C. RECENT DEVELOPMENTS IN CABLE TELEVISION This Section 111 of the Copyright Act of 1976 represented Congress' resolution of the competing demands of an established broadcast industry, an emerging cable industry, and television program creators and producers. provision is based historically on a joint use of the copyright law and the laws regulating telecommunications to govern cable retransmission of broadcast signals. Under this scheme, the Federal Communications Commission (FCC), through regulation, governs signal allocation, including the importation of distant broadcast signals by cable systems, as a matter of national communications policy. The Copyright Act, taking FCC regulation into account, establishes a compulsory license mechanism, a statutory device constituting an exception to the traditional grant of exclusive rights in copyrighted works, under which cable systems may secondarily transmit certain copyrighted programming without the express consent of the copyright owners, upon payment of statutory royalties and fulfillment of other conditions and obligations set forth in Slll. The Copyright Office is only part of this licensing system: we collect the royalties. The Copyright Royalty Tribunal (CRT), which is not a part of the Copyright Office, is authorized to decide the distribution of those royalties to copyright owners. The initial copyright royalty rates are set in the statute itself. The Copyright Royalty Tribunal is authorized, within statutory constraints, periodically to revise the rates. The premises of the $111 "settlement" were that cable needed imported signals to survive and the public was entitled to at least a minimum range of available programming which many did not then have. Cable, it was thought, lacked both bargaining position and alternative sources of program supply to permit acquisition of programming rights by contract in the marketplace. Hence, the compulsory license for imported signals was imposed. Since the passage of §1ll of the Copyright Act in 1976, several developments have occurred in the cable television industry which affect, either directly or indirectly, the compulsory licensing mechanism for secondary transmissions. 1. Satellite Transmissions. Changes in FCC rules governing the registration of television receive-only earth stations (TVRO's) and technological advances have led to a proliferation of programming networks distributed to cable systems via satellite. Although three satellite program-carrying signals are further transmissions of over-the-air television broadcast signals (WGN, WOR, and WTBS), a majority of the signals transmitted contain nonbroadcast, original programming (Cable News Network, USA Network, MTV, ESPN, Hame Box Office, Showtime, etc.). Such nonbroadcast material is subject to full copyright liability; hence, cable systems acquire and pay for such programming by negotiation and contract, unassisted by a compulsory license. technology has enormously increased the diversity of programming available to the cable subscribers, but retransmitted broadcast signals, local and distant, remain the mainstay of cable programming. In recent years, however, pay programming has expanded at a rate more rapid than that of basic cable service. Satellite 2. FCC Deregulation of the Cable Television Industry. As part of its policy of deregulation, the FCC has eliminated from its regulations: 1) restrictions on the number of distant signals that may be carried by a cable system; and 2) protection afforded to program suppliers under its syndicated program exclusivity rules. The Copyright Act permits the Copyright Royalty Tribunal, in the case of a change in the FCC rules, to adjust the royalty rate schedule governing carriage of the newly permitted signals and syndicated programming. The recent CRT adjustment in response to these changes, presently contested in a case before the Court of Appeals for the District of Columbia, is discussed later. 3. Copyright Office. Collection of Royalties: Under the statute, cable systems deposit their compulsory license royalty fees with the Copyright Office on a semi annual basis. The following table indicates the amount of royalties received: Data concerning the accounting period July-December 1982 is incomplete since royalties for that period did not have to be deposited until March 1 of this year. 4. Copyright Royalty Tribunal. In a. Distribution of Royalties: Every year, the CRT distributes the cable royalties plus accumulated interest to qualified copyright owners. its most recent decision, published in the Federal Register of December 28, 1982, the CRT announced the following distribution of 1980 cable royalties: b. Adjustment of the Royalty Rate: Since the compulsory license mechanism became effective in January 1978, the CRT has announced two rate adjustment decisions: (1) The CRT is authorized to adjust the statutory royalty rate schedule every five years to reflect national monetary inflation or deflation and changes in the average rates charged to cable subscribers for the basic service of providing secondary transmissions. In 1980, the CRT adjusted the cable television royalty rate by 18.35% to reflect such changes. In addition, the CRT raised the small system ceiling (under which "small" cable systems are permitted to pay royalties on a reduced and simplified basis) from $160,000 to $214,000. (2) The CRT also is authorized to adjust the royalty rate schedule to reflect changes in certain FCC rules. As a result of the FCC deregulation discussed earlier, the CRT made the following adjustments: A) The CRT added a surcharge ranging between .599% to B) The CRT set a royalty rate of 3.75% for carriage of 5. Legislation in the 97th Congress. In light of the changed circumstances in the cable industry since 1976, there were extended discussions and legislative activity in the 97th Congress looking to alteration of the cable license: H.R. 5949: This bill, which passed the House of Representatives but was not considered by the Senate, would have done the following: Retain the cable compulsory license; * Provide for limited syndicated exclusivity protection; Codify in modified form FCC Network Non-duplication and * Codify FCC sports exclusivity rules; Exempt satellite resale carriers from copyright lia- Exempt small cable systems from copyright liability. H.R. 3844: This bill would have accomplished the following: Impose (after a transition period) full copyright lia- Exempt from copyright liability cable carriage of local Exempt from copyright liability cable carriage of Subject satellite resale carriers to copyright lia- Exempt small cable systems from copyright liability; ⭑ Eliminate the FCC "must carry" rules. H.R. 3844 has been reintroduced in this Congress as H.R. 1388. |