WAIS Document Retrieval

[Federal Register: February 11, 2000 (Volume 65, Number 29)]

[Proposed Rules]

[Page 6946-6950]

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LIBRARY OF CONGRESS

37 CFR Part 201

[Docket No. RM 2000-2]

Cable Compulsory License; Definition of a Network Station

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of inquiry.

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SUMMARY: The Copyright Office of the Library of Congress is opening a

rulemaking proceeding to determine the scope and application of the

definition of a network station under the cable statutory license of

the Copyright Act.

DATES: Initial comments should be received no later than April 11,

2000. Reply comments are due by May 11, 2000.

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

and reply comments should be addressed to: Office of the Copyright

General Counsel, PO Box 70977, Southwest Station, Washington, DC 20024.

If hand delivered, an original and twelve copies of comments and reply

comments should be brought to: Office of the

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403, First and Independence Avenue, SE, Washington, DC 20559-6000.

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

William J. Roberts, Jr., Senior Attorney for Compulsory Licenses, PO

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

707-8380. Fax: (202) 707-8366.

SUPPLEMENTARY INFORMATION:

Background

When is a television station a network station? That is the

question for which Paxson Communications Corp. (``Paxson'') has

petitioned the Copyright Office for an answer and to which this

rulemaking proceeding is directed.

The cable statutory license of the Copyright Act, 17 U.S.C. 111,

provides a licensing regime for the retransmission of broadcast

stations by cable systems. Whether a particular station is a

``network'' station or not is critical to the calculation of royalty

payments by cable systems for retransmission of that station because

the cable statutory license only gathers royalties for the

retransmission of nonnetwork broadcast programming. In applying the

royalty payment formula, cable systems pay a full distant signal

equivalent (``DSE'') for retransmission of an independent, nonnetwork

station because it is presumed that all the programming contained on

the signal of that station is not network-provided programming.

However, cable systems must only pay one-quarter of a DSE for

retransmission of a network station, because it is presumed that only

one-quarter of the programming contained on the signal of a network

station is nonnetwork programming. Consequently, as a general

principle, a cable system can carry four network stations for the cost

of one independent station.\1\ This distinction in the classification

of stations is important to both cable systems and copyright owners:

cable systems, because it affects their costs; and copyright owners

because it determines how much money will be in the cable royalty pool.

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\1\ The actual cost of such carriage can vary depending upon the

royalty rate applicable to carriage of each station.

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Whether a station is a ``network station'' also affects matters

related to cable carriage. Most cable systems throughout the United

States have filled their quotas of permitted distant signals. If a new

independent station seeks carriage on a typical cable system, such

carriage will trigger the 3.75% royalty fee for nonpermitted distant

signals which cable systems are reluctant to pay. Consequently, the

signal will not be carried. However, if the station is designated as a

network station, carriage of the station becomes considerably more

attractive to a cable system because the associated royalty fees are

considerably lower.

The issue of what is a network station has arisen intermittently

through the years on an informal basis. When the Copyright Act passed

in 1976, it was clear that the only stations that qualified as network

stations under the section 111 license were those owned and operated,

or affiliated with, the ``Big 3'' networks: ABC, CBS, and NBC. The

during the early 1990's regarding the status of the Fox network, but

the Office declined to rule that Fox was a network for purposes of the

section 111 license. Paxson is the first broadcaster to come forward

and formally petition the Office for a ruling.

Definition of a Network Station

Section 111(f) of title 17 contains the statutory definition of a

network station. It provides:

A ``network station'' is a television broadcast station that is

owned or operated by, or affiliated with, one or more of the

television networks in the United States providing nationwide

transmissions, and that transmits a substantial part of the

programming supplied by such networks for a substantial part of that

station's typical broadcast day.

17 U.S.C. 111(f).

Examination of this definition reveals that there are three

critical elements to the qualification of a broadcast station as a

network station. The broadcast station must be owned and operated by,

or affiliated with, one or more of the U.S. television networks that

provide nationwide transmissions; must transmit a substantial portion

of the programming supplied by the network; and the programming

supplied by the network must constitute a substantial portion of the

station's typical broadcast day. There has never been any question that

stations of the Big 3 networks satisfy these requirements, and the

as a network station for purposes of section 111.

