[Federal Register Volume 89, Number 125 (Friday, June 28, 2024)]
[Notices]
[Pages 54166-54282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13597]



[[Page 54165]]

Vol. 89

Friday,

No. 125

June 28, 2024

Part II





Library of Congress





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Copyright Royalty Board





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Distribution of Cable Royalty Funds; Notice

  Federal Register / Vol. 89 , No. 125 / Friday, June 28, 2024 / 
Notices  

[[Page 54166]]


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LIBRARY OF CONGRESS

Copyright Royalty Board

[Docket No. 16-CRB-0009-CD (2014-17)]


Distribution of Cable Royalty Funds

AGENCY: Copyright Royalty Board (CRB), Library of Congress.

ACTION: Final allocation determination.

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SUMMARY: The Copyright Royalty Judges announce the allocation of shares 
of cable royalty funds for the years 2014, 2015, 2016, and 2017 among 
six claimant groups.

DATES: This determination is effective June 28, 2024.

ADDRESSES: The final determination is posted in eCRB at https://app.crb.gov/. For access to the docket to read the final determination 
and submitted background documents, go to eCRB and search for docket 
number 16-CRB-0009-CD (2014-17).

FOR FURTHER INFORMATION CONTACT: Anita Brown, CRB Program Specialist, 
(202) 707-7658, [email protected].

SUPPLEMENTARY INFORMATION: 

Final Determination of Royalty Allocation

    The purpose of this proceeding is to determine the allocation of 
shares of the 2014-2017 cable royalty funds among six claimant groups: 
the Joint Sports Claimants, Commercial Television Claimants, Public 
Television Claimants, Canadian Claimants Group, Settling Devotional 
Claimants, and Program Suppliers.\1\ The parties have agreed to 
settlements regarding the shares to be allocated to the Music Claimants 
and National Public Radio (NPR). Joint Notice of Settlement Regarding 
2014-2017 Royalty Claims of Music Claimants . . . at 1-2 (June 29, 
2022); Joint Notice of Settlement and Motion for Final Distribution 
Regarding Royalty Claims of National Public Radio at 1 (Jan. 7, 2022).
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    \1\ The program categories at issue are as follows: ``Canadian 
Claimants.'' All programs broadcast on Canadian television stations, 
except: (1) live telecasts of Major League Baseball, National Hockey 
League, and U.S. college team sports, and (2) programs owned by U.S. 
copyright owners; ``Commercial Television Claimants.'' Programs 
produced by or for a U.S. commercial television station and 
broadcast only by that station during the calendar year in question, 
except those listed in subpart (3) of the Program Suppliers 
category; ``Devotional Claimants.'' Syndicated programs of a 
primarily religious theme, but not limited to programs produced by 
or for religious institutions; ``Joint Sports Claimants.'' Live 
telecasts of professional and college team sports broadcast by U.S. 
and Canadian television stations, except programs in the Canadian 
Claimants category; ``Program Suppliers.'' Syndicated series, 
specials, and movies, except those included in the Devotional 
Claimants category. Syndicated series and specials are defined as 
including (1) programs licensed to and broadcast by at least one 
U.S. commercial television station during the calendar year in 
question, (2) programs produced by or for a broadcast station that 
are broadcast by two or more U.S. television stations during the 
calendar year in question, and (3) programs produced by or for a 
U.S. commercial television station that are comprised predominantly 
of syndicated elements, such as music videos, cartoons, ``PM 
Magazine,'' and locally-hosted movies; ``Public Television 
Claimants.'' All programs broadcast on U.S. noncommercial 
educational television stations. Order Lifting Stay and Adopting 
Claimant Categories (Apr. 5, 2021). The categories are mutually 
exclusive and, in aggregate, comprehensive.
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    Between 2016 and 2022, the Judges ordered partial distributions of 
the 2014-2017 cable funds to the ``Phase I'' participants (including 
Music Claimants and NPR) according to allocation percentages agreed 
upon by the participants. Order Granting Motion for Partial 
Distribution (May 22, 2019); Order Granting Motion for Partial 
Distribution, Docket No. 16-CRB-0009 CD (2014) (Aug. 15, 2016); Order 
Granting Motion for Partial Distribution, Docket No. 16-CRB-0020 CD 
(2015) (June 6, 2017); Order Granting Motion for Partial Distribution, 
Docket No. 17-CRB-0017 CD (2016) (Jul. 30, 2018).
    In 2022, the Judges ordered the final distribution of the settled 
shares from the remaining funds to Music Claimants and National Public 
Radio. Order Granting Motion for Final Distribution to National Public 
Radio (Feb. 14, 2022), Order 23 Granting 2014-15 Cable Final 
Distribution to Music Claimants . . . (Dec. 7, 2022).
    When the Judges ultimately order the final distribution of the 
remaining 2014-17 cable royalty funds, they will direct the Licensing 
Division of the Copyright Office to adjust distributions to each 
participant to account for partial distributions and to apply the 
allocation percentages determined herein.
    Based on the record in this proceeding, the Judges make the 
following allocation of deposited royalties.

                                          Table 1--Royalty Allocations
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                                                       2014            2015            2016            2017
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Basic Fund:
    CCG.........................................            6.19           14.59           14.60           15.77
    CTV.........................................           20.55           19.78           17.36           17.50
    JSC.........................................           36.13           11.42           10.72           12.36
    Program Suppliers...........................           21.21           28.29           25.53           23.29
    PTV.........................................           11.07           19.18           24.78           25.25
    SDC.........................................            4.85            6.74            7.01            5.83
3.75% Fund:
    CCG.........................................            6.96           18.05           19.41           21.10
    CTV.........................................           23.11           24.48           23.08           23.41
    JSC.........................................           40.63           14.13           14.25           16.53
    Program Suppliers...........................           23.85           35.00           33.94           31.16
    SDC.........................................            5.45            8.34            9.32            7.80
Syndex Fund:
    Program Suppliers...........................             100             100             100             100
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    PTV and JSC filed timely requests for rehearing on September 21, 
2023 (Rehearing Requests). The Judges issued their ruling on the 
Rehearing Requests on March 21, 2024 (Order on Rehearing), denying 
rehearing on any basis asserted by JSC in its Rehearing Request and 
granting rehearing on a basis asserted by PTV in its Rehearing Request 
to correct arithmetic errors. This Final Determination includes the 
corrections contained in the Initial Determination of Royalty 
Allocation (Corrected and Redacted) filed on March 29, 2024, which 
addressed technical and clerical errors.\2\ This Final Determination 
also includes the corrections set forth in the March 29,

[[Page 54167]]

2024 Order on Rehearing, which is included herein, as ``Addendum A'', 
to be published in the Federal Register.\3\
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    \2\ See Initial Determination of Royalty Allocation (Corrected 
and Redacted) at 1.
    \3\ See Order on Rehearing at 83 n.63 (``To the extent that 
corrections set forth in this Order might be construed to reach 
beyond those identified in the Motions for rehearing or the 
rehearing authority in 17 U.S.C. 803(c)(2), the Judges also make 
such corrections under their authority to correct technical or 
clerical errors in 17 U.S.C. 803(c)(4). For this reason, the Judges 
set forth the analysis herein also as a written addendum to the 
Initial Determination, which is distributed to the participants of 
the proceeding via this Order and will be published as part of the 
Final Determination, pursuant to 17 U.S.C. 803(c)(4).'')
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I. Background

A. Legal Context

    In 1976, Congress granted cable television operators a statutory 
license to enable them to clear the copyrights to over-the-air 
television and radio broadcast programming which they retransmit to 
their subscribers. The license requires cable operators to submit semi-
annual royalty payments, along with accompanying statements of account, 
to the Copyright Office for subsequent distribution to copyright owners 
of the broadcast programming that those cable operators retransmit. See 
17 U.S.C. 111(d)(1). To determine how the collected royalties are to be 
distributed among the copyright owners filing claims for them, the 
Copyright Royalty Judges (Judges) conduct a proceeding in accordance 
with chapter 8 of the Copyright Act. This determination is the 
culmination of one of those proceedings.\4\ Proceedings for determining 
the distribution of the cable license royalties historically were 
conducted in two phases. In Phase I, the royalties were divided among 
programming categories. The claimants to the royalties have previously 
organized themselves into eight categories of programming retransmitted 
by cable systems: movies and syndicated television programming; sports 
programming; commercial broadcast programming; religious broadcast 
programming; noncommercial television broadcast programming; Canadian 
broadcast programming; noncommercial radio broadcast programming; and 
music contained on all broadcast programming. In Phase II, the 
royalties allotted to each category at Phase I were subdivided among 
the various copyright holders within that category.\5\ In the most 
recent proceeding, regarding cable royalties for the 2010-2013 period, 
the Judges broke with past practice by combining Phase I and Phase II 
into a single proceeding in which the functions of allocating funds 
between program categories and distributing funds among claimants 
within those categories proceeded in parallel.\6\ This determination 
addresses the Allocation Phase for royalties collected from cable 
operators for the years 2014, 2015, 2016 and 2017.
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    \4\ Prior to enactment of the Copyright Royalty and Distribution 
Reform Act of 2004, which established the Judges program, royalty 
allocation determinations under the section 111 license were made by 
two other bodies. The first was the Copyright Royalty Tribunal, 
which made distributions beginning with the 1978 royalty year, the 
first year in which cable royalties were collected under the 1976 
Copyright Act. Congress abolished the Tribunal in 1993 and replaced 
it with the Copyright Arbitration Royalty Panel (``CARP'') system. 
Under this regime, the Librarian of Congress appointed a CARP, 
consisting of three arbitrators, which recommended to the Librarian 
how the royalties should be allocated. Final distribution authority, 
however, rested with the Librarian. The CARP system ended in 2004. 
See Copyright Royalty Distribution and Reform Act of 2004, Public 
Law 108-419, 118 Stat. 2341 (Nov. 30, 2004).
    \5\ The Judges last adjudicated an allocation (Phase I) 
determination for royalty years 2010 to 2013. See Final Allocation 
Determination, Distribution of the 2010 to 2013 Cable Royalty Funds, 
84 FR 3552 (Feb. 12, 2019) (2010-13 Determination).
    \6\ Second Reissued Order Granting in Part Allocation Phase 
Parties' Motion to Dismiss Multigroup Claimants and Denying 
Multigroup Claimants' Motion for Sanctions Against Allocation Phase 
Parties, Docket No. 14-CRB-0010-CD (2010-13) (Apr. 25, 2018). The 
Judges discontinued use of the terms Phase I and Phase II and use 
the terms Allocation Phase and Distribution Phase instead. Id. n.4. 
This determination addresses the Allocation Phase of the proceeding.
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    The statutory cable license places cable systems into three classes 
based upon the fees they receive from their subscribers for the 
retransmission of over-the-air broadcast signals. Small- and medium-
sized systems pay a flat fee. See 17 U.S.C. 111(d)(1). Large cable 
systems (``Form 3'' systems) \7\--whose royalty payments comprise the 
lion's share of the royalties distributed in this proceeding--pay a 
percentage of the gross receipts they receive from their subscribers 
for each distant over-the-air broadcast station signal they 
retransmit.\8\ The amount of royalties that a cable system must pay for 
each broadcast station signal it retransmits depends upon how the 
carriage of that signal would have been regulated by the Federal 
Communications Commission (``FCC'') in 1976, the year in which the 
current Copyright Act was enacted.
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    \7\ ``Form 3'' cable systems, so named because they account to 
the Copyright Office for retransmissions and royalties on ``Form 
3.'' The Form 3 filing is required because they have semiannual 
gross receipts in excess of $527,600. These systems must submit an 
SA3 Long Form to the US Copyright Office. They are the only systems 
required to identify which of the stations they carry are distant 
signals. Royalty payments from Form 3 systems accounted for over 90% 
of the total royalties that cable systems paid during 2014-2017. 
Expert Report of Christopher J. Bennett, Ph.D., Amended Corrected, 
Trial Ex. 7203, ] 11 n.2 (Bennett ACWDT).
    \8\ The cable license is premised on the Congressional judgment 
that large cable systems should only pay royalties for the distant 
broadcast station signals that they retransmit to their subscribers 
and not for the local broadcast station signals they provide. 
However, cable systems that carry only local stations are still 
required to submit a statement of account and pay a basic minimum 
fee. See Distribution Order, Distribution of the 2000-2003 Cable 
Royalty Funds, 75 FR 26798 n.2 (May 12, 2010) (2000-03 Distribution 
Order).
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    The royalty scheme for large cable systems employs a statutory 
device known as the distant signal equivalent (DSE), which is defined 
at 17 U.S.C. 111(f)(5). The cable systems, other than those paying the 
minimum fee, pay royalties based upon the number of DSEs they 
retransmit. The greater the number of DSEs a cable system retransmits 
the larger its total royalty payment. The cable system pays these 
royalties to the Copyright Office. These fees comprise the ``Basic 
Fund.'' See 17 U.S.C. 111(d)(1)(B). In addition to the Basic Fund, 
large cable systems also may be required to pay royalties into one of 
two other funds that the Copyright Office maintains: the Syndex Fund 
and the 3.75% Fund.
    As noted above, the utilization of the cable license is linked with 
how the FCC regulated the cable industry in 1976.\9\ FCC rules at the 
time restricted the number of distant broadcast signals a cable system 
was permitted to carry (``the distant signal carriage rules''). 
National Cable Television Assoc., Inc. v. Copyright Royalty Tribunal, 
724 F.2d 176, 180 (D.C. Cir. 1983). FCC rules also allowed local 
broadcasters and copyright holders to require cable systems to delete 
(or blackout) syndicated programming from imported signals if the local 
station had purchased exclusive rights to the programming (``syndicated 
exclusivity'' or ``syndex'' rules). Id. at 187. In 1980, the FCC 
repealed both sets of rules. Id. at 181.
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    \9\ FCC regulation of the cable industry was impacted by passage 
of the 1976 Copyright Act that created the compulsory license for 
cable retransmissions codified in section 111. See Report and Order, 
Docket Nos. 20988 & 21284, 79 F.C.C. 663 (1980), aff'd sub nom. 
Malrite T.V. v. FCC, 652 F.2d 1140, 1146 (2d Cir. 1981).
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    The Copyright Royalty Tribunal (CRT) initiated a cable rate 
adjustment proceeding to compensate copyright owners for royalties lost 
as a result of the FCC's repeal of the rules. Final rule, Adjustment of 
the Royalty Rate for Cable Systems; Federal Communications Commission's 
Deregulation of the Cable Industry, Docket No. CRT 81-2, 47 FR 52146 
(Nov. 19, 1982). The CRT adopted two new rates applicable to large 
cable systems making section 111 royalty payments. The first, to 
compensate for repeal of the distant signal carriage rules, was a 3.75% 
surcharge of a large

[[Page 54168]]

cable system's gross receipts for each distant signal the carriage of 
which would not have been permitted under the FCC's distant signal 
carriage rules. Royalties paid at the 3.75% rate--sometimes referred to 
by the cable industry as the ``penalty fee''--are accounted for by the 
Copyright Office in the ``3.75% Fund,'' which is separate from 
royalties kept in the Basic Fund. See id.; see also 17 U.S.C. 111(d); 
37 CFR part 387.The second rate the CRT adopted, to compensate for the 
FCC's repeal of its syndicated exclusivity rules, is known as the 
``syndex surcharge.'' Large cable operators were required to pay this 
additional fee for carrying signals that were or would have been 
subject to the FCC's syndex rules. Syndex Fund fees are accounted for 
separately from royalties paid into the Basic Fund.\10\
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    \10\ In 1989, in response to changes in the cable television 
industry and passage of the Satellite Home Viewer Act of 1988, the 
FCC reinstated syndicated exclusivity rules. The reinstated rules 
differed from the original syndex rules, giving rise to a petition 
to the CRT for adjustment or elimination of the syndex surcharge. 
See Final Rule, Adjustment of the Syndicated Exclusivity Surcharge, 
Docket No. 89-5-CRA, 55 FR 33604 (Aug. 16, 1990). The CRT held that 
``the syndicated exclusivity surcharge paid by Form 3 cable systems 
in the top 100 television markets is eliminated, except for those 
instances when a cable system is importing a distant commercial VHF 
station which places a predicted Grade B contour, as defined by FCC 
rules, over the cable system, and the station is not ``significantly 
viewed'' or otherwise exempt from the syndicated exclusivity rules 
in effect as of June 24, 1981. In such cases, the syndicated 
exclusivity surcharge shall continue to be paid at the same level as 
before.'' (Id. See Final Rule, Cable Television Services; Program 
Exclusivity in the Cable and Broadcast Industry, 54 FR 12913 (Mar. 
29, 1989), aff'd sub nom. United Video, Inc. v. FCC, 890 F.2d 1173 
(D.C. Cir. 1989); 47 CFR 73.658(m)(2) (1989); 47 CFR 76.156 (1989). 
The present proceeding deals only with allocation of those royalties 
among copyright owners in the various program categories.)
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    Royalties in the three funds--Basic, 3.75%, and Syndex--are the 
royalties to be distributed to copyright owners of non-network 
broadcast programming in a section 111 cable license distribution 
proceeding. See 37 CFR part 387.\11\
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    \11\ The CRB last adjusted cable Basic, 3.75%, and Syndex rates 
in 2021, for the period January 1, 2020, through December 31, 2024. 
See Final Determination, Adjustment of Cable Statutory License 
Royalty Rates, Docket No. 20-CRB-0008-CA (2020-2024), 86 FR 72845 
(Dec. 23, 2021). This adjustment was pursuant to a negotiated 
agreement.
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    Cable system operators are required to file Statements of Account 
with the Copyright Office detailing subscription revenues and specific 
television signals they retransmit distantly, and to deposit section 
111 royalties calculated according to the reported figures. Testimony 
of Gregory S. Crawford, Ph.D., Corrected (2010-2013), Trial Ex. 7031, ] 
74 & n.37 (``Crawford 2010-2013 CWDT'').

B. Posture of the Current Proceeding

    In February 2019, the Copyright Royalty Board (CRB) published 
notice in the Federal Register announcing commencement of proceedings 
and seeking Petitions to Participate to determine distribution of 2014, 
2015, 2016, and 2017 royalties under the cable and satellite 
licenses.\12\
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    \12\ Notice . . ., Distribution of Cable Royalty Funds, Docket 
No. 16-CRB-0009-CD (2014-17), 84 FR 2930 (Feb. 8, 2019); Notice . . 
., Distribution of Satellite Royalty Funds, Docket No. 16-CRB-0010-
SD (2014-17), 84 FR 2931 (Feb. 8, 2019). The CRB received Petitions 
to Participate from Broadcast Music, Inc. (``BMI''), the American 
Society of Composers, Authors and Publishers (``ASCAP''), and SEASAC 
Performing Rights (jointly, the ``Music Claimants''); Canadian 
Claimants Group (``CCG''); Global Music Rights; Public Broadcasting 
System (``PBS'') on behalf of Public Television Claimants (``PTV''); 
Settling Devotional Claimants (``SDC''); Joint Sports Claimants 
(``JSC''); Major League Soccer (``MLS''); Multigroup Claimants; 
Commercial Television Claimants represented by the National 
Association of Broadcasters (``CTV''), National Public Radio for NPR 
Joint Claimants (``NPR''); David Powell; and the Motion Picture 
Association of America for MPAA-represented Program Suppliers 
(``Program Suppliers'' or ``PS''). Subsequently, MLS filed a notice 
that it would not participate separately in the allocation phase, 
eCRB no. 26935, and Mr. Powell was dismissed as a participant, eCRB. 
no. 22314. Multigroup Claimants expressed an intention to 
participate in the allocation phase, eCRB no. 25455, but did not 
file a written direct statement and did not participate.
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    On March 20, 2019, the Judges issued a Notice of Participants and 
Order for Preliminary Action to Address Categories of Claims. On April 
5, 2021, they issued an Order . . . Adopting Claimant Categories in 
which they identified eight categories of claimants for the proceeding: 
(1) Canadian Claimants, (2) Commercial Television Claimants; (3) 
Devotional Claimants, (4) Joint Sports Claimants, (5) Music Claimants, 
(6) National Public Radio, (7) Program Suppliers, and (8) Public 
Television Claimants. National Public Radio and Music Claimants reached 
settlements with the other claimant groups and received respective 
final distributions. Order Granting Motion for Final Distribution to 
National Public Radio (Feb. 14, 2022), Order 23 Granting 2014-15 Cable 
Final Distribution to Music Claimants . . . (Dec. 7, 2022).
    With the settlement of the Music Claimants' share, only the Program 
Suppliers claimant group has an interest in the royalties in the Syndex 
Fund. Program Suppliers' Post Hearing Brief ] 81 (PS PHB). Public TV 
Claimants claim a share only of the Basic Fund. Public Television's 
Post-Hearing Brief at 83 (PTV PHB).
    The hearing in the present proceeding commenced on March 20, 2023, 
and concluded on April 20, 2023. During that period, the Judges heard 
live testimony from 33 witnesses and admitted written and designated 
testimony from a number of additional witnesses. The Judges admitted 
into the record more than 400 exhibits. Many motions related to the 
hearing were filed and ruled on. Participants made closing arguments on 
June 12, 2023, after which time the Judges closed the record.

