[Federal Register Volume 65, Number 29 (Friday, February 11, 2000)]
[Proposed Rules]
[Pages 6946-6950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3237]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. RM 2000-2]


Cable Compulsory License; Definition of a Network Station

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of inquiry.

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SUMMARY: The Copyright Office of the Library of Congress is opening a 
rulemaking proceeding to determine the scope and application of the 
definition of a network station under the cable statutory license of 
the Copyright Act.

DATES: Initial comments should be received no later than April 11, 
2000. Reply comments are due by May 11, 2000.

ADDRESSES: If sent by mail, an original and twelve copies of comments 
and reply comments should be addressed to: Office of the Copyright 
General Counsel, PO Box 70977, Southwest Station, Washington, DC 20024. 
If hand delivered, an original and twelve copies of comments and reply 
comments should be brought to: Office of the

[[Page 6947]]

Copyright General Counsel, James Madison Memorial Building, Room LM-
403, First and Independence Avenue, SE, Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
William J. Roberts, Jr., Senior Attorney for Compulsory Licenses, PO 
Box 70977, Southwest Station, Washington, DC 20024. Telephone: (202) 
707-8380. Fax: (202) 707-8366.

SUPPLEMENTARY INFORMATION:

Background

    When is a television station a network station? That is the 
question for which Paxson Communications Corp. (``Paxson'') has 
petitioned the Copyright Office for an answer and to which this 
rulemaking proceeding is directed.
    The cable statutory license of the Copyright Act, 17 U.S.C. 111, 
provides a licensing regime for the retransmission of broadcast 
stations by cable systems. Whether a particular station is a 
``network'' station or not is critical to the calculation of royalty 
payments by cable systems for retransmission of that station because 
the cable statutory license only gathers royalties for the 
retransmission of nonnetwork broadcast programming. In applying the 
royalty payment formula, cable systems pay a full distant signal 
equivalent (``DSE'') for retransmission of an independent, nonnetwork 
station because it is presumed that all the programming contained on 
the signal of that station is not network-provided programming. 
However, cable systems must only pay one-quarter of a DSE for 
retransmission of a network station, because it is presumed that only 
one-quarter of the programming contained on the signal of a network 
station is nonnetwork programming. Consequently, as a general 
principle, a cable system can carry four network stations for the cost 
of one independent station.\1\ This distinction in the classification 
of stations is important to both cable systems and copyright owners: 
cable systems, because it affects their costs; and copyright owners 
because it determines how much money will be in the cable royalty pool.
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    \1\ The actual cost of such carriage can vary depending upon the 
royalty rate applicable to carriage of each station.
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    Whether a station is a ``network station'' also affects matters 
related to cable carriage. Most cable systems throughout the United 
States have filled their quotas of permitted distant signals. If a new 
independent station seeks carriage on a typical cable system, such 
carriage will trigger the 3.75% royalty fee for nonpermitted distant 
signals which cable systems are reluctant to pay. Consequently, the 
signal will not be carried. However, if the station is designated as a 
network station, carriage of the station becomes considerably more 
attractive to a cable system because the associated royalty fees are 
considerably lower.
    The issue of what is a network station has arisen intermittently 
through the years on an informal basis. When the Copyright Act passed 
in 1976, it was clear that the only stations that qualified as network 
stations under the section 111 license were those owned and operated, 
or affiliated with, the ``Big 3'' networks: ABC, CBS, and NBC. The 
Copyright Office received several informal inquiries from cable systems 
during the early 1990's regarding the status of the Fox network, but 
the Office declined to rule that Fox was a network for purposes of the 
section 111 license. Paxson is the first broadcaster to come forward 
and formally petition the Office for a ruling.

Definition of a Network Station

    Section 111(f) of title 17 contains the statutory definition of a 
network station. It provides:

    A ``network station'' is a television broadcast station that is 
owned or operated by, or affiliated with, one or more of the 
television networks in the United States providing nationwide 
transmissions, and that transmits a substantial part of the 
programming supplied by such networks for a substantial part of that 
station's typical broadcast day.

