[Federal Register Volume 61, Number 209 (Monday, October 28, 1996)]
[Notices]
[Pages 55653-55669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27573]


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LIBRARY OF CONGRESS

Copyright Office
[Docket No. 94-3 CARP CD-90-92]


Distribution of 1990, 1991 and 1992 Cable Royalties

AGENCY: Copyright Office, Library of Congress.

ACTION: Distribution order.

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SUMMARY: The Librarian of Congress, upon the recommendation of the 
Register of Copyrights, is announcing the distribution of royalties 
collected under the cable compulsory license, 17 U.S.C. 111, for the 
years 1990, 1991, and 1992. The Librarian is adopting in part and 
rejecting in part the decision of the Copyright Arbitration Royalty 
Panel (CARP). The rejection takes the form of making some adjustments 
to the distribution percentages.

EFFECTIVE DATE: The distribution percentages announced in this Order 
are effective on October 28, 1996.

ADDRESSES: The full text of the CARP's report to the Librarian of 
Congress is available for inspection and copying during normal business 
hours in the Office of the Copyright General Counsel, James Madison 
Memorial Building, Room LM-407, First and Independence Avenue, S.E., 
Washington, DC 20540.

FOR FURTHER INFORMATION CONTACT: Marilyn J. Kretsinger, Acting General 
Counsel or William Roberts, Senior Attorney for Compulsory Licenses, 
P.O. Box 70977, Southwest Station, Washington, D.C. 20024. Telephone 
(202) 707-8380.

SUPPLEMENTARY INFORMATION:

I. Recommendation of the Register of Copyrights

Background

    In 1976, Congress adopted a statutory compulsory license for cable 
television operators to enable them to clear the copyrights to the 
broadcast programming which they retransmitted to their subscribers. 
Codified at 17 U.S.C. 111, the cable compulsory license allows cable 
operators to submit semiannual royalty payments, along with 
accompanying statements of account, to the Copyright Office for future 
distribution to copyright owners of broadcast programming retransmitted 
by those cable operators. Until December 1993 royalty distribution 
proceedings were conducted by the Copyright Royalty Tribunal (CRT), at 
which time Congress abolished the Tribunal and transferred its 
responsibilities to the Librarian of Congress and the Copyright Office. 
Public Law No. 103-196 (1993). Distribution proceedings are now 
conducted by ad hoc Copyright Arbitration Royalty Panels (CARPs) 
convened by the Librarian of Congress, which determine the proper 
division of royalties among the participating claimants in a written 
report and then deliver that report to the Librarian for his review and 
approval. Today's determination constitutes the first distribution of 
royalties under the new system enacted by Congress in 1993.

Operation of the Cable Compulsory License

    The cable compulsory license applies to cable systems that carry 
broadcast signals in accordance with the rules and regulations of the 
Federal Communications Commission (FCC). These systems are required to 
submit royalties for the carriage of their signals on a semiannual 
basis in accordance with the prescribed statutory royalty rates. The 
royalties are submitted to the Copyright Office, along with a statement 
of account reflecting the number and identity of the broadcast signals 
carried, the gross receipts received from subscribers for those 
signals, and other relevant filing information. The Copyright Office 
deposits the collected funds with the United States Treasury for later 
distribution to copyright owners of the broadcast programming through 
the procedure described in chapter 8 of the Copyright Act.
    Creation of the cable compulsory license was premised on two 
significant Congressional considerations: first, the perceived need to 
differentiate for copyright payment purposes between the impact of 
local versus distant broadcast signals carried by cable operators; and 
second, the need to distinguish among different sizes of cable systems 
based upon the dollar amount of receipts they receive from subscribers 
for the carriage of broadcast signals. These two considerations played 
a significant role in deciding what economic effect cable systems had 
on the value of copyrighted works shown on broadcast television. See 
H.R. Rep. No. 1476, 94th Cong., 2d Sess. 90 (1976). It was felt that 
the carriage of local broadcast signals by a cable operator did not 
affect the value of the works broadcast because the signal was already 
available to the public for free through over-the-air broadcasting. 
Therefore, the compulsory license essentially lets cable systems carry 
local

[[Page 55654]]

signals for free.1 Distant signals, however, do affect the value 
of copyrighted programming because local advertisers, who provide the 
principal remuneration to broadcasters enabling broadcasters to pay for 
the programming, are not willing to pay increased advertising rates for 
cable viewers in distant markets who cannot be reasonably expected to 
purchase their goods. The increase in viewership of the programming 
through distant signal importation by cable systems goes uncompensated 
because advertisers will not pay for it, and hence broadcasters cannot 
pay greater sums to copyright owners. The distinction among sizes of 
cable operators, based on their income from subscribers, assumes that 
only the larger systems which import distant signals have any 
significant economic impact on copyrighted works.
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    \1\ It should be noted, however, that cable systems which carry 
only local signals and no distant signals (a rarity) are still 
required to submit a statement of account and pay a basic minimum 
royalty fee.
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    Section 111 distinguishes among three sizes of cable systems 
according to the amount of money they receive from subscribers for the 
carriage of broadcast signals. The first two classifications are small 
to medium-sized cable systems known as SA-1's and SA-2's, in accordance 
with the title of the statement of account form which they file with 
their royalty payments. SA-1's pay a flat rate (currently $28) for 
carriage of all their signals, while SA-2's pay a percentage of their 
gross receipts received from subscribers for broadcast signals 
irrespective of the number of distant signals that they carry. The 
large systems, SA-3's, pay in accordance with a highly complicated and 
technical formula, principally dependent on how the FCC regulated the 
cable industry in 1976, which allows the systems to distinguish between 
carriage of local and distant signals and to pay accordingly. The vast 
majority of royalties available for distribution in this proceeding 
come from the large cable systems.
    The royalty scheme for the large cable systems employs the 
statutory device known as the distant signal equivalent (DSE). Distant 
signals are determined in accordance with two sets of FCC regulations: 
the ``must carry'' rules for broadcast stations in effect on April 15, 
1976, and a station's television market as currently defined by the 
FCC. 17 U.S.C. 111(f). A signal is distant for a particular cable 
system when that system would not have been required to carry the 
station under the FCC's 1976 ``must carry'' rules, and the system is 
not located with the station's television market.
    Cable systems pay for carriage of distant signals based upon the 
number of DSE's they carry. The statute defines a DSE as ``the value 
assigned to the secondary transmission of any nonnetwork television 
programming carried by a cable system in whole or in part beyond the 
local service area of a primary transmitter of such programming.'' 17 
U.S.C. 111(f). A DSE is computed by assigning a value of one to a 
distant independent broadcast station, and a value of one-quarter to 
distant noncommercial educational and network stations, which do have a 
certain amount of nonnetwork programming in their broadcast days. Cable 
systems pay royalties based upon a sliding scale of percentages of 
their gross receipts depending upon the number of DSEs they incur. The 
greater the number of DSEs, the greater the total percentage of gross 
receipts and, consequently, the larger the total royalty payment.
    As noted above, the operation of the cable compulsory license is 
intricately linked with how the FCC regulated the cable industry in 
1976. The Commission regulated cable systems extensively in 1976, 
restricting them in the number of distant signals they could carry (the 
distant signal carriage rules), and requiring them to black-out 
programming on a distant signal where the local broadcaster had 
purchased the exclusive rights to that same programming (the syndicated 
exclusivity rules). However, in 1980, the Commission took a decidedly 
deregulatory stance towards the cable industry and eliminated the 
distant signal carriage rules and the syndicated exclusivity 
(``syndex'') rules. Malrite T.V. v. FCC, 652 F.2d 1140 (2d Cir. 1981), 
cert. denied sub. nom., National Football League, Inc. v. FCC, 454 U.S. 
1143 (1982). Cable systems were now free to import as many distant 
signals as they desired without worry of any black-out restrictions.
    Pursuant to its statutory authority, and in reaction to the FCC's 
action, the Copyright Royalty Tribunal initiated a rate adjustment 
proceeding for the cable compulsory license to compensate copyright 
owners for the loss of the distant signal carriage rules and the syndex 
rules. This rate adjustment proceeding produced two new rates 
applicable to large cable systems making section 111 royalty payments. 
47 FR 52146 (November 19, 1982). The first, to compensate for the loss 
of the distant signal carriage rules, was the adoption of a royalty fee 
of 3.75% of a cable system's gross receipts for carriage of each 
distant signal that would not have previously been permissible under 
the former distant signal carriage rules. This 3.75% fee has become 
known as the ``penalty fee'' in cable circles and has restricted the 
number of distant signals carried today by large cable systems.
    The second rate adopted by the CRT, to compensate for the loss of 
the syndex rules, is known as the syndex surcharge. Large cable 
operators must pay this additional fee when the programming appearing 
on a distant signal imported by the cable system would have been 
subject to black-out protection under the FCC's former syndex 
rules.2
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    \2\ Royalties collected from the syndex surcharge have decreased 
in recent years because the FCC has reimposed syndicated exclusivity 
protection in certain circumstances.
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    Since the CRT's action in 1982, the royalties collected from cable 
systems have been divided into three categories for distribution to 
copyright owners to reflect their origin: 1) the ``Basic Fund'', which 
includes all the royalties collected from SA-1 and SA-2 cable systems, 
and the royalties collected from large SA-3 systems for carriage of 
distant signals that would have been permitted under the FCC's former 
distant signal carriage rules; 2) the ``3.75% Fund,'' which includes 
the royalties collected from large cable systems for distant signals 
whose carriage would not have been permitted under the FCC's former 
distant signal carriage rules; and 3) the ``Syndex Fund,'' which 
includes the royalties collected from large cable systems for carriage 
of distant signals that contain programming that would have been 
subject to black-out protection under the FCC's former syndex rules.

Distribution of Royalties

    Royalties are collected twice a year from cable systems for the 
privilege of retransmitting broadcast signals to their subscribers. As 
discussed above, these royalties are collected by the Copyright Office 
and deposited in interest-bearing accounts with the United States 
Treasury for subsequent distribution to copyright owners of the 
retransmitted broadcast programming.
    In order to be eligible for a distribution of royalties, a 
copyright owner of broadcast programming retransmitted by one or more 
cable systems must submit a written claim to the Copyright Office. Only 
copyright owners of nonnetwork broadcast programming are eligible for a 
royalty distribution. 17 U.S.C. 111(d)(3). Eligible copyright owners 
must submit their claims in the month of July for royalties collected 
from cable systems

[[Page 55655]]