Nevertheless, the specific meaning of these three elements is far

from clear. For example, what are ``nationwide'' transmissions? Does

there have to be a station of a particular ``network'' in every state

or television market in order to qualify that organization as a

network, or is something less than that sufficient? What constitutes

transmitting a ``substantial'' portion of the programming offered by a

network? Is fifty percent enough, or is more or less required? Does the

programming supplied by the network have to be first-run or original

programming, or is syndicated programming permissible? What constitutes

a ``substantial'' portion of a station's typical broadcast day? It is

these questions, and the ones described below, to which the Copyright

Office seeks public comment in this Notice of Inquiry.

Petition of Paxson

Paxson provides television programming over the PaxTV Television

Network (``PaxTV'') to over sixty owned and operated and affiliated

television broadcast stations. According to Paxson, its owned and

operated and affiliate stations satisfy all three of the criteria for a

``network station'' under section 111.

First, Paxson submits that PaxTV is a television network because it

provides nationwide transmissions of PaxTV programming. PaxTV is

carried on stations in 34 states and the District of Columbia, all of

which are either owned and operated by, or are primary affiliates of,

PaxTV.

Second, Paxson asserts that its stations carry a substantial

portion of the programming provided by PaxTV because its contracts with

these stations require that PaxTV programming be broadcast a minimum of

18 hours daily. And third, as a result of this requirement, Paxson

submits that each of its stations meets the requirement of transmitting

PaxTV programming for a ``substantial part'' of each station's

``typical broadcast day.''

In addition to meeting the three criteria, Paxson notes that the

there could be a fourth network for purposes of the section 111 license

provided that the statutory criteria were met. Letter from Dorothy

Schrader, General Counsel, to Thomas Hendrickson (November 13, 1981).

Paxson also cites a passage from the 1976 House report accompanying the

were contemplated under section 111:

To qualify as a network station, all of the conditions of the

definition must be met. Thus, the retransmission of a Canadian

station affiliated with a Canadian network would not qualify under

the definition. Further, a station affiliated with a regional

network would not qualify, since a regional network would not

provide nationwide transmissions. However, a station affiliated with

a network providing nationwide

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transmissions that also occasionally carries regional programs would

qualify as a ``network station,'' if the station transmits a

substantial part of the programming supplied by the network for a

substantial part of the station's typical broadcast day.

H.R. Rep. No. 94-1476, at 101 (1976).

In conclusion, Paxson requests that the Copyright Office declare

that stations owned and operated by, or affiliated with, PaxTV be

declared network stations under section 111, and that cable systems

carrying PaxTV stations be permitted to report and pay for such

stations as network stations.

This Proceeding

Since the implementation of the section 111 license in 1978, the

operated by, or affiliated solely with, one of the Big 3 networks as a

``network station'' for section 111 purposes. All other stations have

been treated as independents, including those that have dual

affiliations with broadcasters other than the Big 3. \2\ As a matter of

policy, the Office has never questioned the network status of a

broadcast station identified as a CBS, ABC, or NBC station. It has

always been assumed that such a station automatically took a

substantial portion of the network's programming and that that

programming made up a substantial portion of the station's typical

broadcast day. There could be cases, however, where such a station does

not take a sufficient amount of network programming. The Office has

never inquired and has accepted the delineation of network station at

face value for stations in the CBS, ABC, and NBC networks. It appears

now that with the changing television marketplace, and with the

petition of Paxson, the Office must reevaluate its approach before it

can declare whether there are any new networks and network stations.

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\2\ For example, a station that is affiliated with ABC and Fox

would not be considered a network station because the Office has not

determined that Fox is a network under section 111.