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

    Examination of this definition reveals that there are three 
critical elements to the qualification of a broadcast station as a 
network station. The broadcast station must be owned and operated by, 
or affiliated with, one or more of the U.S. television networks that 
provide nationwide transmissions; must transmit a substantial portion 
of the programming supplied by the network; and the programming 
supplied by the network must constitute a substantial portion of the 
station's typical broadcast day. There has never been any question that 
stations of the Big 3 networks satisfy these requirements, and the 
Copyright Office has always treated a station of one of these networks 
as a network station for purposes of section 111.
    Nevertheless, the specific meaning of these three elements is far 
from clear. For example, what are ``nationwide'' transmissions? Does 
there have to be a station of a particular ``network'' in every state 
or television market in order to qualify that organization as a 
network, or is something less than that sufficient? What constitutes 
transmitting a ``substantial'' portion of the programming offered by a 
network? Is fifty percent enough, or is more or less required? Does the 
programming supplied by the network have to be first-run or original 
programming, or is syndicated programming permissible? What constitutes 
a ``substantial'' portion of a station's typical broadcast day? It is 
these questions, and the ones described below, to which the Copyright 
Office seeks public comment in this Notice of Inquiry.

Petition of Paxson

    Paxson provides television programming over the PaxTV Television 
Network (``PaxTV'') to over sixty owned and operated and affiliated 
television broadcast stations. According to Paxson, its owned and 
operated and affiliate stations satisfy all three of the criteria for a 
``network station'' under section 111.
    First, Paxson submits that PaxTV is a television network because it 
provides nationwide transmissions of PaxTV programming. PaxTV is 
carried on stations in 34 states and the District of Columbia, all of 
which are either owned and operated by, or are primary affiliates of, 
PaxTV.
    Second, Paxson asserts that its stations carry a substantial 
portion of the programming provided by PaxTV because its contracts with 
these stations require that PaxTV programming be broadcast a minimum of 
18 hours daily. And third, as a result of this requirement, Paxson 
submits that each of its stations meets the requirement of transmitting 
PaxTV programming for a ``substantial part'' of each station's 
``typical broadcast day.''
    In addition to meeting the three criteria, Paxson notes that the 
Copyright Office has previously stated that, in addition to the Big 3, 
there could be a fourth network for purposes of the section 111 license 
provided that the statutory criteria were met. Letter from Dorothy 
Schrader, General Counsel, to Thomas Hendrickson (November 13, 1981). 
Paxson also cites a passage from the 1976 House report accompanying the 
Copyright Act as further proof that networks in addition to the Big 3 
were contemplated under section 111:

    To qualify as a network station, all of the conditions of the 
definition must be met. Thus, the retransmission of a Canadian 
station affiliated with a Canadian network would not qualify under 
the definition. Further, a station affiliated with a regional 
network would not qualify, since a regional network would not 
provide nationwide transmissions. However, a station affiliated with 
a network providing nationwide

[[Page 6948]]

transmissions that also occasionally carries regional programs would 
qualify as a ``network station,'' if the station transmits a 
substantial part of the programming supplied by the network for a 
substantial part of the station's typical broadcast day.

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

    In conclusion, Paxson requests that the Copyright Office declare 
that stations owned and operated by, or affiliated with, PaxTV be 
declared network stations under section 111, and that cable systems 
carrying PaxTV stations be permitted to report and pay for such 
stations as network stations.