during the previous year. 17 U.S.C. 111(d)(4)(A). Once the claims have 
been processed, the Library begins to determine whether there are 
controversies among the parties filing claims as to the proper division 
and distribution of the royalties. If there are no controversies--
meaning that the claimants have settled among themselves as to which 
claimant is due what amount of royalties--then the Library distributes 
the royalties in accordance with the claimants' agreement(s) and the 
distribution is concluded. However, the Library must conduct a 
distribution proceeding in accordance with the provisions of chapter 8 
of the Copyright Act for those claimants who do not agree.
    Distribution proceedings conducted under chapter 8 are accomplished 
in two phases. In Phase I, the royalties are divided among the 
categories of broadcast programming represented in the proceeding. The 
copyright owner claimants have, traditionally, divided themselves into 
eight categories during Phase I. These categories of claimants are: (1) 
Program Suppliers, which are the copyright owners of syndicated 
television series, movies, and television specials; (2) Joint Sports 
Claimants, which are the copyright owners of live telecasts of 
professional and college team sports; (3) National Association of 
Broadcasters (also known as ``Commercial Television''), which are the 
copyright owners of programs --typically news and local interest 
programs--produced by broadcast stations; (4) Public Broadcasting 
Service (also known as ``Noncommercial Television''), which are the 
copyright owners of all programming broadcast by the Public 
Broadcasting Service that do not fall within another category; 3 
(5) Devotional Claimants, which are copyright owners of syndicated 
programs with a religious theme that do not fall within another 
category; (6) Canadian Claimants, which are the copyright owners of 
programs broadcast on Canadian stations that do not fall within another 
category; (7) Music Claimants, which are the copyright owners of 
musical works broadcast on all programming, as represented by the 
performing rights societies ASCAP, BMI and SESAC; and (8) National 
Public Radio, representing the copyright owners of all programming 
broadcast on National Public Radio radio stations that does not fall 
within the Music Claimants category. The copyright owners within each 
category traditionally agree among themselves to hire counsel to 
represent all owners within that category during the course of a Phase 
I distribution proceeding.
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    \3\ An example of a program which would not be in the Public 
Broadcasting Service category, because it fell within another 
category, would be the movie ``Platoon'' that was broadcast by a PBS 
station. That program would properly fall within the Program 
Suppliers category.
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    In Phase II, the royalties are divided among claimants within a 
particular category. For example, in a Phase II proceeding within the 
Music Claimants category, the copyright owners represented by ASCAP may 
be in controversy with the copyright owners represented by BMI as to 
the division of royalties allotted to the Music Claimants category 
after the conclusion of the Phase I proceeding. If such a controversy 
existed, the Library would conduct a Phase II proceeding under the same 
provisions of chapter 8 of the Copyright Act applicable to the Phase I 
proceeding.
    The cable distribution proceeding which is the subject of today's 
recommendation of the Register of Copyrights, and Order of the 
Librarian of Congress, is a Phase I proceeding. Phase II proceedings 
will be conducted subsequently to resolve all Phase II controversies 
for distribution of the 1990-1992 cable royalties.
    This Proceeding
    At stake in this royalty distribution proceeding is over $500 
million in royalties collected from cable systems for the 
retransmission of broadcast signals during the years 1990-92. A 
distribution proceeding for the 1990 royalties was begun by the CRT in 
April of 1993, 58 FR 17387 (April 2, 1993), but was suspended when the 
Congress eliminated the Tribunal later that year. See Order, CRT Docket 
No. 92-1-90 CD (October 14, 1993).
    Royalty distribution proceedings now require the Librarian to 
assemble a CARP to determine the proper allocation of royalties among 
the copyright owner claimants. The Librarian assembles a CARP for a 
period of 180 days--selecting two of the arbitrators and allowing the 
two selected to choose a third--to make a determination as to the 
proper distribution or rate adjustment and submit a written report to 
the Librarian with their findings of fact and conclusions of law. 17 
U.S.C. 802(e). The Librarian then has 60 days to review the report and, 
upon the recommendation of the Register of Copyrights, either accept or 
reject it. 17 U.S.C. 802(f). The statute directs that the Librarian 
must adopt the report unless he ``finds that the determination is 
arbitrary or contrary to the applicable provisions of'' the Copyright 
Act, whereupon he must ``after full examination of the record created 
in the arbitration proceeding, issue an order setting the royalty fee 
or distribution of fees, as the case may be''. Id.
    Shortly after the elimination of the Tribunal and the assumption of 
its new duties, the Library published a notice seeking comments on the 
existence of controversies to the distribution of the 1990 cable 
royalty fund. 59 FR 64714 (December 15, 1994). Consistent with its 
position that the Library was not a successor agency to the Tribunal, 
the Library began 1990 cable distribution proceedings anew. At the 
urging of the parties submitting comments, the Library consolidated 
distribution of the 1990, 1991 and 1992 cable funds into a single 
proceeding and instructed those parties interested in presenting 
evidence to the CARP to file their Notices of Intent to Participate. 60 
FR 14971 (March 21, 1995). Representatives from six claimant groups 
expressed their intention to participate in the proceeding: Program 
Suppliers, Joint Sports Claimants (JSC), the National Association of 
Broadcasters (NAB), the Public Broadcasting System (PBS), the 
Devotional Claimants, and the Canadian Claimants.4 The 
participating parties submitted their written direct cases on August 
18, 1995, and precontroversy discovery was conducted on those cases 
consistent with the new procedural rules adopted by the Librarian to 
govern CARP proceedings. See 37 CFR 251.45.
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    \4\ The Music Claimants and NPR settled their claims to the 
1990-92 funds, and did not participate. The Canadian Claimants 
settled their 1990 claims with the other parties, and therefore only 
participated in the proceeding for the years 1991 and 1992.
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    During the course of the precontroversy discovery period, the 
Librarian was called upon to make a number of procedural and 
evidentiary rulings consistent with 17 U.S.C. 801(c). See Order, dated 
October 30, 1995; Order, dated November 7, 1995. In the November 7, 
1995 Order, the Librarian specifically designated an issue to the CARP 
for its resolution: ``whether programs distributed by the Fox 
Broadcasting Corp. to its affiliates during 1990-1992 were `nonnetwork 
programs' within the meaning of Section 111(d)(3)'' of the Copyright 
Act. Order, dated November 7, 1995 at p. 21. The Library permitted the 
parties to the proceeding ``to amend their direct cases to submit such 
evidence as they consider relevant by December 15, 1995.'' Id.
    Arbitration proceedings before the CARP were initiated on December 
4, 1995, and the 180 day arbitration was begun. 60 FR 58680 (November 
28, 1995). On June 3, 1996, 180 days later, the chairperson of the CARP 
delivered

[[Page 55656]]

the Panel's written report to the Librarian. As provided in 37 C.F.R. 
251.55(a), the parties filed their petitions with the Librarian to 
modify and/or set aside the decision of CARP by June 17, 1996. Replies 
were filed by July 1, 1996.5
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    \5\ National Public Radio (NPR), which settled for all years and 
did not participate in the proceeding, filed joint comments with the 
Music Claimants on the Panel's Report on August 2, 1996, and 
additional comments on September 17, 1996. They request the 
Librarian to make the following ``corrections'' to the CARP report: 
(1) clarify that there are traditionally eight claimant groups to 
cable royalties, the six described by the Panel plus Music Claimants 
and NPR; (2) clarify that both the Music Claimants and NPR filed 
Notices of Intent to Participate in this proceeding; and (3) correct 
the mathematical error made by the Panel for failing to include the 
settlements of the Music Claimants and NPR in the total distribution 
percentages.
    The first two points are accepted as accurate. The third point 
is addressed, infra, in this Order.
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Further Action by the CARP

    After preliminary review of the CARP's report, and consideration of 
the parties' petitions to modify the Panel's decision, the Register of 
Copyrights determined that she would not be able to make a 
recommendation to the Librarian regarding the sufficiency of the 
report. Specifically, the Register determined that the report lacked 
the full explanation needed to enable her to make a recommendation of 
either rejection or adoption, as required by the statute. See 17 U.S.C. 
802(f).
    On July 11, 1996, the Register met with representatives of the 
Program Suppliers, JSC, PBS, National Public Radio (NPR), the Music 
Claimants, NAB, the Canadian Claimants, and the Devotional Claimants, 
to discuss the possibility of remanding the report to the Panel for 
further explanation and development. After considering the parties' 
reactions to such a proposal, the Register decided to submit a series 
of certified questions to the Panel in order to expand the explanation 
of the reasoning behind the Panel's determinations of the distribution 
percentages.
    On July 16, 1996, the Office delivered the certified questions to 
the Panel chairperson, the Honorable Mel R. Jiganti. After consulting 
with the other members of the Panel, Judge Jiganti delivered the 
Response to the certified questions on August 29, 1996. The Response 
has been made a part of the Panel's report as an addendum.
    The parties to the proceeding were given additional time to comment 
on the Response. See Order, dated August 30, 1996. These supplemental 
petitions to modify were received by September 17, 1996. Replies were 
filed by September 24, 1996.

The Reporting Date

    Section 802(f) of the Copyright Act states that the Librarian shall 
deliver his decision either accepting or rejecting the Panel's report 
within 60 days of its receipt. The Panel did not deliver its final 
determination until August 29, 1996, the day on which the Register 
received the Response to her certified questions. Issuance of this 
Order is, therefore, in compliance with the statutory deadline.

Standard of Review

    The Copyright Royalty Tribunal Reform Act of 1993 created a unique 
system of review of a CARP's determination. Typically, an arbitrator's 
decision is not reviewable, but the Reform Act created two layers of 
review: the Librarian and the Court of Appeals for the District of 
Columbia Circuit. Section 802(f) directs the Librarian to either accept 
the decision of the CARP or reject it. If the Librarian rejects it, he 
must substitute his own determination ``after full examination of the 
record created in the arbitration proceeding.'' Id. If the Librarian 
accepts it, then the determination of the CARP has become the 
determination of the Librarian. In either case, through issuance of the 
Librarian's Order, it is his decision that will be subject to review by 
the Court of Appeals.
    Section 802(f) of the Copyright Act directs that the Librarian 
shall adopt the report of the CARP ``unless the Librarian finds that 
the determination is arbitrary or contrary to the provisions of this 
title.'' Neither the Reform Act nor its legislative history indicates 
what is meant specifically by ``arbitrary,'' but there is no reason to 
conclude that the use of the term is any different than the 
``arbitrary'' standard described in the Administrative Procedure Act, 5 
U.S.C. 706(2)(A).
    Review of the case law applying the APA ``arbitrary'' standard 
reveals six factors or circumstances under which a court is likely to 
find that an agency acted arbitrarily. An agency is generally 
considered to be arbitrary when it:

    (1) Relies on factors that Congress did not intend it to 
consider;
    (2) Fails to consider entirely an important aspect of the 
problem that it was solving;
    (3) Offers an explanation for its decision that runs counter to 
the evidence presented before it;
    (4) Issues a decision that is so implausible that it cannot be 
explained as a product of agency expertise or a difference of 
viewpoint;
    (5) Fails to examine the data and articulate a satisfactory 
explanation for its action including a rational connection between 
the facts found and the choice made; and
    (6) When the agency's action entails the unexplained 
discrimination or disparate treatment of similarly situated parties.

Motor Vehicle Manufacturers Association v. State Farm Mutual Insurance 
Co., 463 U.S. 29 (1983); Celcom Communications Corp. v. FCC, 789 F.2d 
67 (D.C. Cir. 1986); Airmark Corp. v. FAA, 758 F.2d 685 (D.C. Cir. 
1985).
    Given these guidelines for determining when a determination is 
``arbitrary,'' prior decisions of the Court of Appeals for the District 
of Columbia Circuit reviewing the determinations of the former 
Copyright Royalty Tribunal have been consulted. The decisions of the 
Tribunal were reviewed under the ``arbitrary and capricious'' standard 
of 5 U.S.C. 706(2)(A) which, as noted above, appears to be applicable 
to the Librarian's review of the CARP's decision.
    Review of judicial decisions regarding Tribunal actions reveals a 
consistent theme: while the Tribunal was granted a relatively wide 
``zone of reasonableness,'' it was required to articulate clearly the 
rationale for its award of royalties to each claimant. See Recording 
Industry Association of America v. CRT, 662 F.2d 1 (D.C. Cir. 1981); 
National Cable Television Association v. CRT, 689 F.2d 1077 (D.C. Cir. 
1982); Christian Broadcasting Network v. CRT, 720 F.2d 1295 (D.C. Cir. 
1983); National Association of Broadcasters v. CRT, 772 F.2d 922 (D.C. 
Cir. 1985). As one panel of the D.C. Circuit succinctly noted:

    We wish to emphasize * * * that precisely because of the 
technical and discretionary nature of the Tribunal's work, we must 
especially insist that it weigh all the relevant considerations and 
that it set out its conclusions in a form that permits us to 
determine whether it has exercised its responsibilities lawfully. * 
* *

Christian Broadcasting Network, Inc. v. CRT, 720 F.2d 1295, 1319 (D.C. 
Cir. 1983), quoting National Cable Television Association v. CRT, 689 
F.2d 1077, 1091 (D.C. Cir. 1982).
    Because the Librarian is reviewing the CARP decision under the same 
``arbitrary'' standard used by the courts to review the Tribunal, he 
must be presented by CARP with a detailed rational analysis of the 
decision, setting forth specific findings of fact and conclusions of 
law. This requirement of every CARP report is confirmed by the 
legislative history to the Reform Act which notes that a ``clear report 
setting forth the panel's reasoning and findings will greatly assist 
the Librarian of Congress.'' H.R. Rep. No. 103-286, 103 Cong., 1st 
Sess. 13 (1993). Thus, to engage in reasoned decisionmaking, the

[[Page 55657]]

CARP must ``weigh all the relevant considerations and that it set out 
its conclusions in a form that permits [a determination of] whether it 
has exercised its responsibilities lawfully.'' National Cable 
Television Association v. CRT, 689 F.2d 1077, 1091 (D.C. Cir. 1982). 
This goal cannot be reached by ``attempt[ing] to distinguish apparently 
inconsistent awards with simple, undifferentiated allusions to a 10,000 
page record.'' Christian Broadcasting Network, Inc. v. CRT, 720 F.2d 
1295, 1319 (D.C. Cir. 1983).6
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    \6\ The record in this proceeding is much larger, containing 
over 12,000 pages of hearing transcripts and several thousand pages 
of briefs and arguments.
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    It is the need for explained decisionmaking that prompted the 
Register to submit certified questions to the CARP in this proceeding. 
The Response having now been received and made a part of the CARP's 
report, it is the task of the Register to review the report and make 
her recommendation to the Librarian as to whether it is arbitrary or 
contrary to the provisions of the Copyright Act and, if so, whether, 
and in what manner, the Librarian should substitute his own 
determination.

