News

NCTA Seeks Signal-Fee Reform

8/26/2005 8:00 PM Eastern

Cable operators deserve a break in the fees they pay for compulsory licenses to carry stations affiliated with broadcasters Fox, UPN, The WB and Paxson Communications Corp., the National Cable & Telecommunications Association asserts in a recent filing with the federal Copyright Office.

In its Aug. 17 petition for rulemaking, the NCTA contends that stations in those groups now meet the definition of network, not independent, stations.

The definition is important: cable systems pay a full distant-signal equivalent, calculated at 0.956 of 1% of a station's gross revenues, as royalties for an independent station. The payment drops by three-quarters for network stations.

'UNFAIR, OUTDATED' POLICY

The NCTA has urged the agency to update the “unfair and outdated” copyright policy created in 1976.

The NCTA filing points out the growth of station groups in the recent decade. Fox now has 183 affiliated stations in 47 states, including 25 stations owned and operated by the parent broadcaster; UPN has 189 stations in 48 states, including 18 O&Os; The WB has 88 primary and 10 secondary affiliates; and i, formerly Pax TV, has 60 O&O's, including stations in all of the top-20 markets.

Federal copyright law defines network stations as those owned, operated or affiliated with a TV network which provides a substantial part of the programming supplied to those stations and used for a substantial part of the typical broadcast day.

There is no specified amount in the law that meets the threshold of “substantial,” but the filing suggests that 15 or more hours on 25 or more stations could meet the standard. Fox stations air 16 hours of network programming (not counting sports or news); UPN stations air 13; the WB, 15; and Paxson stations, 42, according to NCTA

National Association of Broadcasters senior vice president Dennis Wharton said attorneys are examining the NCTA filing, but declined to comment otherwise. Individual network representatives said compulsory licenses are a studio issue that will be championed by the Motion Picture Association of America.

The same day, the NCTA also filed a petition for rulemaking on another “enduring area of controversy,” the so-called phantom signal issue.

For years operators have sought government revision of a policy that judges adjoining systems under the same ownership to be a single system for the purpose of royalties calculation.

CLUSTERING IMPACT

But as the strategy of system clustering has expanded, the federal policy has become more problematic, making operators of large regional clusters pay royalties on content that might be seen in only part of the operation.

NCTA has been arguing for a change since at least 1983, asserting that federal policy that was written to prevent “artificial fracturing” of system groups now penalizes companies for operating efficiency. If the policy stipulated the adjoining systems had to be operating off the same headend, royalties would be collected based on actual use, the association argued.

NCTA senior vice president for law and regulatory policy Dan Brenner said the filings were made now because new issues are being raised before the Copyright Office by lobby groups such as the MPAA. The cable industry wants the Copyright Office to act on these lingering issues before it moves on to more contemporary controversies, he indicated.

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