This Proceeding

    Since the implementation of the section 111 license in 1978, the 
Copyright Office has treated a broadcast station that is owned and 
operated by, or affiliated solely with, one of the Big 3 networks as a 
``network station'' for section 111 purposes. All other stations have 
been treated as independents, including those that have dual 
affiliations with broadcasters other than the Big 3. \2\ As a matter of 
policy, the Office has never questioned the network status of a 
broadcast station identified as a CBS, ABC, or NBC station. It has 
always been assumed that such a station automatically took a 
substantial portion of the network's programming and that that 
programming made up a substantial portion of the station's typical 
broadcast day. There could be cases, however, where such a station does 
not take a sufficient amount of network programming. The Office has 
never inquired and has accepted the delineation of network station at 
face value for stations in the CBS, ABC, and NBC networks. It appears 
now that with the changing television marketplace, and with the 
petition of Paxson, the Office must reevaluate its approach before it 
can declare whether there are any new networks and network stations.
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    \2\ For example, a station that is affiliated with ABC and Fox 
would not be considered a network station because the Office has not 
determined that Fox is a network under section 111.
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    To that end, the Office is opening this rulemaking proceeding to 
consider what makes a broadcast station a ``network station'' for 
purposes of section 111. As noted above, there are considerable 
questions related to the three criteria of the definitional provision 
which require resolution before the Office can determine whether there 
are more or less network stations under section 111. The first 
criterion of the definition focuses on the status of the television 
network, as opposed to that of the individual station. In order for 
there to be a television network, there must be nationwide 
transmissions by stations associated with that network. What is the 
meaning of ``nationwide'? Does it mean coverage in a certain number of 
television markets, or is it solely a geographical matter? For example, 
would coverage of the top twenty television markets constitute 
``nationwide'' transmissions because cities on both coasts and a 
portion of the interior of the United States are covered? Or does 
``nationwide'' mean greater, or perhaps even less, coverage? Does the 
section 119 definition of a network station, which provides that the 
network must offer an interconnected program service with at least 15 
hours per week of network programming to at least 25 stations in 10 or 
more states, offer any guidance, and, if so, on what grounds?
    The second and third criteria refer to the individual station and 
both contain the word ``substantial.'' The second criterion states that 
the broadcast station must transmit a substantial part of programming 
supplied by the network. The obvious question is, what is a 
``substantial'' amount? Is it 50 percent, or something more or perhaps 
even less? The definition of a ``full network station'' in the Federal 
Communications Commission's 1976 cable rules provides that a full 
network must transmit 85 percent of the weekly prime time hours offered 
by the network. 47 CFR 76.5. Does this provision offer any guidance, 
and, if so, on what grounds?
    The third criterion provides that the amount of network programming 
taken by the station must constitute a ``substantial'' portion of the 
station's typical broadcast day. Once again, what does ``substantial'' 
mean? Can some percentage or number of hours be determined to provide a 
bright-line test as to what is substantial and what is not? 
Furthermore, can a station which carries all or most of the prime time 
programming offered by a network satisfy the ``substantial'' 
requirement, regardless of what it carries at other hours of the day?
    If, after reviewing the responses to these questions, the Copyright 
Office is able to fashion a test for determining when a particular 
station is a network station, how should such a test be implemented? 
Can the Office continue to assume that a station that is solely 
affiliated with, or owned and operated by, one of the Big 3 networks is 
still a network station for section 111 purposes, or will such stations 
be required to individually satisfy the new test? If the latter, how 
should the Office implement the test, and to what extent should 
broadcasters and cable operators have input as to the determination?
    Finally, there is the matter of the Paxson petition, which is the 
source of this rulemaking proceeding. We do not believe that the 
question of PaxTV's network status can be reached until a method for 
determining when a station is a network station is established. 
Nevertheless, the Paxson petition is useful to creating such a 
methodology, and PaxTV stations will undoubtably be the first to which 
the new regulation is applied. The Office has already identified above 
the number of hours of network programming carried daily by PaxTV 
stations. The Appendix to this Notice contains a list (provided by 
Paxson) identifying the stations of the Paxson network, their market 
location, and Paxson's ownership interest. Commenters are encouraged to 
use this information in addressing the fundamental issue of when is a 
television station a network station.
    In addition, after rules have been adopted for determining network 
station status, there is the matter of how the Office should treat 
other putative broadcast networks, such as the Fox, United Paramount, 
and Warner Brothers networks? One possible approach is a case-by-case 
basis whereby each of these networks is afforded the opportunity to 
petition the Office for a determination of network status, such as 
Paxson has done. Is this appropriate, or should cable operators who 
carry such stations be allowed to petition the Office as well? Must 
each petition be addressed through a notice and comment rulemaking 
proceeding, or is there some other procedure that is permissible or 
desirable?
    The Office encourages responses to the questions posed in this 
Notice of Inquiry, as well as any other comments relevant to the issues 
raised.

    Dated: February 4, 2000.
Marybeth Peters,
Register of Copyrights.

    Note: This Appendix will not be Codified in Title 37, Part 201, 
of the Code of Federal Regulations.

    The following table lists the owned, operated or affiliated 
stations airing PAX TV programming.