Review of the CARP Report

    As discussed above, the parties to this proceeding submitted 
petitions to the Librarian to modify the Panel's determination based on 
their assertions that the Panel acted arbitrarily or contrary to the 
applicable provisions of the Copyright Act. These petitions have 
assisted the Register in identifying what evidence and issues in this 
enormous proceeding, in the eyes of the petitioners, are areas where 
the Panel may have acted arbitrarily or contrary to the provisions of 
the Copyright Act. The law gives the Register the responsibility to 
make recommendations to the Librarian on the panel's determination 17 
U.S.C. 802 (f) and in so doing she must review the entire report.
    After a complete review of the Panel's report and the record in 
this proceeding, the Register has determined that there are nine issues 
that require a full discussion and analysis.
    The first issue involves the Panel's treatment of the ``harm'' 
criterion as a means of calculating the division of royalties among the 
claimant groups. In order to determine the percentage royalties due to 
a particular category of programming, the Copyright Royalty Tribunal 
fashioned three criteria to weigh the relative merit of each party's 
evidence. The first criterion--the ``harm'' criterion--required each 
party to demonstrate how it has been economically harmed by cable 
systems' importation of distant signals. The CRT typically gave an 
unquantified credit, or no credit, to each party depending upon how 
well that party demonstrated it was harmed by distant signal 
importation. See, e.g. 57 FR 15286 (April 27, 1992). The Panel chose to 
discount the importance of the harm criterion in this proceeding, which 
requires review.
    The second issue concerns the eligibility of copyright owners of 
Fox programming for a distribution of royalties. As noted above, only 
copyright owners of nonnetwork programming are entitled to a royalty 
distribution. The Library specifically designated the ``Fox issue'' to 
the Panel for resolution, and the Panel ruled as a matter of law that 
Fox programming was eligible for a distribution. The question is 
whether that ruling was proper.
    The third issue involves the Panel's distribution percentages for 
the entire royalty pool. The Panel fashioned its percentages as if the 
entire royalty pool were subject to distribution, when in fact two 
categories of copyright owners--Music Claimants and NPR--had settled 
out of the proceeding and did not participate. The question is whether 
the Panel's percentages must be adjusted to include the Music Claimants 
and NPR's settled funds.
    The fourth issue concerns the Panel's allocation of royalties from 
the 3.75% Fund. As discussed above, the 3.75% Fund represents royalties 
collected from large cable systems for the retransmission of distant 
signals that would not have been permissible under the FCC's former 
distant signal carriage rules. Not all parties are entitled to 3.75% 
royalties, because not all parties own programming that was 
retransmitted on formerly nonpermitted distant signals. The questions 
for review on this issue are whether the Panel considered JSC's 
evidence regarding its claim to the 3.75% Fund, whether the 3.75% award 
to the Canadian Claimants was correct, and whether the Canadian 
Claimants 1990 3.75% award (which was reached through settlement with 
the other parties) is assured as a matter of law.
    The fifth issue concerns the Panel's award to NAB. NAB contends 
that the Panel miscategorized certain programs which belonged in the 
NAB category, thereby reducing NAB's overall award. NAB also claims 
that the Panel rejected certain statistical survey evidence that it 
presented, thereby further reducing its award.
    The sixth issue concerns the award to the Devotional Claimants. 
Like NAB, they allege that the Panel ignored and/or rejected certain 
evidence and arguments which would have resulted in an increase of 
their award.
    The seventh issue involves the Panel's award of Basic Fund 
royalties to the Canadian Claimants. The question is on what basis, or 
what approach, did the Panel use in arriving at the Canadian's award 
and was it proper.
    The eighth issue is the Panel's award to PBS. PBS alleges that the 
Panel failed to make an adjustment in the statistical survey numbers 
presented by PBS which would have resulted in an increase in its award.
    The ninth, and final, issue was not raised by any of the parties 
and is being reviewed on the Register's initiative. The Panel made a 
single, unified award to each claimant for each of the three years of 
cable royalties available for distribution. The question is whether it 
was permissible for the Panel to make such an award, or whether it was 
required to award different percentages for each claimant for each year 
based upon the evidence each claimant submitted for that year.
    A discussion and analysis of these nine issues, and a resolution of 
each as to whether the Panel acted arbitrarily or inconsistently with 
the Copyright Act follows. As noted below, those areas where the Panel 
erred, the Register is recommending that an appropriate adjustment be 
made to the awards of the affected parties.

Resolution of the Issues

A. The ``Harm'' Criterion
    Since the initial distribution of cable royalties, the Copyright 
Royalty Tribunal has attempted to determine the correct division of 
cable royalties among competing claimants through application of three 
primary criteria to each claimant: (1) the harm suffered by the 
claimant as a result of distant signal retransmission by cable 
operators; (2) the benefit accruing to cable operators for the 
retransmission of the claimant's works; and (3) the predictive 
marketplace value of the claimant's works. See National Association of 
Broadcasters v. CRT, 675 F.2d 367 (D.C. Cir. 1982). The CARP took 
express notice of these criteria, and discussed the Tribunal's 
application of the ``harm'' criterion in various proceedings. Report at 
20-21. The Panel concluded that ``the Tribunal has generally discounted 
the `harm' criterion from its consideration due to an inability to 
quantify the evidence submitted on this factor,'' but did note that the 
Tribunal in the 1989 proceeding ``gave Program Suppliers and JSC (but 
not NAB or PTV) a `credit for harm'* * * '' Id. The Panel then stated:


[[Page 55658]]


    Given this history, and taking into account the evidence and 
arguments regarding `harm' which have been presented in this 
proceeding, we have determined to make explicit what has been 
implicit since these royalty proceedings were first commenced. In 
creating the compulsory license scheme, Congress specifically 
recognized that harm occurs when distant signal [sic] are 
retransmitted without compensation. Experience has demonstrated the 
difficulty, if not impossibility, of quantifying this factor or of 
determining which claimants were `harmed' more than others by 
distant signal retransmissions. Consequently, we have concluded that 
`harm' should be taken as a given, and we will neither summarize nor 
address the claimants' arguments in this regard or attempt to grant 
or deny `credits' for a showing of harm. Instead, all claimants are 
deemed to have been equally harmed by virtue of their eligibility to 
make claim to a share of these royalties.

Id. at 21.

    Program Suppliers and Devotional Claimants challenge the Panel's 
approach to the ``harm'' criterion, and its decision that ``all 
claimants are deemed to have been equally harmed. * * *'' Program 
Suppliers submit that the Panel's treatment of harm as a nonfactor 
means that all parties received a zero credit for harm. They argue that 
such action was contrary to the express direction of the Copyright 
Royalty Tribunal Reform Act of 1993 which required the Panel to adhere 
to prior Tribunal decisions and determinations, and that it was 
arbitrary because there was no evidence in the record to suggest that 
all parties were harmed equally. Program Suppliers Petition to Modify 
at 5-8. Program Suppliers submit that they were the only party to prove 
compensable harm and therefore are entitled to an upward adjustment of 
their royalty share. Id. at 10-13.
    Devotional Claimants do not dispute the Panel's authority to treat 
all claimants as equally harmed, but submit that they did not receive 
any benefit whatsoever from the Panel's conclusion. The Devotional 
Claimants note that the Tribunal did give some claimants credit for 
harm in the 1989 proceeding, but expressly denied the Devotional 
Claimants any credit based on a finding that they were not harmed by 
the importation of distant signals by cable systems. Devotional 
Claimants Petition to Modify at 4. Because the Panel decided to treat 
all claimants as equally harmed, the Devotional Claimants submit that 
their award must go up from its 1989 level. They submit that the 
Panel's decision was arbitrary because it failed to explain why the 
Devotional Claimants did not receive any credit for harm, despite the 
Panel's supposed assertion that the Devotional Claimants would now 
receive a credit for harm. Id. at 6.
    JSC, PBS, NAB, and the Canadian Claimants object to Program 
Suppliers' categorization of the harm criterion. These parties, for the 
most part, argue that Program Suppliers failed to prove adequately that 
they were harmed by distant signal importation, so that even if the 
Panel had awarded quantifiable `harm' credits, Program Suppliers were 
not entitled to any. NAB Reply at 5-10; JSC Reply at 8-14; Canadian 
Claimants Reply at 14; PBS Reply at 4-8. Several parties also offer 
arguments to bolster the reasoning of the Panel to treat all claimants 
as equally harmed. JSC, NAB, and PBS submit that the Federal 
Communications Commission's reimposition of the broadcast syndicated 
exclusivity rules in 1990 are considerable evidence of ``changed 
circumstances'' justifying the Panel's break with Tribunal precedent. 
JSC Reply at 10; NAB Reply at 5-6; PBS Reply at 7. PBS submits that the 
Panel did consider the evidence the parties presented regarding harm, 
and ``conclud[ed], in effect, that the evidence was inconclusive and 
did not establish that any party was entitled to a `harm' credit.'' PBS 
Reply at 3. Canadian Claimants acknowledge that the Panel may have 
``correctly or incorrectly rolled the harm criteria into marketplace 
value,'' but submit that they nonetheless proved harm. All in all, JSC, 
NAB, PBS and the Canadian Claimants believe that their evidence on harm 
is superior to that of Program Suppliers.
    In her certified questions to the Panel, the Register requested 
clarification regarding the Panel's application of the harm criterion. 
Specifically, the Register inquired as to ``[w]hat record evidence 
supports your conclusion that all claimants were equally harmed during 
1990-92,'' and asked ``[i]f you concluded that the parties were equally 
harmed during 1990-92, but the Tribunal concluded that the parties were 
disparately harmed in 1989, how did that affect your awards to each of 
the six parties?'' Certified questions 1-A, 1-B.
    The Panel responded to both questions by stating that it ``found 
harm to be of limited utility and not quantifiable. And, other than 
identifying that a claimant whose program was retransmitted without 
compensation has been harmed, it does not lend any appreciable 
information on market value.'' CARP Response at 4.
    Program Suppliers argue that the Panel's answer demonstrates that 
it eliminated the harm criterion ``as a legal matter,'' which, they 
submit, is clearly contrary to the statute. Program Suppliers 
Supplemental Petition at 4. The Devotional Claimants continue their 
assertion that all parties were treated as equally harmed, requiring an 
increase in the Devotionals' award. Devotional Claimants Supplemental 
Petition at 7-8.
    In reply, PBS and NAB submit that Program Suppliers' assertion is 
incorrect, and that rather than ``legally'' eliminate the harm 
criterion, the Panel weighed the evidence and determined that none of 
the parties was entitled to a credit for harm. NAB Supplemental 
Petition Reply at 5-6; PBS Supplemental Petition Reply at 2-3. JSC 
contend that Program Suppliers' harm arguments are without merit 
because they failed to sustain their burden on proving harm, JSC 
Supplemental Petition Reply at 5-6, and the Devotional Claimants submit 
that even though the harm criterion is of no value for determining 
royalty distributions, they are nevertheless entitled to an increase in 
their award. Devotional Claimants Supplemental Petition Reply at 4-8.
    It is clear from the Panel's answer that, rather than treating all 
parties as equally harmed and awarding equal shares of harm credit, the 
Panel effectively determined that the harm criterion was a complete 
nonfactor. The Panel did not consider harm to be of any value in 
determining the distribution percentages, instead it emphasized the 
marketplace value criteria. As a result, all parties received a zero 
credit for harm, and the evidence presented by the parties regarding 
this factor was given no weight. The issue is, then, whether it is 
permissible for the CARP to determine the harm criterion was not 
relevant.
    Section 802(c) of the Copyright Act states that CARPs ``shall act 
on the basis of a fully documented written record, prior decisions of 
the Copyright Royalty Tribunal, prior copyright arbitration panel 
determinations, and rulings by the Librarian of Congress under section 
801(c).'' (emphasis added). Program Suppliers argue that the ``prior 
decisions of the Copyright Royalty Tribunal'' language means that all 
CARPs are bound by, and may not deviate from, Tribunal precedent. This 
would mean that the Panel in this proceeding was bound to interpret and 
apply the harm criterion in the same manner that the CRT did in 
previous cable distribution proceedings.
    This is too narrow a reading of the statutory language. The CARPs 
are vested with full authority ``to distribute royalty fees'' collected 
under the cable compulsory license, and ``to determine,

[[Page 55659]]