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To that end, the Office is opening this rulemaking proceeding to

consider what makes a broadcast station a ``network station'' for

purposes of section 111. As noted above, there are considerable

questions related to the three criteria of the definitional provision

which require resolution before the Office can determine whether there

are more or less network stations under section 111. The first

criterion of the definition focuses on the status of the television

network, as opposed to that of the individual station. In order for

there to be a television network, there must be nationwide

transmissions by stations associated with that network. What is the

meaning of ``nationwide'? Does it mean coverage in a certain number of

television markets, or is it solely a geographical matter? For example,

would coverage of the top twenty television markets constitute

``nationwide'' transmissions because cities on both coasts and a

portion of the interior of the United States are covered? Or does

``nationwide'' mean greater, or perhaps even less, coverage? Does the

section 119 definition of a network station, which provides that the

network must offer an interconnected program service with at least 15

hours per week of network programming to at least 25 stations in 10 or

more states, offer any guidance, and, if so, on what grounds?

The second and third criteria refer to the individual station and

both contain the word ``substantial.'' The second criterion states that

the broadcast station must transmit a substantial part of programming

supplied by the network. The obvious question is, what is a

``substantial'' amount? Is it 50 percent, or something more or perhaps

even less? The definition of a ``full network station'' in the Federal

Communications Commission's 1976 cable rules provides that a full

network must transmit 85 percent of the weekly prime time hours offered

by the network. 47 CFR 76.5. Does this provision offer any guidance,

and, if so, on what grounds?

The third criterion provides that the amount of network programming

taken by the station must constitute a ``substantial'' portion of the

station's typical broadcast day. Once again, what does ``substantial''

mean? Can some percentage or number of hours be determined to provide a

bright-line test as to what is substantial and what is not?

Furthermore, can a station which carries all or most of the prime time

programming offered by a network satisfy the ``substantial''

requirement, regardless of what it carries at other hours of the day?

If, after reviewing the responses to these questions, the Copyright

Office is able to fashion a test for determining when a particular

station is a network station, how should such a test be implemented?

Can the Office continue to assume that a station that is solely

affiliated with, or owned and operated by, one of the Big 3 networks is

still a network station for section 111 purposes, or will such stations

be required to individually satisfy the new test? If the latter, how

should the Office implement the test, and to what extent should

broadcasters and cable operators have input as to the determination?

Finally, there is the matter of the Paxson petition, which is the

source of this rulemaking proceeding. We do not believe that the

question of PaxTV's network status can be reached until a method for

determining when a station is a network station is established.

Nevertheless, the Paxson petition is useful to creating such a

methodology, and PaxTV stations will undoubtably be the first to which

the new regulation is applied. The Office has already identified above

the number of hours of network programming carried daily by PaxTV

stations. The Appendix to this Notice contains a list (provided by

Paxson) identifying the stations of the Paxson network, their market

location, and Paxson's ownership interest. Commenters are encouraged to

use this information in addressing the fundamental issue of when is a

television station a network station.

In addition, after rules have been adopted for determining network

station status, there is the matter of how the Office should treat

other putative broadcast networks, such as the Fox, United Paramount,

and Warner Brothers networks? One possible approach is a case-by-case

basis whereby each of these networks is afforded the opportunity to

petition the Office for a determination of network status, such as

Paxson has done. Is this appropriate, or should cable operators who

carry such stations be allowed to petition the Office as well? Must

each petition be addressed through a notice and comment rulemaking

proceeding, or is there some other procedure that is permissible or

desirable?

The Office encourages responses to the questions posed in this

Notice of Inquiry, as well as any other comments relevant to the issues

raised.

Dated: February 4, 2000.

Marybeth Peters,

Note: This Appendix will not be Codified in Title 37, Part 201,

of the Code of Federal Regulations.

The following table lists the owned, operated or affiliated

stations airing PAX TV programming.

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Pax TV Distribution

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Rank and market name Call letters Station ownership interest

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1 New York.............................. WPXN Owned & Operated.

