[Federal Register: February 28, 2000 (Volume 65, Number 39)]


[Page 10564-10565]



Copyright Office

[Docket No. 2000-4 CARP CRA]


Adjustment of Cable Statutory License Royalty Rates

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice with a request for comments and announcement of 

negotiation period.


SUMMARY: The Copyright Office of the Library of Congress is announcing 

receipt of petitions to adjust the royalty rates for the cable 

statutory license. The Office seeks comments on the petitions, 

announces the deadline for filing Notices of Intent to Participate in a 

CARP proceeding to adjust the rates, and announces the dates of the 30-

day negotiation period.

DATES: Comments on the petitions, and Notices of Intent to Participate, 

are due no later than April 6, 2000. The 30-day negotiation period 

begins on April 10, 2000, and ends on May 10, 2000. Written 

notification of the status of settlement negotiations is due no later 

than May 11, 2000.

ADDRESSES: If sent by mail, an original and five copies of the comments 

on the petitions, Notice of Intent to Participate, and written 

notification of status of settlement negotiations should be addressed 

to: Copyright Arbitration Royalty Panel (CARP), P.O. Box 70977, 

Southwest Station, Washington, DC 20024. If hand delivered, an original 

and five copies should be brought to: Office of the Copyright General 

Counsel, James Madison Memorial Building, Room 403, First and 

Independence Avenue, SE, Washington, DC 20540.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 

William J. Roberts, Jr., Senior Attorney for Compulsory Licenses, P.O. 

Box 70977, Southwest Station, Washington, DC 20024. Telephone: (202) 

707-8380. Telefax: (202) 252-3423.


I. Background

    Section 111 of the Copyright Act, title 17 of the United States 

Code, grants a statutory copyright license to cable television systems 

for the retransmission of over-the-air broadcast stations to their 

subscribers. In exchange for the license, cable operators submit 

royalties, along with statements of account detailing their 

retransmissions, to the Copyright Office on a semi-annual basis. The 

Office then deposits the royalties with the United States Treasury for 

later distribution to copyright owners of the broadcast programming 

retransmitted by cable systems.

    A cable system calculates its royalty payments in accordance with 

the statutory formula described in 17 U.S.C. 111(d). Royalty fees are 

based upon the gross receipts received by a cable system from 

subscribers receiving retransmitted broadcast signals. Section 111(d) 

subdivides cable systems into three categories based on their gross 

receipts: small, medium and large. Small systems pay a fixed amount 

without regard to the number of broadcast signals they retransmit, 

while medium-sized systems pay a royalty within a specified range, with 

a maximum amount, based on the number of signals they retransmit. Large 

cable systems calculate their royalties according to the number of 

distant broadcast signals which they retransmit to their 

subscribers.\1\ Under this

[[Page 10565]]

formula, a large cable system is required to pay a specified percentage 

of its gross receipts for each distant signal that it retransmits.


    \1\ For large cable systems which retransmit only local 

broadcast stations, there is still a minimum royalty fee which must 

be paid. This minimum fee is not applied, however, once the cable 

system carries one or more distant signals.


    Congress established the gross receipts limitations that determine 

a cable system's size, and provided the gross receipts percentages 

(i.e., the royalty rates) for distant signals. 17 U.S.C. 111(d)(1). It 

also provided for adjustment of both the gross receipts limitations and 

the distant signal rates. 17 U.S.C. 801(b)(2). The limitations and 

rates can be adjusted to reflect national monetary inflation, changes 

in the average rates charged by cable systems for the retransmission of 

broadcast signals, or changes in certain cable rules of the Federal 

Communications Commission in effect on April 15, 1976. 17 U.S.C. 

801(b)(2)(A), (B), (C) and (D). Prior rate adjustments of the Copyright 

Royalty Tribunal made under section 801(b)(2)(B) and (C) may also be 

reconsidered at five-year intervals. 17 U.S.C. 803(b). The current 

gross receipts limitations and rates are set forth in 37 CFR 256.2. 

Rate adjustments are now made by a Copyright Arbitration Royalty Panel 

(CARP), subject to review by the Librarian of Congress.

    Section 803 of the Copyright Act provides that the gross receipts 

limitations and royalty rates may be adjusted every five years 

beginning with 1995, making this a royalty adjustment year, upon the 

filing of a petition from a party with a ``significant interest'' in 

the proceeding. If the Librarian determines that a petitioner has a 

``significant interest'' in the royalty rate or rates in which 

adjustment is requested, the Librarian must convene a CARP to determine 

the adjustment. 17 U.S.C. 803(a)(1). Section 251.63 of the Library's 

rules provides that ``[t]o allow time for the parties to settle their 

differences concerning * * * rate adjustments, the Librarian of 

Congress shall * * * designate a 30-day period for negotiation of a 

settlement. The Librarian shall cause notice of the dates for that 

period to be published in the Federal Register.'' 37 CFR 251.63(a).

II. Petitions

    In this window year for filing petitions to adjust the cable rates 

and gross receipts limitations, the Library has already received two. 

Both petitions come from copyright owner groups: the first filed on 

behalf of the National Basketball Association, the National Hockey 

League, Major League Baseball, and the National Collegiate Athletic 

Association (collectively, the ``Joint Sports Claimants''), and the 

second filed on behalf of Program Suppliers.

    Both petitioners seek adjustment of the cable rates, and both 

assert they have a significant interest in the adjustment based upon 

their longtime status as recipients of royalty fees submitted under the 

cable statutory license. Consistent with 17 U.S.C. 803(a)(1), the 

Library seeks comment as to whether Joint Sports Claimants and Program 

Suppliers have a significant interest in the adjustment of the cable 

rates. Comments are due no later than April 6, 2000.

III. Negotiation Period and Notices of Intent To Participate

    As discussed above, the Library's rules require that a 30-day 

negotiation period be prescribed by the Librarian to enable the parties 

to a rate adjustment proceeding to settle their differences. 37 CFR 

251.63(a). The rules also require interested parties to file Notices of 

Intent to Participate with the Library. 37 CFR 251.45(a). Consequently, 

in addition to requiring parties to file comments on the Joint Sports 

Claimants' and Program Suppliers' petitions, the Library is directing 

parties to file their Notices of Intent to Participate on the same day, 

April 6, 2000.\2\ Failure to file a timely Notice of Intent to 

Participate will preclude a party from further participation in this 



    \2\ The Library is changing its practice to require Notices of 

Intent to Participate to be filed prior to the start of the 30-day 

negotiation period, rather than at the end. The purpose of the 

change is to identify the participants to the proceeding before the 

negotiation period in order to facilitate complete settlements among 

all interested parties.


    The 30-day negotiation period shall begin on April 10, 2000, and 

conclude on May 10, 2000. Those parties that have filed Notices of 

Intent to Participate are directed to submit to the Library a written 

notification of the status of their settlement negotiations no later 

than May 11, 2000. If, after the submission of these notifications, it 

is clear that no settlement has been reached, the Library will issue a 

scheduling order for a CARP proceeding to resolve this rate adjustment 


    Dated: February 22, 2000.

David O. Carson,

General Counsel.

[FR Doc. 00-4609 Filed 2-25-00; 8:45 am]