in cases where controversy exists, the distribution of such fees.'' 17 
U.S.C. 801(b)(3). While the CARP must take account of Tribunal 
precedent, the Panel may deviate from it if the Panel provides a 
reasoned explanation of its decision to vary from precedent. Airmark 
Corp. v. FAA, 758 F.2d 685, 692 (D.C. Cir. 1985). Such action is fully 
consistent with judicial interpretation of the role of precedent. It 
would make little sense to require the CARPs to apply Tribunal 
precedent in all circumstances, and allow no deviation, especially in 
the area of determining the relevant factors for distributing 
royalties. The Tribunal was not itself consistent in application of the 
harm criterion, and never quantified the value of a ``harm credit.'' 
The Panel in this proceeding took full account of the harm criterion--
i.e. acted on the basis of it--and concluded, consistent with its 
authority to make distribution determinations, that the criterion was 
not useful to deciding distribution percentages. The Panel further 
noted that even the Tribunal itself had, through the years, ``generally 
discounted the `harm' criterion from its consideration due to an 
inability to quantify the evidence submitted on this factor. * * *'' 
Report at 20. Because the Panel provided a reasoned explanation for its 
decision to discount the harm criterion, and clarified in its response 
to the certified questions that it did not give any claimant credit for 
harm, it did not act arbitrarily or contrary to the statute.
B. The Fox Issue
    On October 2, 1995, before the initiation of the 1990-92 
consolidated cable royalty distribution proceeding, JSC filed a motion 
with the Librarian of Congress requesting him to rule that Fox-
distributed programming is network programming ineligible to receive 
section 111 royalties.
    The basis of JSC's motion was that section 111 of the Copyright 
Code provides that only owners of nonnetwork television and radio 
programs may claim cable royalties. JSC Motion at 1-3. According to 
JSC, Fox Broadcasting Corp. had become a network by the years 1990-92, 
serving 90% of television households and paying independent producers 
license fees comparable to that of ABC, CBS, and NBC. Id. at 3. JSC 
therefore moved to have the programming licensed by Fox television 
declared as noncompensable network programming and to dismiss those 
royalty claims represented by Program Suppliers that are for 
nationally-distributed Fox programs. Id.
    Program Suppliers opposed JSC's motion on the basis that cable 
systems paid for Fox-affiliated stations as a full distant signal 
equivalent during 1990-92 and continue to do so today because those 
stations are not network stations as defined by Section 111. Program 
Suppliers Opposition at 2-4. Program Suppliers further argued that Fox 
does not have the nationwide reach that ABC, CBS, and NBC have because 
Fox's stations are mostly UHF stations with lesser coverage, and this 
lesser coverage has resulted in lower network fees for Fox programs 
than for ABC, CBS and NBC programs. Id. at 3-4. Program Suppliers also 
noted that Fox affiliates often choose the times when Fox programs air 
as opposed to the networks which have uniform program times and dates. 
Id.
    In reply, JSC stated that it was not basing its argument on the 
status of Fox-affiliated stations, whether they are network or 
nonnetwork stations. JSC Reply at 4. JSC accepted Program Suppliers' 
argument that Fox-affiliated stations were not network stations in 
1990-92 because they did not broadcast network programming ``for a 
substantial part of the station's typical broadcast day,'' which is a 
requirement for a station to be considered a network station under 
section 111. Id. at 3-4. However, in JSC's view, that did not matter 
because programs could be network programs even if they aired on a 
nonnetwork station so long as they were distributed by a nationwide 
network. Id. at 4-5.
    On November 7, 1995, the Copyright Office issued an Order 
designating the following issue to the CARP: ``whether programs 
distributed by the Fox Broadcasting Corporation to its affiliates 
during 1990-92 were `nonnetwork programs' within the meaning of Section 
111(d)(3).'' The Office further ordered that any party could amend its 
direct cases to submit such evidence as it considered relevant by 
December 15, 1995.
    On December 15, 1995, two parties, JSC and Program Suppliers 
amended their cases to provide written testimony on the designated Fox 
issue. On December 29, 1995, PBS filed a partial opposition to JSC's 
precontroversy motion.
    On January 26, 1996, the Panel ruled, as a matter of law, that the 
definitions section of 111(f) provides that the words defined in that 
section apply as well to their ``variant forms''; that the phrase 
``network program'' was a ``variant form'' of the phrase ``network 
station''; and therefore a program had to be aired on network stations 
before it could be considered a network program ineligible for section 
111 royalties. Tr. 6899-90. In addition, it ruled that because it 
disposed of the Fox issue as a matter of law, it would not consider the 
written testimony JSC and Program Suppliers had furnished on the Fox 
issue. Tr. 6900.
    JSC challenged the ruling of the Panel as contrary to law, and 
urged the Librarian to declare that ``(1) programming may be network 
programming, ineligible for compensation under section 111(d)(3), even 
if it was not broadcast over a station classified as a `network' 
station under section 111(f), (2) copyright owners are not required to 
have Fox affiliates declared `network' stations before they can 
challenge the allocation of royalties to Fox programming; and (3) the 
programming distributed by the Fox network to its affiliates does not 
qualify as `nonnetwork' programming under section 111(d)(3).'' JSC 
Petition to Modify at 24.
    Program Suppliers urge the Librarian to reject JSC's request. They 
argue that independent stations are paid for as a full (1.0) DSE, 
whereas network stations are paid for as a one-quarter (0.25) DSE. 
Program Suppliers Reply at 27-28. They assert that Congress made the 
decision that cable operators pay for the entire programming on 
independent stations, and therefore, no program on an independent 
station could be, as a matter of law, a network program. Id. at 28-29.
    JSC countered that the 4-1 ratio Congress established for the value 
of nonnetwork programming on independent and network stations was 
simply a rough estimate that is often not the case in reality. Just as 
40-50% of programs on network stations are nonnetwork programs --
instead of Congress' estimate of 25%--it could be the case, JSC posits, 
that a small percentage of programs on independent stations are network 
programs--instead of Congress' estimate of 100%. JSC Petition to Modify 
at 28.
    Although the Register did not certify a question to the Panel 
regarding its treatment of the Fox issue, the Panel nonetheless 
included a response. They observed:

    The Panel would like to comment on the Fox issue. The Copyright 
Office views it as a mixed question of fact and law. The Panel 
respectfully disagrees. We found it to be solely a matter of law. 
The Joint Sports Claimants in their petition to modify did not 
suggest that it is a question of fact.

Response at 3.

    JSC urged the Librarian to reject the Panel's resolution of the Fox 
issue as a matter of law. JSC Supplemental

[[Page 55660]]

Petition at 6. Further, JSC urged the Librarian to ``articulate the 
appropriate test for deciding whether programming is noncompensable 
network programming,'' submitting that the proper test should be 
``whether the programming has been sold to a single buyer for exclusive 
distribution across a nationwide network of broadcast affiliates.'' Id 
at 6-7. Program Suppliers and PBS oppose JSC's requests, submitting 
that the Panel ruled correctly on the Fox issue, and that there are 
``no grounds'' for the Librarian to adopt JSC's test for determining 
noncompensable network programming. Program Suppliers Supplemental 
Petition Reply at 9; PBS Supplemental Petition Reply at 4-5. Program 
Suppliers further note that it only would be permissible for the 
Librarian to adopt such a test through a rulemaking proceeding, and not 
during the course of review in a royalty distribution proceeding. 
Program Supplier Supplemental Petition Reply at 9.
    The House Judiciary Committee Report to the Copyright Act discusses 
the disparate royalty obligations under the cable compulsory license 
for network versus independent stations:

    Under the proposal, the royalty fee is determined by a two step 
computation. First, a value called a ``distant signal equivalent'' 
is assigned to all ``distant'' signals. Distant signals are defined 
as signals retransmitted by a cable system, in whole or in part, 
outside the local service area of the primary transmitter. Different 
values are assigned to independent, network, and educational 
stations because of the different amounts of viewing of non-network 
programming carried by such stations. For example, the viewing of 
non-network programs on network stations is considered to 
approximate 25 percent.

H.R. Rep. No. 1476, 94th Cong, 2d Sess. 90 (1976) (emphasis added). It 
appears from the above statement that Congress considered that there 
were different amounts of viewing of nonnetwork program on all three 
categories of stations, and estimated that it was 25% on network 
stations. Therefore, Congress also estimated that it was 100% on 
independent stations, but did not preclude the possibility that there 
could be network programs on independent stations.
    Congress spoke in the statute and the legislative history only with 
regard to how cable systems should pay royalties for network stations; 
it did not define ``network programming'' for royalty distribution 
purposes, other than to state that only copyright owners of 
``nonnetwork programming'' are entitled to a distribution. On the 
payment side, Fox Broadcasting stations are paid for as independent 
signals, meaning that they are paid for at one DSE, as opposed to the 
one-quarter DSE for network signals. The reason is that, during the 
1990-1992 period, Fox stations did not ``transmit[] a substantial part 
of the programming supplied by such network[] for a substantial part of 
that station's typical broadcast day.'' 17 U.S.C. 111(f). The issue, 
then, is can Fox be a network for distribution purposes, but not a 
network for payment purposes.
    PBS argues in its reply to JSC's petition to modify, that the 
Copyright Royalty Tribunal ruled, as a matter of law, in the 1978 cable 
copyright royalty distribution proceeding, in the context of PBS 
programming, that programs must air on network stations before they can 
be considered network programs. PBS Reply at 14-17. However, in the 
1978 proceeding, the Tribunal considered and ruled on two arguments in 
the alternative. First, it considered the question of whether public 
television stations are network stations, as defined in section 111(f). 
If public television stations were network stations, the Tribunal was 
prepared to find that PBS programming was network programming. However, 
the Tribunal found that PBS did not own any public television stations, 
nor were any public television stations affiliates of PBS. PBS is a 
membership corporation whose members are public television stations. 
Therefore, the first requirement of a network station under section 
111(f)--that they be owned by or affiliated with a network--was not 
met, and the Tribunal concluded that public television stations are not 
network stations.
    The Tribunal then considered the second argument: whether PBS 
programs aired on public television stations--which are not network 
stations--are nonetheless network programs. The Tribunal stated, ``We 
have looked at the record of this proceeding, which in our view 
establishes significant distinctions between the functioning of PBS and 
that of the commercial networks. We find that the operation of PBS in 
distributing programs is more akin to that of a program syndicator.'' 
1978 Cable Royalty Distribution Proceeding, 45 FR 63026, 63033 (Sept. 
23, 1980). Because the Tribunal ruled, based on the facts, that PBS' 
distribution of programs is more akin to that of a program syndicator, 
it did not have to reach the legal question of whether a nationally 
distributed program appearing on a nonnetwork station is, as a matter 
of law, a nonnetwork program.
    Given both the silence of the statute and the lack of Tribunal 
precedent, it cannot be said that the Panel acted arbitrarily or 
contrary to the provisions of the Copyright Act by ruling that Fox 
programming was nonnetwork programming for distribution purposes. The 
Panel approached the issue from the payment side and concluded that 
what is not a network for pay-in purposes must likewise not be a 
network for pay-out purposes. Ruling in favor of JSC's request would 
produce an incongruity in the statute, raising the question of why 
cable systems should pay the full royalty value for Fox stations (one 
DSE), when the copyright owners of Fox programming have no share in 
those royalties. The Panel's harmonization of the pay-out with the pay-
in is neither arbitrary nor contrary to the Copyright Act.
    Furthermore, even if the Register were inclined to recommend to the 
Librarian that the Panel's determination was contrary to the Copyright 
Act, there would be no factual record for the Librarian to substitute 
his own determination. The statute makes clear that the Librarian may 
conduct his review of the CARP's determination on the basis of the 
``record created in the arbitration proceeding,'' and does not grant 
any responsibility or authority to the Librarian to make his own 
factual findings. 17 U.S.C. 802(f).
    Consequently, the Panel did not err in ruling that Fox programming 
was eligible for a distribution of royalties, and JSC's petition to 
modify the CARP's ruling concerning Fox-distributed programs is denied.
C. The Mathematical Adjustment
    The Devotional Claimants claim that, because of a mathematical 
mistake, the Panel, contrary to its stated intent, did not give the 
Devotional Claimants the same award as it received in 1989. Devotional 
Claimant's Petition to Modify at 2. They submit that the Panel's key 
finding with respect to them was that there was ``no change in 
circumstances'' from their showing in the 1989 cable royalty 
distribution proceeding. As a result the Panel awarded them 1.25% of 
the Basic Fund, and 0.95% of the 3.75% Fund, the same as in 1989. Id. 
at 3. However, because the awards in the 1989 cable royalty 
distribution proceeding were inclusive of the settlement of the Music 
Claimants, and the awards in this proceeding were exclusive of the 
settlement of the Music Claimants, the awards to the Devotional 
Claimants were actually a 5.62% reduction in the Basic Fund to an 
equivalent of 1.19% of the total Basic Fund and a 4.275% reduction in 
the 3.75% Fund to an equivalent of 0.91% of the 3.75% Fund.

[[Page 55661]]

