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Padden: Get Rid of Compulsory License and Retrans

Former Disney and News Corp. executive Preston Padden plans
to tell the Senate Commerce Committee next week that it should "follow the
roadmap" of S. 2008, the Next Generation Television Marketplace Act that
would repeal the compulsory copyright license, retrans, must-carry and other
ownership rules, but scuttling the compulsory license needs to come first.

The compulsory licenses allow cable and satellite operators
to retransmit TV station programming into their local markets without having to
negotiate with program owners for that right. The retrans regime requires cable
and satellite operators to negotiate for carriage of the TV signal delivering
that programming, "thus setting up a negotiation that essentially is a
substitute for the copyright negotiations that would take place absent the compulsory

Padden, who is currently senior fellow at the Silicon
Flatirons Center at the University of Colorado, sees that combination of a
compulsory license and retrans as a Rube Goldberg approach.

"Broadcasters absolutely deserve to be paid by any
commercial business that wishes to retransmit their programs for a fee to
consumers. But, a far better course would have been to simply repeal the
Compulsory licenses. The Retransmission Consent right is fundamentally flawed
because it is based on a legal fiction -- the notion that consumers and MVPDs
are interested in a broadcast station's signal rather than in the programs on
that signal."

As a Disney lobbyist, Padden
was a frequent Hill witness,
generally raising questions about the need for
the compulsory license, suggesting a direct negotiation for programming rights
might be preferable, but stopping short of calling for the compulsory license's
immediate abolition.

According to a copy of Padden's testimony for the July 24
hearing on the Cable Act of 1992 and associated FCC regulations, Padden says
that, for the first time he is not being paid to advocate a particular point of
view, and his own view is that getting rid of the cable and satellite
compulsory copyright licenses is an absolute prerequisite for any committee
action for major deregulation, or any FCC action to repeal or modify
retrans/must-carry, which he also advocates.

"Many of the Communications Act provisions were adopted
expressly to prevent unfair and unintended consequences that otherwise would
flow from Compulsory Licensing," he says. "They are inseparable.
Repeal of the Communications provisions without also repealing the Compulsory
Copyright Licenses would result in an unjustifiable windfall for
cable/satellite/telco operators ('Multichannel Video programming Distributors"
or "MVPDs') at the expense of broadcasters and program creators."

Padden says repealing the compulsory license would also
remove an impediment to the growth of online video distributors (OVDs).

"Repeal of the Compulsory Licenses would prompt
broadcasters to secure the right to authorize retransmissions of the programs
on their schedule," he says, "Then all retransmitters -- cable,
satellite, telco and OVDs -- could negotiate on a level playing field with the

Padden points out that the Copyright Office has recommended
that the compulsory license be phased out, as has the FCC.

He also argues for getting rid of media ownership rules.
Faced with a plethora of news choices, he suggests, the decaying hulk of media
ownership rules sits in a sea of media choices. "All of these Rules were
sensible and necessary when adopted. But, some of these Rules have become
counterproductive while others have been rendered merely nonsensical. The
TV/Newspaper Cross-Ownership Rule is an example of a Rule that has become

He points out that while Comcast, "the nation's largest
cable TV and Internet Company," can team up with NBCU and its "vast
array" of broadcast stations, cable channels, studio and news networks,
Tribune "will need waivers of the TV/Newspaper Cross-Ownership Rule just
to be allowed to try to maintain the Company's existing television and print
news operations." He said consumers could be forgiven for scratching their
heads over what the government will and won't allow.