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factor of 28 percent (see Table I), and "popularity" factors
as defined in the TPT proposal. We have employed the term
"copyright qualifying broadcast signals as defined on page 10.'
Application of the formula with these components to the re-
maining 78 "copyright qualifying systems results in a copy-
right liability of 2.35 percent of the revenues of the sub-
ject systems, or 13.2 cents per subscriber per month. These
data are presented in summary form by system revenue classi-
fication in Table IV. Examination of the data in Columns (5)
and (6) indicates that copyright liability impacts unevenly
according to revenue classification. In some cases copyright
liability falls with greater impact on lower revenue classes.
For example, the greatest impact is on TPT systems in the
$160,000-$320,000 annual revenue class, an effective rate of
2.61 percent of revenues, or 14.9 cents per subscriber per
month, as compared with impacts of 2.42 percent and 13.4 cents
per subscriber per month for the largest TPT systems--those in
the over $640,000 annual revenue class. Copyright liability
is determined system by system and is a function of the

Note that the 28 percent figure is based on total broadcast revenues which has the effect of reducing copyright pay

ments.

To give proper weight to copyright qualifying non-network programming of network affiliated stations, we have applied a factor of 40 percent to the market share percentage of viewing hours obtained by such stations.

Estimate

is based on A. C. Nielsen Co., Nielsen National TV Ratings,
NTI Nielsen Television Index, which was provided by an
MIAA member firm.

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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

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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. VALUATION OF SIGNALS OR "POPULARITY"

The

As

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. 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." 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

1

Network 1974 program expenses were $1.148 billion. (Fed-
eral Communications Commission, Public Notice No. 5445,
September 8, 1975, "TV Broadcast Financial Data--1974,"
Table 6.)

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county" households rather than "popularity" in CATV households only. The use of TPT's measure of "popularity" could tend to understate "popularity" among cable viewers and, thus, to

understate the system's copyright liability.

Although TPT's contention that these data are now

being collected by the national rating services is technically
correct, their application would represent a substantial
administrative burden. TPT's draft statute contemplates FCC
certification of the market share of each "copyright quali-
fying broadcast station" to the Register of Copyrights each
quarter. This presupposes an unambiguous determination of
such stations as well as identification of the appropriate
percentage of "copyright qualifying" non-network programming
included in the signals of otherwise copyright-exempt sta-
tions. The rigorous application of the appropriate rating
service data clearly would constitute an immense undertaking;
indeed, the mere determination of "qualifying" stations/
signals required four times each year would itself be admin-
istratively burdensome.

The ultimate effect of TPT's proposal is very
clear. By definition, the proposal seeks to narrow substan-
tially the base of TPT systems (and revenues) which are sub-
ject to copyright liability by exempting certain systems
entirely and the bulk of revenues of many other systems. This
approach is in sharp contrast to the fee schedule currently
incorporated in H. R. 2223, which applies copyright liability

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to the full base of the cable industry's basic service revenues, and which is structured incrementally to impact more heavily on the larger systems.

Before turning to an examination of the TPT proposal in application to its systems, it is appropriate to review the effect of the H. R. 2223 fee schedule on TPT cable systems.

VI. COPYRIGHT FEE IMPACT OF H.R. 2223 ON TELEPROMPTER SYSTEMS
Tables II through II-E present observations on 142

TPT cable television systems for which data on subscribers
and monthly subscriber fees are published. The tables array
the cable systems by annual revenue classification as deter-
mined by the fee schedule in H. R. 2223. The cable systems in
each of the five resulting revenue classifications are pre-
sented in Tables II-A through II-E. Table II presents a
summary of the five classifications. Examination of Column
(6) shows that copyright liability for TPT's systems under the
provisions of H. R. 2223 ranges from an effective rate of 0.50
percent for the smaller systems in the lowest revenue classi-
fication to 1.88 percent for the larger systems in the highest
revenue classification. These rates are equivalent to 2.6
cents and 11.2 cents per subscriber per month, respectively
(Column (7)]. The effective rate for all 142 TPT cable sys-
tems in all revenue classifications results in an overall

2

Including those in which TPT has an interest of at least 50 percent.

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