House Judiciary Hearing on Copyright, Compensation, and Licensing at Capitol

McSlarrow, Rehr, and reps from satellite, programming, and consumer sides weigh in

The bright lines between industries, as well as some intersecting lines, continued to be drawn Wednesday as Congress held its second and third hearings on changes to the law circumscribing cable and satellite's licenses to carry TV station signals.

In a House Judiciary Committee hearing, "Copyright Licensing in a Digital Age: Competition, Compensation and the Need to Update the Cable and Satellite TV Licenses," NCTA President Kyle McSlarrow and NAB President David Rehr weighed in, joined by representatives of the satellite, programmer and consumer sides.

The Copyright Office in a report to Congress last year suggested it was time to make changes to the regime under which cable and satellite MVPDs are licensed to carry TV station signals. For one thing, the Copyright Office suggested it might be time for a single, unitary license covering all MVPDs. Currently, cable's license is based on gross receipts, while satellite's is a flat fee.

The most pressing issue is reauthorization of the Satellite Home Viewer Extension and Reauthorization Act (SHVERA), which deals with satellite's compulsory license to import distant signals to un-served customers. That is because that license expires at the end of the year. But, per the Copyright Office's suggestions for reforming and/or harmonizing related permanent compulsory licenses for cable and satellite distant and local signals, Congress is looking to deal with those issues as well.

For his part, McSlarrow argued that the different compulsory licenses for cable and satellite make sense, with some small modifications, saying copyright holders are fairly compensated, distributors are helped and consumers are well-served. He conceded that the compulsory copyright license is "horrifyingly complex" and understood the natural reaction to want to "harmonize" it. But he said if major reform is on the table, then reforming retransmission consent needs to be part of the equation.

Rehr agreed with McSlarrow that the compulsory license has generally worked, saying he disagreed with the Copyright Office's recommendation to harmonize the licenses. "They have different business models, different technologies, and different evolutions," he said, adding "we are unsure of all the unintended consequences particularly in this difficult economic climate."

But Rehr also agreed with Copyright that the distant signal license should be phased out for satellite carriers saying that it should be replaced with an affirmative obligation to carry local signals in all 210 markets.

Bob Gabrielli, senior VP of DirecTV, argued that his company already was able to serve every local market with a device that integrated the satellite channels with an over-the-air tuner. If viewers still couldn't get signals, he argued, it was because broadcasters weren't delivering their signal to all the viewers in their markets.

Arguing for doing away with the compulsory distant signal licenses altogether was Register of Copyrights Marybeth Peters, who said that cable and satellite operators no longer needed the protection of that license and could negotiate independently, as is the case with Internet-delivered video content.

Fritz Attaway, EVP of the Motion Picture Association of America, said that the current regime undercompensated content creators, whose interests the committee should focus on. It isn't the fiber or the head-end that consumers want, he said, but the high-value content.

McSlarrow begged to differ with the suggestion the compulsory license undercompensated programmers, saying that a collective yearly payment of a quarter of a billion dollars didn't sound like under-compensation.

Also sticking up for the compulsory license was a representative from Consumers Union, who said that prices would skyrocket if the content industry was allowed to have greater leverage over negotiations.

Judiciary Committee Chairman John Conyers (D-MI) called the hearing a first salvo and said he expected the debate to continue into the spring.

At a Senate Judiciary Committee Hearing on the same subject-and at exactly the same time-
similar cases were being made by Comcast's David Cohen and Jim Yager, head of the NAB TV Board. The witness list was almost identical to Tuesday's House Communications, Tech & Internet hearing on the same subject.