-8 copyright liability of 1.48 percent of annual revenues, or 8.6 cents per subscriber per month (less than the postage cost of billing each subscriber for service each month). It should also be noted that the purposefully incremental construction of the H. R. 2223 fee schedule results in a greater than proportional share of copyright liability being borne by the largest TPT systems--those with annual revenues in excess of $640,000, and with the highest average monthly charge to subscribers--$5.98 [Column (4)]. Columns (3) and (5) indicate that these systems, representing 60.6 percent of TPT's revenues, account for 76.9 percent of the total copyright liability. A less than proportional share applies to all other classes of TPT's sytems. This result is consistent with the intention of the H.R. 2223 statute as drafted. It is also significant to note that the overall copyright fee impact of 1.48 percent on TPT systems per H.R. 2223 contrasts sharply with the illustrative figure of 2.24 percent in the text of TPT's proposal. Despite the higher illustrative fee given in the text of the TPT proposal (2.24 percent versus 1.48 percent in H.R. 2223), one is led to conclude that there are elements in the TPT proposal, which if placed in actual operation would result in substantially lower copyright liability for TPT. Since the formula would apply only to systems which retransmit "copyright qualifying" stations and/or signals, the definition serves to exempt outright a number of cable systems from all copyright liability. n/e/r/a -9 It should also be noted that, beyond outright exemption, the concepts of "copyright qualification" and "popularity embodied in the TPT proposal necessarily result in an uneven geographic distribution of copyright liability. This would tend to place a greater copyright burden on cable systems located in more remote areas which rely heavily on "distant signal" importation rather than on systems located in or near major TV markets which, because of the availability of many local signals, use fewer "distant signals" in providing service to their subscribers. The greater copyright burden, therefore, would fall more on those systems for which the lack of sufficient "local" signals means greater reliance on "distant signals." To illustrate this point, Table VI presents an analysis of the geographic distribution of those systems which retransmit the signals of "copyright qualifying" TV stations, as defined by the TPT proposal. The data contained therein show that of the 25 systems within 35 miles of a top 100 TV market, only 2 systems, or 8 percent, relied on distant signals with "popularity" factors of 4 percent or more. Conversely, of the 79 systems outside the 35 mile zones of top 100 TV markets, 51 systems, or 65 percent, relied on "copyright qualifying distant signals" with relatively high "popularity" ratings. This pattern of signal carriage by cable systems underscores the greater copyright burden of systems outside major markets. n/c/r/a -10 The consistency of this pattern is further underscored by the observation that of the 26 "copyright qualifying" cable systems with minimal viewing to distant signals, 16 systems, or 62 percent, are within the 35 mile zone of a top 100 TV market. This indicates that closer proximity to a major TV market results in less reliance on "copyright liable" distant signals. Moreover, in addition to the 104 TPT "copyright qualifying" systems in the foregoing analysis, the same pattern of signal carriage is evident among the 38 TPT systems, which are exempt outright from copyright liability. Of these 38 systems, 30 systems, or 79 percent, are within 35 miles of a top 100 TV market. Again, a pattern wholly consistent with their nonreliance on "copyright qualifying" distant signals. VII. EXEMPTION EFFECT OF TELEPROMPTER PROPOSAL In order to evaluate the exemption aspects of the TPT proposal, we have established a definition of the term "copyright qualifying broadcast signal" and, by extension, "qualifying" cable systems. For purposes of this analysis, we have defined such systems as those which retransmit signals of stations whose Grade B contours do not cover the location of the cable system. Therefore, "non-copyright qualifying" cable systems are those which retransmit only the signals of stations within whose Grade B coverage the system is located, n/e/r/a -11 plus other significantly viewed" signals in the county in which the system is located. Although we are mindful that these definitions lack absolute precision, they should yield results which are reasonably representative of the impact of TPT's proposal on their systems. The results of applying these definitions to the 142 TPT cable systems included in our analysis are found in Tables III and III-A which are, respectively, summaries of cable systems and system revenues as to copyright qualification. Examination of the data in these tables indicates that if the exemption aspects of the TPT proposal were to be implemented, 38 of its systems, or 26.8 percent would be exempt outright from all copyright liability. More to the point is that these systems account for and exempt 26.3 percent of TPT's revenues from all copyright liability. Beyond outright exemption, also consider the impact of the "popularity" component of the TPT proposal on copyright qualification. Although we have already commented on the unwieldy aspects of the "popularity" component, we have, nevertheless, undertaken the viewing hour 3 As defined and listed in Appendix B of the Memorandum Opinion and Order on Reconsideration of the Cable Television Report and Order (Docket 18397 et al.), FCC 72-530. It should be noted that Appendix B is based upon 1971-1972 viewing data, and, hence, may not reflect current patterns of significant viewing. Furthermore, the application of these definitions to the data is not completely unambiguous, e.g., the proper distribution of subscribers of systems located in more than one county. n/e/r/a -12 market share analysis in conformity with our interpretation of totals. Column VIII. COPYRIGHT FEE IMPACT OF PROPOSAL ON TELEPROMPTER To the 78 TPT systems that would remain liable for copyright payments we have applied the formula from the TPT proposal to determine copyright liability. The formula we have used includes the program expense/broadcast revenue S The minimum reporting standard of the Arbitron television rating service is 0.5 percent. n/e/r/a |