We determined in our cable royalty proceeding that the fee for additional distant signals should be a uniform flat rate. This determination was reached on the basis of the record presented in a specific proceeding, and as an appropriate response to the situation created by the total repeal of the FCC distant signal rules. We express no views concerning how this issue should be resolved in other situations, or in a legislative resolution. It has been suggested that cable copyright fees should be established at lower than reasonable marketplace rates to reflect alleged benefits to certain broadcasters from cable carriage of their distant signals. Because of the pending appeal, we must restrict our observation on this issue to informing the subcommittee of the proposed findings on this issue presented to the Tribunal by the National Association of Broadcasters. The NAB requested us to make a finding that the claimed harm to broadcasters from distant signal carriage is not offset by any corresponding benefit. Stations are not able to sell distant cable audiences directly. The copyright owners and broadcasters strongly urged the Tribunal to provide that the rate for the new distant signals should be effective, as of July 1981, to provide for compensation at the new rates as of the commencement of carriage of the additional signals. For the reasons described in our opinion, we determined that the rates should not be effective until January 1, 1983, subsequently extended by the Congress until March 15, 1983. This date has provided cable operators with more than adequate time to make business judgments concerning the number of distant signals they wish to carry. During the last Congress, the Tribunal restricted its comments on pending cable copyright legislation to a few issues directly relating to the operations of the Tribunal. Many of the provisions of the legislation related to matters on which the Tribunal had no basis for submitting comments. That situation is unchanged. We do have a general observation on the approach of any legislation. It is our view that the incorporation in rigid statutory language of detailed agreements reached by parties has not been proved to be viable in such dynamic areas as cable television. This is particularly true when the Congress is induced by the parochial concerns of the parties to preclude or rigidly restrict the customary regulatory or administrative procedures to make such adjustments as may be justified as a result of altered conditions. We agree with the observation of Senator Charles McC. Mathias that if legislation sticks to broad policy issues, and keeps out of the nitty-gritty of daily operations, perhaps we will not see our laws overtaken quite so quickly by advancing technology. Thank you very much, Mr. Chairman. [The statement of Mr. Ray follows:] CRT COPYRIGHT ROYALTY TRIBUNAL UNITED STATES OF AMERICA 1111 20th Street, N.W. TESTIMONY OF COPYRIGHT ROYALTY TRIBUNAL BEFORE SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES, AND COMMITTEE ON THE JUDICIARY UNITED STATES HOUSE OF REPRESENTATIVES March 3, 1983 Mr. Chairman: My name is Edward (Eddie) Ray, Chairman of the Copyright Royalty Tribunal. Appearing with me are Commissioners Thomas C. Brennan, Douglas E. Coulter, Mary Lou Burg and Katherine D. Ortega. We are pleased to appear before you in order to present this subcommittee testimony on the activities of the Copyright Royalty Tribunal. Since a detailed activity report is submitted as part of the record, it is unnecessary to burden the subcommittee with repetitive testimony on most of these matters. However, Mr. Chairman, I do have a brief statement that reflects the Tribunal's views on other matters that may be useful to the subcommittee in the performance of its legislative responsibilities. First, I would like to turn to the Tribunal's recent proceeding for the adjustment of certain cable television copyright royalties. On this subject the Tribunal must observe a narrow line between our obligation to preserve the integrity of the judicial process, and the need of this subcommittee for information necessary to the performance of its legislative Because of the substantial change in the membership of the Subcommittee, it may be useful to briefly describe the background of the responsibilities. Tribunal's proceeding. The Federal Communications Commission commenced a proceeding to consider essentially deregulating the cable industry by the complete repeal of their rules restricting the importation of distant signals, and providing protection for program syndication exclusivity. During the Commission's proceedings, Chairman Kastenmeier and other members of the Subcommittee expressed concern to the Commission at their proposed course of action. The thrust of these comments was that the Congress in enacting the cable copyright provisions of the Copyright Act of 1976 did not contemplate the complete elimination Piecemeal revision of the regulations, rather than of the cable rules. outright repeal was said to be what Congress clearly had in mind. Chairman Kastenmeier in a letter of March 13, 1980 to FCC Chairman Charles Ferris, said: The announced intention of the Commission to deregulate the cable industry is particularly of interest because we did not contemplate such a sweeping change in the regulatory structure when we drafted Public Law 94-533 1. Complete deregulation of the cable industry at this time would not only have the effect of placing enormous burdens on a Tribunal not fully prepared to meet them, but would also precipitate a panicked rush to Capitol Hill for remedial copyright legislation. The Commission did deregulate the cable industry, which action was appealed in the Second Circuit. In the case of Malrite T.V. v. F.C.C., the Court of Appeals affirmed the Commission's action and described the relationship between the FCC and the Tribunal. The Court said: The plain import of § 801 is that the FCC, in its development This subcommittee proceeded, with a protracted examination of the cable copyright issue in light of the FCC action. The cable, industry asserted that no legislative action was necessary, as the Tribunal had authority to make any necessary rate adjustments. The Chairman and other members of the Subcommittee maintained that the FCC action had undermined the basis for the cable copyright provisions, and that this balance could not be fully restored by the Tribunal adjusting rates. 1/ Chairman Kastenmeier is referring to P.L. 94-553, the Copyright Act of 1976. The National Cable Television Association (NCTA) petitioned the Tribunal to commence a rate proceeding. NCTA argued that a decision by the Tribunal was urgent, so that cable operators would have knowledge of the copyright fees, and could make an informed judgment as to which signals they desired to carry. The Tribunal approved the request and commenced the proceeding. During much of 1982 the Tribunal proceeding and congressional consideration of significant changes in the cable copyright law proceeded simultaneously. The Tribunal proceeding was exhaustive with 23 days of hearings. As in all Tribunal cases the Commissioners personally heard the testimony and examined the witnesses. At a Sunshine Act meeting on October 20, 1982, the Tribunal, by unanimous vote, adopted its final rule. The Tribunal determination was based on the record evidence presented in the proceeding. We note that some of those most active in discussing our determination did not participate in the proceeding, or present evidence. As the Chairman is aware, the Tribunal is without authority to compel the presentation of evidence. We have on several occasions brought this matter to the attention of this subcommittee. The General Accounting Office has supported our position, stating that they knew of no body in the Federal Government performing similar rate functions without such authority. The I request that a copy of the Tribunal's opinion as published in the Federal Register of November 19, 1982 be made part of my testimony. Tribunal shortly will file with the subcommittee a copy of the brief being filed by the Department of Justice in support of the Tribunal's determination. I request that that document also be made part of the record. These |