C. Allocation Standard

    Congress did not establish a statutory standard in section 111 for 
the Judges (or their predecessors) to apply when allocating royalties 
among copyright owners or categories of copyright owners. However, 
through determinations by the Judges and their predecessors (the 
Copyright Royalty Tribunal, the CARPs, and the Librarian of Congress), 
the allocation standard has evolved, and the present standard is one of 
``relative marketplace value.'' \13\ See Distribution Order, 
Distribution of the 2004 and 2005 Cable Royalty Funds, 75 FR 57065 
(Sept. 17, 2010) (2004-05 Distribution Order).
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    \13\ In this proceeding, the Judges distinguish between 
``relative values'' (to describe the allocation shares), and 
absolute ``fair market values.'' Because the royalties at issue in 
this proceeding are regulated and not derived from any actual market 
transactions, they do not correspond with absolute dollar royalties 
that would be generated in a market and thus would not reflect 
absolute ``fair market value.''
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    ``Relative marketplace values'' in these proceedings have been 
defined as valuations that ``simulate [relative] market valuations as 
if no compulsory license existed.'' Final Rule, Distribution of 1998 
and 1999 Cable Royalty Funds, 69 FR 3608 (Jan. 26, 2004) (1998-99 
Librarian Order). Because such a market does not exist (having been 
supplanted by the regulatory structure), the Judges are required to 
construct a ``hypothetical market'' that generates the relative values 
that approximate those that would arise in an unregulated market. 2004-
05 Distribution Order at 57065; see also Program Suppliers v. Librarian 
of Congress, 409 F.3d 395, 401-02 (D.C. Cir. 2001) (``[I]t makes 
perfect sense to compensate copyright owners by awarding them what they 
would have gotten relative to other owners . . . .'').\14\
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    \14\ The Judges discuss the relative marketplace value standard 
in more detail, infra, as applied to the facts of this proceeding.
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II. Introduction To Regression Section

    Four parties have proposed that the Judges utilize regression 
analysis to estimate the relative marketplace value of each party's 
programs distantly retransmitted by CSOs during the four-year period 
2014-2017. Each party relies on testimony from economic

[[Page 54169]]

experts to support its position. CCG relies on the testimony of Dr. 
Lisa George. CTV relies on the testimony of Dr. Leslie Marx and the 
supportive testimony of Dr. Cristopher Bennett. Program Suppliers rely 
on the testimony of Dr. Cleve Tyler and the supportive testimony of Dr. 
Gray. Finally, PTV relies on the testimony of Dr. John Johnson.
    Two parties oppose all of the regression approaches on which each 
of the above parties relies. The SDC, through the testimony of 
economists Drs. Erkan Erdem and Daniel Rubinfeld, oppose the regression 
approach for many of the same reasons it (unsuccessfully) opposed the 
regressions proffered in the 2010-13 allocation proceeding, which was 
the most recent section 111 allocation proceeding. However, the SDC has 
also presented arguments that are differentiated from those it made in 
that prior proceeding. JSC, although it relied in part on a regression 
approach in the prior proceeding, opposes the regression approaches 
through the testimony of two economists, Dr. W. Robert Majure and Dr. 
John Asker, and a statistician, Mr. R. Garrison Harvey.
    Dr. Marx, identified above as an expert who relies on the 
regression approach, does so only for the 2014 royalty year. For the 
2015-2017 period, she opposes the use of the regression approach, based 
on industry changes that she maintains (consistent with a criticism 
from the other opposing experts listed above) diminished the quality of 
the available economic data necessary to conduct an appropriate 
regression.
    The models of each of the four experts who proffered regression 
analyses are discussed individually below, together with the rebuttals 
levied by the opposing experts. However, in order to understand and 
contextualize the regression-related evidence, it is helpful to address 
several overarching issues that color the Judges' analysis and 
conclusions. Accordingly, before jumping into the specific regression 
models, the Judges first (1) consider in greater detail their 
allocation standard of ``relative marketplace value'', (2) address the 
changing impact of the ``minimum fee'' in the 2014-2017 period, (3) 
evaluate assertions of inappropriate econometric practice 
(``specification searching'') that may compromise the regression 
approaches, and (4) analyze questions regarding whether certain types 
of PTV programs are properly included within the regression analyses.
    After clearing this analytical underbrush, the Judges proceed to a 
discussion of the sequential presentation of the parties' regression 
models, followed by the Judges' ``Analysis and Conclusions'' regarding 
those models. Finally, the Judges consider several additional important 
issues arising from the regressions that relate specifically to (1) the 
CCG claims for Canadian programming issues and (2) the 3.75% Fund.

III. The Data Relied On By The Parties

    All of the parties' experts who relied on data detailing royalty 
reporting and programming information essentially utilized the same 
data sources and processed the data in basically the same manner. 
Specifically, the parties engaged in the following steps:
    1. Establish a method to link the CSOs distant signal carriage to 
the programs carried on each signal, by merging CSO and distant signal 
carriage data to television programming and scheduling data (as 
detailed below).
    2. Obtain a dataset on distant signal carriage from Cable Data 
Corporation (CDC), that covers each semiannual accounting period from 
2014-1 through 2017-2 for the larger ``Form 3'' cable systems.\15\ CDC 
compiles and digitizes this dataset data directly from the SA3 
Statement of Account (SOA) forms that Form 3 cable systems are required 
to file semiannually at the Licensing Section of the Copyright Office. 
(The CDC data is set forth in the Written Direct Testimony of Jonda K. 
Martin.)
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    \15\ ``Form 3'' systems are cable systems with semiannual gross 
receipts in excess of $527,600 that are required to submit an SA3 
Long Form to the US Copyright Office. They are the only systems 
required to identify which of the stations they carry are distant 
signals, and they account for over 90% of the total royalties paid 
by all cable systems during 2014-2017.
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    3. Obtain through these SOAs, for each CSO, information about its 
(a) ownership, rates, gross receipts, total number of subscribers, and 
communities served, and (b) the identity of every broadcast television 
station carried and a calculation of royalties owed for the 
transmission of distant signals under section 111.
    4. Obtain station, program, and scheduling data from Red Bee Media 
(formerly FYI Television, Inc.) to merge with the foregoing carriage 
and royalty data. (Red Bee Media is an international broadcasting and 
media services company that publishes television airing data, using 
programming data that it sources directly from stations in the form of 
interactive program guides.)
    5. Examine the Red Bee Media's database of U.S. and Canadian 
broadcast and cable channels carried by U.S. CSOs, together with 
network data and detailed program and scheduling data for the period 
January 1, 2014, through December 31, 2017, to identify, per station, 
(a) program titles, (b) program type/category, (c) originating station, 
and (d) date and time of program airing.
    6. Obtain Canadian television program log data from the Canadian 
Radio-Television and Telecommunications Commission (CRTC), which 
regulates and supervises broadcasting and telecommunications within 
Canada.
    7. Develop and apply an algorithm, using the aforementioned data, 
that assigns program airings to their correct categories.
    8. Review and confirm the results and make any modifications that 
are appropriate.
    Amended Corrected Written Direct Testimony of Christopher Bennett, 
Ph.D., Trial Ex. 7203, ]] 10-27 (Bennett ACWDT) (describing the CTV 
data process); Corrected Written Direct Testimony of R. Garrison 
Harvey, Trial Ex. 7105, tech. app., pt. A (Harvey CWDT) (describing the 
JSC data process); Written Direct Testimony of John H. Johnson, IV, 
Trial Ex. 7300, ]] 46-51 & app. G (Johnson WDT) (describing the PTV 
data process); Written Direct Testimony of Lisa M. George, Ph.D., Trial 
Ex. 7403, at 47-50 & app. B (George WDT) (describing the CCG data 
process, also supplemented with U.S. Census income information); 
Amended Corrected Written Direct Testimony of Jeffrey S. Gray, Trial 
Ex. 7605, ]] 16-18; 32-34, & 39 n.23 (describing the Program Suppliers' 
data process).
    Given the voluminous nature of the data relating to programming and 
minutes, the data-related processes suffered from several hiccups 
during assembly and analysis for the several experts. The record 
reflects that most of the data-based problems were resolved before the 
experts filed their direct testimonies, and there were some data-
related amendments and corrections set forth in subsequent testimonies. 
To the extent any of the data problems were unresolved, material, and 
need to be addressed in order for the Judges to properly allocate 
shares, those data problems are discussed in this determination.

IV. The Role of Regression Analysis In The Statutory Context

    Section 111 sets forth no standard for the Judges (or their 
predecessors) to apply in allocating royalties arising from the 
payments made by CSOs. This was no mere oversight. The legislative 
history makes it clear that Congress

[[Page 54170]]

intentionally omitted a standard to guide the Judges:

    [T]he bill does not include specific provisions to guide . . . 
determining the appropriate division among competing copyright 
owners of the royalty fees collected from cable systems under 
section 111 [because] it would not be appropriate to specify 
particular, limiting standards for distribution. Rather, the 
Committee believes that the [adjudicator] should consider all 
pertinent data and considerations presented by the claimants.

House Report No. 94-1476, Notes of Committee on the Judiciary. This 
standardless delegation has led the parties, as well as the Judges and 
their predecessors, to invoke an evolving set of five broad factors, 
that have waxed and waned, to consider when allocating royalties among 
program category claimants. As the Judges recounted in a prior 
proceeding:

    [T]he standards for determining distribution awards have changed 
dramatically since the inception of the license. In the first Phase 
I [allocation] proceeding, the Copyright Royalty Tribunal identified 
three primary factors to guide its determinations: (1) The harm to 
copyright owners caused by distant signal retransmissions; (2) the 
benefit derived by cable systems from those retransmissions; and (3) 
the marketplace value of the copyrighted works retransmitted. 45 FR 
63026, 63035 (September 23, 1980). The Tribunal also identified two 
secondary factors: (1) The quality of the retransmitted material; 
and (2) time-related considerations. Id. By the time of the last 
fully litigated Tribunal determination, the Tribunal dropped its 
consideration of the two secondary factors. 57 FR 15286 (April 27, 
1992). The first CARP to undertake a Phase I distribution, the 1990-
92 proceeding, discarded the ``harm'' criterion in its consideration 
. . . . That action was upheld by the Librarian of Congress and, 
subsequently, the Court of Appeals. Nat'l Ass'n of Broadcasters v. 
Librarian of Congress, 146 F.3d 907 (D.C. Cir. 1998). The 1998-99 
CARP refined the approach further still, noting that ``every party 
to this proceeding appears to accept `relative marketplace value' as 
the sole relevant criterion that should be applied by the Panel.'' 
CARP Report at 10 (emphasis in original). As a consequence, the CARP 
announced that its ``primary objective is to `simulate [relative] 
market valuation' as if no compulsory license existed.'' Id. The 
Librarian upheld this conclusion as well, and the Court of Appeals 
once again affirmed. Program Suppliers v. Librarian of Congress, 409 
F.3d 395 (D.C. Cir. 2005).

    Distribution Order, Distribution of the 2000-2003 Cable Royalty 
Funds, 75 FR 26798, 26801-02 (May 12, 2010) (2000-03 Distribution 
Order).\16\
---------------------------------------------------------------------------

    \16\ ``Fee-generation,'' discussed elsewhere in this 
determination, is a method proffered to identify relative 
marketplace value. Id. at 26804 (the ``fee generation approach 
should be accorded deference, not as the methodology to determine 
the relative marketplace value but as a methodology to determine 
that value.''). Other approaches proffered more recently have been 
advanced in order to apply the present standard, ``relative 
marketplace value.'' See 2010-13 Determination at 3556 (identifying 
[r]egression analyses, CSO survey results, viewership measurements, 
a changed circumstances analysis, and a cable content analysis'' as 
approaches to estimate relative marketplace value).
---------------------------------------------------------------------------

    The D.C. Circuit Court of Appeals has recognized that ``the process 
that Congress ordained'' has placed the Judges and their predecessors 
in a context where ``mathematical exactitude . . . appears well-nigh 
impossible [and] rough justice in dividing up the royalty pie seems to 
be . . . inevitable.'' Nat'l Ass'n of Broadcasters v. Copyright Royalty 
Tribunal, 772 F.2d 922, 926 (D.C. Cir.1985) (emphasis added) (``NAB''). 
Moreover, despite the shifts in the administrative standard for 
allocating royalties, the D.C. Circuit has continued to note this 
practical concern. See, e.g., Settling Devotional Claimants v. 
Copyright Royalty Board, 797 F.3d 1106, 1121 (D.C. Cir. 2015).
    It is in the context of this ``rough balancing of hotly competing 
claims,'' NAB at 940, that the Judges find it appropriate to rely (in 
part) on regression approaches in this proceeding. The counter-argument 
that the regressions do not generate a proxy for price that meets the 
exactitudes of econometric theorizing may be correct, but it appears to 
be a precise answer to the wrong question, namely, what is the price 
that would obtain in a marketplace ill-defined in the record in this 
proceeding?
    The Judges have experience in considering market proxies when 
exercising their companion jurisdiction of setting royalty rates for 
certain forms of music and sound recording distributions. In those 
proceedings, the parties proffer, and the Judges consider, benchmark 
evidence from analogous markets, market-based evidence from the 
regulated market itself, economic models, economic experiments, and 
survey evidence--all in an attempt to identify applicable market 
factors. Often, more than one of these approaches are proffered in the 
same proceeding, and the Judges consider whether to apply more than one 
model in rendering a determination. Here, the parties have provided 
evidence from the regulated market itself, in the form of regression 
analyses, and survey evidence, in the form of the Bortz Survey.
    Focusing here on the criticism of the regression evidence generated 
from the regulated market itself,\17\ the Judges consider the emphasis 
of the regression opponents upon the exactitude of the price proxies, 
and find that fixation to be dubious. As the Judges have explained, 
also in their rate determinations, intellectual property goods (whether 
retransmitted television stations or streams of musical works or sound 
recordings) are often licensed at various royalty rates because the 
nature of these goods invites price discrimination. See, e.g., Final 
rule and order, Determination of Royalty Rates and Terms for Making and 
Distributing Phonorecords (Phonorecords III), 84 FR 1918, 1980 (Feb. 5, 
2019) (dissent, Strickler, J.) (for intellectual property goods there 
``exist many alternative rate structures with varying rates for various 
segments of the market . . . forms of `price discrimination,' which, in 
the broadest sense, means simply a departure from a single, per-unit 
price.''). Thus, the very idea of a single econometrically correct 
price for the royalties at issue in this proceeding is fanciful, 
particularly in the absence of any evidence of such prices or even a 
methodology to establish price.
---------------------------------------------------------------------------

    \17\ The Judges focus on the Bortz Survey infra.
---------------------------------------------------------------------------

    Additionally, in line with the D.C. Circuit's acknowledgment that 
these allocation proceedings may afford the Judges only the ability to 
dispense ``rough justice,'' the Judges note an economic corollary: It 
is better to be ``roughly correct'' than ``precisely wrong.'' \18\ 
Similarly, in matters of econometrics, Professor Kennedy, cited infra 
by parties on both sides of the regression divide in this proceeding, 
has cautioned econometricians against making what he calls ``Type III 
errors[,] . . . when a researcher produces the right answer to the 
wrong question.'' Peter Kennedy, A Guide to Econometrics 391 (5th ed. 
2003). Indeed, Professor Kennedy, then echoing the quote attributed to 
Keynes, advises that in econometric practice ``a corollary of this rule 
is that an appropriate answer to the right question is worth a great 
deal more than a precise answer to the wrong question.'' Id.
---------------------------------------------------------------------------

    \18\ Attributed to John Maynard Keynes. See, e.g.,https://graciousquotes.com/john-maynard-keynes/ (last accessed August 28, 
2023).
---------------------------------------------------------------------------

    In this proceeding, counsel for the SDC, a party vigorously 
advancing the price-based criticism of the regressions, argues that 
application of any regression analyses would indeed be ``rough'' but 
acknowledges that, as for ``justice,'' only the Judges could say. 6/12/
23 Tr. 6007-08 (closing argument). Counsel is essentially correct on 
both points. First, the use of regression analyses is not precise, but 
rather ``rough,'' at least compared to the exactitude of a full-

[[Page 54171]]

fledged hedonic regression or a discrete choice approach noted by SDC's 
economic witnesses as possible alternatives (but not proffered as 
alternative models). And further, Congress most clearly left to the 
Judges the decision as to the standard to be applied and the methods by 
which the standards could be effectuated.\19\
---------------------------------------------------------------------------

    \19\ SDC's counsel's argument was in line with the D.C. 
Circuit's understanding that the Judges must by necessity engage in 
``rough justice'' in these allocation proceedings, but he protested 
that any rough variant of justice that relied on one or more of 
these regressions would not constitute ``rough economic justice.'' 
Id. (emphasis added). The Judges disagree, as do their predecessors 
who have relied on these models, and as do the economists/
econometricians who have proffered regression-based models in this 
and prior proceedings. In this regard, the Judges were struck by a 
warning given by SDC's counsel that, if the Judges ``adopt[ed] the 
Tyler [M]odel on a theory of ``rough economic justice'' without 
discarding the ``relative market value'' standard, [they] would 
inhibit the parties' ability to present top-shelf economists . . . 
'' SDC PHB at 64 (emphasis in original). The Judges agree with 
Program Suppliers' counsel who rightly took umbrage at the ``not-so-
subtle condescending posture of this remark . . . '' Program 
Suppliers PHRB at 41. The expert witnesses certainly do disagree 
among each other, but the experience and education of the 
economists/econometricians who have proffered their regression 
approaches belie the ad hominem argument by SDC's counsel.
---------------------------------------------------------------------------

V. Minimum Fee Issue

A. CCG Position on the Minimum Fee Issue

    CCG argues that ``[it] is incorrect to claim that regressions are 
not useful . . . because of the minimum fee structure,'' or because of 
``the presence of more minimum fee or `excess capacity' systems'' in 
the 2015-2017 period compared to the prior four years. Proposed 
Findings of Fact and Conclusions of Law of the Canadian Claimants Group 
(CCG PFF) at 72-73. In support of this argument, CCG asserts that the 
regressions proffered in this proceeding do not require accurate 
measures when the royalty fees ``actually paid'' are the minimum fees, 
even though they may be ``poor proxies for price.'' CCG PFF ] 197 (and 
record citations therein) (emphasis added). Rather, CCG maintains that 
the regression coefficients--which are calculated using unpaid 
subscriber-group base fees--nonetheless provide useful information 
regarding the correlation between ``carriage decisions and royalty 
payments.'' CCG PFF ] 197 (and record citations therein). In further 
support, CCG cites to a statement by the Judges in the prior 
proceeding, citing Final Allocation Determination, Distribution of 
Cable Royalty Funds, Docket No. CONSOLIDATED 14-CRB-0010-CD (2010-
2013), 84 FR 3552, 3555-56 n.17 (Feb. 12, 2019) (2010-13 
Determination).\20\
---------------------------------------------------------------------------

    \20\ In fact, footnote 17 cited by CCG does not address this 
minimum fee issue.
---------------------------------------------------------------------------

    CCG acknowledges though that reliance in these regressions on 
minimum-fee-paying CSOs generates ``measurement error,'' but claims 
that this is not a concern, because it is ``an ordinary part of 
regression . . . reduc[ing] precision but . . . not bias[ing] claimant 
shares.'' CCG PFF ] 198 (citing 4/18/23 Tr. 5125-26 (George)). In fact, 
CCG maintains that the data pertaining to CSOs that pay only the 
minimum fee reveals that, for them, the value of the distant signal is 
essentially zero--information that could not have been ascertained from 
data in an unregulated market.\21\ CCG ] 199 (citing 4/18/23 Tr. 5139-
41 (George); Written Rebuttal Testimony of Lisa George, Trial Ex. 7404, 
at 15-16, 47 (George WRT)).
---------------------------------------------------------------------------

    \21\ The minimum fee is a fixed (sunk) cost. A CSO that pays 
only the minimum fee has a marginal royalty cost to retransmit a 
signal equal to zero. Thus, a minimum-fee-paying CSO's decision not 
to retransmit any signal indicates that the net value of 
retransmittal is zero for that CSO (and may even be negative given 
transmission and/or opportunity costs).
---------------------------------------------------------------------------

    Focusing on the dramatic increase in the number of minimum-fee-only 
CSOs, CCG dichotomizes this cohort. With regard to CSOs that ``do not 
carry distant signals'' at all, CCG reasons that their voluntarily 
refusal to retransmit means that they cannot be used to determine the 
value of distant signals in a regression.\22\ CCG PFF ] 201 (citing 
George WRT at 15; 4/18/23 Tr. 5141 (George). And, with regard to the 
CSOs that do carry some distant signals, but still have ``excess 
capacity'' and thus also pay only the minimum fee, CCG maintains that 
``these are the same ones that would determine value absent the 
compulsory license.'' CCG PFF ] 201 (citing George WRT at 15; 4/18/23 
Tr. 5141 (George)).
---------------------------------------------------------------------------

    \22\ CCG maintains that these non-transmitting CSOs also cannot 
be utilized in the Bortz Survey.
---------------------------------------------------------------------------

B. Program Suppliers Position on the Minimum Fee Issue

    According to Program Suppliers, notwithstanding the increase in the 
number of minimum-fee-only CSOs, regression remains the most useful 
technique for estimating relative marketplace value. Program Suppliers' 
Proposed Findings of Fact and Conclusions of Law (PS PFF) at 78. They 
note that, despite this increase, still ``20% of CSOs who carry distant 
signals have a calculated royalty fee which is approximately the size 
of the minimum fee.'' This ``cluster of CSOs at the threshold . . . 
provides evidence that . . . certain CSOs that paid the minimum fee 
nevertheless engaged in economic decision-making with regard to 
distantly retransmitted signals carried.'' Amended and Corrected 
Written Direct Testimony of Cleve B. Tyler, Ph.D., Trial Ex. 7600, ]] 
151-52 (Tyler ACWDT). Further elucidating this point, Program Suppliers 
rely on additional oral testimony by Dr. Tyler, explaining that his 
regression model ``is based in part on the . . . likely uncertainty, at 
the time that carriage decisions are made, as to whether the minimum 
fee or the calculated rate [i.e., the base rate] would bind . . . 
increas[ing] the economic content within the decision-making process, 
even where the minimum fee ultimately binds.'' PS PFF ] 323 (citing 4/
19/23 Tr. at 5521-22 (Tyler)) (emphasis added).\23\ Further in this 
regard, Program Suppliers aver that even CSOs with zero distant signal 
carriage derive ``option value'' from the section 111 license, because 
they are always permitted (``privileged'' in the language of section 
111) to engage in such retransmission. Tyler ACWDT ] 102. According to 
Dr. Tyler, the base fee calculation would tacitly reflect this option 
value. Id.
---------------------------------------------------------------------------

    \23\ In a following colloquy with Judge Strickler, Dr. Tyler 
acknowledged that, by contrast, where the base fees calculated by 
CSOs were well below the minimum fee ultimately paid, their base 
fees provided ``less economic content.'' 4/19/23 Tr. 5525 (Tyler).
---------------------------------------------------------------------------

    In any event, Dr. Tyler rejects as ``too extreme'' the alternative 
of ``[d]ropping most of the observations'' by excluding the minimum-
fee-only CSOs, because that would implicitly incorporate the assumption 
that ``there is essentially no value associated with any of the minutes 
for the systems paying the minimum fee.'' 4/19/23 Tr. 5474 (Tyler). In 
support of this point, Program Suppliers note that ``[n]o expert in 
this proceeding took the approach of dropping minimum fee systems from 
the analysis.'' PS PFF ] 327 (and record citations 
therein).24 25
---------------------------------------------------------------------------

    \24\ This argument is misleading. As described infra, the SDC, 
JSC, and CTV, through their experts, all relied on the large number 
of minimum-fee-only CSOs as a basis to throw out the regressions 
entirely for the 2015-2017 period (and the SDC and JSC also reject 
the minimum-fee-only data for 2014 as part and parcel of their 
wholesale rejection of the regression approach).
    \25\ Program Suppliers also note that the Bortz Survey likewise 
considers the stated preferences of survey respondents whose systems 
pay only the minimum fee. PS PFF ] 328.
---------------------------------------------------------------------------

    Despite Program Suppliers' assertion that there is economic 
evidence from the carriage decisions of minimum-fee-only CSOs, they 
acknowledge that there is also merit to considering a version of the 
model that includes only CSOs paying above the minimum fee. Tyler

[[Page 54172]]

ACWDT ]] 155-156. According to Dr. Tyler, this restricted data set 
presents with the ``highest degree of confidence'' the CSO tradeoffs 
between different stations and categories of minutes. Tyler ACWDT ] 
155. To this end, Dr. Tyler undertook a ``sensitivity'' analysis that 
considered only CSOs paying more than the minimum fee, and determined 
the following estimated shares (and standard errors):
[GRAPHIC] [TIFF OMITTED] TN28JN24.000

    According to Dr. Tyler, these shares are sufficiently close to the 
shares he proposes through his analysis of all CSOs, i.e., including 
those only paying the minimum fee. Compare Tyler ACWDT fig.3.2, with 
Tyler ACWDT fig.6.3. According to Dr. Tyler, this ``sensitivity'' 
comparison of his recommended share allocation and the allocation 
generated by above-minimum-fee-only CSOs reveals that his ``modeling 
approach . . . is reasonably robust and . . . sufficiently reliable for 
informing allocation of the 2014-2017 Cable Royalties among the 
Allocation Phase claimant categories.'' Tyler ACWDT ] 105.

