APPENDIX ANALYSIS OF COPYRIGHT FEE IMPACT OF H.R. 2223 AND In addition to the study presented in the body of this report, we were requested by MPAA to prepare an analysis of copyright fee liability under H.R. 2223 and the TPT proposal for systems located within the Congressional Districts of members of the House Judiciary Subcommittee on the Courts, Civil Liberties, and the Administration of Justice. Pursuant to this analysis, MPAA furnished us with a list of those cable systems which they determined to lie within each such Congressional District. Time constraints did not permit verification of these data; accordingly, the results of this analysis necessarily reflect the data provided by MPAA. I. COPYRIGHT FEE IMPACT OF H.R. 2223 ON CONGRESSIONAL DISTRICT SYSTEMS Table 1 summarizes copyright liability under the H.R. 2223 fee schedule for the 23 cable systems in the six Congressional Districts selected for analysis. Liability amounts to less than nine-tenths of 1 percent (0.84 percent) of total system revenues, or 4.9 cents per subscriber per month as in Columns (6) and (7). The range is from a high of 0.96 percent and 5.6 cents for the eight systems in the Illinois 19th, to a low of 0.50 percent and 2.5 cents for the single system in the New York 21st. Tables 1-a through 1-f n/e/r/a A-2 present data for each cable system in each Congressional District by revenue classification. classifications. As a group, the 23 systems in the Congressional Districts are located predominantly within the lower revenue Nineteen systems, accounting for more than one-half of the subscribers, are in the two lowest revenue classes (annual revenues under $320,000), with fee impacts of 0.5 percent and 3 cents per subscriber per month, and 0.64 percent and 3.6 cents, respectively. Three systems, with 28 percent of the subscribers, fall into the mid-range revenue class ($320,000-$480,000), with a fee impact of 0.91 percent and 5.6 cents per subscriber per month. Only one system, in the Illinois 19th, falls into the highest (over $640,000) revenue class with impacts of 1.43 percent and 8.5 cents per subscriber per month. Overall, as indicated above, copyright fees per H.R. 2223 for the 23 Congressional District systems work out to less than 1 percent of annual revenues and less than a nickel per subscriber per month. II. EXEMPTION EFFECT OF PROPOSAL ON CONGRESSIONAL DISTRICT Applying our definitions of signal qualification and "popularity" from the TPT proposal to the 23 Congressional District cable systems results in outright exemption from copyright liability for 11 systems, accounting for 32.5 percent of total revenues. The data for each Congressional District are presented in Table 2, Column (6). The effect on 57-786 76 pt. 3 40 n/e/r/a A-3 revenue exemption by district is found in Table 2-a, Column exempt entirely. III. COPYRIGHT FEE IMPACT OF PROPOSAL ON CONGRESSIONAL DIS- For the 12 systems in three Congressional Districts that remain liable by application of the TPT proposal, copyright fee payments amount to 0.70 percent of revenues, or 4.1 cents per subscriber per month. These data are presented in summary form by Congressional District and revenue classifications in Table 3. Tables 3-a through 3-f present the data for each cable system which remains liable for payment under the TPT proposal. The revenue classification section of Table 3 shows, that for systems which remain liable, the greatest relative fee impact is experienced by smaller systems with lowest annual revenues. As shown in Column (5), for the four systems in the under $160,000 class, copyright fees amount to 1.69 percent of revenues as contrasted with a weighted average liability for all systems of 0.70 percent. From Column (4), note that the absolute dollar liability for the four smaller systems with 2,631 total subscribers is higher ($3,426) than the liability for the one largest system with 10,504 subscribers ($2,100). The disparities that result under the TPT proposal are also reflected by the data in Table 3-a (Illinois 19th n/c/r/a A-4 CD). One cable system in Monmouth with 1,453 subscribers has a copyright liability of $2,834 on revenues of $112,462, or 2.52 percent and 16.3 cents per subscriber per month. The cable system in Moline, with 10,504 subscribers, has a copyright fee of only $2,100 on revenues of $749,986, or 0.28 percent and 1.7 cents per subscriber per month. IV. COMPARATIVE FEE IMPACT OF H.R. 2223 AND PROPOSAL ON To summarize our findings thus far, application of the TPT proposal exempts 11 systems and almost $1.4 million in system revenues from all liability. The copyright fee impact in toto for systems in the three Congressional districts which remain liable under the TPT proposal is lower than under H.R. 2223.1 Overall, liability is reduced in absolute dollars from $35,328 under H.R. 2223 to $19,971 under TPT's proposal. The rate is reduced from 0.84 percent to 0.70 percent and the fee per subscriber per month from 4.9 cents to 4.1 cents. The "bottom line" result of the true effective rates is shown in Table 4. Copyright fees for the 12 systems in the three Congressional Districts that remain liable for payment 1 This effect is not necessarily true on a system-by-system n/c/r/a |