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NCTA Seeks Signal-Fee Reform

Cable operators deserve a break in the fees they pay for compulsory licenses to carry stations affiliated with broadcasters Fox, UPN, The WB Television Network and Paxson Communications Corp., the National Cable & Telecommunications Association asserted in a recent filing with the federal Copyright Office.

In its Aug. 17 petition for rulemaking, the NCTA contended that stations in those groups now meet the definition of network stations, not independent stations.

The definition is important: Cable systems pay a full distant-signal equivalent, calculated at 0.956% of a station’s gross revenues, as royalties for an independent station. The payment drops by three-quarters for network stations.

The NCTA has urged the agency to update the “unfair and outdated” copyright policy created in 1976.

The trade group’s filing pointed out the growth of station groups in the recent decade. Fox now has 183 affiliated stations in 47 states, including 25 stations owned and operated by the parent broadcaster; UPN has 189 stations in 48 states, including 18 O&Os; The WB has 88 primary and 10 secondary affiliates; and Pax has 60 O&Os, including in all of the top 20 markets.

Federal copyright law defines network stations as those owned, operated or affiliated with a TV network that provides a substantial part of the programming supplied to those stations and used for a substantial part of the typical broadcast day.

There is no specified amount in the law that meets the threshold of “substantial,” but the filing suggested that 15 or more hours on 25 or more stations could meet the standard. Fox stations air 16 hours of network programming (not counting sports or news); UPN stations air 13; The WB 15; and 42 by Pax stations, according to the NCTA.

National Association of Broadcasters senior vice president Dennis Wharton said attorneys are examining the NCTA filing, but he declined to comment otherwise.

Individual network representatives said compulsory license is a studio issue that will be championed by the Motion Picture Association of America.

The same day, the NCTA also filed a petition for rulemaking on another “enduring area of controversy,” the so-called phantom-signal issue.

For years, operators have sought government revision of a policy that judges adjoining systems under the same ownership to be a single system for the purpose of calculation of royalties.

But as the strategy of system clustering has expanded, the federal policy has become more problematic, making operators of large regional clusters pay royalties on content that might be seen in only part of the operation.

The NCTA has been arguing for a change since at least 1983, asserting that federal policy that was written to prevent “artificial fracturing” of system groups now penalizes companies for operating efficiency. If the policy stipulated that the adjoining systems had to be operating off the same headend, royalties would be collected based on actual use, the association argued.

NCTA senior VP for law and regulatory policy Dan Brenner said the filings were made now because new issues are being raised before the Copyright Office by lobbyists such as the MPAA. The cable industry wants the Copyright Office to act on these lingering issues before it moves on to more contemporary controversies, he added.