C. PTV Position on the Minimum Fee Issue

    PTV, like CCG, finds economic significance in the choices of a CSO 
``to retransmit a distant signal to particular subscriber groups'' 
despite the fact that the CSO pays the minimum fee, relying in part on 
Dr. Marx's testimony that those choices reveal only ordinal preferences 
as to distant programming types. Public Television's Proposed Findings 
of Fact and Conclusions of Law (PTV PFF) ] 58 (citing, inter alia, 4/
11/23 Tr. 4165 (Marx)). Thus, PTV finds it appropriate to rely on what 
it describes as the ``ample variation in the decision-making of CSOs 
that pay the minimum fee . . . to . . . inform[ ] . . . relative 
marketplace value. . . .'' PTV PFF ] 59.
    As an alternative basis for finding relevance in the decision-
making of CSOs that paid only the minimum fee after the WGNA 
conversion, PTV finds relevance in the fact that many CSOs had 
distantly carried certain PTV signals pre-conversion together with 
WGNA, paying above the minimum fee, and continued to transmit that 
companion signal post-conversion, when only the minimum fee applied. 
According to PTV, this continuity of PTV carriage is record evidence of 
the value of the PTV carriage during the minimum-fee-only periods. PTV 
PFF ] 60; Johnson WRT ] 78 (``The WGN conversion in 2015 does not mean 
the value of KAET-DT [Public Television signal] declined or disappeared 
altogether.''); see generally Johnson WRT ] 79 (As in the KAET example, 
``there were 1,115 CSO-Public Television distant signal combinations in 
the 2015-2017 period where the CSO paid a minimum fee during those 
years [and] [f]or 55 percent of these combinations, the same CSO also 
carried the same Public Television distant signal, at a different point 
in time, when it paid section 111 royalties greater than the minimum 
fee.''(emphasis added)).
    As another alternative, Dr. Johnson, on behalf of PTV, and like Dr. 
Tyler, undertook a ``sensitivity test'' that excluded the minimum-fee-
paying CSOs. According to PTV, the results of this sensitivity test 
were sufficiently consonant with the coefficients in Dr. Johnson's 
preferred ``baseline'' fee-based regression, which included the 
minimum-fee-only CSOs, to suggest that decisions made by CSOs that paid 
minimum fees are informative as to the question of relative value. PTV 
PFF ] 84 (and record citations therein); compare Johnson WDT fig.11 
(baseline model coefficient, with Johnson WDT fig.14 (``sensitivity 
test'' coefficients excluding minimum-fee-paying CSOs). This consonance 
was important, according to Dr. Johnson, because it justified his use 
of the ``baseline'' model, which, because it included the minimum-fee-
paying CSOs, relied on 18,666 observations, and therefore was more 
precise than his ``sensitivity test'' approach. Johnson WDT ] 84.
    From yet another economic perspective, PTV maintain that for 
minimum-fee-paying CSOs making some retransmissions, the value of the 
retransmitted programming must have some marginal value, in excess of 
``opportunity costs'' regarding alternative uses of bandwidth including 
streaming alternatives. PTV PFF ]] 62-63. Taken together, PTV asserts 
that the foregoing facts support the inclusion of the base-fee 
decisions of minimum-fee-paying CSOs. PTV PFF ] 97.

[[Page 54173]]

D. CTV Position on the Minimum Fee Issue

    CTV presents a nuanced argument regarding the relevancy of minimum-
fee-only CSOs, consistent with the opinions of their economic expert, 
Dr. Leslie Marx. On the one hand, CTV and Dr. Marx maintain that the 
retransmission decisions of minimum-fee-only CSOs were not so numerous 
as to preclude the use of base fee data from minimum-fee-only CSOs in a 
regression for the years 2010-2013 (addressed in the prior 
determination) and for 2014 (the earliest year addressed in the present 
proceeding). 4/11/23 Tr. 4157 (Marx) (testifying that ``the mere 
presence of royalties from excess capacity CSOs'' does not make the 
fee-based regressions invalid'' because ``it's a matter of degree . . . 
.''). On the other hand, CTV and Dr. Marx maintain that the 
retransmission decisions of the minimum-fee-only CSOs were so pervasive 
during the years 2015-2017 as to preclude the use of fee-based 
regressions for those three years. Id. at 4157-58. See generally 
Commercial Television's Proposed Findings of Fact and Conclusions of 
Law (CTV PFF) at 38 (describing CTV's and Dr, Marx's approach as 
measured, because it ``utilize[ed] a fee-based regression only for 
2014, [which was] the sole year at issue in this proceeding without 
significant marketplace changes.'') \26\
---------------------------------------------------------------------------

    \26\ This nuanced position is not an inconsistent economic 
argument. Rather, it is an argument regarding data differentiation 
and the concomitant weighing of evidence. CTV and Dr. Marx assert 
that, as a matter of ``degree,'' too high a percentage of the number 
of CSOs paying only the minimum fee (and/or too high a percentage of 
all royalties paid by minimum-fee-only CSOs) will render the 
incorporation of the retransmission decisions of those CSOs (and/or 
the royalties they paid) fatal to a fee-based regression. However, 
they assert that when those minimum-fee-only CSOs and their 
royalties are only approximately half of the CSOs and royalties 
paid, as in the 2010-2013 period, and when they principally apply to 
CSOs with only one subscriber group (and thus are excluded anyway 
from the Crawford-style regression), their inclusion is too small to 
preclude use of a fee-based regression. See generally CTV PFF at 20 
et seq. (``The lack of informative data renders any fee-based 
regression inappropriate and unreliable for 2015, 2016 and 2017.'').
---------------------------------------------------------------------------

    CTV continues its argument on this point by pointing out that when 
a CSO elects to carry a set of distant signals resulting in a payment 
higher than the minimum fee, that indicates the CSO sufficiently values 
the programming minutes bundled into the carriage to make it willing to 
pay marginal royalty payments above the minimum fee. Written Rebuttal 
Testimony of Leslie M. Marx, Ph.D., Trial Ex. 7208, ] 21 (Marx WRT). 
Alternatively stated, for these CSOs which CTV accurately describes as 
``above-capacity'', i.e., retransmitting more than 1.0 DSE and thereby 
paying above the minimum fee, the base fee royalties reported by their 
subscriber groups are their actual royalty payments, revealing the 
CSO's perceived value of the distantly retransmitted stations and their 
constituent programs. Written Rebuttal Testimony of Christopher 
Bennett, Ph.D., Trial Ex. 7035, ] 15 (Bennett WRT); CTV PFF ] 158.
    To contrast from the ``above-capacity'' CSOs, CTV and its experts 
examine the carriage decisions of CSOs that had carried WGNA in 2014, 
either solely or with other signals, but could not, and thus did not, 
carry WGNA after 2014. CTV asserts that because the WGNA conversion 
generated the explosion of minimum-fee-only CSOs, the majority of the 
royalties and CSOs do not reflect incremental costs associated with 
incremental carriage. CTV PFF ]] 177, 186. This change is reflected in 
a series of figures presented by Dr. Marx. First, she demonstrates the 
share of royalty payments by CSOs carrying distant signals relative to 
the minimum fee, across the relevant years:
[GRAPHIC] [TIFF OMITTED] TN28JN24.001


[[Page 54174]]


    Next, Dr. Marx identifies the percentage of all CSOs carrying 
distant signals that are paying the minimum fee over the relevant 
years:
[GRAPHIC] [TIFF OMITTED] TN28JN24.002

    These data present the contrast between how the actual royalty 
obligations through 2014 were directly linked to base fees at the 
subscriber-group level and the actual royalty obligations in the 2015-
2017 period where they were instead predominantly a function of the 
minimum fee. CTV PFF ] 167 (citing Bennett WRT fig.5). Likewise, Dr. 
Marx testified that there was no substantial dissimilarity in the 2010-
2014 period between: (1) the overall regression coefficients (not 
allocation shares) for all CSOs and (2) the regression coefficients for 
only CSOs carrying fewer distant signals than the minimum fee would 
permit, which Dr. Marx aptly described as ``excess capacity'' CSOs. 
Marx WRT ] 62. This substantially similarity was depicted as follows by 
Dr. Marx:
[GRAPHIC] [TIFF OMITTED] TN28JN24.003

    Moreover, according to Dr. Marx, many of the CSOs with ``excess 
capacity'' also had less than the two subscriber groups necessary to be 
observed by the Crawford regression, thus making their ``excess 
capacity'' status inconsequential to the regression for this 
independent reason. 4/11/23 Tr. 4157 (Marx).
    The scenario for the 2015-2017 period was drastically different, 
according to Dr. Marx. She also presents coefficients (not allocation 
shares) for this latter three-year period, and shows how the 
coefficients for all CSOs differed from those with no excess capacity:

[[Page 54175]]

[GRAPHIC] [TIFF OMITTED] TN28JN24.004

    With regard to the necessity of at least two subscriber groups 
within a system during an accounting period (required by Dr. Crawford's 
system-accounting period fixed effect), Dr. Marx reported that, 
beginning in 2015, fully 62% of CSOs, accounting for almost 35% of 
total royalties, did not satisfy this requirement. Amended Corrected 
Written Direct Testimony of Leslie M. Marx, Ph.D., Trial Ex. 7204, ] 58 
(Marx ACWDT). By 2017, 93.8% of the royalties were paid via the minimum 
fee, rather than the base fees. CTV ] 189 (citing Marx WRT, fig.14).
    Although CTV and Dr. Marx do not consistently characterize the 
evidentiary weight of the royalty data from ``excess-capacity'' CSOs as 
wholly uninformative, they unambiguously report Dr. Marx's own opinion 
that the 2015-2017 minimum fee royalty data is decidedly ``less 
informative'' than the royalty data from CSOs that transmitted more 
than 1.0 DSE. Marx WRT ] 22.
    Further bolstering the point that minimum-fee-only-CSO royalty data 
dominated the 2015-2017 landscape, CTV points to the following data:

    CSO carriage of fewer distant signals after 2014 sharply 
increased the percentage number of excess capacity CSOs, from less 
than 20% of CSOs in 2014 to 73% of CSOs in 2016 onward. Marx WRT ] 
64.
    The percentage of CSOs paying more than the minimum fee 
decreased from 48% in 2014 to only 19% by the end of 2017 (measured 
by including CSOs with zero retransmittals).

CTV PFF ]] 209-210 (and record citations therein).

    Based on the foregoing, CTV relies on Dr. Marx's conclusions 
that:
    The changed circumstances in the real-world market have infected 
the quality of the data and reduced the quantity of the data 
utilized by the proffered fee-based regressions making those 
regressions in the 2015 to 2017 timeframe unreliable. 4/11/23 Tr. 
4510-12 (Marx).
    A regression requires reliable data that fits the underlying 
assumptions, otherwise the model is putting ``garbage in'' and 
getting ``garbage out.'' The data no longer represents carriage 
decisions based off of royalty payments from the CSOs. 4/11/23 Tr. 
4147; 4194 (Marx).

CTV PFF ]] 299-300. See also Marx WRT ] 82 (``[F]or a minimum fee-
paying CSO, the inclusion of a distant signal in the channel line-up to 
a subscriber group . . . reflects the CSO's choice over other 
alternative signals that also have no incremental cost. This can be 
informative as to the value of the program minutes on whatever signal 
the CSO elects to offer.'').

E. JSC Position on the Minimum Fee Issue

    Like CTV, JSC contrasts the 2010-2014 period with the years 2015-
2017. In the former period, JSC notes, most CSOs calculated ``a Base 
Fee + their 3.75% Fee that equaled or exceeded the Minimum Fee.'' More 
particularly, JSC specifies that, ``in 2014, 71.8% of all CSOs 
calculated a Base + 3.75% Fee that met or exceeded their minimum fee 
obligation, and during the 2010-13 period, 73.0% of all CSOs did so . . 
. account[ing]for 76.5% of total royalties paid in 2014 and 79.9% of 
total royalty fees paid during the 2010-13 period.'' Proposed Findings 
of Fact and Conclusions of Law of the Joint Sports Claimants (JSC PFF) 
] 17 (citing 3/30/23 Tr. 2578 (Majure); Harvey CWDT ] 17 & tbl.3; 
Corrected Bortz Report, Trial Ex. 7101, at 9 (Bortz Report).
    Further, JSC maintains that even if an economic model could produce 
reliable ordinal rankings, which none of the regressions in evidence 
attempted, it is not possible to make the leap from such rankings to 
cardinal relative values, i.e., allocation of specific royalty amounts 
to each of the claimant categories in this proceeding. 3/30/23 Tr. 
2512-13 (Asker).
    JSC also maintains that the base fee calculations of any minimum-
fee-only CSO cannot reveal the programming preferences of such CSOs or 
otherwise be useful in the estimation of relative marketplace value. 
Specifically, JSC first maintains that ``[a]ny alleged uncertainty 
about application of the Minimum Fee is speculative.'' Reply Proposed 
Findings of Fact and Conclusions of Law of the Joint Sports Claimants 
(JSC RPFF) at 11. Not only does JSC find this uncertainty to be 
speculative, they further argue that it is ``highly unlikely that most 
Minimum Fee CSOs would have been uncertain about whether a carriage 
decision would affect their royalty payment.'' JSC RPFF ] 32. In 
support of this point, JSC notes that, after 2014, among minimum-fee-
only CSOs that retransmitted at least one distant signal, approximately 
86% calculated a base fee + 3.75% Fee that was 75% or less of the CSO's 
minimum fee. JSC RPFF ] 32. Further to this point, JSC takes note of 
Dr. Tyler's acknowledgement that ``the further you are away from the 
minimum fee threshold, the less likely it would be that there would be 
that risk of exceeding it.'' JSC RPFF ] 32.\27\
---------------------------------------------------------------------------

    \27\ However, JSC also acknowledges that the Bortz Survey, on 
which it relies, likewise ``decided to adopt Base [Fee] + 3.75% Fee 
. . . weighting ``[o]nce Bortz realized that many . . . systems were 
paying the Minimum Fee. . . .'' JSC RPFF ] 105.
---------------------------------------------------------------------------

    In further criticism of the usefulness of regressions, particularly 
for the two-year 2016-2017 period, JSC notes that only 55.2% of [CSOs 
chose to carry] distant signals. Harvey CWDT ] 26. JSC further notes 
that, out of this 55.2%,

[[Page 54176]]

approximately 74% paid only the minimum fee.
    Additionally, JSC notes that during the two-year 2016-2017 period, 
14% of all CSOs met or exceeded the minimum fee, accounting for but 
6.8% of total royalty payments, which reflected a 91% decrease compared 
to 2014. Harvey CWDT tbl.11.\28\
---------------------------------------------------------------------------

    \28\ More particularly, in the years 2016-2017, only 3.2% of 
CSOs calculated a base fee + 3.75% Fee that ``met'' (rather than 
``exceeded) the minimum fee. JSC PFF ] 54 (citing Harvey CWDT 
tbl.14).
---------------------------------------------------------------------------

    With regard to 2015, JSC relies on Mr. Harvey's finding that, after 
he removes reported WGNA carriage, 72% of CSOs carrying at least one 
distant signal then paid only the minimum fee. JSC notes that Mr. 
Harvey found that only 13.4% of CSOs calculated a minimum fee, 
accounting for 85.2% of total royalty payments for that year. JSC PFF ] 
46 (citing the Harvey CWDT).\29\ Considering these 2015 data from the 
opposite perspective, JSC cites Mr. Harvey's calculation that only 
13.4% of CSOs calculated a base fee + a 3.75% fee in excess of the 
minimum fee, reflecting only 9.8% of the total royalties paid in that 
year. JSC PFF ] 47 (further the Harvey CWDT).
---------------------------------------------------------------------------

    \29\ It is hardly clear that Mr. Harvey was justified in 
removing reported carriage of WGNA in 2015. The record reflects the 
existence of SOAs filed for 2015 that reported such carriage, and 
there is uncertainty as to whether those SOAs were erroneous or 
whether there was residual WGNA carriage as WGNA transitioned from a 
broadcast channel to a cable station. But see Kent Gibbons, WGN 
America Converts to Cable in Five Markets, Broadcasting & Cable 
(Dec. 14, 2014) (``Tribune Media Co. said its WGN America is 
debuting on cable television systems in Chicago, Boston, 
Philadelphia, Seattle and Washington, DC, starting Tuesday, as it 
begins converting from a superstation to a cable network . . . on 
Comcast systems [with] more launches and conversions . . . happening 
on distributors this month and throughout 2015.'') (emphasis added).
---------------------------------------------------------------------------

    JSC also relies on another of its expert witnesses, the economist 
Dr. W. Robert Majure, who explained that, in the 2015-2017 period, most 
CSOs that formerly carried WGNA under the section 111 license chose not 
to replace it with an equivalent number of DSEs, and as a result ``made 
far less use of the section 111 license.'' JSC PFF ] 49 (citing Written 
Direct Testimony of W. Robert Majure, Ph.D., Trial Ex. 7103, ] 77 
(Majure WDT)).
    Based on these data related to the minimum fee, JSC maintains that 
the fee-based regressions, as they relate to the 2015-2017, period 
wrongly use base fees (with or without the 3.75% fee) as ``price 
proxies,'' in that when the minimum fee binds, the marginal royalty 
cost of carriage is zero. JSC PFF ]] 148-152 (and record citations 
therein).
    In econometric terms, Dr. Asker, on behalf of JSC, measured the 
alleged errors that Drs. George, Johnson, and Tyler introduced into 
their regressions by using the incorrect base-fee-related price 
proxies. These alleged ``measurement errors,'' according to Dr. Asker, 
were correlated with the variables measuring distant signal content 
minutes in the entire 2014-2017 period and equal the difference between 
the improper price proxies y and the zero price implied by the payment 
of the minimum fee. Written Rebuttal Testimony of John Asker, Ph.D., 
Trial Ex. 7114, ] 79 (Asker WRT).
    JSC further notes in this regard that Dr. George herself conceded 
that the link between base rate royalties and actual CSO demand is 
``not super tight,'' and adds the very sort of ``measurement error to 
the dependent variable'' that Dr. Asker has calculated. JSC PFF ] 154 
(citing Dr. George's hearing testimony).
    Dr. Asker also takes issue with the regression experts' use of the 
base fee as a price proxy even for CSOs paying above the minimum fee. 
He explains that for a perfectly rational CSO calculating price, the 
true marginal cost of distantly retransmitting a local station in this 
context--the difference in cost to the CSO between retransmitting and 
not retransmitting--is not the base fee, but rather the difference 
between (1) the total fees that would bind, which may have been the 
minimum fee, without retransmitting that local station, and (2) the 
total base fees that would bind (the minimum fee having been exceeded) 
if that local station was distantly retransmitted. See Asker WRT ]] 59-
77 (applying the definition of price, stated in ] 61, as ``the extra 
expenditure required to have it, as compared to not having it.'').
    Finally, JSC takes note of Dr. Asker's point that it is standard 
practice among statisticians and econometricians to test the validity 
of a regression against other available external evidence, as a sort of 
``reality filter.'' JSC PFF ] 169 (citing Asker WRT ] 104); see also 3/
28/23 Tr. 1910-11 (Harvey) (agreeing with Judge Strickler that 
``validity test'' is synonymous with ``reality filter''). Here, JSC 
points out that the validity of the regressions is refuted by the fact 
that, during the 2015-2017 period, CSOs did not behave in accordance 
with the assumption behind the regressions. That is, despite the 
assumption that the incremental benefits of distant carriage were 
positive (according to the regression estimates) and the incremental 
royalty cost was zero, most CSOs elected not to add additional distant 
signals. Thus, the regressions purportedly were invalid, unrealistic, 
and self-contradictory (``false within their own premise'' one might 
say), according to JSC. Written Rebuttal Testimony of W. Robert Majure, 
Ph.D., Trial Ex. 7104, ]] 15, 47-50 (Majure WRT); 3/30/23 Tr. 2594-95, 
2598-99 (Majure).

