OVERVIEW 1. The TPT proposal is ambiguous and invites definitional dispute; is internally illogical and perhaps discriminatory; and if implemented, would be an expensive administrative burden. a. The language of the proposal employs terms such as "distant signal," "copyright qualifying broadcast station," and "signals...not required to be retransmitted," none of which are straightforwardly applicable, especially within the context of the FCC's complex rules on signal carriage. Even if these terms were precisely defined, the FCC would still have to undertake laborious file-by-file determinations to produce an accurate system-by-system compilation of "copyright qualifying broadcast signals." b. The essence of the TPT proposal is that copyright liabilities apply only to "non-network programming of distant stations." (Emphasis added.) Nevertheless, the TPT formula uses as the factor by which cable system revenues are adjusted for copyright purposes, the ratio of non-network program expenses to total broadcast revenues (arriving at a figure of 28 percent) rather than non-network broadcast revenues or non-network revenues net of commissions and discounts. The following table summarizes the relevant ratios, based upon FCC broadcast financial data, that would be calculated using these other measures of revenue. n/e/r/a C. The TPT proposal would be complex in application and expensive to administer. The proposal contemplates quarterly certification by the FCC (perhaps at the taxpayer's expense) to the Register of Copyrights of the market share ("popularity") of each "copyright qualifying" station. This would require quarterly determination of the subject stations, measurement of the "popularity" of subject stations from commercially syndicated rating service data (which are published only once each year), and calculation of copyright liability for over 3,200 cable systems. The cost of administering this procedure could amount to a sizable proportion of total copyright fees collected. 2. In contrast to the provisions of. H. R. 2223, the concepts of "copyright qualification" and "popularity" applied to broadcast signals by the TPT proposal serve to exempt outright substantial numbers of cable systems and their revenues from copyright liability. The following charts show the exemptions resulting from the proposal on TPT's systems (and revenues, in millions of dollars). -ix n/e/r/a 3. Beyond outright exemption, the "qualification" and "popularity" aspects of the proposal necessarily tend to place a greater copyright burden on systems located in more remote areas compared with systems located in or near major TV markets. Stated another way, the copyright burden would fall more heavily on those systems for which the lack of sufficient "local" signals means greater reliance on "distant signals." 4. The TPT proposal impacts in grossly different ways on systems of comparable size. As a result: (a) some systems are exempt because they carry no "copyright qualifying signals"; other systems, although "copyright qualifying" are rendered exempt by reason of insignificant "popularity"; and (b) certain smaller systems, due to their relative remoteness -x n/c/r/a from major TV markets, are liable for copyright fees substantially in excess of the nominal levels contemplated in H.R. 2223, and in excess of fees paid by larger systems. As applied to TPT's own systems, the following table illustrates Another effect of TPT's proposal is that it tends to increase payments by the decreased number of systems which remain liable for payment, with a proportionately greater burden borne by systems in the lower revenue classes. -xi n/e/r/a |