1 New York.............................. WBPT Do.

2 Los Angeles........................... KPXN Do.

3 Chicago............................... WCPX Do.

4 Philadelphia.......................... WPPX Do.

5 San Francisco-Oakland................. KKPX Do.

6 Boston................................ WBPX Affiliated.

6 Boston................................ WPXB Owned & Operated.

7 Dallas-Ft.Worth....................... KPXD Do.

8 Washington, D.C....................... WPXW Do.

8 Washington, D.C....................... WWPX Affiliated.

9 Detroit............................... WPXD Owned & Operated.

10 Atlanta.............................. WPXA Do.

11 Houston.............................. KPXB Do.

12 Seattle-Tacoma....................... KWPX Do.

13 Cleveland............................ WVPX Do.

14 Tampa-St. Petersburg................. WXPX Do.

15 Minneapolis-St. Paul................. KPXM Do.

16 Miami-Ft. Lauderdale................. WPXM Do.

17 Phoenix.............................. KBPX Do.

17 Phoenix.............................. KPPX Affiliate--Pending Owned & Operated.

18 Denver............................... KPXC Owned & Operated.

20 Sacramento-Stockton-Modesto.......... KSPX Pending Owned & Operated.\1\

21 St. Louis............................ WPXS Affiliated.

22 Orlando-Daytona Beach................ WOPX Owned & Operated.

23 Portland, OR......................... KPXG Do.

25 Indianapolis......................... WIPX Affiliated.

27 Hartford & New Haven................. WHPX Do.

29 Raleigh-Durham....................... WRPX Do.

29 Raleigh-Durham....................... WFPX Owned & Operated.

30 Nashville............................ WNPX Do.

32 Cincinnati........................... .................................. .........................................................................

33 Kansas City.......................... KPXE Do.

36 Salt Lake City....................... KUPX TBA--Pending Owned & Operated.\1\

36 Salt Lake City....................... KUWB Owned & Operated.

37 Grand Rapids-Kalamazoo............... WZPX Affiliated.

38 San Antonio.......................... KPXL Pending Owned & Operated.\1\

39 Birmingham-Tuscaloosa................ WPXH Owned & Operated.

40 Norfolk-Portsmouth................... WPXV Do.

41 New Orleans.......................... WPXL Pending Owned & Operated.\1\

42 Buffalo.............................. .................................. .........................................................................

43 Memphis.............................. WPXX Pending Owned & Operated.

44 West Palm Beach-Ft. Pierce........... WPXP Owned & Operated.

45 Oklahoma City........................ KOPX Owned & Operated.\1\

47 Greensboro-H. Point.................. WGPX Owned & Operated.

48 Louisville........................... .................................. .........................................................................

49 Albuquerque-Santa Fe................. KAPX Do.

50 Providence-New Bedford............... WPXQ Do.

51 Wilkes-Barre-Scranton................ WQPX Do.

53 Albany-Schenectady-Troy.............. WYPX Do.

54 Dayton............................... WDPX Do.

55 Fresno-Visalia....................... KPXF Do.

57 Little Rock-Pine Bluff............... KYPX Pending Owned & Operated.\1\

58 Charleston-Huntington................ WLPX Owned & Operated.

59 Tulsa................................ KTPX Do.

62 Mobile-Pensacola..................... .................................. .........................................................................

63 Knoxville............................ WPXK Do.

67 Lexington............................ .................................. .........................................................................

68 Roanoke-Lynchburg.................... WPXR Do.

69 Green Bay-Appleton................... WPXG Do.

70 Des Moines-Ames...................... KFPX Do.

71 Honolulu............................. KPXO Do.

74 Syracuse............................. WSPX Do.

75 Shreveport........................... KPXJ Do.

82 Champaign & Springfield.............. WPXU Do.

88 Cedar Rapids-Waterloo................ KPXR Do.

105 Greenville-N. Bern-Washington....... WEPX Do.

NR San Juan/Ponce/San Sebastian, Puerto WJPX Do.

Rico.

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\1\ To be acquired.

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[FR Doc. 00-3237 Filed 2-10-00; 8:45 am]

BILLING CODE 1410-31-P