F. SDC Position on the Minimum Fee Issue

    At the outset, when framing the relevant minimum fee issue, the SDC 
maintain that, ``while it may be true'' that CSOs' ordinal decision-
making shows their ranked preferences, ``no regression model in this 
case has been specified for such a theory.'' SDC PFF ] 39. Rather, 
these regressions consider the calculated (but not paid) base fees (and 
the 3.75% Fee, depending on the regression at issue) of these minimum-
fee-only CSOs.
    But the SDC maintain that the minimum fee ``confounds any 
interpretation of a fee-based regression'' premised on the CSOs' 
``willingness-to-pay.'' Settling Devotional Claimants' Proposed 
Findings of Fact and Conclusions of Law (SDC PFF) at 27. In this 
regard, the SDC point to the testimony of several experts who opine 
that the minimum fee structure ``largely obviate[s] the purported 
causal theory based on `willingness-to-pay,' '' because the minimum-
fee-only CSOs ``are required to pay a minimum fee equivalent to a 1.0 
DSE . . . whether they are `willing' or not.'' SDC PFF ] 60 (citing 
Asker WRT ]] 78-86; Marx WRT ] 22.). Stating the point in economic 
terms, the SDC state that ``there is no marginal cost'' incurred by a 
CSO unless and until ``the minimum fee is exceeded.'' SDC PFF ] 60.
    The SDC do not limit their criticism of the minimum fee issue to 
the regressions proffered in this proceeding. They also look back to 
the 2010-13 proceeding, where ``approximately 50% of the CSOs paid only 
the Minimum Fee,'' which, the SDC maintain now (as they did in the 
2010-13 proceeding), constituted a ``serious problem'' for the Crawford 
regression upon which the Judges relied in the prior proceeding. SDC 
PFF ] 61.
    But the SDC assert that their criticism in the 2010-13 proceeding 
is even more relevant in the present proceeding, in that this minimum 
fee problem is ``exacerbated after 2014, [because] the proportion of 
fees paid by systems paying the Minimum Fee went up from 39.2% to 
93.8%.'' SDC PFF ] 62 (citing Ex. 7204 at 29, Marx ACWDT ] 65). In this 
environment, the SDC maintain, it is difficult to see how any 
inferences could be drawn about ``willingness to pay.'' SDC PFF ] 62.

[[Page 54177]]

    The SDC then evaluate the attempts by the regression experts to 
address the minimum fee issue, as summarized below:

--The SDC acknowledge that Dr. Tyler's ``sensitivity test of this 
issue,'' in which he dropped the minimum-fee-only CSOs, ``might 
provide some rough guidance as to the potential direction and 
magnitude of bias introduced by the presence of minimum fees.'' SDC 
PFF ] 63 (emphasis added) (citing Tyler ACWDT ] 156). But the SDC 
take note of what they characterize as ``the vast amount of data'' 
that Dr. Tyler had to discard to apply this sensitivity test, 
leading the SDC to conclude that Dr. Tyler's attempt to drop all 
minimum-fee-paying CSOs was ``probably too extreme.'' SDC PFF ] 63 
(citing 4/19/23 Tr. 5473-74 (Tyler).
--Dr. Johnson's sensitivity test, in which he too applied his model 
only to systems paying above the minimum fee, resulted in large 
swings in the JSC coefficients, rendering them statistically 
insignificant. SDC PFF ] 104.
--The SDC acknowledge that Dr. Marx ``makes good points about the 
confounding effects of minimum fee-paying systems . . . in the 2015-
2017 timeframe,'' but find ``her position on the reliability of the 
model before 2015 . . . too convenient to credit.'' Harkening back 
to their criticism of the 2010-13 Determination's adoption of the 
Crawford regression, the SDC maintain that Dr Marx's Bayesian 
regression for 2014 is deficient with regard to this minimum fee 
issue because `` `CSOs paying the minimum fees accounted for a large 
proportion already before the conversion of WGNA,' '' and any 2014 
modeling `` `should have been specified' '' to address this issue. 
SDC PFF ] 130 (citing Written Rebuttal Testimony of Daniel L. 
Rubinfeld, Trial Ex. 7505, ] 95 (Rubinfeld WRT) (``The fact that Dr. 
Crawford's model does not hold up when applied to 2014-2017 data in 
the current proceeding reveals that the regression specification put 
forth by Dr. Crawford was not robust or informative.'').

G. The Judges' Analysis and Conclusions Regarding the Minimum Fee Issue

    The Judges find that the dramatic increase in the number of 
minimum-fee-only CSOs (i.e., those with no distant retransmittals and 
those with some distant retransmittals but with ``excess capacity'') 
renders regression analyses that include those CSOs less reliable and 
thus can be accorded only very limited economic evidentiary weight. 
Moreover, the Judges accord significantly more evidentiary weight to 
regression modeling that focuses only on the CSOs that actually 
revealed their preferences by willingly paying above the minimum fee, 
i.e., at the base fee level.
    In particular, as discussed infra, the Judges rely on the Tyler 
Model, as Dr. Tyler applied his model to the CSOs paying above the 
minimum fee. See Tyler ACWDT ] 156 & fig.6.3 (discussed infra). 
Although there is hardly a consensus as to the adoption of this variant 
of the Tyler Model, the Judges are struck by the supportive argument of 
the SDC, set forth below, regarding the Tyler Model as applied to 
above-minimum-fee-paying CSOs:

    Dr. Tyler, whose rate-based methodology is the most explicitly 
based on a ``minimum willingness to pay'' theory . . . offers a 
sensitivity test of this issue. Tyler [ACWDT] ] 156. (It is a fairer 
sensitivity test than Dr. Johnson's similar test, which was selected 
retrospectively out of hundreds of tests that were tried and is 
performed in the presence of the distortion of multiple 
misspecifications). Dr. Tyler's sensitivity test might provide some 
rough guidance as to the potential direction and magnitude of bias 
introduced by the presence of minimum fees.

SDC PFF ] 156. See also 4/19/23 Tr. 5473 (SDC's counsel's statement to 
Dr. Tyler on cross-examination) (``I do want to point out to your 
credit that your first sensitivity test tries to address this 
issue.''). This argument is generally consistent with Dr. Tyler's 
response to SDC counsel on this point, agreeing that it was important 
to be ``cognizant'' of this minimum fee issue and that it be 
``considered and addressed'' because there is ``reasonable disagreement 
about how to handle the issue.'' Id. at 5473-74.
    The Judges do not see the disagreement as necessarily 
``reasonable'' regarding whether to rely on the calculated base fee 
data of all CSOs (including the CSOs paying only the minimum fee) or 
only those who actually paid their calculated base fees. But, however 
one couches this disagreement, the Judges find the latter approach 
appropriate, and that--to borrow the SDC's phrase--the variant of the 
Tyler Model in Figure 6.3 of the Tyler ACWDT offers the Judges' ``rough 
guidance'' in the allocation of shares.\30\
---------------------------------------------------------------------------

    \30\ Evidence that provides ``rough guidance'' is useful 
evidence in these proceedings. As noted elsewhere in this 
determination, the D.C. Circuit has acknowledged that the nature of 
this statutorily-mandated, but statutorily standardless, allocation 
process can require a measure of ``rough justice,'' in the face of 
inevitable mathematical imprecision.
---------------------------------------------------------------------------

    With regard to the issue of precision, mathematical or economic, 
the Judges do not adopt Dr. Asker's analysis, discussed above, that the 
appropriate method to calculate royalties for above-minimum-fee-paying 
CSOs should be based on the difference between (1) the actual royalty 
amount paid when a distant station is added; and (2) the amount that 
the CSO would have paid pursuant to the minimum fee calculation if it 
would bind in the absence of transmittal of that station. Although in 
theory that would appear to be a rational approach, there is no 
evidence that any CSO actually engages in such an activity. Further, as 
the Judges note elsewhere in this determination, they credit the 
designated testimony of Ms. Hamilton, a cable industry expert, who 
stated that the amount of money at issue regarding section 111 
royalties is essentially de minimis to the CSOs (although quite 
significant to the parties in this proceeding), and that the CSOs do 
not devote much attention to issues regarding distant retransmittals. 
In this context, and in the absence of any evidence to the contrary, 
the Judges cannot assume, let alone apply, a pricing rationale that 
suggests a tunnel-vision sort of hyperrationality, when Ms. Hamilton's 
testimony suggests a broader rationality, whereby CSOs rationally apply 
their scarce time and attention to more economically consequential 
matters.\31\
---------------------------------------------------------------------------

    \31\ This finding is consistent with a broader point made by the 
economist Ronald Coase, who won the Nobel Prize for his foundational 
work on transaction costs, regarding an overemphasis on what he 
coined ``blackboard economics.'' As Dr. Coase explained: ``[When] 
[t]he policy under consideration is one which is implemented on the 
blackboard [and] [a]ll the information needed is assumed to be 
available and the teacher plays all the parts . . . there is no 
counterpart to the teacher within the real economic system . . . no 
one who is entrusted with the task that is performed on the 
blackboard.'' R. Coase, The Firm, the Market, and the Law 19 (1990). 
Substitute ``expert witness'' for ``teacher'' and ``in the 
testimony'' for ``on the blackboard'' and Dr. Coase's point applies 
here.
---------------------------------------------------------------------------

VI. The Allegations of ``Specification Searching'' 32
---------------------------------------------------------------------------

    \32\ Specification searching (also known as ``data fishing.'') 
is defined as ``the practice of searching numerous research 
methodologies--including different models, design components, 
analytical methods, and hypotheses--and selectively reporting only 
those that produce significant or otherwise favorable results. H. 
Bavli, Credibility in Empirical Legal Analysis, 87 Brook. L. Rev. 
501, 509 (2022).
---------------------------------------------------------------------------

A. Allegations of Concealed Specification Searching by Dr. Crawford 
Applicable to the Present Proceeding

    In their determination in the 2010-13 cable proceeding, the Judges 
relied predominantly, although not solely, on the fee-based regression 
model presented by Dr. Crawford, who was then a witness on behalf of 
CTV. In deciding to rely on Dr. Crawford's regression (the Crawford 
Model), the Judges credited his testimony denying allegations by the 
SDC that he had improperly attempted and rejected many alternative 
regression models. 2010-13 Determination at 3566-3567; see also SDC PFF 
] 68 (and record citations therein).

[[Page 54178]]

    The SDC maintain that three of the four fee-based regression models 
presented in this proceeding, PTV's, CCG's, and CTV's, are based upon 
the Crawford Model. In order to understand the relationship of these 
three models to the Crawford Model, the SDC argue (and the Judges 
agree) that it is necessary to understand the characteristics and 
history of the Crawford Model, comparing what was known at the time of 
the 2010-13 cable proceeding with what was subsequently uncovered. SDC 
PFF ] 69 (and record citations therein).
    To begin its review of the Crawford Model, the SDC point to the 
basic hypothesis undergirding the approach--attempting to ``relat[e] a 
measure of royalty fees to numbers of [program] category minutes.'' SDC 
PFF ] 70. The SDC state that, although the Crawford Model ``followed a 
framework that somewhat resembled . . . the model offered by Dr. 
Waldfogel [the Waldfogel Model] in the 2004-05 cable proceeding,'' Dr. 
Crawford actually made ``multiple dramatic departures.'' SDC PFF ] 70 
(citing 2010-13 Determination at 3557 for a description of Dr. 
Waldfogel's model). Dr. Crawford departed from the Waldfogel Model, 
according to the SDC, because after he ``tested Dr. Waldfogel's model 
as a starting point using 2010-13 data (which he falsely denied doing), 
the Waldfogel [M]odel yielded implausible results . . . demonstrating, 
at a minimum, that [the Waldfogel Model] . . . performed poorly on out-
of-sample data.'' SDC PFF] 70 (and record citations therein). Moreover, 
the SDC assert that Dr. Crawford undertook, but failed to disclose, his 
sensitivity testing when he constructed the Crawford Model, which 
showed that the results of the Waldfogel Model were extremely sensitive 
to annual changes, suggesting that the Waldfogel Model may have been 
``selected to fit the data in 2004-05.'' SDC PFF ] 70 (and record 
citations therein).
    Expanding on the foregoing, the SDC imply that specification 
searching is widespread, noting that ``[a]t least 10 different expert 
witnesses have presented at least 10 different fee-based regression 
models in the last five allocation proceedings: Dr. Rosston (CTV, 1998-
99 cable), Dr. Waldfogel (CTV, 2004-05 cable), Dr. Crawford (CTV, 2010-
13 cable), Dr. Israel (JSC, 2010-13 cable), Dr. George (CCG, 2010-13 
cable, 2014-17 cable), Dr. Heeb (CTV, 2010-13 satellite), Dr. Gray (PS, 
2010-13 satellite), Dr. Johnson (PTV, 2014-17 cable), Dr. Tyler (PS, 
2014-17 cable), and Dr. Marx (CTV, 2014-17 cable). Further, the SDC 
emphasize that only Dr. George has appeared more than once, and that 
her models in the 2010-13 proceeding and in this proceeding are ``very 
different'' from each other. SDC PFF ] 73 (and record citations 
therein).
    Dr. Erdem, also, later discovered, based on CTV's compelled 
production in the 2010-13 satellite case, that Dr. Crawford had 
actually tested many different functional forms before deciding to use 
the log-linear form. Only then did he perform the appropriate 
statistical test (the ``Box-Cox'' test), which Dr. Erdem claims 
``specifically rejected the log-linear form.'' Dr. Erdem further claims 
that Dr. Crawford improperly failed to run the test on the independent 
variables, limiting the test to the dependent variable (the royalty 
measure). Amended Written Direct Testimony of Erkan Erdem, Ph.D., Trial 
Ex 7502, ]] 41-42 (Erdem AWDT); see also Supplemental Written Rebuttal 
Testimony of Erkan Erdem (2010-13 satellite proceeding), Trial Ex. 
7054, ]] 16-18 & Ex. 3. See SDC PFF ] 76 (and record citations 
therein).
    According to Dr. Erdem, the failure of Dr. Crawford and CTV, in the 
2010-13 cable proceeding to disclose, in Dr. Crawford's direct 
testimony or in discovery, this testing and the results thereof served 
to conceal the potential for ``distortion and bias'' in the Crawford 
Model arising from the use of a ``linear form'' of a control variable 
for the number of subscribers in the subscriber group during the prior 
accounting period (the so-called ``lagged subscribers'') as affecting 
the dependent variable (royalties) expressed not in level (i.e., 
linear) form, but rather in log form. See Erdem AWDT ]] 51, 71; see 
also Asker WRT ]] 98-99; Written Rebuttal Testimony of R. Garrison 
Harvey, Trial Ex. 7106, ]] 194, 197, 202 & Ex. H (Harvey WRT); see also 
SDC PFF ] 77.
    The SDC maintain that the foregoing exemplifies the ``poor economic 
practice'' and econometric ``sin'' of specification searching broadly 
undertaken by Dr. Crawford. SDC PFF ] 87 (citing Kennedy, supra, at 
367).\33\ Moreover, the SDC assert that Dr. Crawford did not merely 
commit the ``sin'' of specification searching; he also lied by 
repeatedly denying his econometric misconduct. Erdem AWDT ] 36; Written 
Rebuttal Testimony of Erkan Erdem, Ph.D., Trial Ex. 7503, ] 77 (Erdem 
WRT). According to the SDC, Dr. Crawford instead ``acknowledged 
performing only a single alternative analysis,'' and the Judges trusted 
and relied on his testimony. SDC PFF ] 88 (citing 2010-13 Determination 
at 3568 (finding that Dr. Crawford ``had not run such an alternative 
regression by generating a regression and then discarding it . . . 
.'')). In fact, according to the SDC, Dr. Crawford ``had performed and 
rejected . . . undisclosed alternative models . . . with different 
combinations of variables, interactions of variables, no fixed effects, 
different forms of fixed effects, and a wide range of functional forms 
. . . produc[ing] wide ranges of implied shares, including 0% shares 
for every . . . category in . . . some models.'' SDC PFF ] 88 (and 
record citations therein).
---------------------------------------------------------------------------

    \33\ A pernicious aspect of covert specification searching is 
that it masks from the reader (whether Judge, adversary party, 
journal editor or academic referee) conduct that bears importantly 
on the regression ultimately produced. The classic example of a 
simple hidden specification search is the following: ``[Although] 
the probability of flipping a coin and obtaining heads in ten 
consecutive flips out of ten tries is almost zero. . . . if 15,000 
individuals attempt this, it is virtually certain that one or more 
will succeed.'' M. Klock, Finding Random Coincidences while 
Searching for the Holy Writ of Truth: Specification Searches in Law 
and Public Policy or Cum Hoc Ergo Propter Hoc, Wis. L. Rev. 1007, 
1010 (2001). An experimenter who ``searches'' for, and reports only, 
the 1 out of 15,000 times the experiment generates ten consecutive 
heads, and who conceals the 14,999 times this result did not occur, 
is misrepresenting his or her work and the usefulness of the result.
---------------------------------------------------------------------------

    According to the SDC, a telltale sign that Dr. Crawford had engaged 
in specification searching was the Crawford Model's inclusion of 
``indicator variables that had no function . . . [given] his system-
accounting period fixed effects . . . [thereby] suggesting that he had 
tested the regression with no fixed effects or at other levels of fixed 
effects . . . . [But] Dr. Crawford repeatedly denied trying a 
specification without fixed effects or at a different level of fixed 
effects.'' SDC PFF ] 90 (and record citations therein). Moreover, the 
SDC claim that, in response to a question from Judge Feder, Dr. 
Crawford lied by claiming he did not test regressions without fixed 
effects; his test results, later produced in the satellite proceeding, 
showed that he ``ran most of his hundreds of models without fixed 
effects and at different levels of fixed effects, searching for the 
best results.'' SDC PFF ] 91 (and record citations therein) (emphasis 
added).
    Returning to the issue of whether to transform variables from 
linear to log form, the SDC claim to have identified ``[p]erhaps the 
clearest fingerprint'' of Dr. Crawford's specification search. 
Specifically, although Dr. Crawford had testified that he did not 
perform a sensitivity test on a log-log form of regression because he 
``strongly fe[lt] that including log subscribers is not an appropriate 
specification as an

[[Page 54179]]

explanatory variable'', this ``was a lie'' because the discovery in the 
satellite proceeding showed that Dr. Crawford did test a log-log form 
of regression, which resulted in ``an approximately 10-point drop in 
CTV shares (about an $80 million value).'' SDC PFF ] 93 (and record 
citations therein).
    After reviewing the satellite discovery, which included 
approximately 500 regression model runs, and weighing it against Dr. 
Crawford's cable testimony, SDC expert Dr. Rubinfeld stated: ``I've 
never seen anything on this scale . . . .'' 4/6/23 Tr. 3638 
(Rubinfeld). The SDC characterize Dr. Crawford's purported 
specification searching and related alleged untruths as ``[e]vidence of 
fraud in a past proceeding'' that constitutes ``changed 
circumstances,'' thus ``requir[ing] a reevaluation of those 
characteristics of a Crawford-like regression that have infected the 
regression models presented in this proceeding.'' SDC PFF ] 96 
(emphasis added).
    In this regard, the SDC take particular note that Dr. Marx 
acknowledges that because her Bayesian model relies directly on Dr. 
Crawford's results her results are unreliable if Dr. Crawford's results 
are unreliable. SDC PFF ] 129 (citing 4/11/23 Tr. 4323-24 (Marx)).

B. CCG Response Regarding Alleged Specification Searching by Dr. 
Crawford

    CCG's ``primary response'' to the SDC's claim is that any 
specification searching by Dr. Crawford is irrelevant because 
``regression has the advantage of transparency and replicability.'' CCG 
PFF ] 217 (and record citations therein). This occurred in the present 
proceeding, CCG maintains, as the work of various experts presenting 
testimony in this case showed, that every aspect of a regression such 
as the Crawford Model could be and was examined and tested. 4/18/23 Tr. 
5177-79 (George); George WRT at 53.
    Further, CCG maintains it is appropriate for experts in the present 
proceeding not to ``mov[e] away from an approach that the Judges have 
found highly useful in determining relative market value'' unless there 
were ``clear theoretical or empirical reasons'' to do so. CCG PFF ] 218 
(and record citations therein). CCG analogizes to the ``academic 
setting,'' in which ``differing views'' among econometricians can be 
``addressed through the `referee' process . . . where the most 
important criterion for evaluating a proposed alternative model is 
whether the proposed change undermines the theoretical relationships in 
some way . . . .'' George WRT at 52.
    Applying the foregoing points, Dr. George was unconcerned that Dr. 
Crawford's procedures appeared to include ``more than one model.'' She 
analyzed the Crawford Model on its merits, concluding that it ``was 
tightly linked to the economics of the cable marketplace and estimated 
to minimize bias.'' It was on this basis, as well as the Judges' 
endorsement of the model, that Dr. George used the Crawford Model as 
the basis for her work in this proceeding. 4/18/23 Tr. 5131, 5176 
(George); George WDT at 6; Ex. 7404; George WRT at 10-11, 13, 43-44; 
see also CCG PFF ] 220.

C. CTV Response Regarding Alleged Specification Searching by Dr. 
Crawford

    When asked whether she believed Dr. Crawford had or had not engaged 
in improper specification searching, Dr. Marx demurred stating that she 
was ``not offering that opinion.'' 4/11/23 Tr. 4119 (Marx). When asked 
specifically about the more detailed arguments made by the SDC 
witnesses regarding Dr. Crawford's alleged specification searching 
based on supplemental discovery Dr. Marx sought to make sure her ``no-
opinion'' testimony was unambiguous:

    I want to be clear that I didn't reach an opinion about whether 
or not [Dr.] Crawford had a fair underlying theoretical structure 
behind the regressions that he ran. I didn't see anything in what I 
reviewed that raised red flags that that was not the case, but what 
I saw was consistent with or at least not inconsistent with proper 
econometric practice.

