Copyright Office Recommends End to Compulsory Broadcast Licensing

Copyright Office Recommends End to Compulsory Broadcast Licensing
September 21, 2011

Phil Britt

Phil Britt (spenterprises@wowway.com) writes from South Holland, Illinois. (read full bio)

Cable operators may be forced to negotiate copyright licenses directly with sports leagues and movie studios if Congress heeds the recommendations in a proposal from the U.S. Copyright Office. Both the American Cable Association (ACA) and the National Cable Telecommunications Association are resisting the effort to scrap the current statutory licensing process, asserting it will require them to raise rates or reduce station offerings for their customers.

Calling it an “artifact of a bygone era,” the U.S. Copyright Office called for Congress to drop the compulsory license that it created with the 1976 Copyright Act, in the proposal the agency submitted on August 29, 2011. Instead of paying a uniform copyright fee—reported by the Los Angeles Times as “tens of millions of dollars in fees that it distributes to rights holders” annually—to the Copyright Royalty Tribunal (CRT), which distributes the fees to Hollywood studios, TV stations, and sports leagues, the proposed change would force multichannel video programming distributors (MVPDs) to pay individual copyright holders.

“The compulsory license has served as Congress intended, benefitting consumers, broadcasters, distributors, and the vast majority of rights holders through efficient clearance of copyright on broadcast signals,” testified Ross Lieberman, ACA vice president of government affairs, at a hearing conducted this past June by the U.S. Copyright Office.

If adopted, the recommended changes could also make it more expensive for satellite companies and cable operators to distribute distant signals from independent TV stations. Currently, MVPDs pay the CRT a fee that goes to broadcast stations providing copyrighted material originating from outside the MVPD region. The recommended copyright change, MVPDs contend, will require the MVPDs to either pay more—requiring them to charge customers more to recoup costs—or drop the stations.

Opposition Will Continue
According to an ACA press release issued June 10, “Congress instructed the U.S. Copyright Office in law to prepare a report addressing possible mechanisms, methods, and recommendations for phasing out [the current statutory licensing process].”

New York-based attorney Craig Delsack, who negotiates retransmission agreements, said dismantling the compulsory license could mean more a la carte programming for viewers who could choose among more options for programming rather than being locked into a few select bundles. But it could also mean higher prices for consumers.”

Delsack also sees a benefit for local broadcasters, who could likely collect copyright fees for programming that they don’t receive under the current copyright structure.

The opposition from the cable and satellite firms can be expected to continue, said James M. C. Green, a patent and trademark attorney with the Winston-Salem, North Carolina-based Dummit Law Firm.

Consumers Shoulder Added Costs
“One only needs to look at the SEC-ESPN deal or the University of Texas TV channel deal to begin to comprehend the dollar signs that sports leagues will envision,” Green explained. “However, it could mean significant increases in prices to consumers of cable and satellite providers, a passing of the buck. It may also mean that national television channels will no longer be received throughout the country because of those increased costs.”

Green added, “A satellite provider might opt not to contract with a particular sports channel due to the cost, which was [under the current regulatory regime] borne by the sports channel to arrange a contract with a particular league. In a time of increased access to sports leagues, even well outside the leagues’ traditional coverage area, this move may mean less access for viewers,” he said.

“Similarly, cable companies will certainly resist because it is easier and potentially cheaper for them to pay a single fee than to negotiate with each rights holder,” Green said. “Some broadcasters are also against a change as they already pay for the rights to sublicense content they receive from Hollywood and sports leagues and would be reluctant to sacrifice that.”

Phil Britt (spenterprises@wowway.com) writes from South Holland, Illinois.

Internet Info

“Satellite Television Extension and Localism Act: A Report of the Register of Copyrights,” U.S. Office of Copyrights, August 29, 2011: http://www.copyright.gov/reports/section302-report.pdf

“Copyright Office Advocates Eliminating Compulsory License,” Joe Flint, Los Angeles Times, August 29, 2011: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/08/copyright-office-advocates-eliminating-compulsory-license.html?ST=1

“ACA’s Lieberman Urges U.S. Copyright Office To Keep Compulsory License,” American Cable Association Press Release, June 10, 2011: http://www.americancable.org/node/2964

Phil Britt

Phil Britt (spenterprises@wowway.com) writes from South Holland, Illinois. (read full bio)