[Federal Register: February 11, 2000 (Volume 65, Number 29)]
[Proposed Rules]
[Page 6946-6950]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe00-27]

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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

[[Page 6947]]

Copyright General Counsel, James Madison Memorial Building, Room LM-
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
Copyright Office received several informal inquiries from cable systems
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
Copyright Office has always treated a station of one of these networks
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
Copyright Office has previously stated that, in addition to the Big 3,
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
Copyright Act as further proof that networks in addition to the Big 3
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

[[Page 6948]]

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
Copyright Office has treated a broadcast station that is owned and
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,
Register of Copyrights.

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.

[[Page 6949]]

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