice RWK:bla |