Id. at 3-4. The Devotional Claimants ask the Librarian to correct this 
mathematical error and restore the Panel's intended award to the 
equivalent of what they received in the 1989 cable royalty distribution 
proceeding.
    In reply, the Program Suppliers question the assumption of the 
Devotional Claimants that the Panel intended to give them the same 
award as in 1989. Program Suppliers Reply at 31. They note that the 
only evidence allowing for this inference is that the percentage awards 
are the same on their face. However, Program Suppliers assert that the 
Panel never explicitly stated they were awarding the Devotional 
Claimants the same award they received in 1989, and the Panel could 
have intended the actual 5.62% and 4.275% reductions that did in fact 
take place. Id. Further, Program Suppliers state that if, indeed, the 
Panel made a mathematical mistake with regard to the Devotional 
Claimants, they made the same mathematical mistake with regard to the 
Program Suppliers who facially received an even 55% award for all three 
years in the Basic Fund. Id. at 32. Program Suppliers conjecture that 
the Panel could have intended the Program Suppliers should receive 55% 
inclusive of the Music Claimants settlement, in which case their award 
would need to be 57.59% of the Basic Fund and 61.36% of the 3.75% Fund, 
instead of the 55% and the 58.6% they were awarded. Id.
    The Canadian Claimants make a similar argument as the Program 
Suppliers, questioning the Devotional Claimants' basic assumption that 
the Panel intended to give them the same award as in 1989. Canadian 
Claimants Reply at 8-9. They note that the key evidence in this 
proceeding, the Nielsen study and the Bortz survey, were both offered 
exclusive of the music element, and the Panel could have intentionally 
made its award with full knowledge that it was exclusive of the Music 
Claimants' settlement. The Canadian Claimants further assert, as the 
Program Suppliers do, that if the Devotional Claimants deserve an 
upward adjustment, then all claimants deserve one, in which case an 
adjustment would be a wash. Id. at 9. Last, the Canadian Claimants 
argue that if the Librarian decides to make an upward adjustment for 
the Devotional Claimants, the increase must come from parties other 
than the Canadian Claimants because no devotional programming appeared 
on Canadian stations and the Canadian Claimants' award was derived from 
the fees generated by their signals. Id. at 10.
    JSC make similar arguments. They question the Devotional Claimants' 
basic assumption, and, alternatively, argue that if it is true for the 
Devotional Claimants, it is true for them and all other claimants. JSC 
Reply at 44-45. Similarly, NAB states that if the mathematical mistake 
is true for the Devotional Claimants, it is true as well for NAB. NAB 
Reply at 25.
    The Devotional Claimants are correct when they state that the Panel 
found no changed circumstances with regard to them, and that the Panel 
awarded them percentages that were identical on their face to their 
1989 award. The other parties are equally correct when they state that 
nowhere did the Panel explicitly state that it intended to give the 
Devotional Claimants the same awards as in 1989. In addition, the 
parties are justified in positing that, perhaps, the Panel's 
calculations vis-a-vis the other claimants were similarly 
mathematically flawed, only less obviously so, because their final 
numbers happen to be different from those awarded in the 1989 cable 
distribution proceeding.
    Because of these difficulties and the lack of adequate explanation, 
the Register questioned the Panel as to whether a mathematical mistake 
had been made as to the Devotional Claimants. In addition, the Register 
provided the Panel with a chart adjusting the final distribution 
figures to take account of the settlement reached by the Music 
Claimants and National Public Radio.
    In response, the Panel stated that it intended to award 1.25% of 
the Basic Fund, plus the additional 0.01% for 1990, because it treated 
the distribution as if 100% of the cable royalties were involved in the 
proceeding, and did not consider the settlement of the Music Claimants 
for all three years as having a bearing on the distribution. Response 
at 3. The Panel asserted that it was proper to do this ``because the 
parties represented that the Panel should base its award on 100% of the 
fund, leaving it to the parties to adjust among themselves for 
settlements with non-participating parties.'' Id. The Panel was unable 
to provide a record citation for representation of the parties. Id. at 
3-4.
    The Devotional Claimants submit that the Panel's answer has made it 
unclear as to whether the Panel intended to award Devotionals the same 
share they received in 1989, and therefore underscores the 
arbitrariness of its action. Devotional Claimants Supplemental Petition 
at 3-4. In any event, the Devotional Claimants urge the Librarian to 
increase their award because ``it would be illogical and arbitrary for 
the CARP to have awarded Devotional Claimants less than they had been 
awarded in the 1989 determination. Id. at 6. Program Suppliers submit 
that the Panel's answer regarding the Devotional Claimants award 
underscores the entire report's lack of reasoned explanation, but 
submit that the Devotional Claimants' evidence does not merit an 
increase in their award. Program Suppliers Supplemental Petition Reply 
at 12-15.
    The Panel did not act arbitrarily in its award to Devotional 
Claimants, but a mathematical adjustment must be made to all the 
distribution percentages determined by the Panel to reflect the total 
award of all royalties. The Copyright Royalty Tribunal always reported 
its distribution percentages for all parties receiving royalties, 
inclusive of those parties who had reached settlement. See, e.g. 1989 
Cable Royalty Distribution Proceeding, 57 FR 15286 (April 27, 1992). 
The Panel should have done the same in this proceeding, especially 
since it did not offer any reasons why it was adopting percentages only 
for the parties before it, rather than considering the entire 
distribution. Further, the statute requires the Librarian to publish 
the distribution percentages for the entire cable royalty funds, and 
not only those amounts that were in controversy. 17 U.S.C. 802(f).
    Accordingly, the Register recommends that the Panel's numbers are 
adjusted to account for the total distribution of the 1990-92 cable 
royalty funds: 7
---------------------------------------------------------------------------

    \7\ The stipulated award to NPR of 0.18% is subtracted from the 
funds, as is consistent with CRT precedent. See, 1989 Cable Royalty 
Distribution Proceeding, 57 FR 15286, 15304 (April 27, 1992).

[[Page 55662]]



------------------------------------------------------------------------
                                          Basic              Syndex     
------------------------------------------------------------------------
1990:                                                                   
    Program Suppliers.............         52.6336250         95.5000000
    JSC...........................         28.2355000  .................
    NAB...........................          7.1820500  .................
    Music Claimants...............          4.5000000          4.5000000
    PBS...........................          5.5049750  .................
    Devotional Claimants..........          1.1938500  .................
    Canadian Claimants............          0.7500000  .................
1991-1992:                                                              
    Program Suppliers.............         52.5250000         95.5000000
    JSC...........................         28.1725000  .................
    NAB...........................          7.1625000  .................
    Music Claimants...............          4.5000000          4.5000000
    PBS...........................          5.4912500  .................
    Devotional Claimants..........          1.1937500  .................
    Canadian Claimants............          0.9550000  .................
------------------------------------------------------------------------

    The above adjustment to the Panel's numbers does result in a 
decline to the distribution for Devotional Claimants vis-a-vis its 1989 
distribution percentage. However, the Panel did not state in its 
report, as the Program Suppliers, Canadian Claimants, JSC, and NAB 
correctly observe, that it intended the Devotional Claimants to receive 
the same percentage that they received in the 1989 proceeding. This 
position was confirmed by the Panel's Response to the certified 
questions where it stated that it intended for the Devotional Claimants 
to receive its award based upon only those royalties in the funds that 
were in controversy. Consequently, the Devotional's award, even after 
the mathematical adjustment, was not arbitrary.
D. The 3.75% Fund
    JSC argue that the Panel erred in its allocation of the 3.75% Fund. 
First, they claim that the Panel acted arbitrarily when it rejected 
their proffered evidence concerning the allocation of the 3.75% Fund. 
Second, JSC claim that the Panel acted arbitrarily in denying them any 
share of the Canadian Claimants' award of 3.75% Fund royalties. 
Finally, JSC ask the Librarian to clarify the Panel's intent concerning 
the Canadian Claimants' 1990 share of the 3.75% Fund.
    1. JSC's evidence. JSC claim that their proffered evidence on the 
higher value of sports programs on stations paid for by cable systems 
at the 3.75% rate was improperly rejected by the Panel. JSC Petition to 
Modify at 17-18. JSC state that they offered the testimony of Jerry 
Maglio, Senior Vice President for Marketing and Programming at United 
Artists Cable, on the value of sports on 3.75% rate signals, and a 
statistical analysis of the proportion of superstations on 3.75% rate 
stations, but that this proffered evidence was neither discussed nor 
evaluated. Id. (citing JSC's Proposed Findings of Fact and Conclusions 
of Law at 157-158).
    Program Suppliers counter that the Panel did discuss Maglio's 
testimony on page 88 of the Report and the carriage of superstations on 
page 92 of the Report. Program Suppliers Reply at 24. Further, Program 
Suppliers argue that the discussion by the dissenting arbitrator of 
JSC's proffered 3.75% Fund evidence can lead to a reasonable inference 
that these matters were raised and considered by the entire Panel when 
it deliberated. Id.
    On the merits, Program Suppliers argue that there is contrary 
record evidence that undercuts any conclusion that it is the presence 
of sports that creates the willingness on the part of cable operators 
to carry signals at the 3.75% rate. Such evidence includes the decline 
in the carriage of two sports flagship stations, WSBK and WPIX, and 
that the continued carriage of WTBS 8 and WGN has more to do with 
their being the first superstations in the country rather than solely 
their sports offerings. Id. at 24-25.
---------------------------------------------------------------------------

    \8\ The record also shows that WTBS was heavily promoted on 
other Turner channels.
---------------------------------------------------------------------------

    The Panel's discussion of its division of the 3.75% Fund is, at 
best, terse. The Panel states:

    The 3.75% fund established a royalty rate of 3.75% of gross 
receipts for newly permitted distant signals. Little new argument is 
made concerning its distribution. PTV is not a participant in this 
fund. We make these awards in a similar basis as the Tribunal in 
1989. The allocations are as follows: Program Suppliers 58.6%, JSC 
32.6%, NAB 7.5%, Devotionals 0.95% and Canadians 0.35%.

Report at 142. In order to determine the Panel's reasoning for these 
awards, the Register inquired of the Panel as to whether it took ``into 
account JSC's proffered evidence on the value of sports on 3.75% 
signals and Program Suppliers' counter arguments,'' and, if so, ``what 
reasons led the Panel to conclude that these presentations did not 
change the Panel's analysis concerning the allocation of 3.75% 
royalties.'' Certified questions 6-A, 6-B.
    In response to whether the Panel considered JSC's evidence, the 
Panel stated that it ``took into account the evidence of Jerry 
Maglio.'' Response at 5. In answer to why this evidence did not change 
the Panel's conclusion regarding allocation of the 3.75% Fund, the 
Panel stated that ``we weighed that evidence and found that it was not 
persuasive.'' Id.
    JSC do not contest the Panel's weighing of the testimony of Jerry 
Maglio, but submit that it was prejudicial for the Register to ask the 
Panel a question regarding its consideration of JSC's evidence while 
not asking similar question about other claimants' evidence. JSC 
Supplemental Petition at 5. Further, JSC argue that the Panel's sole 
mention of Jerry Maglio's testimony indicates that it overlooked other 
key evidence, and that the Librarian consequently should adopt the 
dissenting arbitrator's percentage for JSC. Id. at 5-6. Program 
Suppliers oppose JSC's request, arguing that JSC's evidence does not 
support an increase in its award. Program Suppliers Supplemental 
Petition Reply at 6-8.
    The Panel has now responded to JSC's contention that its evidence 
was ignored by stating that it considered the testimony of JSC's 
witness on the 3.75% Fund, Jerry Maglio, and considered it not to be 
persuasive. It is troublesome that while the Panel has now identified 
the evidence that it considered, it declined to identify any reasons as 
to why it found Mr. Maglio's testimony unpersuasive. The 3.75% Fund 
represents approximately $45 million of the 1990, 1991, and 1992 funds, 
or a total of approximately $135 million. JSC Ex. 2, at 2. As the Court 
of Appeals said

[[Page 55663]]

