[Federal Register: March 30, 2005 (Volume 70, Number 60)]
[Page 16306-16308]

Copyright Office

[Docket No. 2005-2 CARP CRA]

Adjustment of Cable Statutory License Royalty Rates

AGENCY: Copyright Office, Library of Congress

ACTION: Request for notices of intention to participate, and announcement of negotiation period


The Copyright Office of the Library of Congress announces the deadline for filing Notices of Intent to Participate in a CARP proceeding to adjust the rates for the cable statutory license and announces the dates of the 30-day negotiation period.


Comments on the petition and Notices of Intent to Participate are due no later than April 29, 2005. The 30-day negotiation period begins May 4, 2005 and ends on June 3, 2005. Written notification of the status of settlement negotiations due no later than June 6, 2005.


If hand delivered by a private party, an original and five copies of the comments on the petition, Notices of Intent to Participate, and/or written notification of status of settlement negotiations should be addressed to: Copyright Office General Counsel/ CARP, U.S. Copyright Office, James Madison Memorial Building, Room LM- 401, 101 Independence Avenue, SE., Washington, DC 20059-6000; then delivered Monday through Friday, between 8:30 a.m. and 5 p.m., to the Public Information Office located at the same address. If hand delivered by a commercial courier (excluding Federal Express, United Parcel Service and similar corporate courier services), an original and five copies of the comments on the petition, Notices of Intent to Participate, and/or written notification of status of settlement negotiations should be addressed to: Copyright Office General Counsel/CARP, Room 403, James Madison Memorial Building, 101 Independence Avenue, SE., Washington, DC.; then delivered by a courier showing proper identification, e.g., a valid driver's license, Monday through Friday between 8:30 a.m. and 4 p.m. to the Congressional Courier Acceptance Site (CCAS) located at Second and D Street, NE., Washington, DC. If sent through the U.S. Postal Service, an original and five copies of the comments on the petition, Notices of Intent to Participate, and/or written notification of status of settlement negotiations should be addressed to: Copyright Arbitration Royalty Panel, P.O. Box 70977, Southwest Station, Washington, DC 20024-0977. Comments may not be delivered by means of overnight delivery services such as Federal Express, United Parcel Services, etc., due to delays in processing receipt of such deliveries.


Tanya M. Sandros, Associate General Counsel, or Abioye E. Oyewole, CARP Specialist. 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 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 retransmissions 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.\2\


\2\ The Library is conducting this rate adjustment proceeding under the CARP system as opposed to the new Copyright Royalty Judges system adopted by Congress at the end of last year. See, infra.


Section 803 of the Copyright Act provides that the gross receipts limitations and royalty rates may be adjusted every five years, making 2005 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 37 CFR 251.63 of the CARP rules provides that the Librarian shall designate a 30-day negotiation period to allow interested parties to settle differences regarding the adjustment of cable rates before commencement of a formal CARP proceeding.

II. Petitions

This is a window year for filing. On January 10, 2005, the Library received a petition to adjust the cable rates and gross receipts limitations from Joint Sports Claimants and Program Suppliers seeking commencement of the 30-day voluntary negotiation period under Sec. 251.63. See http://www.copyright.gov/carp/cable-rate-petition.pdf. On January 26, 2005, the Office published a Federal Register notice requesting public comments as to whether or not it was appropriate and/ or required that the 2005 cable rate adjustment be resolved through the CARP process set forward under chapter 8 of the Copyright Act prior to the passage of the Copyright Royalty Distribution and Reform Act (“CRDRA”), or whether the petition filed by the Joint Sports Claimants and the Program Suppliers should be terminated and transferred to the Copyright Royalty Judges under the CRDRA. 70 FR 3738 (January 26, 2005). In response, on February 16, 2005, the Library received one comment from the Copyright Owners requesting a CARP for the resolution of the 2005 cable rate adjustment. Having received no comments in opposition and persuaded that it is appropriate to conduct a CARP

[[Page 16308]]

Proceeding, the Library now seeks comment consistent with 17 U.S.C. 803(a)(1) 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 29, 2005.

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' petition, the Library is directing parties to file their Notices of Intent to Participate on the same day, April 29, 2005. Failure to file a timely Notice of Intent to Participate will preclude a party from further participation in this proceeding.

The 30-day negotiation period shall begin on May 4, 2005, and conclude on June 3, 2005. 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 June 6, 2005. 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 proceeding.


Dated: March 25, 2005.
David O. Carson,
General Counsel.