4/11/23 Tr. 4121 (Marx) (emphasis added). See also 4/11/23 Tr. 4226 
(Marx) (testifying similarly in response to questioning by Judge 
Strickler); 4/11/23 Tr. 4257 (Marx) (same). On cross-examination, Dr. 
Marx elaborated while reiterating her ``no opinion'' regarding the 
characterization of Dr. Crawford's consideration of hundreds of 
regression alternatives:

[Dr. Marx]

    [I]n my direct testimony . . . I wanted to emphasize that I am 
not opining that [Dr.] Crawford had an underlying theoretical 
structure. I'm just saying that what I saw was consistent with that. 
What I saw was not inconsistent with proper econometric practice, 
but I'm not offering an opinion about what [Dr.] Crawford was 
thinking in the process of running these tests. And I'm not trying 
to speak for [Dr.] Crawford.

[SDC counsel Mr. MacLean]

    So you would agree that . . . running hundreds of different 
models and then selecting models based on preferred or expected 
results or what you referred to as casting about, that would not be 
a good research practice . . . ?

[Dr. Marx]

    It is not a good research practice to cast about without 
thinking and without an underlying theoretical structure . . . 
without the underlying economics being kept in mind. The mere 
observation of a large number of regressions being run, by itself, 
in the context of the 2010 to 2013 proceeding, I don't find at all 
surprising, and seeing that did not raise any concerns in my mind 
about either the reliability of the work or my ability to use my 
usual procedure and thinking to assess the reliability of the work.

4/11/23 Tr. 4325-27 (Marx).
    However, after being confronted with Dr. Crawford's testimony that 
he had ``perform[ed] only one alternative analysis, that he hadn't 
provided'' in discovery, in contrast to what was uncovered in the 
satellite discovery, Dr. Marx acknowledged that as to Dr. Crawford's 
oral testimony ``there are statements that were made that seem in 
retrospect not accurate.'' 4/11/23 Tr. 4332 (Marx). Dr. Marx then 
nonetheless retreated to one of her stock statements, asserting that 
``nothing that I saw raised any concerns in my mind that [Dr.] 
Crawford's results were not reliable . . . .'' 4/11/23 Tr. 4334 (Marx).
    Accordingly, rather than render her own judgment as to the 
appropriateness of Dr. Crawford's conduct or adjust her application of 
the Crawford Model in light of these issues, Dr. Marx testified that 
she reviewed and assessed Dr. Crawford's 2010-13 regression model as 
she would consider any such model, whether in her role as an economist 
or as an academic journal referee (which is a function she performs). 
On this basis, she determined that Dr. Crawford's model was reliable, 
i.e., regardless of any of the specification searching and dissembling 
that SDC claimed had been uncovered in the satellite proceeding 
discovery. Marx WRT ]] 42-54; 4/11/23 Tr. 4112-20, 4325-4327, 4334 
(Marx); CTV PFF ]] 366-69; Reply of the Commercial Television Claimants 
to Proposed Findings of Fact and Conclusions of Law (CTV RPFF) ] 169.
    A key reason why Dr. Marx declined to express an opinion as to Dr. 
Crawford's alleged specification searching is the following: What the 
SDC characterize as Dr. Crawford's wrongful experimentation with 
alternative model specifications, Dr. Marx maintains it can also be 
understood as a form of sensitivity analysis--not only a standard 
activity, but actually a best practice in econometric analysis. Marx 
WRT ] 10; 4/11/23 Tr. 4120-21 (Marx). More broadly, CTV asserts that 
what Drs. Erdem and Rubinfeld criticize as evidence of the improper 
practice of specification searches can all be understood as the 
``standard practice of economists''--involving ``[r]obustness checks, 
sensitivity analyses, and

[[Page 54180]]

differences across economists in regression specifications.'' CTV PFF ] 
371 (citing Marx WRT ]] 31-36).

D. PTV Response Regarding Alleged Specification Searching by Dr. 
Crawford

    PTV's expert economic witness, Dr. Johnson, did not address the 
soundness of Dr. Crawford's 2010-13 regression methodology, which, to 
repeat, the SDC economic experts characterize as the wrongful 
undertaking of a specification search.\34\ But PTV emphasizes that, 
although Dr. Johnson acknowledges that his own regression analysis is 
based on the economic theory and principles underlying Dr. Crawford's 
regression analysis, Dr. Johnson modified and improved some aspects of 
Dr. Crawford's regression model. PTV PFF ]] 113, 115 (citing Crawford 
WDT ]] 32-36, 46.) Thus, PTV argues, even if Dr. Crawford engaged in 
wrongful specification searching to construct his 2010-13 model, ``it 
makes no sense for it to adversely affect the reliability of Dr. 
Johnson's regression specification, which has a different set of 
variables and has been tested on the 2014-17 data.'' PTV PFF ] 143.
---------------------------------------------------------------------------

    \34\ Dr. Johnson testified he never received Dr. Crawford's 
workpapers unearthed in discovery in the 2010-13 satellite 
proceeding on which the SDC relies for its specification search 
allegation (despite the production of those documents by the SDC to 
all counsel, including PTV's counsel, in this proceeding.).
---------------------------------------------------------------------------

E. Allegations of Concealed Specification Searching by Dr. Johnson in 
This Proceeding

    Turning from the work of Dr. Crawford to the work of Dr. Johnson, 
on behalf of PTV in the present proceeding, the SDC accuse PTV and Dr. 
Johnson of similar misconduct as they allege was committed by Dr. 
Crawford in the 2010-13 proceeding. SDC charge that Dr. Johnson 
concealed numerous regression modeling tests in discovery, limiting 
production to only a few sensitivity tests. SDC PFF ] 105. Despite this 
modest discovery, based on the documentation that had been produced by 
PTV, Dr. Erdem saw evidence suggestive of specification searching. 4/5/
23 Tr. 3429; 4/6/23 Tr. 3552-55 (Erdem). These suspicions gave rise to 
the SDC's motion to compel SDC's production of all regression models 
that Dr. Johnson had considered, and the Judges granted the motion. See 
Order 24 Granting the SDC Motion to Compel PTV to Produce Documents 
(Jan. 19, 2023).

F. SDC Assertions After Further Discovery

    After PTV was compelled by the Judges to provide further discovery, 
it produced documents revealing that Dr. Johnson's team had selected 
the four models that he presented out of more than four hundred models. 
He and his professional subordinates had actually engaged in over 400 
runs of regression approaches over several different data sets 
(resulting in numerous different results in terms of program category 
coefficients implied allocation shares). Erdem WRT ] 82; Supplemental 
Written Rebuttal Testimony of Erkan Erdem, Trial Ex. 7504, ] 3 n.3 
(Erdem SWRT); 4/5/23 Tr. 3403 (Erdem); SDC PFF ] 106. Further, the SDC 
cataloged the use by Dr. Johnson and his professional subordinates of 
44 different dependent variables (including log transformations) and 
wide ranges of shares (negative as well as positive) in all claimant 
categories. Erdem WRT ] 82; Supplemental Written Rebuttal Testimony of 
Daniel L. Rubinfeld, Trial Ex. 7506, ] 21, tab 2 (Rubinfeld SWRT).
    Dr. Erdem analyzed these tests according to dates and sequence 
numbers included in the documents produced by PTV and claimed to find 
that the successive testing by Dr. Johnson and/or his team was 
correlated with a steady rise in PTV's allocation share. Erdem SWRT Ex. 
2.
    The SDC dismissed as implausible Dr. Johnson's explanation of this 
correlation. Specifically, the SDC rejects Dr. Johnson's claims that 
the correlation was a ``coincidence'' or that it could be explained by 
incomplete and erroneous data that needed to be corrected or updated. 
SDC PFF ] 109 (citing 3/22/Tr. 737-39 (Johnson)).\35\
---------------------------------------------------------------------------

    \35\ It is important to note here that the SDC is 
mischaracterizing Dr. Johnson's specific testimony. He clearly did 
not say the correlation was a mere coincidence or explainable as a 
data issue. Rather he claimed in his testimony that the increase in 
PTV shares was coincidental with and caused by the inputting of 
additional and correct data, and that it was the data that generated 
PTV's higher share. See 3/22/23 Tr. 738 (Johnson) (``I completely 
refute . . . that it's a coincidence. The reason that this happened 
is . . . tied to specific data issues . . . [and] the data is what 
it is.'') (emphasis added).
---------------------------------------------------------------------------

    In any event, Dr. Erdem testified that if Dr. Johnson and his team 
were not engaged in specification searching, the allocation results 
arising from the data updates or corrections should have been more 
randomly distributed, and, further, that as a matter of regression 
methodology it was inexplicable that data changes would serve to 
generate hundreds of regressions with different combinations of 
specifications. 4/6/23 Tr. 3565-67 (Erdem). Moreover, Dr. Erdem accused 
Dr. Johnson and his professional subordinates of self-servingly 
searching not only for the specifications that would increase PTV's 
allocation share, but also of attempting to search for an optimal 
combination of a specification set and a dataset for increasing PTV's 
allocation share. 4/6/23 Tr. 3552-55 (Erdem). As purported proof, Dr. 
Erdem points to his running of Dr. Johnson's preferred (``baseline'') 
model, but with Dr. George's dataset, which caused PTV's allocation 
share to decrease by 8 percentage points, with the share of every other 
category increasing. Erdem WRT Ex. 8.
    In addition to the more technical econometric evidence relied on by 
the SDC, they also point to physical evidence. Specifically, the SDC 
relies on notes left by a project manager on this assignment, Ms. Yan, 
which showed the search criteria that Dr. Johnson's team applied: a 
search for positive and statistically significant coefficients on all 
content and a high allocation share for PTV, denoted in a document as 
``PBS[uarr]'' (i.e., an ``increase value to shift w/lots of minutes''). 
Erdem SWRT ]] 8-9 & app. E; SDC PFF ] 114. The SDC's other econometric 
expert, Dr. Rubinfeld, using the essentially synonymous phrase ``p 
hacking'' to describe the alleged specification searching conduct of 
Dr. Johnson's professional subordinates, asserts that this behavior 
``invalidates'' Dr. Johnson's statistical tests. Rubinfeld SWRT ] 23. 
SDC's counsel characterizes this note from Ms. Yan as the proverbial 
``smoking gun.'' SDC PFF ] 115.
    The SDC further assert that when the hundreds of regression models 
developed by Dr. Johnson and his team were culled to a sub-group of 
those with ``positive and statistically significant coefficients for 
all categories,'' only four had higher share allocations for PTV. 
Moreover, Dr. Erdem opined that these other four had data and 
statistical anomalies that would have made them difficult for Dr. 
Johnson to defend in any event. 4/5/323 Tr. 3424-25 (Erdem). The SDC 
thus concludes that Dr. Johnson and his team essentially chose the 
model with the highest PTV share that they thought they could defend. 
SDC PFF ] 116.
    The SDC also maintain that there was an intentional separation 
between Dr. Johnson and other professionals at his consulting firm, 
Edgeworth Economics (``Edgeworth'') intended to shield Dr. Johnson from 
regression specifications that would have generated lower shares for 
PTV--a form of ``plausible deniability.'' In support of this assertion, 
the SDC point to written communications within Edgeworth indicating 
that certain documents

[[Page 54181]]

needed to be kept from Dr. Johnson or else PTV would be required to 
turn them over in discovery. See, e.g., Erdem SWRT ] 8 (reproducing 
notes of Edgeworth employee Eduardo Munoz-Alonso, dated 7/8/2021, 
distinguishing between material for ``John's report (he'll see) [and] 
other stuff (John won't)''; Erdem SWRT ]] 8-9 & app. E (5/26/22 note 
written by Esther Yan, 5/26/2022 stating ``Anything we show John gets 
turned over. . . .''); and Erdem SWRT ] 8 (an email containing a link 
to CDC distant signals data sent to Dr. Johnson's team includes the 
caveat: ``. . . these data files are being shared for consulting 
purposes only and should not be shared with John'').
    Looking at the entirety of the record regarding the procedures 
undertaken by Dr. Johnson and others at Edgeworth, Dr. Rubinfeld, one 
of the two SDC expert witnesses, opined:

    Dr. Johnson's practices (or the practices of other experts or 
their staff on behalf of PTV Claimants) are counter to sound 
empirical research practices. Their analyses involve the misuse of 
the regression methodology to obtain statistically significant 
results that deliver coefficient values that generated relatively 
high shares for PTV Claimants.

Rubinfeld SWRT ]] 28-30.\36\
---------------------------------------------------------------------------

    \36\ A JSC expert statistical witness, Mr. Harvey, likewise 
concluded that Dr. Johnson had engaged in a specification search. 
However, the JSC did not emphasize this point, maintaining instead 
that ``it is unnecessary to conclude that Dr. Johnson intentionally 
searched for a specification favoring PTV in order to find his model 
untrustworthy [because] the selection of data inputs and 
specifications'' was improperly undertaken. JSC PFF ]] 195-196 (and 
record citations therein).
    Program Suppliers' expert economic witness, Dr, Tyler, also 
concluded that the work by Dr. Johnson and/or his team ``provides 
evidence that, rather than letting the facts of the industry guide 
the modeling decision, [they] tested many different models, and then 
sought to justify certain specifications with economic theory.'' PS 
PFF ] 377 (and record citations therein). Further, Program Suppliers 
maintain that ``[t]he evolution of Dr. Johnson's calculated shares 
for PTV over time provides evidence that data mining [i.e., 
specification searching] and/or overfitting occurred.'' Id. Further, 
Program Suppliers find it problematic that, in this context, ``[o]ut 
of the many regression specifications that Dr. Johnson ran, he 
selected for his baseline model one in which the PTV share is 
substantially higher than the median results from the models 
considered . . . .'' Id. at ]] 377-378 (and record citations 
therein).
---------------------------------------------------------------------------

G. Rebuttals to the SDC's Assertions of Specification Searching

    Dr. Johnson maintains that the SDC and other critics of his work 
(including Dr. Tyler and Mr. Harvey) have misunderstood the nature of 
the many regression specifications that were generated and run on 
behalf of PTV. More particularly, he explains in detail that he and his 
team ran many of the regression specifications for the purpose of 
testing the data, a process that needed to be repeated to incorporate 
corrections and updates to the data. 3/21/23 Tr. 416-23, 627-745 
(Johnson) (explaining the regression log, the research process, 
Edgeworth team structure and personnel, timing of data receipts and 
updates from vendors and scope of discovery productions). See also PTV 
PFF ]] 139, 145.
    Dr. Johnson further maintains that assuming arguendo there was any 
untoward activity in the nature of a specification search, it is 
essentially a moot point because through discovery (including the 
discovery PTV at first withheld and later produced only in response to 
an order compelling production) every regression specification that he 
and his team ran has now been produced. This production, according to 
Dr. Johnson, eliminates any concern that the Johnson Model was 
misspecified, whether intentionally or otherwise. 3/21/23 Tr. 641 
(Johnson) (``Again, you actually have everything. . . . I followed . . 
. what counsel instructed me to do in terms of what I was required to 
turn over. And when we were required to turn over everything, 
everything has been turned over that my team ever ran, so we have given 
you everything.''). See also PTV PFF ] 146.
    Additionally, many of the regression models generated and run by 
Dr. Johnson and other professionals at Edgeworth Economics (Dr. Johnson 
is the founder and CEO), according to Dr. Johnson, reflected their 
efforts to understand the Crawford Model proffered in the 2010-13 
proceeding and to determine whether the Crawford Model could be applied 
to the 2014-17 data. 3/21/23 Tr. 367-68, 370-73 (Johnson). Those 
purposes, PTV maintain, are inconsistent with a characterization of 
their work as specification searching. Public Television's Reply 
Proposed Findings of Fact and Conclusions of Law (PTV RPFF) ] 208.
    Overall, given the full disclosure of all the work by Dr. Johnson 
and his fellow professionals at PTV, PTV maintains that this 
comprehensive body of evidence shows that the Johnson Model generated 
regression results that are unbiased and best reflect the data 
available to be input into the Johnson Model. PTV RPFF ] 210.

H. The Judges' Analysis and Conclusions

    As an initial matter, the Judges reject SDC's argument that Dr. 
Crawford's deviations from the prior regression models presented by 
Drs. Joel Waldfogel and Gregory Rosston ipso facto demonstrate, or even 
suggest, that Dr. Crawford engaged in the wrongful process of 
specification searching. The record reflects no legal, economic or 
econometric principle that an expert cannot alter, revise, add to or 
subtract from a prior economic model. Indeed, the history of the 
Judges' acceptance of fee-based regression models as evidence shows 
quite the opposite. A brief examination of the evolution the regression 
methodology, set forth immediately below, makes that clear.
    In the allocation (Phase I) proceedings for the 1998-99 royalties, 
the CARP described the first fee-based regression relies upon in such 
proceedings:

    Dr. Rosston's regression attempts to analyze the relationship 
between royalties paid by cable operators for the carriage of 
distant signals in 1998-1999 and the quantity of programming minutes 
by programming category on those distant signals. . . . It compares 
the relative volume of the various Phase I categories of programming 
contained in the station signals actually purchased by CSOs in 1998 
1999 with the total royalties each CSO actually paid for that 
programming . . . identifying the amount of royalties as the 
dependent variable . . . .

. . .

    Dr. Rosston included more than royalties and programming minutes 
in the dataset he used for his regression analysis. In order to 
account for the non-programming factors that may affect the 
royalties paid by a cable system, Dr. Rosston added the following 
variables: (1) the number of subscribers to the cable system in the 
prior period (the so-called ``lagged subscribers'' variable); (2) 
the number of activated channels for the cable system; (3) the 
average household income of the market in which the cable system was 
located; (4) the total number of local channels carried; (5) a 
variable to account for the payment of 3.75% royalties; and (6) a 
variable to account for the carriage of partially distant signals.

Report of the Copyright Arbitration Royalty Panel to the Librarian of 
Congress, in Docket No. 2001-8 CARP CD 98-99 (``1998-99 CARP Report'') 
at 45-46 (Oct. 21, 2003). The CARP accepted Dr. Rosston's fee-based 
regression, but only as corroborative of survey results also in 
evidence. Id. at 50. The CARP declined to give more evidentiary weight 
to the Rosston regression, relative to the Bortz Survey (which the CARP 
found to be ``extremely robust,'' id. at 30).
    In the allocation (Phase I) proceeding for the 2004-05 years, the 
Judges received in evidence the Waldfogel fee-based regression. Dr. 
George has described in her testimony in this proceeding the key 
changes made by Dr. Waldfogel to the Rosston regressions:

    (1) estimating the marginal value of additional programming 
minutes (regression

[[Page 54182]]

coefficients) using pooled data for all years, improving the 
precision of the estimates;
    (2) calculating claimant shares using only compensable 
programming; and
    (3) estimating the regression model with a sample of programming 
covering three full weeks per accounting period.

George WDT at 24 n.22. See also 2004-05 Distribution Order at 57068 
(noting that the Waldfogel regression was ``similar'' to the Rosston 
regression, not identical).
    Similarly, in the 2010-13 proceeding, the Judges found that the 
regression approach on which they relied--the Crawford Model--reflected 
an improvement over the Waldfogel Model, because, inter alia, the 
Crawford Model: (1) relied on more granular subscriber group data (made 
available by statutory changes in CSO reporting requirements); and (2) 
employed ``fixed effects'' to diminish the impact of potentially 
``omitted variables.'' 2010-13 Determination at 3569. See also George 
WDT at 24-26 (identifying the improvements made by Dr. Crawford).
    This history clearly shows that the Judges have not found that the 
mere presence of model modifications reveals any inherent defect in 
fee-based regressions writ large or in any such model in particular. 
Rather, a modification of a fee-based regression model may properly 
reflect (1) improvements in the model; (2) improvements in the data; 
(3) changes in the underlying industry; (4) changes in applicable 
economic theory; and/or (4) wrongful specification searching. Without 
further analysis, deviations from prior models is not itself 
informative.
    But the SDC maintain that Dr. Crawford's development of his model 
was--to say the least--troubling, and not consistent with an attempt 
simply to improve upon prior regression models or to generate a more 
relevant model for this proceeding. As noted supra, SDC argue 
essentially that Dr. Crawford engage in the improper process of 
specification searching, and lied on the witness stand to cover-up that 
improper conduct. To summarize, SDC contends that Dr. Crawford lied 
under oath about the following:

--his testing of many different functional forms
--his development and rejection of many undisclosed alternative 
models
--his inclusion of indicator variables with no apparent function
--his running of hundreds of models without Fixed Effects when he 
actually ran these models at various levels of Fixed Effects.

See SDC PFF ]] 90-91, 99, 106.

