Witnesses Debate Whether Retrans Is Related to Compulsory License Changes

Another area of disagreement was whether eliminating distant-signal statutory licenses, which let pay-TV providers import the signals of out-of-market stations, would be workable. Representatives of the MPAA and NAB said direct negotiations between multichannel video programming distributors and TV stations over rights in such situations could work. Officials from both major DBS companies, cable operators large and small, and rural telcos that also sell video said they're against such changes. The office must report to Congress by Nov. 27 on phasing out Section 111, 119 and 122 of the Copyright Act, under last year’s Satellite TV Extension and Localism Act.

Witnesses also fielded staffers’ questions about music programming rights and how they're cleared across multiple copyright holders through performance rights organizations like ASCAP and BMI and the length of such deals. There’s a “functioning marketplace where broadcasters are actually doing deals for retransmission,” said BMI Vice President Joe DiMona. Other witnesses said they couldn’t say with specificity how many TV stations opt for retrans contracts versus getting guaranteed cable carriage by forgoing payment, nor give the exact portion of U.S. households watching TV only terrestrially. Written statements from witnesses are at http://xrl.us/bkrb7r.

"Direct licensing today has the same drawbacks as in 1976,” when the Copyright Act set up compulsory licenses, said NCTA Deputy General Counsel Diane Burstein. Some copyright holders recommend keeping the licenses, and those who want to do away with them “have really failed to show any mechanism for doing so that would not eliminate the balance” in the system now, she said. Should distant-signal licenses be nixed, “there would be a tremendous amount of disruption” for consumers because of the complexity of working out deals, Burstein said later.

Overall, “the best policy is to maintain the status quo,” American Cable Association Vice President Ross Lieberman testified for the group and others representing rural MVPDs: NTCA, the Organization for the Promotion and Advancement of Small Telecom Companies and Western Telecommunications Alliance. “In support of eliminating the license, some powerful copyright holders maintain they are underpaid. Ironically, some of these copyright holders may be overpaid,” Lieberman said. He later said the retrans process is “broken,” which MVPD interests have contended in an FCC proceeding on that subject.

TV stations may be able to license only their news shows to be carried by MVPDs in markets other than where those broadcasts originate, Tribune Assistant General Counsel Chuck Sennet said for the NAB. That might solve part of the problem that the cable and rural telco interests say would be created if part of the statutory license system is deleted, he said. “The distant signal license can and should be terminated at the end of 2014, when the satellite license expires.” Exceptions are for superstations and for markets and areas where and consumers who can’t get the signal of a station, Sennet said. Retrans deals that are “attacked by some in this proceeding are independent of the statutory copyright licenses and are beyond the scope of this proceeding,” he said: Those rules “are absolutely distinct from and serve different purposes than the statutory license.”

A longtime MPAA executive agreed. “Everyone is talking about retransmission consent: Retransmission consent is a recognition of the value of a broadcaster’s signal. It has nothing to do with copyright. So I am not so sure retransmission consent would be affected” by repealing the statutory license, said Executive Vice President Fritz Attaway. “I am hearing change is bad, we just can’t deal with the unknown. That just doesn’t make sense in the world in which we live,” where MVPDs face other changes, “but can’t in this one little tiny area,” Attaway said.

It “may be a tiny area, but it is an area that has special significance, as Congress has realized,” responded John Stewart of Crowell and Moring, representing the NAB. “I don’t want us to lose sight of that particular fact.” Speaking to the staffers, he said “we understand that in your brief [to] Congress in this proceeding, you may want to consider whether changes in other laws are necessary.” But “there is no justification” to conclude retrans “is necessarily on the chopping block just because the compulsory license is eliminated or reduced in the transition” away from the licenses, Stewart added.

Retrans points up some concerns behind changing statutory licenses, so that if there are changes, “one copyright holder that owns Glee could hold out” and so an MVPD wouldn’t be able to carry that popular show, said Dish Network Senior Vice President Jeff Blum. “Our concern if the statutory license is removed is our ability to actually enter into agreements to provide the full program,” with each station airing perhaps 5,000 shows annually, he said. Negotiating retrans deals “is a full-time job, as our friends at NAB know,” Blum said. “The frequent impasses of retransmission consent negotiations illustrate the chaos that would almost certainly result were the statutory license to be abolished.” Stakeholders seem “to know that if the distant signal license went away that there would be no distant signals,” harming MVPD subscribers who get stations that way, said lawyer Mike Nilsson of Wiltshire & Grannis for DirecTV. “You can’t reasonably argue that there will be no disruption.”