in an earlier royalty distribution proceeding, ``shorthand and 
tossaway, conclusory sentences are no way to handle a multi-million 
dollar proceeding.'' National Association of Broadcasters v. CRT, 772 
F. 2d 922, 931 n.10 (D.C. Cir. 1985).
    Nevertheless, the Panel did not act arbitrarily in its 
consideration of JSC's 3.75% evidence. As discussed earlier in this 
Order, the Librarian's scope of review is very narrow. This limited 
scope certainly does not extend to reconsideration of the relative 
weight to be accorded particular evidence, and the Librarian will not 
second guess a CARP's balance and consideration of the evidence, unless 
its decision runs completely counter to the evidence presented to it. 
Motor Vehicle Manufacturers Association v. State Farm Mutual Auto 
Insurance Co., 463 U.S. 29, 43 (1983). As the Program Suppliers point 
out, the 3.75% fees generated for two major sports stations, WSBK and 
WPIX, declined between the second accounting period of 1983 and the 
second accounting period of 1992, and the relative position of all 
superstations other than WTBS and WGN dropped from 22% to 16%. Program 
Suppliers Reply Findings of Fact and Conclusions of Law at 15-16. The 
record is further unclear as to whether the relative strengths of WTBS 
and WGN were due solely to sports programming carried on those signals, 
or to other factors. In sum, JSC's arguments concerning its 3.75% 
evidence depended upon the Panel's judgment in ascertaining their 
merit, and that judgement should not be disturbed.
    2. The Canadian Claimants' 1991 and 1992 3.75% award. JSC claim 
that the Panel erred by awarding the Canadian Claimants an amount of 
the 3.75% Fund that exceeded the 3.75% royalties paid by cable 
operators during 1991-1992 for Canadian signals. JSC Petition to Modify 
at 18-19. JSC begin their argument by noting that in making its award 
of the Basic Fund to the Canadian Claimants, the Panel seemed to accept 
the fee generation analysis proposed by the Canadians. Report at 140-
141. According to that analysis, carriage of Canadian stations in the 
United States accounted for 1.95% of the royalties in the Basic Fund, 
and is 56% attributable to Canadian programs, 29% to sports programs, 
and 15% to U.S. movies and series. Report at 141.
    Since it appears that the Panel accepted the fee generation 
approach for the Basic Fund, JSC reason that the Panel should have 
followed the same approach in evaluating the 3.75% Fund. JSC Petition 
to Modify at 19. However, although carriage of Canadian signals 
accounted for 0.31% of the 3.75% Fund, the Panel awarded the Canadian 
Claimants 0.35% of the 3.75% Fund, an amount higher than its fee 
generation. Id. In addition to awarding the Canadian Claimants more 
than 100% of their fee generation, the Panel did not carry through its 
analysis of the Basic Fund (in which 29% of the fees generated by 
Canadian signals were attributable to sports programming) and gave JSC 
a zero award of Canadian signal generated 3.75% royalties. Id. at 20. 
JSC assert that such a zero award is contrary to CRT precedent and was 
arbitrary, and request the Librarian award them 30% of the Canadian 
Claimants' 3.75% royalties. Id.
    In support of JSC's claim, the Program Suppliers assert that should 
the Librarian agree that JSC should get 30% of the Canadians' 3.75% 
Fund award, the Program Suppliers should get a minimum of 15%, as well. 
Program Suppliers Reply at 26, n.12.
    In reply, the Canadian Claimants argue the following: (1) JSC did 
not make a 30% claim to the Canadian Claimants' allocation of the 3.75% 
Fund during the hearings or in the findings and are precluded from 
doing so now; (2) it is possible the Panel may have foregone a strict 
fee generation analysis when it came to the 3.75% Fund, and JSC may 
have received its share of the 3.75% Canadian allocation as part of the 
increase the Panel gave JSC generally for 3.75%, which is permissible 
if fee generation is not required; (3) but if fee generation is 
required, it should be required across the board, including PBS whose 
fee generation in the Basic Fund ranges from 2.1% to 2.5%, depending on 
assumptions, not the 5.75% the Panel awarded it. Canadian Claimants 
Reply at 6-8.
    The Register inquired how the Panel calculated the Canadian 
Claimants award. She asked ``if the Panel intended to make an 
allocation to the Canadian Claimants of the Basic Fund on the basis of 
fee generation, did it also intend to make an allocation to the 
Canadian Claimants of the 3.75% Fund on the basis of fee generation,'' 
and, if so, how did ``the Panel account for the award to the Canadian 
Claimants being greater than their fee generation of 3.75% royalties.'' 
If the Panel did not intend to use a fee generation analysis, the 
Register inquired as to the basis used by the Panel. Certified 
questions 6-C, 6-D, and 6-E.
    The Panel replied by stating in response to all three questions 
that the allocation of 3.75% royalties that it made to the Canadian 
Claimants ``was an error.'' Response at 5. The Panel did not, however, 
make any attempt to substitute what it believed to be the correct 
percentage.
    Canadian Claimants acknowledge that their 3.75% award exceeded the 
amount of fees that Canadian programming generated. Canadian Claimants 
Supplemental Petition at 5. They submit, however, that if a part of 
their 3.75% award must be shared with other parties based on the 
Panel's analysis for their basic award, then, to be consistent, their 
basic award must be increased to 1.1%. Id. at 6.
    In reply, JSC argue that the Canadian 3.75% award was 113% of the 
fees generated by Canadian signals, and that they are only entitled to 
51%, which is consistent with their Basic Fund award. JSC Supplemental 
Petition Reply at 8.
    The Panel's response of ``error'' is troubling because it fails to 
shed any light on what the Panel's intended approach was to awarding 
the Canadian Claimants their share of 3.75% royalties. Was the Panel's 
error in awarding the Canadian Claimants more than 100% of their fee 
generation, or was the error in failing to allocate a share of the 
Canadian's 3.75% royalties to JSC and Program Suppliers, or both?
    It appears that the Panel's error was not in the total amount of 
3.75% royalties attributable to Canadian signals (0.35%), but rather in 
the allocation of those royalties among JSC, Program Suppliers and the 
Canadian Claimants. As the Canadian Claimants point out, the Panel did 
not follow a strict fee generation analysis for any of the claimants in 
determining Basic Fund awards, and actually awarded PBS an amount that 
was two and a half times the amount generated by PBS signals under a 
fee generation analysis. Canadian Claimants Reply at 8. The award of 
0.35% to the Canadian Claimants for 3.75% royalties is not at great 
variance with the 0.31% the Canadians requested, and falls within the 
zone of reasonableness. See, National Association of Broadcasters v. 
CRT, 772 F.2d 922, 930 (D.C. Cir. 1985). The error committed by the 
Panel, therefore, rests in its failure to properly allocate the 0.35% 
of 3.75% royalties generated by Canadian signals among JSC, Program 
Suppliers and the Canadian Claimants.
    In allocating the 0.35% share of 3.75% royalties among JSC, Program 
Suppliers and the Canadian Claimants, the Panel's approach used in 
making the Basic Fund award to the Canadians is adopted. The Panel 
found that 29% of the programming on Canadian signals was attributable 
to JSC, and 15% was attributable to Program Suppliers. Report at 140-
141. The remainder

[[Page 55664]]

(56%) was attributable to Canadian Claimants. Id. at 141. There is no 
reason to expect that these percentages would be different for Canadian 
signals paid for at the 3.75% rate, and the parties did not present any 
evidence to indicate such. See Canadian Claimants Findings of Fact at 
82-83, 96. Those percentage are therefore used to adjust the allocation 
of the 3.75% Funds for 1991 and 1992. The final allocation of those 
funds should be as follows: 9
---------------------------------------------------------------------------

    \9\ These figures represent the final overall award, which 
includes the Music Claimants settlement.

------------------------------------------------------------------------
                                                               3.75%    
                                                             royalties  
------------------------------------------------------------------------
Program Suppliers.......................................      56.0131375
JSC.....................................................      31.2299325
NAB.....................................................       7.1625000
PBS.....................................................                
Music Claimants.........................................       4.5000000
Devotional Claimants....................................       0.9072500
Canadian Claimants......................................       0.1871800
------------------------------------------------------------------------

    3. The Canadian Claimants' 1990 3.75% award. JSC note that on pages 
142-143 of the Panel's Report, the Panel announced its decision to 
award the Canadian Claimants 0.35% of the 3.75% Fund, but is silent as 
to whether that applies to 1990-92, or just the years for which the 
Canadian Claimants had a controversy, 1991-92. JSC Petition to Modify 
at 21. JSC ask the Librarian to clarify that the Panel's intent was 
simply to make an award for those years that were in controversy. Id. 
JSC further ask the Librarian to reallocate the Canadian Claimants' 
share of the 3.75% Fund among the other claimants, in proportion to 
each claimant's share of the 3.75% Fund. Id. at 21-22. JSC's motion is 
supported by NAB which asks for an increase of 0.03% in its 3.75% Fund 
award. NAB Reply at 24.
    In reply, the Canadian Claimants do not claim more than their 
settled amounts for 1990, but want a declaration that their settled 
amount for 1990 is assured in both the basic and the 3.75% Fund. 
Canadian Claimants Reply at 7, n.4.
    The Canadian Claimants reached a settlement with all the other 
parties of their claim for 1990 in which they received 0.75% of the 
Basic Fund and 0.25% of the 3.75% Fund. The parties notified the 
Librarian of this settlement and it is assured, as a matter of law. 
Therefore, the Panel did not have the authority to alter the Canadian 
Claimants' share of the 1990 3.75% Fund. Moreover, the Panel does not 
assert such authority. Report at 142-143. Accordingly, the awards 
listed on page 142 and the allocation table on page 143 are read as 
making an award of 0.35% of the 3.75% Fund to the Canadian Claimants 
for 1991 and 1992 only.
    However, having concluded that the Canadian Claimants' award in the 
3.75% Fund for 1990 is, as a matter of law, 0.25%, the total allocation 
for the 1990 3.75% Fund is now 99.90% (excluding the Music Claimants 
settlement), and an adjustment must be made. JSC and NAB have asked 
that the adjustment be pro rata among the other claimants that have 
entitlement to the 3.75% Fund. This is the proper basis, and the 
reallocation should be made accordingly.
E. The NAB Award
    1. Program miscategorization. NAB argues that the Panel acted 
arbitrarily in failing to correct the Nielsen study for miscategorized 
programs when it awarded NAB a percentage equal to its viewing share. 
NAB Petition to Modify at 2. NAB notes that the Panel concluded that 
``NAB's programming was previously undervalued'' by the Copyright 
Royalty Tribunal in its 1989 cable distribution, and then stated that 
``NAB [programs] attracted and retained subscribers at a level equal to 
its viewing.'' Report, at 112-113. According to NAB, the Panel 
considered that a percentage equal to NAB's viewing was 7.5%, halfway 
between the range of 7% to 8% which the Panel found was NAB's Nielsen 
viewing for 1990-92. Because the Panel intended to award NAB its 
Nielsen viewing share, NAB contends that it should have corrected the 
study for miscategorized programs which properly belonged to NAB. Id.
    NAB notes that when the Tribunal considered the relative weight to 
assign the Nielsen study, it first corrected the study for all 
perceived deficiencies and miscategorizations. Id. at 4. The Panel 
failed to do this, in NAB's view, and was wrong when it stated that it 
was ``unpersuaded that the criticisms involving miscategorization and 
nonresponse rate have any real measurable effect on the validity of the 
results.'' Report at 42-43. NAB states it offered the measurable effect 
of the miscategorized NAB programs, and that the Panel was arbitrary in 
ignoring this effort. Id. at 5. Last, NAB argues that the Panel was 
particularly arbitrary in disregarding the miscategorized programs 
because, with one exception, NAB's evidence on their miscategorization 
was not challenged. Id.
    The one program categorization that was challenged concerned 
``National Geographic Explorer.'' Id. at 7-10. Program Suppliers 
asserted that ``National Geographic Explorer'' was syndicated as 
``National Geographic On Assignment.'' Id. at 8. NAB asserts that 
``National Geographic on Assignment'' is a re-packaged, but separate 
program from ``National Geographic Explorer,'' and although ``National 
Geographic On Assignment'' is a Program Supplier syndicated series, 
``National Geographic Explorer'' remains a station-produced program 
belonging in the NAB category. Id. at 9.
    Program Suppliers disagree with NAB's conclusion that the Panel 
intended to award them their viewing share, and disagree with NAB's 
assertions regarding ``National Geographic Explorer.'' First, Program 
Suppliers question NAB's assumption that the Panel gave NAB a one-to-
one correlation between its Nielsen figures and its final award, noting 
that at an earlier section of the Report, the Panel referred to the 
Nielsen study ``merely as a reference point and not as an absolute 
value.'' Program Suppliers Reply at 3. Further, Program Suppliers argue 
that NAB did not carry its burden to show the Panel how the 
miscategorizations affected the Nielsen numbers, because NAB did not 
give the Panel a final exhibit with all the numbers calculated; absent 
such a showing, the Panel could properly reject NAB's argument. Id. at 
5-7. Second, Program Suppliers assert that ``National Geographic 
Explorer'' does belong to the Program Suppliers category under a 
Tribunal exception for a program produced by or for WTBS comprising 
predominantly of syndicated elements. In addition, Program Suppliers 
assert that there are two programs, ``Night Tracks'' and ``Thirty Years 
of Andy: A Mayberry Reunion,'' that were improperly classified as 
station-produced programs belonging in the NAB category when they 
should have been classified as syndicated shows belong in the Program 
Suppliers category. When the effect of ``National Geographic 
Explorer,'' ``Night Tracks'' and ``Thirty Years of Andy: A Mayberry 
Reunion'' are added together, Program Suppliers assert that the final 
effect is a wash for both parties. Id. at 5-9.
    JSC agrees with Program Suppliers that the Nielsen study data were 
taken ``with a grain of salt'' and as a ``reference point,'' rather 
than on a one-to-one basis. JSC Reply at 49-50. However, should the 
Librarian agree with NAB that the miscategorizations were material and 
deserving of an adjustment, the JSC argue that the adjustments should 
come entirely from the Program Suppliers category because they were 
originally classified as belonging to Program Suppliers and

[[Page 55665]]