    As Chief Judge Shaw noted at the hearing, the Judges are not in a 
position to find whether Dr. Crawford did or did not engage in improper 
professional conduct, as alleged by SDC, because he is not appearing as 
a witness in this proceeding. 3/22/23 Tr. 894-95 (Shaw, C.J.) Thus, the 
Judges were loath to conduct a ``trial-within-a-trial'' as to Dr. 
Crawford's work and procedures.
    However, that is hardly the end of the matter. SDC has presented 
compelling evidence of potential specification searching and 
dissembling by Dr. Crawford. Moreover, SDC provided to the other 
parties in this proceeding, as voluntary discovery disclosures, Dr. 
Crawford's internal workpapers, which the Judges had ordered produced 
in the 2010-13 satellite proceeding that followed on the heels of the 
2010-13 cable proceeding--disclosed only after SDC's Motion to Compel 
and the Judges' in camera review of those documents.
    The fee-based regression experts view Dr. Crawford's potential 
transgressions with less concern. Dr. George, CCG's expert witness, 
maintains that Dr. Crawford's non-disclosures and untruths, as 
cataloged and characterized by SDC, are of no consequence, because she, 
and the other experts, were able to examine the Crawford Model as it 
was presented, and evaluate it on its merits. George WRT at 53. In 
essence, this response is in the nature of a ``no harm, no foul'' 
rationale for disregarding any of Dr. Crawford's alleged improprieties 
as alleged by SDC. And, in that context, Dr. George examined the 
Crawford Model and found no cause to reject it as a starting point for 
her analysis (although she modified the Crawford Model to account for 
marketplace changes, arising predominantly from the WGNA conversion, 
that she found to necessitate modeling changes particularly with regard 
to the use of fixed effects). George WRT at 50-54.
    Dr. Marx's carefully repeated testimony is similar, but nuanced, 
hedged and cast in the form of a double negative: ``[W]hat I saw was 
consistent with or at least not inconsistent with proper econometric 
practice.'' 4/11/23 Tr. 4121 (Marx). She does make a more specific 
defense of Dr. Crawford, offering her opinion that, the ``mere 
observation of a large number of regressions'' in Dr. Crawford's 
workpapers is ``not surprising,'' and is what one would expect to see 
as a ``sensitivity'' analysis, which is a ``best practice'' in 
regression modeling. Marx WRT ] 10. As a final defense of Dr. 
Crawford's modeling conduct, Dr. Marx analogizes his proffer of expert 
testimony before the Judges to an academic economist's submission of a 
proposed article to a professional journal, which would be reviewed by 
an editor and referees, in a process that is within the ambit of Dr. 
Marx's professional responsibilities. In that context, Dr. Marx would 
not require that all the modeling decisions by the econometrician be 
set forth in the proposed article, 4/11/23 Tr. 4328 (Marx) (``in my 
work as a professional economist, as a referee, as an editor, I don't 
expect to see the full list of every regression that was ever run.'') 
and she notes that she was able to evaluate Dr. Crawford's submission 
on its own merits, like a proposed article, without all the prior 
regression runs. Id. at 4111-4115.\37\
---------------------------------------------------------------------------

    \37\ The Judges also take note of Dr. Marx's awkward position as 
to this issue. As SDC notes, she is a partner at Bates White, an 
economic and econometric consulting firm (in addition to her 
position as an economics professor at Duke University's Fuqua School 
of Business). Dr. Crawford likewise is a partner at Bates White (as 
is another CTV testifying expert in this proceeding and in the 2010-
13 proceeding, Dr. Bennett). Further, Dr. Crawford testified in the 
prior proceeding on behalf of CTV, whereas Dr. Marx is the economic 
expert now testifying on behalf of the same party, CTV.
---------------------------------------------------------------------------

    The Judges find that the other experts in this proceeding--
particularly Drs. Johnson, George and Marx--who proffered fee-based 
regression models--were obligated to adequately address the impact of 
Dr. Crawford's workpapers, as well as the assertion that they 
demonstrated he lied in his testimony in the prior proceeding. This 
obligation existed because, as SDC witness Dr. Rubinfeld testified, in 
his decades of experience, he has ``never seen anything on this scale'' 
where ``a researcher selected a model from hundreds that were tried.'' 
4/6/23 Tr. 3638 (Rubinfeld). The economists' careful analysis of Dr. 
Crawford's work is necessary, because--as explained in more detail 
infra--the discovery of his potential concealment and dissembling, 
which was unearthed in discovery in the satellite proceeding, may have 
been procedural in origin, but procedural matters can be outcome-
determinative, or at least impactful as to the outcome of a legal 
proceeding.\38\ As explained below, Drs. George, Johnson and Marx all 
failed in this regard.
---------------------------------------------------------------------------

    \38\ Courts have long been concerned with whether what appears 
facially to be procedural is in actuality outcome-determinative. See 
Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). The Judges in the 
present case expected the same concern from the economic experts in 
the context of their analysis.
---------------------------------------------------------------------------

    The fundamental problem with the self-exculpations by these experts 
is that they failed to address an issue that the Judges made explicit 
in the 2010-13 Determination. Specifically, in response to the SDC's 
speculation that Dr. Crawford had engaged in specification searching, 
the Judges agreed that the problem inherent in such improper

[[Page 54183]]

behavior was that it would ``consum[e] . . . `phantom degrees of 
freedom,' i.e., `variables that were tried and rejected--rather than 
included in the regression model in evidence.' '' 2010-13 Determination 
at 3566.\39\
---------------------------------------------------------------------------

    \39\ As the Judges noted in that prior proceeding:
    `Degrees of freedom' are defined ``[i]n multiple regression 
analysis, [as] the number of observations minus the number of 
estimated parameters.'' [citation omitted] Accordingly, 
statisticians understand ``degrees of freedom' to be measures of how 
much can be learned from a regression, with the quality of knowledge 
improved by increasing the number of observations, reducing the 
number of estimated parameters, or by some combination of both that 
serves to widen the difference between the number of observations 
and parameters. [citation omitted] . . . [A] `phantom degree of 
freedom' can be generated when the modeler reduces the number of 
parameters by his or her rejection of other models that would have 
added a greater number of parameters--nothing more has really been 
learned but the explicit number of degrees of freedom appears 
larger, as an artifact (a ` ``phantom') arising from the 
econometrician's rejection of models containing additional 
parameters. [citation omitted].
    2010-13 Determination at 3566 n.63.
---------------------------------------------------------------------------

    In that prior proceeding, the Judges found that the record did not 
reveal evidence of specification searching (recall that this finding 
was made prior to the CTV's compelled production of Dr. Crawford's 
workpapers in the companion satellite proceeding). However, in response 
to an SDC Motion to Strike Dr. Crawford's testimony, which the Judges 
denied given the absence of evidence of specification searching, they 
did reserve the right to reduce the weight they accord to the 
regression Dr.] Crawford presented. Id. n.64. Ultimately though, the 
Judges declined to reduce the weight they accorded to Dr. Crawford's 
regression analysis based on the claim of specification searching. Id.
    Of course, between the two cable proceedings then and now, the 
satellite proceeding intervened. In Order 24 in the present proceeding, 
the Judges granted SDC's Motion to Compel another party, PTV, to 
produce document that might reflect specification searching by its 
expert Dr. Johnson (discussed infra). The Judges' discussion of 
specification searching in Order 24 also bears on the Judges' present 
consideration of how Dr. Crawford's modeling procedures impacted the 
models proffered by Drs. George, Johnson and Marx in this proceeding, 
all of which were based on the Crawford Model. In summary fashion,\40\ 
below is what the Judges stated regarding specification searching in 
Order 24:
---------------------------------------------------------------------------

    \40\ Although the following is a summary, with citations 
omitted, the Judges adopt in full herein their reasoning in Order 
24.

--the particular importance of discovery relating to econometric 
evidence is underscored by the potential for models to be 
manufactured in the service of a particular result, where findings 
are presented with ``notoriously misleading accounts of how the 
research itself was conducted.''
--it is important that econometricians explain fully their 
specification search in order to judge how the results may have been 
affected.
--econometricians should disclose ``all the regressions that were 
run, not just the good ones . . . basically an `honesty is the best 
policy approach.''
--these criticisms of special import here, where the applied 
econometric work can affect the allocation of significant royalty 
sums.
--specification searching is a concern here because the ``hired 
gun'' role of the expert creates an environment in which 
specification searching can cause ``far-reaching harm.''
--but what can be construed as improper ``specification searching'' 
can ``in fact constitute good econometric practice'' by using the 
empirical evidence to rank models and let the data speak for itself;
--adding specifications to the modeling can assist in solving the 
econometric problem at hand
--suppressing failed specifications and arbitrarily presenting one 
successful specification is a ``spurious success,'' but it is not 
necessarily dishonest.
--it would be fallacious to prefer not to search but simply to write 
down a model and to conduct a one-shot test. . . .
--there are search methodologies that support, rather than distort 
statistical hypothesis tests.
--specification searches are necessary, provided there is a ``full 
accounting'' of all alternative models, specifications and datasets

Order 24 at 48-51 & n.65. (citations omitted).

    In sum, as one authority cited by the Judges concluded: ``[T]here 
are good and bad search procedures.'' Order 24 at 51 (emphasis added).
    The foregoing summary makes clear that, on the surface, the methods 
and practice of an econometrician may look either like improper 
specification searching or like a proper searching for the appropriate 
model specifications. In order to determine which characterization is 
more accurate, further expert analysis is needed.
    However, as to this, the parties that relied on the Crawford Model 
punted. Most startingly, Dr. Johnson testified that he never received 
the satellite case documents that SDC's counsel produced to PTV's 
counsel (and to all counsel) or the testimony by Dr. Erdem in the 
satellite proceeding that was designated as evidence (Ex. 7054) in this 
proceeding by the SDC. 3/21/23 Tr. 340-41; 611, 616-17 (Johnson).\41\
---------------------------------------------------------------------------

    \41\ The record does not reflect whether PTV's counsel ever 
provided copies of these materials to Dr. Johnson.
---------------------------------------------------------------------------

    For her part, Dr. Marx in essence simply restates the difficult 
nature of the process, testifying that she was unable to distinguish 
Dr. Crawford's process as either an improper specification search or a 
useful sensitivity search. But Dr. Marx did not indicate that she 
examined the documents produced by SDC in any detail approximating the 
analysis engaged in by Dr. Erdem on behalf of SDC, before figuratively 
throwing up her hands and declaring the characterization of Dr. 
Crawford's position as unknowable. Moreover, although Dr. Marx was 
troubled by Dr. Crawford's apparently false statements under oath, she 
remained incurious as to whether his troubling testimony was indicative 
of a covering-up of specification searching.\42\
---------------------------------------------------------------------------

    \42\ The SDC also convincingly explained that whatever it was 
that Dr. Crawford was doing, it did not qualify as a ``sensitivity'' 
test. Settling Devotional Claimants' Proposed Reply Findings of Fact 
and Conclusions of Law ] 2. The Judges agree. A sensitivity test is 
``[t]he process of checking whether the estimated effects and 
statistical significance of key explanatory variables are sensitive 
to inclusion of other explanatory variables, functional form, 
dropping of potential out-lying observations, or different modes of 
estimating.'' 2010-13 Determination at 3562 n.48 (citation omitted). 
But the same authority quoted in note 34 situates the ``sensitivity 
analysis'' as occurring after the econometrician has estimated his 
or her original model, not during the specification process. 
Wooldridge, Introductory Economics 687 (3d ed. 2006). To engage in 
what would otherwise be a sensitivity analysis in order to search a 
model places the cart before the horse, and may be a telltale sign 
of ``data mining,'' i.e., specification searching. See Wooldridge, 
supra, at 688 (The ``inclination . . . to try different models, 
different estimation techniques, or perhaps different subsets of 
data until the results correspond more closely to what was expected 
[is] data mining[which] violates the assumptions we have made in our 
econometric analysis.'').
---------------------------------------------------------------------------

    Moreover, when the specification process has been shrouded, as 
here, the position taken by Drs. Johnson and George becomes untenable. 
Their analysis and replication of the Crawford Model is materially 
incomplete, given that it has credibly been described as allegedly 
constructed by a specification search that may have generated the 
``phantom degrees of freedom'' discussed supra, or through a process 
which is analogous to the equivalent of the spurious coin flip 
experiment also discussed supra. The problem for the regression experts 
who ignore the evidence of potential specification searching is that 
they simply cannot appreciate the problems that may have been 
generated, unless and until they have engaged in a reasonable forensic

[[Page 54184]]

analysis of the work (and workpapers) of the expert who constructed the 
model at issue.
    The failure of Drs. George, Johnson and Marx to thoroughly re-
examine the Crawford Model in light of the discovery obtained by SDC in 
the 2010-13 satellite proceeding has consequences. Although, as noted 
supra, the Judges are not in a position to engage in a ``trial within a 
trial'' and render findings regarding the Crawford Model in this 
proceeding (where Dr. Crawford is absent), these three expert witnesses 
were not similarly constrained. They had a duty to review all materials 
relevant to their assignments, in a sufficient manner, and the 
satellite discovery pertaining to Dr. Crawford's work clearly falls 
within that category of materials. For Dr. Johnson to have not even 
received that material is inexplicable. For Dr. Marx to acknowledge the 
problematic nature of Dr. Crawford's apparent dissembling under oath 
without further analysis of his work is troubling. And for Dr. George 
to dismiss the assertions of improper specification searching by 
claiming that she could independently evaluate the Crawford Model is to 
dismiss the very idea that specification searching may generate hidden 
problems.
    Indeed, among the witnesses proffering regressions, only Dr. Tyler 
appeared to respond reasonably, relying (in part) on the troubling 
facts uncovered in the satellite proceeding regarding Dr. Crawford's 
processes to generate his own model that deviated in important ways 
from the Crawford Model.
    The impact of Dr. Crawford's troubling conduct is that it raises an 
issue familiar to judges and lawyers in another context--how to handle 
testimony and evidence that may be characterized as the ``fruit of the 
poisonous tree.'' Although this evidentiary concept is typically 
pertinent to the criminal law, it is instructive in other areas, 
including intellectual property matters:

    The animating principle of the fruit of the poisonous tree 
doctrine is causation: If you had not violated the law, you wouldn't 
have found the evidence, and you wouldn't have followed whatever 
investigative path that was triggered by finding that evidence. The 
newly discovered evidence-the fruit-is tainted by the poison of the 
illegal search. Civil law also concerns itself with chains of 
causation . . . [b]ut it does not typically apply the logic of the 
fruit of the poisonous tree to chase down every consequence of a 
wrong.

M. Lemley, The Fruit of the Poisonous Tree in IP Law, 103 Iowa L. Rev. 
245, 246 (2017). As to the present issue, the ``fruit of the poisonous 
tree'' logic--if the source of the evidence or evidence itself is 
tainted, then anything gained from it is tainted as well--has 
application because it would be inequitable for the Judges to adopt 
regression evidence built on the Crawford Model, when the witnesses who 
proffered that evidence inadequately addressed reasonable questions 
regarding the appropriateness of the methods used to generate the 
Crawford Model.
    If the Crawford Model had been the first regression model utilized 
in these allocation proceedings, the Judges might consider rejecting 
the models proffered by Drs. George, Johnson and Marx for their failure 
to address in more and sufficient detail how the factual bases for the 
allegations of Dr. Crawford's specification searching impacted their 
models. But, as described supra, the Crawford Model itself was built 
upon, but differentiated from, the prior regressions produced by Drs. 
Rosston and Waldfogel and relied upon by the Judges. Thus, the 
regression models of Drs. George, Johnson and Marx are not the product 
merely of the Crawford Model, but also of those models that preceded 
it. Moreover, Drs. George and Johnson take pains to explain how their 
models are different from Dr. Crawford's, particularly in the reduction 
or elimination, respectively, of fixed effects, in order to generate 
more observations (as discussed elsewhere in this determination).\43\ 
So, it is clear that these two experts engaged in independent economic 
analysis separate and apart from what was undertaken by Dr. Crawford.
---------------------------------------------------------------------------

    \43\ Whether those particular differentiations from the Crawford 
Model were appropriate is likewise discussed elsewhere in this 
determination.
---------------------------------------------------------------------------

    The consideration of Dr. Marx's full adoption of the Crawford 
Model, as it pertained to the year 2013, in order for her to generate 
her Bayesian model for 2014, must be considered separately. Dr. Marx 
explicitly relies on the Crawford Model, despite her inability to 
explain or address his apparent prevarications and despite her 
unwillingness to determine whether his methods constituted 
specification searching, sensitivity analysis or something else. 
However, Dr. Marx's qualitative and directional economic (not 
econometric) testimony regarding the years 2015-2017 are not 
compromised in this regard.
    Accordingly, among the regression approaches proffered in this 
proceeding, the experts' responses and non-responses to Dr. Crawford's 
conduct lead the Judges, ceteris paribus, to give diminished weight to 
the Johnson and George Models, and the least weight to the Marx Model 
for 2014. The Judges do not diminish the weight they shall give to the 
Tyler Model on this basis, given his deviation from the Crawford Model.

I. The Allegation That Dr. Johnson Engaged in Improper Specification 
Searching

    Unlike the specification searching issue regarding the Crawford 
Model, there is no valid allegation that Dr. Johnson made any material 
misrepresentations in his testimony. Although SDC correctly notes that 
PTV did not provide full discovery of the work by Dr. Johnson and other 
professionals at Edgeworth until compelled to do so pursuant to SDC's 
motion and the Judges' Order 24, PTV appears to have withheld 
production of documents regarding this regression work based on its 
understanding that the Federal Rules of Civil Procedure do not require 
production of documents which related to regressions that an expert had 
rejected or had not otherwise seen or upon which he did not rely.\44\
---------------------------------------------------------------------------

    \44\ In Order 24, the Judges noted that, although they look to 
the Federal Rules of Civil Procedure for guidance, they are bound on 
this issue by 37 CFR 351.10 (e), regarding the production of 
documents relating to an expert witness's methodology, and that this 
rule also applies to the production of documents in discovery 
pertaining to expert methodology.
---------------------------------------------------------------------------

    However, the Judges remain troubled, as they so expressed in Order 
24, that PTV appeared to allow for the creation of two different 
``teams'' within Dr. Johnson's firm--one identified as the ``consulting 
team,'' and the other as the ``testifying'' team. As noted supra, the 
regression-related documents generated by the ``consulting team'' were 
not provided to Dr. Johnson. The Judges noted in Order 24 that a 
``consulting team'' of experts can be utilized by a party's law firm, 
to allow for work product confidentiality in connection with the law 
firm's evaluation of the facts. However, as Order 24 further explained, 
when the ``consulting team'' is created withing the same firm of 
economists who are also preparing testimony and actually testifying, 
there is the risk that work by the ``consulting'' team will be utilized 
as a screening device for work that should have been undertaken by the 
``testifying'' team. Thus, the use of a ``consulting'' team can allow a 
party to also cloak from discovery expert work by claiming the 
protection of the work-product rule.
    This is essentially what SDC alleges, when it points to evidence, 
as noted supra, that Edgeworth had shielded Dr.

[[Page 54185]]

Johnson from certain documents. Moreover, the soundness of the ``wall'' 
between the ``consulting'' team and the ``testifying'' team was 
questionable, given that the ``consulting'' team was led by Drs. 
Michael Kheyfets and David Colino, but they also were the senior 
members of the ``testifying'' team that reported to Dr. Johnson, along 
with dual team members Dr. Stephanie Cheng and Esther Yan. 3/21/23 Tr. 
664-65 (Johnson). Additionally, when PTV first produced documents to 
SDC, it did not also provide a privilege log describing the Edgeworth 
documents otherwise withheld because of an assertion of a privilege 
relating to a consulting team. (After SDC's motion to compel, PTV 
provided a privilege log, but, after Order 24 issued, PTV produced 
virtually all of the previously withheld material.) Thus, the Judges 
find some evidence that PTV attempted to avoid discovery of the work 
undertaken by the firm it engaged for expert work in this proceeding--
the work that has been characterized by SDC as evidence of 
specification searching.\45\ This evidence serves to diminish the 
Judges' reliance on the Johnson Model that was generated out of this 
scenario, although the Judges stop well short of any finding that 
Edgeworth, or any of its professionals, engaged in any misconduct.\46\
---------------------------------------------------------------------------

    \45\ The Judges take particular note of the fact that an email 
that was withheld from Dr. Johnson as ``consulting'' team material 
contained ``a link to CDC distant signals [with] the caveat: `. . . 
these data files are being shared for consulting purposes only and 
should not be shared with John'.''. Rubinfeld SWRT at 6. It is 
difficult to fathom why raw data regarding distant signals would be 
withheld from the testifying expert.
    \46\ Rather, the Judges perceive from the facts that PTV and its 
experts took a very aggressive litigation posture, one that SDC 
successfully challenged, leading to the issuance of Order 24.
---------------------------------------------------------------------------

    Turning to the substance of the documents produced in response to 
Order 24, the Judges are struck, as was SDC, with the sheer number of 
regression runs undertaken by Edgeworth. In particular, the Judges 
agree with SDC that the experimentation with 44 dependent variables is 
specifically troubling, as it suggests that the model-building was not 
well-grounded in economic theory.
    Also troubling was the fact that, over a prolonged period, 
successive testing by Dr. Johnson and other Edgeworth Economics 
professionals was highly correlated with a steady rise in PTV's 
allocation shares. Although the Judges disagree with SDC's distortion 
of Dr. Johnson's testimony as to the ``coincidental'' nature of this 
correlation, as noted supra, the Judges do not find any sufficient 
basis in the record to explain this correlation between sequential 
regression runs and the growth of PTV's allocation share. Although PTV 
argues that this correlation subsided as data corrections were 
completed, PTV presented no sufficient basis to rebut SDC's charge that 
data changes should not consistently be correlated with the growth of 
PTV's share allocation, as opposed to a randomized effect on share 
percentages.\47\
---------------------------------------------------------------------------

    \47\ The Judges are less concerned with SDC's assertion that 
proof of PTV's specification searching is supported by evidence that 
PTV's goal was to maximize PTV's share. The Judges are not 
na[iuml]ve, and they recognize that experts will work to produce the 
best results for the party on whose behalf they provide testimony. 
Rather, the Judges are concerned with whether the evidence suggests 
that experts may have engaged in any inappropriate or questionable 
acts in the course of attempting to maximize the return to the party 
on whose behalf they give testimony.
---------------------------------------------------------------------------

    On balance, the Judges find that the regression analyses undertaken 
on behalf of PTV at least demonstrate an appearance--in the words of 
SDC's expert, Dr. Rubinfeld--of practices that ran ``counter to sound 
empirical research practice,'' and that this work may well have been 
undertaken with an overzealous attempt ``to obtain . . . results that . 
. . generated relatively high shares for PTV Claimants.'' Rubinfeld 
SWRT ] 28. For this reason--and for other reasons set forth elsewhere 
in this determination--the Judges give reduced weight to the Johnson 
Model.

VII. Issues Specific to PTV

A. How should ``must-carry'' PTV stations be analyzed in the regression 
analyses?

1. PTV's Position on the ``Must-Carry'' Issue
    PTV first emphasizes its legal argument. They begin by 
acknowledging that under the Cable Television Consumer Protection and 
Competition Act of 1992 (the ``Cable Act'') and the regulations of the 
Federal Communications Commission (``FCC'') (the ``must-carry'' rules), 
CSOs are required to retransmit certain broadcast signals. PTV PFF ] 70 
(citing 47 U.S.C. 534-35). Nonetheless, PTV maintain that ``the Judges 
and their predecessors . . . have never found that must-carry 
requirements materially affect the value of distant retransmissions of 
Public Television programming.'' PTV PFF ] 71 (emphasis added).
    PTV follows this legal point with a factual issue, challenging the 
testimony of JSC's witness, Mr. Harvey, who identifies 15.5 percent of 
PTV distant signals as having been retransmitted in compliance with 
these must-carry rules, using criteria that Mr. Harvey believed were 
``generally indicative'' of must-carry carriage. PTV PFF ] 72. 
Specifically, Mr. Harvey categorized distantly retransmitted signals as 
``must-carry'' if they were:
    (1) carried to all subscriber groups within the system,
    (2) local to at least one subscriber group within the system, and
    (3) were licensed to a community whose reference point was within 
50 miles of the location where the CSO received signals for cable 
distribution (the ``headend'').

