-3 1. the percentage of total cable revenues that should be available for copyright payments, and purposes. 2. the value of each distant signal for copyright To place the TPT proposal in perspective we shall examine its specific components point by point. Cable system copyright liability is determined by application of the for The product of the first two components (A) x (B) of the TPT formula defines the base of cable system revenues that would be subject to copyright liability. The TPT proposal adjusts total cable system revenues by a factor which is the ratio of "programming costs" (in reality, non-network programming costs) to "total revenues" of "all television stations (28 percent in this hypothetical example). Our nera examination of FCC data for 1974 indicates that the 28 percent figure is almost certainly low and its basis open to question. Since the main thrust of the TPT proposal is imposition of copyright liability only on non-network distant signals, at the very least a more logical figure would be 31 percent, the ratio of non-network program expense to non-network total broadcast revenues. Indeed, it would appear perhaps even more appropriate to use a figure of 37 percent, based on nonnetwork net broadcast revenues, which adjusts for various commissions and cash discounts. Clearly, these alternatives to TPT's 28 percent would yield greater copyright liability. The relevant FCC data are summarized in Table I. A final comment is appropriate on this point. The TPT proposal characterizes its use of the program expense/ revenue ratio as "extremely generous" given broadcasters' use of scarce spectrum space at no cost to them. To be sure, there may be some merit to TPT's position, insofar as broadcasters ordinarily are not charged directly for allocated channels. Nevertheless, TPT apparently overlooks the not inconsiderable effort and expense required to ascertain community needs and interests, maintain public records, monitor compliance with the fairness and equal time provisions of FCC rules and regulations, etc., pursuant to the continued grant of a license to operate on an allocated channel. In addition, without presuming to speak for the broadcasters on this issue, examination of FCC data for 1974 shows that the cable industry nera -5 currently has available for use programming valued at $736 million at the TV station level, and $1.884 billion' for the whole broadcast industry (including networks). The bulk of this programming is retransmitted by the cable industry "at no cost to them." V. VALCATION OF SIGNALS OR "POPULARITY" The (C) component of TPT's formula attempts a valuation of the "copyright qualifying distant signals used by cable systems. TPT uses 8 percent in its illustration. The device employed by the TPT proposal is a "popularity measurement of the signals. This "popularity measurement would be applicable to the county or counties in which cable systems are located, "expressed as a market share percentage. As stated in TPT's redraft of the statute, "the 'market share' of each 'copyright qualifying broadcast station'...shall be derived by...dividing the total number of viewer hours credited to the...station with respect to the county...in which the cable system is located by the total number of viewer hours credited to all stations...in such county...." Since TPT uses the "popularity of copyright qualifying signals in its determination of cable system copyright liability, it appears inconsistent to measure that "popularity" in "total Network 1974 program expenses were $1.148 billion. (Fed- nera 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). nera 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 n/c/r/a |