should not result in a lower JSC award. Id. at 50.
    One of the Register's certified questions to the Panel asked 
whether the Panel intended ``to give an award to NAB equal to its share 
of the Nielsen study,'' and, if not, to describe what other factors 
entered into the award. Certified questions 3-A, 3-B. In response, the 
Panel stated that the 7.5% award to NAB represented the fair market 
value of NAB's programming, and therefore was not intended as a measure 
of its Nielsen viewing. Response at 4.
    NAB renews its request that it be awarded its Bortz survey share of 
12.6%, but submits that the Panel's response confirms that it is 
entitled to no less than its corrected Nielsen viewing share of 9.3%. 
NAB Supplemental Petition at 3-4. Program Suppliers counter that NAB is 
not entitled to its Bortz survey results because its evidence did not 
corroborate those results. Program Suppliers Petition Reply at 10. 
Program Suppliers also argue that the Panel committed error by stating 
that it found NAB's programming to be ``previously undervalued'' with 
respect to the 1989 award, because the Panel cannot reevaluate prior 
decisions of the CRT. Id. at 11-12.
    The Panel did not act arbitrarily in awarding NAB a 7.5% share. The 
Panel has clarified that it did not intend to award NAB its Nielsen 
viewing share, but was only using those numbers as a reference point 
for determining the award. The Panel's use of the so-called 
``uncorrected'' Nielsen numbers is also not erroneous, even though 
those numbers were used as only a reference point. The Panel, in 
addressing the miscategorization issue, stated that ``none of the 
witnesses were able to articulate what effect, if any, these alleged 
problems had on the survey results,'' and concluded that it was 
``unpersuaded that the criticisms involving miscategorization and 
nonresponse rate have any real measurable effect on the validity of the 
[Nielsen] results.'' Report at 42-43. NAB did not present any evidence 
to the Panel as to how the programs which it alleges are miscategorized 
would change its Nielsen numbers, and NAB's post-hoc rationalization in 
its Petition to Modify is not acceptable. See, Citizens to Preserve 
Overton Park v. Volpe, 401 U.S. 402, 419 (1971).
    2. Corroboration of the Bortz survey. NAB claims that the Panel 
arbitrarily rejected its evidence corroborating the Bortz survey. NAB 
claims that the Panel stated that it would not award NAB the results it 
received in the Bortz survey, because ``NAB [did] little to corroborate 
Bortz.'' Report at 112. NAB argues that, on the contrary, it presented 
much evidence to corroborate its results in the Bortz survey. They 
include: (a) subscribers' letters and calls when distant signals are 
dropped; (b) analogous demand for the CNN cable channel; (c) actions 
taken by subscribers to avoid losing distant signal news programs; (d) 
independent research on ``parasocial interaction,'' meaning strong 
personal attachment to news programs and personalities; (e) a 1991 
study commissioned by WTBS finding that subscribers value station-
produced newsbreaks and other informational programs; (f) a 1992 study 
by Beta Research Corporation finding that subscribers highly value 
cable networks featuring news and other information; (g) subscriber 
valuation surveys conducted for the 1983 distribution proceeding; (h) 
evidence of clustering of distant signal carriage in regions close to 
the market of the station being carried, where interest in news of the 
community is greatest; and (i) cable operator testimony, including 
operators testifying for other Phase I categories. NAB Petition to 
Modify, Attachment A at 64, 134, 152-163.
    Program Suppliers counter that NAB did not corroborate NAB's 
results in the Bortz survey. Program Suppliers characterize NAB's 
analogy to CNN's license fees as creating an unfair comparison with 
compulsory license fees, and that the comparison was dismissed by the 
Panel as ``overstated'' and ``of little value.'' Program Suppliers 
Reply at 9-10. Program Suppliers fault NAB for not presenting any data 
concerning the actual prices paid for station-produced programs in the 
syndication marketplace. Id. at 10. They also state that to show 
audience avidity is not enough; it must be greater avidity than shown 
for the other types of programs being compared in Phase I in order to 
get an increased award. Id. Lastly, Program Suppliers consider the 
Panel's conclusion that there were no changed circumstances as 
dispositive of NAB's claim for a higher award. Id. at 10-11.
    JSC submit that if the Librarian believes NAB should get an award 
equal to its Bortz results, so should JSC. JSC Reply at 51. The 
Canadian Claimants state that if the Librarian believes NAB's award 
should be upwardly adjusted, that should not affect the Canadian 
Claimants' award because no NAB programming was shown on Canadian 
distant signals. Canadian Claimants Reply at 10-11.
    The Panel did not act arbitrarily in rejecting NAB's evidence 
purporting to corroborate NAB's results in the Bortz survey. In the 
section entitled ``Analysis of and Award to the NAB,'' the Panel stated 
that it could not accept NAB's proffered analogy to CNN for the reasons 
given by Program Suppliers, which was, that it was an unfair comparison 
between CNN's license fees and compulsory license fees which are 
limited by law. Report at 112. Further, the Panel stated that NAB's 
evidence from the Opinion Research study, about ``parasocial 
interaction,'' and about regional clustering, was credible. But it 
nonetheless rejected these as justifying an increase for NAB, because 
it found them to be at the same level as prior to 1990-92--no changed 
circumstances. Report at 112. Although each and every one of NAB's 
proffered evidence could have been described by the Panel, the more 
important evidence was discussed sufficiently to support the Panel's 
determination.
F. The Devotional Claimants Award
    The Devotional Claimants claim the Panel ignored record evidence 
and/or rejected certain arguments that were accepted for other 
claimants, that would have supported an increased award to the 
Devotional Claimants.
    First, the Devotional Claimants assert that the Panel erred when it 
discounted the Bortz survey results for the Devotional Claimants 
because, ``The Tribunal in 1989 found, as we do also, that the price of 
the programs is much less than what the cable operator is willing to 
spend.'' Report at 130. To have made this finding, the Devotional 
Claimants contend that the Panel would have had to ignore the 
unrebutted evidence of Dr. David Clark and Mr. Michael Nason who 
testified that devotional programmers would carefully negotiate to 
obtain a market price if a free market did exist in distant signal 
retransmissions. Devotional Claimants Petition to Modify at 7-8. The 
Devotional Claimants submit that PBS witness, Dr. David Scheffman, 
conceded there was no reason to discount the Devotional Claimants' 
award for any ``supply-side'' considerations. Id. at 8. The Devotional 
Claimants further contend that to discount their award for lack of 
pricing is another way of saying that their award should be discounted 
for lack of ``harm.'' Id. But the Panel re-evaluated ``harm'' in this 
proceeding and found all claimants equally harmed. Therefore, the 
Devotional Claimants contend, the Panel acted illogically when it 
continued to discount their award for lack of pricing. Id.
    Program Suppliers reply that there was countervailing record 
evidence to rebut the testimony of Clark, Nason and

[[Page 55666]]

Scheffman. Program Suppliers Reply at 33-34. JSC contend that while the 
Panel discounted the Bortz survey results for the Devotional Claimants 
by 2-3%, it discounted the Bortz survey results for the JSC by 7-10%, 
and both are equally illogical. However, in the JSC's view, the Panel 
acted within its discretion to weigh the evidence, and this weighing is 
not subject to review. JSC Reply at 47.
    Second, the Devotional Claimants contend that their evidence 
corroborative of the Bortz survey was ignored by the Panel while 
similar evidence was credited to other parties. For example, the 
Devotional Claimants assert that: (1) while the Panel credited PBS for 
its increased share in the Nielsen study, the Panel did not credit the 
Devotional Claimants for its increased share in the Nielsen study; (2) 
while the Panel credited the JSC for the testimony of cable operators 
Myhren and Maglio on behalf of sports, the Panel did not credit the 
Devotional Claimants for the testimony of cable operators Engel and 
Searle on behalf of devotional programming; (3) while the Panel 
credited the JSC and NAB with their showings related to the intensity 
or avidity of viewership, the Panel did not credit the Devotional 
Claimants' evidence of avidity of viewership; (4) while the Panel 
credited the JSC and PBS with the marketplace value of analogous 
program channels, such as ESPN and Arts and Entertainment, the Panel 
did not credit the Devotional Claimants for the marketplace value of 
such analogous program channels as the Family Channel and the Faith and 
Values network; and (5) while the Panel gave increases to all other 
parties who relied on the Bortz survey--JSC, NAB, and PBS--it gave no 
increase to the Devotional Claimants, the only other party who relied 
on the Bortz survey, Devotional Claimants Petition to Modify at 10-14.
    In reply, Program Suppliers note that the Nielsen figures for 1989 
cannot be compared with 1990-92 because of the change from a diary-
based study to a meter-based study. Therefore, instead of concluding 
that the Panel should have credited the Devotional Claimants with an 
increase in their Nielsen share, the Panel erred when it credited PBS 
with an increase in their Nielsen share. Program Suppliers Reply at 37. 
Further, Program Suppliers state that the Devotional Claimants 
mathematically exaggerated their increase in the Nielsen study. Id. In 
addition, Program Suppliers argue that the opinion testimony of the 
cable operators was not rejected, but was discounted for not being 
quantified by the Devotional Claimants. Id. at 38. As for the analogous 
cable channels, Program Suppliers assert that the Family Channel 
consists more of movies and television series than devotional 
programming. Id. at 39.
    JSC also argue that the 1989 Nielsen study and the 1990-92 Nielsen 
studies are not comparable because they are based on different 
methodologies. JSC Reply at 48. NAB agrees with the Devotional 
Claimants that the Panel ignored their evidence corroborative of the 
Bortz survey, just as the Panel ignored, NAB asserts, NAB's 
corroborative evidence, and that both the Devotional Claimants and NAB 
deserve higher adjustments for their corroborative evidence. NAB Reply 
at 26.
    Third, the Devotional Claimants contend that their fee generation 
analysis for religious specialty stations was ignored, and that there 
is no basis for the Panel to have given the Devotional Claimants a 
different award in the Basic Fund and the 3.75% Fund. Devotional 
Claimants Petition to Modify at 14.
    Program Suppliers contend that the specialty station fee generation 
analysis was used by the Panel, but discounted. Further, the specialty 
station fee generation analysis shows the basis for why the Panel gave 
a different award to the Devotional Claimants in the Basic Fund and the 
3.75% Fund, because specialty stations are never carried at the 3.75% 
rate. Program Suppliers reply at 39-40. JSC makes the same point 
justifying the different awards to the Devotional Claimants in the 
Basic Fund and the 3.75% Fund. JSC Reply at 49.
    The Panel did not act arbitrarily in its award to the Devotional 
Claimants. First, the Panel did not err in reaching its conclusion that 
the price of Devotional programs is less than what the cable operators 
state in the Bortz survey they are willing to spend. The Panel made 
findings based on record evidence in support of this conclusion when it 
recited the criticism offered by the Program Suppliers that 
``Devotionals pay stations for air time and argue this practice 
indicates a lower value for devotional programming compared with other 
programs.'' Report at 129.
    Second, the Panel did not act arbitrarily in considering what 
appears to be similar evidence differently. When a decision-making body 
weighs evidence, it may often decide to accept one piece of evidence 
but reject another, even though they appear similar. Anderson v. 
Bessemer City, 470 U.S. 564, 574 (1985). For example, it is within the 
Panel's discretion to accept the testimony of one cable operator, but 
not another. It is also within the Panel's discretion to consider one 
cable channel analogous to one claimant, but find that another cable 
channel is not analogous to another claimant. Program Suppliers and JSC 
give creditable reasons why the Panel made its distinctions concerning 
the Devotional Claimants. While the Panel's explanation was less than 
compelling, in its section called ``Analysis and Award to the 
Devotional [Claimants],'' enough can be gleaned from it to support the 
conclusion that the Panel rationally weighed the differences in 
seemingly similar evidence.
    Third, the Panel did not act arbitrarily in reaching its conclusion 
that the award in the Basic Fund to the Devotional Claimants should be 
1.25% because it found in the findings of fact that ``the specialty 
station royalties for the three years at issue represent less than 1% 
of the total royalty pool, and are thus consistent with Devotionals' 
low viewing shares.'' Report at 129. Further, the Panel incorporated by 
reference the Tribunal's reason for giving the Devotional Claimants 
disparate awards in the basic and the 3.75% Funds; that is, that 
religious specialty stations are not paid for at the 3.75% rate, and 
therefore, the Devotional Claimants 3.75% Fund award should be 
correspondingly reduced. Report at 142.
G. The Canadian Claimants Award
    In her review of the Panel's Report, the Register discovered what 
appeared to be a discrepancy in the Basic Fund award to the Canadian 
Claimants. Specifically, the Report contained language indicating that 
the Panel would award the Canadian Claimants a 1.1% share of the Basic 
Fund, but then awarded the Canadian Claimants only a 1.0% share. The 
Report stated:

    More specifically, the Canadians claim that approximately 1.95% 
of all basic royalties is for the carriage of Canadian stations. Of 
that number, JSC should receive 29%, Program Suppliers should 
receive 15%, and the balance (56%) should be allocated to the 
Canadians. This 56% is equal to 1.1% of the basic royalties.
    The Panel believes that the analysis for this category should be 
the same as for the other categories. The Bortz survey shows cable 
system operators value Canadian programming at .3%. This number is 
totally unreliable as Mr. Bortz suggests that the small numbers are 
incapable of being accurately measured. The other quantitative 
evidence we have is the fees generated. While there is a great deal 
of criticism, particularly by PTV, concerning acceptance of the fee-
generated method, we see no other significant evidence to dispute 
the claim of the Canadians.
    We allocate 1% of the Basic Fund to the Canadians for the years 
1991 and 1992.


[[Page 55667]]


Report at 140-141.