[[Page 6949]]



                                                                   Pax TV Distribution
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           Rank and market name                       Call letters                                     Station ownership interest
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1  New York..............................  WPXN                                Owned & Operated.
1  New York..............................  WBPT                                    Do.
2  Los Angeles...........................  KPXN                                    Do.
3  Chicago...............................  WCPX                                    Do.
4  Philadelphia..........................  WPPX                                    Do.
5  San Francisco-Oakland.................  KKPX                                    Do.
6  Boston................................  WBPX                                Affiliated.
6  Boston................................  WPXB                                Owned & Operated.
7  Dallas-Ft.Worth.......................  KPXD                                    Do.
8  Washington, D.C.......................  WPXW                                    Do.
8  Washington, D.C.......................  WWPX                                Affiliated.
9  Detroit...............................  WPXD                                Owned & Operated.
10  Atlanta..............................  WPXA                                    Do.
11  Houston..............................  KPXB                                    Do.
12  Seattle-Tacoma.......................  KWPX                                    Do.
13  Cleveland............................  WVPX                                    Do.
14  Tampa-St. Petersburg.................  WXPX                                    Do.
15  Minneapolis-St. Paul.................  KPXM                                    Do.
16  Miami-Ft. Lauderdale.................  WPXM                                    Do.
17  Phoenix..............................  KBPX                                    Do.
17  Phoenix..............................  KPPX                                Affiliate--Pending Owned & Operated.
18  Denver...............................  KPXC                                Owned & Operated.
20  Sacramento-Stockton-Modesto..........  KSPX                                Pending Owned & Operated.\1\
21  St. Louis............................  WPXS                                Affiliated.
22  Orlando-Daytona Beach................  WOPX                                Owned & Operated.
23  Portland, OR.........................  KPXG                                    Do.
25  Indianapolis.........................  WIPX                                Affiliated.
27  Hartford & New Haven.................  WHPX                                    Do.
29  Raleigh-Durham.......................  WRPX                                    Do.
29  Raleigh-Durham.......................  WFPX                                Owned & Operated.
30  Nashville............................  WNPX                                    Do.
32  Cincinnati...........................  ..................................  .........................................................................
33  Kansas City..........................  KPXE                                    Do.
36  Salt Lake City.......................  KUPX                                TBA--Pending Owned & Operated.\1\
36  Salt Lake City.......................  KUWB                                Owned & Operated.
37  Grand Rapids-Kalamazoo...............  WZPX                                Affiliated.
38  San Antonio..........................  KPXL                                Pending Owned & Operated.\1\
39  Birmingham-Tuscaloosa................  WPXH                                Owned & Operated.
40  Norfolk-Portsmouth...................  WPXV                                    Do.
41  New Orleans..........................  WPXL                                Pending Owned & Operated.\1\
42  Buffalo..............................  ..................................  .........................................................................
43  Memphis..............................  WPXX                                Pending Owned & Operated.
44  West Palm Beach-Ft. Pierce...........  WPXP                                Owned & Operated.
45  Oklahoma City........................  KOPX                                Owned & Operated.\1\
47  Greensboro-H. Point..................  WGPX                                Owned & Operated.
48  Louisville...........................  ..................................  .........................................................................
49  Albuquerque-Santa Fe.................  KAPX                                    Do.
50  Providence-New Bedford...............  WPXQ                                    Do.
51  Wilkes-Barre-Scranton................  WQPX                                    Do.
53  Albany-Schenectady-Troy..............  WYPX                                    Do.
54  Dayton...............................  WDPX                                    Do.
55  Fresno-Visalia.......................  KPXF                                    Do.
57  Little Rock-Pine Bluff...............  KYPX                                Pending Owned & Operated.\1\
58  Charleston-Huntington................  WLPX                                Owned & Operated.
59  Tulsa................................  KTPX                                    Do.
62  Mobile-Pensacola.....................  ..................................  .........................................................................
63  Knoxville............................  WPXK                                    Do.
67  Lexington............................  ..................................  .........................................................................
68  Roanoke-Lynchburg....................  WPXR                                    Do.
69  Green Bay-Appleton...................  WPXG                                    Do.
70  Des Moines-Ames......................  KFPX                                    Do.
71  Honolulu.............................  KPXO                                    Do.
74  Syracuse.............................  WSPX                                    Do.
75  Shreveport...........................  KPXJ                                    Do.
82  Champaign & Springfield..............  WPXU                                    Do.
88  Cedar Rapids-Waterloo................  KPXR                                    Do.
105  Greenville-N. Bern-Washington.......  WEPX                                    Do.
NR San Juan/Ponce/San Sebastian, Puerto    WJPX                                    Do.
 Rico.
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\1\ To be acquired.


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[FR Doc. 00-3237 Filed 2-10-00; 8:45 am]
BILLING CODE 1410-31-P