PTV PFF ] 72 (and record citations therein). A primary assertion by PTV 
is that, because of the third criterion above, these stations, 
designated as ``must-carry'' while technically ``distant'' within the 
meaning of section 111, ``were more likely to reflect the demands and 
preferences of regional viewers'' and thus contained ``valuable 
programming.'' PTV PFF ] 72 (and record citations therein).
    But PTV takes issue with the entirety of Mr. Harvey's approach to 
designating ``must-carry'' stations. First, PTV points out that ``even 
. . . expert witnesses whose opinions rely on Mr. Harvey's must-carry 
analysis'' acknowledge that his analysis ``did not definitively 
identify must-carry signals.'' PTV PFF ] 73 (and record citations 
therein) (emphasis added).
    Second, PTV argues that ``Mr. Harvey failed to provide a reason for 
adopting his first criterion that the must-carry rules should apply to 
signals carried ``to all subscriber groups within the system.'' PTV PFF 
] 74 (and record citations therein). PTV maintains that there 
presumably would be no reason to use that as a criterion unless he 
thought that the must-carry law required carriage ``to all subscriber 
groups within the system.'' PTV PFF ] 74 (and record citations 
therein). More particularly, PTV understands that a ``cable system,'' 
as defined in the must-carry rules, ``is a smaller unit than the `cable 
system' as defined in section 111.'' PTV PFF ] 75 (and record citations 
therein). Thus, PTV argues that ``carriage of such a signal to all of 
the subscriber groups in a system may be evidence of that cable 
system's choice to carry that signal more broadly than the must-carry 
rules require.'' PTV PFF ] 75 (and record citations therein). PTV 
concludes that Mr. Harvey's must-carry analysis ``likely results in 
overstating the [number] of [PTV] signals subject to mandatory 
carriage, perhaps dramatically so.'' PTV PFF ] 75 (emphasis added).
    PTV further makes what can be characterized as a ``no changed 
circumstance'' argument. Specifically,

[[Page 54186]]

PTV points out that Mr. Harvey fails to address the fact that mandatory 
carriage of PTV distant signals has become more expansive since the 
2010-2013 proceeding, and that no party argued in that proceeding that 
the must-carry rules had any material impact on relative market value. 
Further, PTV avers that ``the fraction of PTV signals that Mr. Harvey 
identified as . . . must-carry declined substantially over the period 
from 2014 to 2017,'' suggesting that, even under his analysis, ``the 
share of PTV distant retransmissions that were subject to must-carry is 
less than in prior proceedings.'' PTV PFF ] 76 (and record citations 
therein).
    Additionally, PTV asserts that Mr. Harvey incorrectly implied that 
PTV's multicast streams \48\ are subject to the must-carry rules. PTV 
PFF ] 77 (and record citations therein). To the contrary, PTV avers 
that ``it is undisputed that the must-carry rules do not require CSOs 
to retransmit those non-primary signals of a PTV broadcast station, and 
all carriage of Public Television multicast streams was due to the 
voluntary choice of the cable operators.'' PTV PFF ] 77 (and record 
citations therein).
---------------------------------------------------------------------------

    \48\ The Judges define and discuss ``multicast streams'' infra.
---------------------------------------------------------------------------

    Beyond its legal and factual arguments, PTV adds an argument based 
on economic analysis. Taking on a point made by another JSC witness, 
Dr. Majure, PTV opines that ``there is no basis to assume that any 
distant signal carried pursuant to the must-carry rules provide `$0' of 
value to the CSO, as Dr. Majure argues.'' PTV PFF ] 78 (and record 
citations therein). More particularly, PTV explains that ``[p]eople are 
routinely required to purchase things, such as health insurance and 
seat belts, which they may value highly.'' PTV PFF ] 78 (and record 
citations therein). See also PTV PFF ] 81 (``Dr. Majure's theory of 
`$0' value fails [to pass through a] `reality filter' [by] suggest[ing] 
that all local [PTV] programming has [zero] value.'')
    Changing tacks, PTV points out that, without dispute, ``many CSOs 
chose to retransmit [PTV] distant signals when they could have carried 
another distant signal instead.'' PTV PFF ] 79 (and record citations 
therein) Additionally, PTV compares this CSO decision-making to the 
CSOs' responses to the Bortz Survey, in which ``[s]everal CSOs that 
carried the purportedly must-carry [PTV] distant signals attributed 
significant value to those Public Television distant signals in their 
[survey] responses . . . .'' PTV PFF ] 79 (and record citations 
therein).
    PTV further points to various ``sensitivity tests'' undertaken by 
Drs. Johnson, Bennett and George, all of which ``found that those 
purportedly must-carry Public Television distant signals do not have 
relative marketplace value that is statistically significantly 
different from the relative marketplace value of other Public 
Television distant signals.'' PTV PFF ] 82 (and record citations 
therein). Thus, PTV takes issue with any implicit assumption ``that any 
distant signal carried pursuant to the must-carry rules are, on 
average, less valuable to the CSOs.'' PTV PFF ] 82.
    But PTV also acknowledges the presence of an indemnification 
provision in the must-carry statute, whereby Congress exempted from 
mandatory carriage any noncommercial educational signals that qualify 
as distant signals, ``unless [the noncommercial educational broadcast 
station] indemnifies the cable operator for any increased copyright 
costs resulting from carriage of such signal.'' PTV PFF ] 84 (quoting 
47 U.S.C. 535(i)(2)). Thus, a CSO ``was eligible for indemnification 
only if and to the extent that its section 111 royalty fee increased 
due to the carriage of a distant signal that was subject to must-carry; 
and the station then had the choice of declining indemnification, in 
which case the [CSO] was released from any must-carry obligation.'' PTV 
PFF ] 84. Nonetheless, PTV criticizes any party seeking to exclude 
must-carry stations from the regressions based on this statutory 
provision, which cancels out any royalty payment, because PTV argues 
(echoing its criticism of Mr. Harvey's analysis), that no party has 
``reliably identified any distant signals that are subject to mandatory 
carriage . . . for which the retransmitting cable operator received 
indemnification.'' PTV PFF ] 85 (and record citations therein).
    PTV also makes a more general argument that would apply to PTV 
``must-carry'' stations, even assuming they had no value. Specifically, 
PTV maintains that ``[a] fee-based regression model is designed to 
estimate the average relative value of programming in a bundle, such 
that bundling of programming of different values does not bias the 
regression estimates of relative marketplace value.'' PTV PFF ] 91.
2. The Other Parties' Positions Regarding PTV ``Must-Carry'' Signals
    As a matter of legal interpretation, JSC argues that it would not 
be reasonable to remove from the hypothetical market any statutory 
provisions that apply to the distant signal market, other than the 
section 111 license. JSC PFF ] 2 (and record citations therein). 
Applying this approach, JSC notes that, as a matter of statutory law, 
the Must Carry statutory and regulatory provisions are not found within 
the section 111 license provisions, but rather are statutorily set 
forth at 47 U.S.C. 535, and therefore should remain in effect in the 
hypothetical market the Judges must construct in this proceeding. And, 
because the Must-Carry provisions preclude any finding of Willingness-
to-Pay and fail to reveal CSO's preferences, it is also economically 
reasonable to maintain the impact of the Must Carry provisions on the 
regression approach by excluding such stations from that valuation 
methodology. JSC PFF ] 3 (and record citations therein).
    JSC also points to the following 1992 legislative history of the 
must-carry provisions as supporting, from both the legal and economic 
perspectives, a finding that must-carry PTV stations do not generate 
additional value that can be incorporated into the fee-based 
regressions:

    The [House Committee on Energy and Commerce] Committee believes 
that absent statutory carriage requirements, there is a substantial 
likelihood that local public television stations will be deleted, 
will not be carried, or will be switched to undesirable channels on 
cable systems. Because cable operators are for-profit enterprises, 
they necessarily seek to provide customers with the package of 
programming and services that will maximize the operators' profits. 
As commercial enterprises, cable operators ordinarily lack strong 
incentive to carry programming that does not attract sufficient 
dollars or audiences. Traditionally, public television has provided 
precisely the type of programming commercial broadcasters and cable 
operators find economically unattractive. For this reason, the 
Committee believes that, without `must carry' provisions, public 
television service increasingly will become unavailable to cable 
subscribers.

JSC PFF ] 475 (citing Trial Ex. 1003 (House of Representatives Report 
102-628) at 62).
    JSC points out that this was not only the Congressional viewpoint 
at the time of enactment of the must-carry law, but also that PTV has 
continued to agree with Congress's assessment of the economic 
circumstances described in the above legislative history, insisting 
that public television stations need must-carry status to guarantee 
carriage. JSC PFF ]] 476-478, 488-489 (and record citations therein).
    Last, but certainly not least, in apparent response to PTV's 
criticism of Mr. Harvey's estimate of the number of must-carry 
stations, JSC suggests that PTV knew or should have known how many of 
the stations it represents in this

[[Page 54187]]

proceeding in fact were must-carry stations. JSC PCOL ] 13 (``When a 
party is in a position to proffer testimony or evidence that would 
elucidate a point, or rebut an adverse point, but declines to do so, a 
finder of fact may determine that the testimony would not have been 
supportive of that party's position.'') (citing Final Rule and Order, 
Determination of Rates and Terms for Digital Performance of Sound 
Recordings and Making of Ephemeral Copies to Facilitate Those 
Performances (Web V), 86 FR 59452, 59476 (Oct. 27, 2021) (Web V Final 
Determination), (citing in turn Huthnance v. District of Columbia, 722 
F.3d 371 (D.C. Cir. 2013)), aff'd NRBNMLC v. CRB, 77 F.4th 949, 2023 WL 
4831376 (July 28, 2023).
a. The SDC Position on the ``Must-Carry'' Issue
    The SDC apply their broad criticism of minimum-fee-only CSOs to the 
question of how to address the must-carry PTV stations: ``[N]o 
inference can be drawn regarding `willingness to pay' or any other 
potential theory on the basis of cable system decision-making in the 
presence of mandatory carriage of certain PTV signals.'' Asker WRT ] 17 
n.11; 4/11/23 Tr. 4319-21 (Marx); see also SDC PFF ] 64.
    Like the JSC, the SDC maintain that, as a legal issue, the Judges' 
consideration of economic market forces to determine relative market 
value does not mean that the statutory must-carry rules should be 
ignored:

    The task in these royalty distribution proceedings is to 
determine the relative value of the relevant program categories in a 
hypothetical market that exists in the absence of the section 111 
compulsory license. There is no basis for assuming away the 
existence of other aspects of the regulated market, nor has any 
party in this proceeding presented a rational framework by which one 
could pick and choose which other aspects of the regulated market 
would survive. At a minimum, the Retransmission Consent and Must-
Carry Requirements set forth in the Communications Act and Federal 
Communications Commission's (``FCC'') rules would continue to 
regulate the relationship between broadcast stations and CSOs. See 
47 U.S.C. 325(b); 47 CFR 76.55, 76.64.

SDC PFF ] 218.
    The SDC also emphasize a point central to their general criticism 
of the fee-based regressions--the impact of geography on retransmission 
decisions:

    Unlike commercial stations, the must-carry zone for 
noncommercial stations is determined by distance from the cable 
system rather than by DMA [Designated Market Area]: a noncommercial 
station is entitled to cable carriage under the FCC's must-carry 
rules if its city of license is within 50 miles of the cable 
system's principal headend. 47 CFR 76.55.

SDC PFF ] 222. Further, the SDC note the indemnification provision, 
discussed supra, also compromises the attempt to derive marketplace 
evidence of the value of must-carry stations:

    [Although] [u]nder section 111, a noncommercial station is only 
considered ``local'' within 35 miles of the cable system's headend . 
. . [a] cable operator is not required to carry a noncommercial 
station that would be considered distant for copyright purposes 
unless the noncommercial station agrees to indemnify the CSO for any 
increased copyright liability resulting from such carriage.
    Presumably, this indemnification requirement would be moot in 
the absence of section 111, because there would be no cost at all to 
cable systems carrying noncommercial signals within the FCC's 50-
mile must-carry zone in the absence of section 111. There is no 
basis to believe the inapplicability of the indemnification 
requirement would affect the relative marketplace value of 
noncommercial stations, as carriage of noncommercial stations would 
still result from the federal must-carry mandate rather than any CSO 
choice.

SDC PFF ] 222 (citing 17 U.S.C. 111(f)(4)).
b. The CTV Position on the ``Must-Carry'' Issue
    CTV emphasizes the substantial importance of the must-carry issue, 
noting first that ``[d]uring 2014-2017, no less than 33.9% PTV signals 
were carried pursuant to must-carry rules.'' CTV PFF ] 249 (citing 
Harvey CWDT ] 87; 3/28/23 Tr. 1836-37 (Harvey)). See also CTV PFF ]] 
256-57 (42.6% of all PTV distant reported base fee royalties are from 
PTV signals subject to the must-carry rule.)
    CTV also expands upon the evidentiary point made by JSC, noted 
supra, regarding PTV's failure to produce evidence as to the number of 
must-carry stations:

    PTV, the claimant with the most accurate information regarding 
PTV distant stations carried by CSOs pursuant to the must-carry 
rules, has provided no evidence or statistics to refute the 
foregoing. At most, PTV economics witness Dr. Johnson contends that 
Mr. Harvey's findings are speculative, but he neither contested nor 
provided any alternative calculations to Mr. Harvey's conclusions.

CTV PFF ] 258. Echoing the criticism noted supra, CTV maintains that 
carriage of a PTV signal under the must-carry rules does not reflect a 
CSO's revealed preference through a weighing of incremental costs 
versus incremental benefits, and thus does not reflect relative 
marketplace value. CTV PFF ] 272 (and record citations therein).
    Moreover, CTV also points out that even when CSOs retransmitting 
must-carry stations pay more than the minimum fee, they nonetheless 
cannot reveal a willingness to pay for that programming because of the 
indemnification obligation, discussed supra, of PTV stations to pay 
back CSOs for any additional royalty costs associated with the required 
(i.e., must-carry) retransmission of its programming. CTV PFF ] 259.
    CTV further notes the ``material'' effect of the must-carry issue 
on PTV's regression and allocation shares, both individually and 
jointly. CTV PFF ] 264. Pointing to a sensitivity analysis by one of 
its expert witnesses, Dr. Bennett, CTV notes that eliminating the 
royalty payments the Johnson Model has attributed to must-carry 
stations substantially reduces the PTV values on either attribute, and 
in combination. Bennett WRT ] 95. These adjustments are shown in the 
figure below:

[[Page 54188]]

[GRAPHIC] [TIFF OMITTED] TN28JN24.005

    Similarly, Dr. Bennett undertakes the same adjustment to Dr. 
George's regression coefficient and allocation share regression results 
for PTV:
[GRAPHIC] [TIFF OMITTED] TN28JN24.006

And in like fashion, Dr. Bennett makes the same must-carry adjustment 
for PTV to Dr. Tyler's analysis:
[GRAPHIC] [TIFF OMITTED] TN28JN24.007

    In conclusion, CTV underscores the existence of a consensus on this 
must-carry issue, noting that Drs. Marx, Bennett, and Majure all agree 
that including PTV must-carry stations in the regressions results in an 
overestimation of the value of PTV content for all four years. CTV PFF 
] 534 (and record citations therein).

[[Page 54189]]

c. The Program Suppliers Position on the ``Must-Carry'' Issue
    Program Suppliers join with the other parties that maintain the 
FCC's must-carry rules should still be deemed by the Judges to apply in 
their modeling of the economic and marketplace environment necessary to 
allocate the royalties at issue. That is, in the hypothetical 
environment, even though the section 111 conditions are relaxed, 
Program Suppliers argue that the parties must ``still continue to be 
subject to the same must-carry rule and agreement obligations . . . .'' 
PS PFF ] 101 (and record citations therein).
    However, Program Suppliers take issue with any assertion that 
accounting for PTV's must-carry stations would have a significant 
effect. Their expert, Dr. Tyler, noted that Dr. Bennett's 
calculations--reproduced supra--showed that removing the must-carry 
stations (that were identified by Mr. Harvey) from the Tyler Model 
barely changed the PTV share allocation. 4/19/23 Tr. 5456 (Tyler). 
Moreover, Dr. Tyler opines, consistent with the testimony by PTV's 
expert Dr. Johnson that, ``even with must-carry, CSOs may still have 
some value related to that carriage.'' 4/19/23 Tr. 5456 (Tyler).\49\ 
See also PS PFF ] 337.
---------------------------------------------------------------------------

    \49\ But note Dr. Marx's point that must-carry stations that 
were distantly retransmitted by CSOs paying only the minimum fee 
would not generate a CSO royalty obligation, mooting the need for a 
royalty indemnification payment. Marx WRT ] 79.
---------------------------------------------------------------------------

d. The CCG Position on the ``Must-Carry'' Issue
    CCG is part of the chorus asserting that the Judges should include 
the impact of the must-carry provisions in their economic analysis of 
relative marketplace value. CCG PFF ] 62. However, CCG parts company 
with those parties arguing that the compelled nature of such 
retransmission decisively compromises the informational worth of that 
carriage in estimating such value.
    Specifically, Dr. George, CCG's expert, like Dr. Johnson, 
analogizes public television programming to other ``real-world 
examples'' of goods that have value, notwithstanding the fact they are 
mandated by the government. In this regard, as examples, she points to 
health insurance, which she says generates value, and to automobile 
airbags and seatbelts which, although mandated, increase the value of 
an automobile. Similarly, she points to the federal government 
requirement that individuals carry health insurance to argue that the 
mandate does not mean that the product does not have value to them. 4/
18/23 Tr. 5346. (George). Based on these analogies, CCG maintains that 
the must-carry rules have a positive effect on the value of PTV 
programming. CCG PFF at 81. See also CCG PFF ] 224.
    Nonetheless, Dr. George recognizes the possibility of an 
alternative finding--that any assertion of value in must-carry stations 
would be rejected. Accordingly, she turns to Dr. Bennett's analysis 
cited supra--at Bennett WRT fig. 21--which she recognizes as showing 
the ``downward adjustments'' to her ``regression'' to account for a 
finding of the absence of value in PTV's must-carry signals. CCG PFF ] 
225 (and record citations therein).
3. The Judges' Analysis and Conclusions Regarding the ``Must-Carry'' 
Issue
    The Judges agree with JSC and CTV, based on the caselaw cited by 
JSC, that PTV, whose clients include the public television stations 
that are in fact subject to must-carry requirements, bore the twin 
burdens of proof--the burden of producing evidence and the burden of 
persuasion--regarding which stations were subject to the must-carry 
provisions and which were not. Further, because PTV is seeking a 
determination including must-carry station data in the regression, 
those burdens are apportioned to PTV as a matter of statute. See 5 
U.S.C. 556(d).
    But rather than produce such evidence or prove its significance, 
PTV elected to attack Mr. Harvey's attempt to estimate the number of 
must-carry stations. Those attacks are insufficient. The Judges first 
take note that PTV argues only that Mr. Harvey ``perhaps'' or 
``likely'' overstated the number of must-carry stations. But Mr. Harvey 
engaged in a reasonable attempt to estimate this number, which PTV 
could have set forth in its submissions, but did not.
    Further, the Judges do not credit PTV's argument that the must-
carry status of some PTV stations can be deemed irrelevant because the 
issue of must-carry stations was not raised in previous section 111 
allocation proceedings. Each of these proceedings is de novo in nature, 
and the determination is based on the evidentiary record in that 
proceeding, as well as on the pertinent findings and conclusions in 
prior proceedings. Although regurgitated factual argument from prior 
findings may be summarily rejected by reference back to the findings in 
prior determinations, and although renewed legal arguments are cabined 
by the precedential effect of prior determinations, new arguments are 
not similarly restricted. Moreover, the absence of an issue in a prior 
proceeding, such as the impact of the must-carry status of PTV 
stations, certainly does not preclude consideration of that issue in 
this proceeding.
    The Judges also reject the argument made by PTV and CCG that the 
must-carry stations have value, notwithstanding that indemnification 
provisions would offset any royalty payments. There are two reasons why 
this argument is incorrect. First, the point is not that the programs 
on must-carry stations, including those subject to royalty 
indemnification payment back to the CSOs, lack value; rather, the point 
is that they lack objective and measurable value. On the issue of 
objective value, the experts for PTV and CCG mistakenly seek to 
analogize must-carry PTV stations to two ``must-buy'' automobile 
attributes, seat belts and air bags, and to ``must-carry'' health 
insurance, which come at a cost. There are two problems with this 
argument. First, although one can quite reasonably argue that these 
coerced purchases are beneficial, from an economic point of view the 
purchase does not reveal a buyer's preference because seatbelts, air 
bags, and health insurance are coerced, not voluntary.\50\ Second, a 
price proxy could likely be generated for seat belts and air bags by 
comparing the retail price of cars immediately before and after their 
inclusion was mandated for new cars, or by comparing the spread in 
price between new cars (with such a safety device) and used cars 
(lacking such safety devices). Regressions seeking to use such data 
would be true, full-fledged hedonic regressions. But here, the task is 
markedly different and more difficult, because no such historical or 
comparative comparisons were possible. Thus, as noted elsewhere in this 
determination, the regressions are ``inspired'' by, and in the nature 
of, hedonic regressions, using the context of section 111 to identify 
the market-related revealed preferences of CSOs, just as fee-based 
regressions have been utilized in previous allocation proceedings. But 
the attempted analogy to market-generated attributes included in 
market-priced products misses the mark and continues the unfortunate 
strained attempts by the experts supporting and criticizing fee-based

[[Page 54190]]

regressions to compare the fee-based regressions to hedonic 
regressions.
---------------------------------------------------------------------------