    In light of this language, the Register certified questions to the 
Panel to determine its intent. The Register inquired as to whether the 
Panel intended ``to make an award to the Canadian Claimants on the 
basis of fee generation,'' and, if so, how did the Panel ``account for 
the discrepancy between 1.1% and 1.0%.'' Certified questions 5-A, 5-B. 
Finally, if the Panel did not intend to use fee generation, the 
Register inquired as to what other factors went into the fashioning of 
the award.
    In response, the Panel stated that it ``did not wish to use a fee 
generation method.'' Response at 5. Instead, the Panel noted that while 
the Canadian Claimants requested 1.1% of the Basic Fund, it was ``[our] 
collective judgment that, based on past proceeding, an increase of one-
third [from the 1989 percentage] was a sufficient increase, so [we] 
concluded that one percent was the appropriate marketplace value.'' Id. 
The Panel concluded by stating that ``[w]hile we tried to distance 
ourselves from the fee generated [sic] method, by the first sentence in 
the second quoted paragraph, we certainly used that method in reaching 
our conclusion.'' Id.
    The Canadian Claimants argue that it was error for the Panel not to 
use the fee generation approach and award the Canadian Claimants 1.1% 
of the Basic Fund because ``the Panel's Report and Response indicate 
that they accepted our factual findings and conclusions. . . .'' 
Canadian Claimants Supplemental Petition Reply at 3; Canadian Claimants 
Supplemental Petition at 2-3. Further, the Canadian Claimants argue 
that the Librarian is prohibited from reducing the Canadians award in 
any way ``because no party sought its reduction.'' Canadian Claimants 
Supplemental Petition at 2.
    In reply, Program Suppliers challenge the Canadian Claimants 
contention that their award cannot be reduced, noting that there is no 
statutory provision in the Copyright Act, unlike the Natural Gas Act 
and Federal Power Acts, which preclude the Librarian from considering 
an issue or award not raised by the parties. Program Suppliers 
Supplemental Petition Reply at 2-3. JSC submit that there is nothing in 
the Panel's report or responses to the certified question that indicate 
that the Panel accepted the Canadian Claimants' evidence in its 
entirety, and that to request the Librarian at this stage, and not in 
the initial petitions to modify, for an increase in award is untimely. 
JSC Supplemental Petition Reply at 7-8.
    Having clarified that it was the Panel's intention to award the 
Canadian Claimants 1.0% of the Basic Fund, the award is reasonable. The 
Copyright Royalty Tribunal was accorded a substantially broad ``zone of 
reasonableness'' in making its determinations, see National Association 
of Broadcasters v. CRT, 772 F.2d 922 (D.C. Cir. 1985), and the Canadian 
Claimants' award falls within this zone, since they received 0.75% in 
the 1989 distribution proceeding and were requesting 1.1% in this 
proceeding. Further, as JSC correctly point out, there is nothing in 
either the Panel's Report or Response to the certified questions that 
indicates that the Panel accepted the Canadians' case in its entirety 
and intended to award them their requested share of 1.1%.
H. The PBS Bortz Adjustment
    PBS makes a technically complex argument alleging that the Panel 
acted arbitrarily in not adjusting its Bortz share in this proceeding. 
PBS submits that the Panel should have made an upward adjustment in its 
award to account for the fact that it does not receive any royalties in 
the 3.75% Fund. Although PBS made a similar adjustment argument to the 
Tribunal in the 1989 proceeding, which was expressly rejected by the 
Tribunal, PBS argues that it presented new evidence and argument for 
adjustment in this proceeding, thereby precluding the Panel from 
properly relying upon the Tribunal's rejection rationale.
    The Panel's analysis of its award to PBS begins with an examination 
of the raw numbers from the Bortz survey for the PBS category: 2.7% of 
the royalty fund for 1990, 2.9% for 1991 and 3.0% for 1992. Report at 
115-116. The Panel then notes the principal arguments made by PBS for 
adjusting these numbers upward. The first adjustment was something 
called the zero value methodology, which attempted to account for the 
cable operator respondents in the Bortz survey that did not actually 
import a distant PBS signal. The Panel accepted this adjustment, though 
somewhat reluctantly. Report at 123 (``The automatic-zero adjustment 
proposed by Dr. Fairley troubles the Panel.''). The Panel then analyzed 
PBS's analogous marketplace adjustment argument, giving that credit as 
well. Id. Finally, and this is significant to PBS's claim of arbitrary 
action, is the Panel's handling of PBS's proposed adjustment to account 
for its zero award in the 3.75% Fund.
    PBS's position is the following: The Bortz survey numbers, even 
after the zero value methodology and analogous marketplace adjustments, 
are not accurate. Unlike the other claimants, PBS does not receive an 
award from the 3.75% Fund because none of its stations are carried by 
cable operators at the 3.75% royalty rate. Thus, PBS only receives an 
award from the Basic Fund, which represents about 75% of the total 
royalty pool (the 3.75% Fund representing the other 25%). An award of 
6% of the total royalty fund (which represents PBS's adjusted Bortz 
share) is only 6% of 75% of the total fund, since PBS receives no 3.75% 
award. Thus, an award of 6% actually works out to be less than 6% when 
the total fund is considered. PBS therefore submits its award must be 
raised to roughly 7% total, so that its award when the total royalty 
pool is considered amounts to 6%. PBS Petition to Modify at 6-8, 12.
    In the 1989 proceeding, the Tribunal rejected this argument, noting 
that the Bortz survey did not require cable operators to allocate value 
to program categories based on their actual compulsory license 
copyright payments, but rather based on a hypothetical programming 
budget. 57 FR 15286, 15295 (April 27, 1996). The operators were 
therefore allocating PBS percentage of the programming budget on 100% 
of the royalty funds in this proceeding, not the 75% of the funds that 
PBS alleges.
    PBS now submits that it has presented a reconstituted version of 
its adjustment argument in this proceeding, arguing that not only is it 
entitled to an adjustment of the Bortz results, but that all parties 
must be adjusted upward. PBS Petition to Modify at 10. The Panel 
rejected this argument ``for the same reason given by the Tribunal in 
the 1989 proceeding.'' Report at 124. PBS asserts that the Panel acted 
arbitrarily in applying this reasoning because PBS submits that it has 
presented a new argument, with attending evidence showing how the other 
parties' shares of the Basic Fund must be adjusted upwards to reflect 
their true Bortz shares. Id. at 11.
    NAB concurs with PBS's logic, and believes that they, too, are 
entitled to an upward adjustment. NAB Reply at 24. JSC states that if 
PBS's Bortz share goes up, its share must increase as well. JSC Reply 
at 51-52. Devotional Claimants do not address PBS's argument. The 
Canadian Claimants and Program Suppliers object to PBS's position, 
submitting that it is nothing more than a rehash of the argument made 
to the Tribunal in 1989. Canadian Claimants Reply at 13-14; Program 
Suppliers Reply at 11-12. Program Suppliers argue that PBS's asserted 
difference between adjusting only its share of the

[[Page 55668]]

Basic Fund in the 1989 proceeding, and adjusting all parties share in 
the current proceeding, is ``a distinction without substance.'' Program 
Suppliers Reply at 15. They note that no matter the adjustment, the 
Panel did not accept PBS's Bortz share as determinative of its award, 
nor did it announce an intention to do so. Because it did not accept 
Bortz as determinative, PBS's post-Panel adjustment is not proper. Id.
    The Panel did not act arbitrarily in rejecting PBS's Bortz 
adjustment for the same reasons articulated by the Tribunal in 1989. 
Whether an adjustment in the Basic Fund award is made for only one 
party (PBS), or all parties, the approach used in the Bortz survey 
itself remain unchanged. As in the 1989 proceeding, Bortz did not ask 
cable operators to base their program share allocation according to the 
royalties they actually paid. Thus, in awarding PBS programming a 
specific share, a cable operator did not take into account that its 
stated share only applied to the Basic Fund and not the 3.75% Fund, 
since PBS does not receive a 3.75% share. The Bortz survey numbers 
therefore do not necessarily require the adjustment demanded by PBS. 
Thus, the Panel was reasonable in adopting the Tribunal's 1989 
rationale because PBS's argument, and the design parameters of the 
Bortz survey, were fundamentally the same.
    Furthermore, as Program Suppliers correctly note, the Panel did not 
state that it was using PBS's Bortz numbers as the sole means of 
determining its award. In fact, the Panel awarded PBS a share that is 
less than the unadjusted Bortz survey numbers. Had the Panel stated 
that it was attempting to award PBS its Bortz share, then PBS's 
argument might have some validity. However, since the Panel did not, it 
did not act arbitrarily in denying PBS's requested adjustment.
I. The Unified Award
    One issue that troubled the Register in her review of the Panel's 
Report was its decision to make the same award to each party for all 
three years, Report at 26, even though some of the parties had 
requested different awards for different years and had presented 
different evidence for each year to support those requests. See, e.g., 
Direct Case of JSC (requesting Basic Fund awards of 31% for 1990, 33% 
for 1991 and 35% for 1992).
    The Register certified a question to the Panel regarding its 
decision to make a unified award. The Register asked whether the 
parties had stipulated that they wanted a unified award for the period, 
and if so, where was that in the record. The Register then asked if the 
parties did not so stipulate, what were the reasons supporting the 
Panel's decision. Certified questions 2-A, 2-B, and 2-C.
    In response, the Panel stated:

    The parties advised the Panel during the course of the 
proceedings that the Panel could either make three separate awards 
or one combined award. The Panel chose the latter. The Panel cannot 
point specifically to a page in the record that says that. It is not 
certain that when that statement was made the court reporter 
recorded that statement. However, the Panel's understanding is 
supported by the fact that none of the claimants objected to the 
single award.

Response at 4.

    Surprisingly, none of the parties commented upon the Panel's answer 
in either their supplemental petitions or replies.
    Section 111 of the Copyright Act establishes that the Copyright 
Office shall collect cable compulsory license fees semiannually, but 
that the distribution of those fees shall be annual. Each July, 
claimants file their claims to the previous year's royalties. 
Distributions then occur annually. Where there are no controversies, 
the entire year's fund is distributed. Where there are controversies, 
the Librarian of Congress convenes a CARP to resolve those disputes.
    The statute describes the distribution of royalties in terms of an 
annual process. The statute is silent as to whether more than one 
year's fund may be combined into a single distribution process. Both 
the Library and all of the parties in this proceeding believe that a 
consolidation of proceedings is permissible and proper, and that was 
done in this proceeding by consolidating the 1990, 1991 and 1992 cable 
royalty funds into a single proceeding. 60 FR 14971 (March 21, 1995). 
The statute is also silent as to whether, in a consolidated proceeding, 
a unified award may be made. At the beginning of this proceeding, it is 
apparent that the parties assumed that the Panel would be making 
separate awards to each of the claimants for each of the three years, 
since they presented separate evidence for each year and requested 
different percentages of royalties for each year. However, that 
assumption apparently changed somewhat during the course of the 
proceedings, and only some of the parties continued to present evidence 
for separate awards in their proposed findings. See Proposed Findings 
of JSC. Further, in its response to the certified questions, the Panel 
stated that a representation was made during the course of the 
proceedings that a unified award could be made. None of the parties 
have challenged the accuracy of the Panel's statement in their 
supplemental petitions.
    It is telling that none of the parties have challenged the Panel's 
unified award, even when expressly presented the opportunity to do so 
on two occasions through the original and supplemental petitions to 
modify. The cable royalties involved in this proceeding are, of course, 
their money, and apparently none of them have a problem with the 
unified award. Because the statute is silent, it cannot be said that 
the Panel acted contrary to the provisions of the Copyright Act. 
Likewise, it cannot be said that the Panel acted arbitrarily when all 
of the parties in this proceeding have supported, if not in fact 
requested, the making of a unified award.

Conclusion

    For the above stated reasons, the Register recommends that the 
following should be the percentages for distribution of the 1990-1992 
cable compulsory license royalties:

----------------------------------------------------------------------------------------------------------------
                                                               Basic              3.75%              Syndex     
----------------------------------------------------------------------------------------------------------------
1990:                                                                                                           
    Program Suppliers..................................         52.6336250         56.0125439         95.5000000
    JSC................................................         28.2355000         31.1605620                   
    NAB................................................          7.1820500          7.1688409                   
    Music Claimants....................................          4.5000000          4.5000000          4.5000000
    PBS................................................          5.5049750                                      
    Devotional Claimants...............................          1.1938500          0.9080532                   
    Canadian Claimants.................................          0.7500000          0.2500000                   
1991-1992:                                                                                                      
    Program Suppliers..................................         52.5250000         56.0131375         95.5000000
    JSC................................................         28.1725000         31.2299325                   

[[Page 55669]]

                                                                                                                
    NAB................................................          7.1625000          7.1625000                   
    Music Claimants....................................          4.5000000          4.5000000          4.5000000
    PBS................................................          5.4912500                                      
    Devotional Claimants...............................          1.1937500          0.9072500                   
    Canadian Claimants.................................          0.9550000          0.1871800                   
----------------------------------------------------------------------------------------------------------------

II. Order of the Librarian of Congress

    Having duly considered the recommendation of the Register of 
Copyrights regarding the report of the Copyright Arbitration Royalty 
Panel in the distribution of the 1990-1992 cable royalty funds, the 
Librarian of Congress fully endorses and adopts her recommendation to 
accept the Panel's decision in part and reject it in part. For the 
reasons stated in the Register's recommendation, the Librarian is 
exercising his authority under 17 U.S.C. 802(f) and is issuing an order 
setting the distribution of cable royalty fees. After deducting 
National Public Radio's 0.18% share per its agreement with the other 
parties to this proceeding, IT IS ORDERED that the 1990-1992 cable 
compulsory license royalties shall be distributed according to the 
following percentages:

----------------------------------------------------------------------------------------------------------------
                                                               Basic              3.75%              Syndex     
----------------------------------------------------------------------------------------------------------------
1990:                                                                                                           
    Program Suppliers..................................         52.6336250         56.0125439         95.5000000
    JSC................................................         28.2355000         31.1605620                   
    NAB................................................          7.1820500          7.1688409                   
    Music Claimants....................................          4.5000000          4.5000000          4.5000000
    PBS................................................          5.5049750                                      
    Devotional Claimants...............................          1.1938500          0.9080532                   
    Canadian Claimants.................................          0.7500000          0.2500000                   
1991-1992:                                                                                                      
    Program Suppliers..................................         52.5250000         56.0131375         95.5000000
    JSC................................................         28.1725000         31.2299325                   
    NAB................................................          7.1625000          7.1625000                   
    Music Claimants....................................          4.5000000          4.5000000          4.5000000
    PBS................................................          5.4912500                                      
    Devotional Claimants...............................          1.1937500          0.9072500                   
    Canadian Claimants.................................          0.9550000          0.1871800                   
----------------------------------------------------------------------------------------------------------------

    As provided in 17 U.S.C. 802(g), the period for appealing this 
Order to the United States Court of Appeals for the District of 
Columbia Circuit is 30 days from the effective date of this Order.

    Dated: October 22, 1996.

    So Recommended.
Marybeth Peters,
Register of Copyrights.
    So Accepted and Ordered.
James H. Billington,
The Librarian of Congress.
[FR Doc. 96-27573 Filed 10-25-96; 8:45 am]
BILLING CODE 1410-33-P