    \50\ It might be reasonable to assume that a consumer would 
prefer an automobile with these safety features over an automobile 
lacking them, or the protection of health insurance rather than the 
risk associated with its absence, but without a structure for 
monetizing such preferences, the measure is only ordinal in nature, 
rather than cardinal. PTV alludes to this problem when, as noted 
supra, it notes that these are items that purchasers ``may'' value. 
But that implies that they may not value them in a context where 
there is an associated out-of-pocket or opportunity cost.
---------------------------------------------------------------------------

    As to the issue of measurable value, PTV and CCG fail to address 
the fact that, if these stations do not generate net royalties, then 
the regressions should not be attributing (correlating) their minutes 
with royalties. The regressions will not ``see'' the indemnification 
payments made by the PTV stations back to the CSOs who made royalty 
payments. Thus, to the extent these royalty payments are recorded as 
base fee payments on the SOA forms relating to subscriber groups, they 
will falsely be ``seen'' by the regressions as indicating that the 
minutes were associated (correlated) with additional royalties, when 
that was not the case. As several witnesses have noted, the regressions 
are ``dumb,'' and will calculate whatever it is they are programmed to 
calculate. It is up to the econometrician who constructs and evaluates 
the regression to ``think,'' and decide whether the regression has 
reflected reality (legal, institutional, and economic) in a proper 
manner. The Judges find that Mr. Harvey made a prima facie case 
regarding the number of PTV stations that were must-carry.
    The Judges also do not credit PTV's point that many CSOs chose to 
retransmit PTV signals when they could have carried another distant 
signal instead. Not only does that point ignore the problem of whether 
a station was subject to indemnification, it also indicates merely an 
ordinal preference.
    The Judges also reject the argument that the regressions can 
include the must-carry station data because CSOs responded to the Bortz 
Survey by attributing value to such signals. This ``whataboutism'' 
argument holds no purchase--either the data belongs in the regressions, 
or it does not. The Bortz Survey is a form of model seeking to address 
relative marketplace value from a different perspective, and the 
requisites or output of one model do not necessarily map onto another 
model. Cf. NRBNLMC v. CRB, supra, slip op. at 41 (affirming the Judges' 
Web V rate determination that a finding applicable to one economic 
model (the issue of opportunity cost) did not automatically apply to 
the same issue when addressed in a different type of model).
    PTV's assertions regarding the value of any adjustment regarding 
presence of must-carry stations with their attendant indemnification 
requirements is merely an argument regarding the extent of the 
adjustment, not regarding the need for one. As noted, the extent of the 
adjustment varies, depending upon how it is applied and to which 
regression model it is applied. The Judges consider that point in 
making their adjustments, infra.
    Finally, the Judges agree with the argument that the legislative 
history relating to the must-carry provisions, and PTV's own prior 
positions, reflect an understanding that public television stations 
need must-carry status in order to obtain carriage. Such real-world 
facts serve as ``reality filters'' that can and should override the 
``dumb'' manner in which a regression ``sees'' the royalty and carriage 
data.
    For these reasons, the Judges find that PTV failed to discharge its 
evidentiary burdens, failed to demonstrate that Mr. Harvey's estimation 
should be rejected by the Judges, and failed to adequately demonstrate 
the existence of value in must-carry stations sufficient to include 
them as part of the relative marketplace value generated by the 
regression approach.
    In terms of the necessary adjustments, the Judges agree with Dr. 
Bennett's approach, in which he eliminates the value attributed to the 
must-carry stations in both the regressions and the allocations, as 
there is no evidence or testimony sufficient to warrant only an 
adjustment in one of these regards. Thus, the Judges agree with the 
adjustments in column number 3 in Dr. Bennett's adjustment made in 
figures 38, 21 and 52, respectively, set forth supra.

B. Are PTV's Multicast Stations Exempt From Royalty Payments? \51\
---------------------------------------------------------------------------

    \51\ The definition of multicasting is not in dispute. 
Basically, it refers to ``a type of national television service 
designed to be broadcast terrestrially . . . on their digital 
subchannels . . . by the conversion from analog to digital 
television broadcasting, which le[aves] room for additional services 
to be broadcast from an individual transmitter . . . .'' Digital 
multicast television network, Wikipedia, https://en.wikipedia.org/wiki/Digital_multicast_television_network (last visited Aug. 9, 
2023). The exempt/non-exempt nomenclature is somewhat confusing; 
``exempt'' means CSOs do not pay section 111 royalties, and ``non-
exempt'' means CSOs shall pay section 111 royalties (unless, by 
agreement with the copyright owners, section 111 royalty payments 
are waived).
---------------------------------------------------------------------------

    The parties dispute whether multicast stations should be included 
in the fee-based regressions. Before setting forth the parties' 
respective positions, it is helpful to set forth a brief history of the 
relevant statutory provisions and the industry reaction. In this 
regard, the SDC's overview of the context is accurate and succinct:

    Prior to the analog-to-digital television transition, a 
broadcast station could transmit only a single stream of 
programming. The transition to digital broadcasting, completed for 
all full-power stations in 2009, enabled stations to broadcast 
multiple streams of programming, i.e., a ``primary stream'' and one 
or more ``multicast streams.''
    Accordingly, the Satellite Television Extension and Localism Act 
(``STELA'') of 2010 added a DSE for distant transmissions of 
multicast streams. STELA, Public Law 111-175, 124 Stat. 1218, 1239 
(2010).
    Certain multicast streams were temporarily exempted from having 
a DSE value assigned, including those that (a) had been carried by a 
CSO prior to February 27, 2010, or (b) had an agreement in place 
prior to June 30, 2009, for free carriage on a CSO. See STELA, 124 
Stat. 1218, 1239; see also Marx ACWDT ] 70.
    The Association of Public Television Stations (``APTS'') entered 
into such an agreement with the National Cable and 
Telecommunications Association (``NCTA'') in 2005, which was renewed 
in 2016 . . . . [REDACTED]. . . .
    The PBS-NCTA agreement governed carriage of PTV stations during 
the 2014-2017 time period and required participating CSOs to carry 
up to four programming streams per PTV station (i.e., the primary 
stream and three multicast streams). The agreement thus served to 
``exempt'' up to three multicast streams per station from generating 
copyright liability until its expiration and renewal in 2016, at 
which time the exempted multicast streams were reclassified for 
royalty purposes as ``non-exempt'' streams with a DSE value of 0.25.

SDC PFF ]] 223-224 (and record citations therein). Accord PTV PFF ] 67 
(and record citations therein).
    The record in this proceeding also reflects the parties' and the 
industry's awareness of the terms of the 2016 renewal of the 2005 PBS-
NCTA agreement referenced above. Accordingly, although the Judges 
denied the post-hearing admission of the PBS-NCTA agreement into the 
record,\52\ the Judges have relied upon the record evidence of the 
parties' understanding of that agreement.
---------------------------------------------------------------------------

    \52\ See Order 41 Denying as Moot Public Television's Motion for 
Reconsideration of Order 33.
---------------------------------------------------------------------------

1. PTV's Position on Multicast Stations
    PTV maintains that, for the years 2016 and 2017, multicast stations 
should be treated like all other distantly retransmitted broadcast 
stations for the purposes of establishing relative marketplace value 
through the fee-based regression analysis, noting that, under section 
111, they ``are assigned the same DSE value as that station's primary 
stream.'' PTV PFF ] 66 (citing 17 U.S.C. 111(f)(5); PTV PFF ] 67 (and 
record citations therein).
    PTV distinguishes the multicast stations from the must-carry rules, 
asserting ``it is undisputed that the must-carry rules do not require 
CSOs to retransmit those non-primary signals of a [PTV] broadcast 
station, and all carriage of PTV multicast streams was due to the 
voluntary choice of the cable operators.'' PTV PFF ] 77 (and record

[[Page 54191]]

citations therein). PTV acknowledges that PTV primary and multicast 
stations are functionally retransmitted distantly as a ``bundle,'' but 
that fact is neither unique to distant carriage of PTV stations nor 
consequential with regard to the inclusion of the multicast stations in 
a fee-based regression model. As to the latter point, PTV asserts that, 
because ``[a] fee-based regression model is designed to estimate the 
average relative value of programming in a bundle, such . . . bundling 
of programming of different values does not bias the regression 
estimates of relative marketplace value.'' PTV PFF ] 91. More 
particularly, PTV explains that the Waldfogel-style regressions of Drs. 
Johnson and George rely on ``average relative valuations,'' and that 
programming which does not correlate with higher royalties ``will be 
factored into the regression.'' PTV PFF ] 91 n.140 (citing George WDT 
at 51; 4/18/23 Tr. 5170-74 (George); 3/21/23 Tr. 350, 456-58:15, 595 
(Johnson); Johnson WRT ] 65.
    Because he understood that programming of multicast streams on 
distantly retransmitted broadcast signals to be compensable under 
section 111, Dr. Johnson applied his regression model to estimate the 
average relative value of distantly retransmitted programming inclusive 
of multicast streaming. And, as indicated supra, he understood that, to 
the extent CSOs might value PBS primary and multicast streams 
differently, these different values for ``multicast streams would be 
averaged out by the subscriber-weighted distant minutes.'' PTV PFF ]] 
133-34 (and record citations therein).
    PTV also notes how relative values, as between JSC and PTV 
programming, moved in opposite directions during the 2014-2017 period. 
That is, in 2015, when WGNA converted from a broadcast station to a 
national cable network, JSC could not claim section 111 royalties for 
sports programming that was televised on WGNA. But for PTV, the 
converse was the case: Compensable programming arguably increased when 
in 2016 multicast stations transformed from being statutorily exempt 
(no right to section 111 royalties) to non-exempt (royalty-generating). 
PTV PFF ] 135.
2. CCG's Position on Multicast Stations
    CCG argues that the minutes of programming on the PTV multicast 
stations that were reclassified from exempt to non-exempt should be 
included in the fee-based regressions because their continued 
retransmission as royalty-generating stations is the consequence of 
deliberate strategies by CSOs. CCG PFF at 25. Specifically, CCG relies 
on the fact that the substantial portion of stations that had been 
distantly retransmitted by Bright House (an MSO) while exempt (from 
royalties) continued to be retransmitted in 2016 as non-exempt 
(royalty-bearing) contemporaneously with the acquisition of Bright 
House by a larger MSO, Charter Communications (formerly Time Warner 
Cable). CCG PFF ] 79 (citing Marx ACWDT ] 78).
    According to Dr. George, Charter Communications could have chosen 
to cease distantly retransmitting these PTV multicast stations after 
they became non-exempt (royalty-bearing), but for commercial purposes 
they elected to maintain carriage, indicating that Charter 
Communications perceived value in these multicast stations. George WRT 
at 20. In this regard, Dr. George concluded that the fact that Charter 
decided to include the PTV signals in its cable lineup and treat those 
PTV signals as paid while deciding not to carry other distant signals 
``reveals the relative value of the programming to the cable system.'' 
George WRT at 20. See also CCG PFF ] 547.\53\
---------------------------------------------------------------------------

    \53\ Program Suppliers are essentially in agreement with CCG in 
this regard. See PS PFF ] 387 (citing Tyler WRT ] 71 for the 
assertion that ``non-exempt signals are part of the question studied 
and properly included in the analysis.'').
---------------------------------------------------------------------------

3. CTV's Position on Multicast Stations
    Like, CCG, CTV states that the reclassification of PTV multicast 
signals from exempt to ``paid'' (i.e., non-exempt, or royalty-bearing) 
had a ``significant impact in the industry.'' CTV PFF at 17. But quite 
unlike CCG, CTV disagrees with the inclusion of the ``paid'' multicast 
signal minutes in the fee-based regressions. After reciting the same 
industry merger history recounted supra, CTV PFF ] 75, CTV notes that 
the reclassification of these multicast PTV stations increased both (1) 
PTV subscriber-weighted minutes and (2) the data inputted into the 
regression (seeking to measure the correlation between category minutes 
and royalties). CTV PFF ] 76.
    More particularly, 231 PTV signals were reclassified from exempt to 
paid from 2014 to 2017, ``with over 90% of the reclassification of PTV 
minutes taking place in 2016 and 81% of those reclassifications 
associated with Charter Communications' acquisitions of Time Warner and 
Bright House.'' CTV PFF ] 77 (and record citations therein). CTV 
further notes the combined industry concentration of Charter 
Communications, Time Warner, and Bright House prior to the 2016 merger, 
together accounting for 26.2% of total cable industry subscribers. CTV 
PFF ] 78.
    But CTV argues that the reclassification had no impact on whether 
those PTV multicast minutes should have been inputted into the fee-
based regressions. Specifically, CTV asserts, ``The increase in PTV 
paid minutes did not create any changes subscribers would notice; there 
was no change in channel line-ups, viewer access to programming, or 
content broadcast. Rather, PTV signals that had previously existed on 
channel lineups became `nonexempt.' '' CTV PFF ] 79 (and record 
citations therein). Thus, CTV concludes that the reclassification 
merely ``created an illusion'' of an increase in the number of 
distantly retransmitted PTV minutes.'' CTV PFF ] 237 (and record 
citations therein).
4. SDC's Position on Multicast Stations
    The SDC echoes Dr. Marx's position on behalf of CTV, that, although 
reclassification from exempt to non-exempt ``changes the reporting of 
PTV minutes in the data, [it] does not change the content or value that 
CSOs offer to their subscribers.'' SDC PFF ] 241 (citing Marx ACWDT ] 
71).
    Further, Dr. Marx takes note, in her consideration of the Charter 
acquisitions discussed supra, of the existence of the PBS-NCTA 
agreement in place that maintained the exempt (no royalty) status of a 
number of public television stations. 4/11/23 Tr. 4272 (Marx).
5. JSC's Position on Multicast Stations
    JSC takes note that, although the number of primary PTV signals did 
not increase significantly, ``CSOs . . . began carrying significantly 
more PTV multicast channels, with the share of PTV volume comprised of 
multicast channels nearly doubling between the beginning of 2014 and 
the end of 2017.'' JSC PFF ] 74 (and record citations therein) 
(emphasis added). More particularly, JSC acknowledges that some of this 
increase in reported PTV multicast carriage is attributable to the 
change in status of certain PTV multicasts from ``exempt'' to ``non-
exempt,'' as a result of Charter Communications' acquisitions of Time 
Warner Cable and Bright House Networks in 2016. JSC PFF ] 75 (and 
record citations therein).
    But JSC rejects the notion that the increase in non-exempt 
(royalty-bearing) multicast carriage reflects an increase in value for 
which the PTV allocation should increase. In support of this argument, 
one of JSC's economic experts, Dr. Majure opines that (1) mere 
reclassification from exempt to non-exempt itself does not reflect an

[[Page 54192]]

increase in value and (2) CSOs chose to carry additional PTV multicasts 
during 2015-2017 when doing so was typically cost-free, even if they 
were non-exempt) because their carriage addition did not cause the CSO 
to exceed the minimum fee. JSC PFF ]] 76-77 (and record citations 
therein).
    Moreover, JSC relies on the testimony of PTV's own witness, Dr. 
Johnson, who acknowledged that the PBS-NCTA agreement provides for CSOs 
who were NCTA members to carry up to three PTV multicasts in addition 
to the carriage of the primary PTV signal, that PTV would not require 
payment for the carriage of these multicasts, and that, should the CSO 
incur financial liability under section 111 for such multicast 
carriage, PTV would be obligated to either indemnify the CSO for the 
royalty costs (as with must-carry primary signals), or waive the PTV 
station's right to compel carriage. JSC PFF ] 7 (citing 3/22/23 Tr. 
985-88 (Johnson)).
    Based on the foregoing, JSC claims that, without the multicast 
provisions in the PBS-NCTA agreement, which JSC characterizes as 
``marketplace'' facts, CSOs would pay ``little or nothing'' for the 
programming on the multicast stations. JSC PFF ] 9 (and record 
citations therein). See also JSC PFF ]] 25, 395; Harvey CWDT tbls.37-
39.
6. The Judges' Analysis and Conclusions Regarding Multicast Stations
    The Judges have the same type of problem with PTV's claim for 
royalties for the multicast programming as they do for the must-carry 
station programming discussed supra. That is, there was evidence 
available to be produced by PTV, namely the PBS-NCTA agreement as well 
as the number of entities it represents that would provide significant 
marketplace evidence of how PTV stations and the licensor CSOs valued 
multicast station programming. But, as noted supra, PTV did not produce 
either this agreement or the number of entities bound by it as 
evidence, although its own expert witness testified as to some of the 
agreement's contents.
    Thus, the Judges were deprived of full knowledge of the terms of 
the agreement, the parties' fulsome testimony as to the meaning of its 
provisions and the number of entities signing on to the agreement. 
Moreover, PTV opposed the admission of that agreement into evidence. 
See Order 41 Denying as Moot Public Television's Motion for 
Reconsideration of Order 33. Accordingly, the Judges here, too, find 
that PTV bore, but failed to discharge, the burdens of production and 
persuasion with regard to the details of the agreement and the extent 
of its coverage. See Web V Final Determination at 59452; Huthnance v. 
District of Columbia, 722 F.3d 371 (D.C. Cir. 2013); see also 5 U.S.C. 
556(d) (placing the burden of proof regarding facts on the party 
seeking an order based on those facts).
    Nonetheless, relevant terms of the PBS-NCTA agreement were well-
understood by the parties, without dispute. As noted supra, PTV's own 
expert, Dr. Johnson, understood what the agreement provided with regard 
to multicast stations and the absence of a royalty obligation attendant 
to their carriage. This constitutes a market-based fact, which has two 
implications. First, as a direct agreement among parties in the sector 
at interest in this proceeding, it is an agreement that reflects actual 
value, not hypothetical value. As such, it is more credible than 
attempts to tease out market value via regression-derived price proxies 
or a constant sum survey such as the Bortz Survey. Second, within the 
context of a fee-based regression, the existence of such zero 
valuations would certainly affect the regression as well as the number 
of minutes by which the impacted PTV regression coefficient would be 
multiplied. But without any information regarding the number of PTV 
stations covered by the PBS-NCTA agreement, the Judges cannot simply 
assume that no multicast stations that generated zero net royalties 
were covered by this agreement.\54\
---------------------------------------------------------------------------

    \54\ The fact that Charter changed some PTV multicast stations 
from exempt (non-royalty-bearing) to non-exempt (royalty-bearing) 
after acquiring certain CSOs is anecdotal evidence that suggests 
these PTV multicast stations were generating royalties, but 
anecdotes are not substitutes in this context for more comprehensive 
data. (And some of these royalty-bearing PTV stations may also have 
been retransmitted by CSOs with excess capacity, thereby not 
actually generating any revealed preference information for the 
retransmitting CSOs.)
---------------------------------------------------------------------------

    If the Judges had full information regarding the PBS-NCTA agreement 
from PTV, whose clients are signatories thereto, as well as information 
from PTV regarding the number of its station clients and base fee 
royalties impacted by the agreement, the Judges' analysis could have 
been different. For example, the Judges are not convinced that the fact 
that these signals had been exempt (not royalty-bearing) previously is 
a dispositive point. The argument in favor of that position is that the 
mere change in legal obligation has no impact on economic value. But a 
simple thought experiment demonstrates the paucity of that reasoning: 
What if these multicast signals had started off as non-exempt (royalty-
bearing) and then were changed to exempt (non-royalty-bearing)? It 
would have been the same change, only in reverse. Would the original 
classification remain in place in this juxtaposed scenario, such that 
royalties would continue to be included in the regression?
    Also, there was a contentious dispute regarding whether the 
multicast PTV stations' programming was ``duplicative'' of the PTV 
primary signal programming or of each other. Questions arose regarding 
whether duplication should be narrowly tailored to mean the 
retransmitting of the identical program at the identical time, at the 
same proximate time or within a certain period of time, and whether 
different episodes from the same series retransmitted at the same or 
some proximate time or day were likewise duplicative. But without 
information as to whether any multicast station that had retransmitted 
such potentially duplicative programming was contractually unable to 
generate royalties under the PBS-NCTA agreement in any event, these 
issues of potential duplication appear to be indeterminate.\55\
---------------------------------------------------------------------------

    \55\ As explained infra, among the regression approaches, the 
Judges rely on the Tyler Model's allocation of shares based upon 
CSOs that actually paid the base fee (not the minimum fee). But 
although Dr. Bennett's testimony (Bennett WRT fig.52) provides 
evidence for a downward adjustment of PTV's share to reflect the 
Must Carry issue discussed supra, the Judges see no clear evidence 
in the record to identify how much of a downward adjustment should 
be made to the PTV share to reflect the Multicast and Duplicative 
Programming issues. However, because the PBS-NCTA agreement 
indicates that CSOs would carry up to three Multicast stations as 
Must Carry stations, i.e., without a net royalty obligation, the 
Judges find that their application of Dr. Bennett's downward 
adjustment for Must Carry stations essentially embodies any 
Multicast adjustment, including any duplicative programming within 
those Multicast channels.
---------------------------------------------------------------------------

VIII. Parties' Positions Regarding Regression Models

A. Introduction

    Four parties, CCG, CTV (for 2014 only), Program Suppliers and PTV, 
through their expert witnesses, proffer regressions that they assert 
are useful methodologies to determine relative market value. An 
overview of each regression model and the criticisms thereof are set 
forth below.

B. CTV's Regression Approach: The Marx Model

    On behalf of CTV, Dr. Leslie Marx \56\ adopted a fee-based 
regression model (the ``Marx Model'') applicable to 2014,

[[Page 54193]]

but not for the 2015-2017 period, because she found that data issues 
rendered the use of such a regression approach ``substantially less 
reliable and informative'' for the 2015-2017 timeframe. 4/11/23 Tr. 
4117 (Marx). More particularly, for 2014, she adopted a ``Bayesian'' 
approach in her fee-based regression model, using that methodological 
technique to mitigate concerns regarding the reduction in the quantity 
and quality of 2015-17 data.
---------------------------------------------------------------------------

    \56\ Dr, Marx was received by the Judges as an ``expert 
economist and econometrician with experience in statistical methods 
and measurements.'' 4/11/23 Tr. 4109 (Marx).
---------------------------------------------------------------------------

    At a high level, she described the Bayesian approach as ``a 
technique that allows [an econometrician] to use results from one 
period and add additional data to it to then update . . . inferences 
based on . . . that earlier period.'' 4/11/23 Tr. 4209:3-6 (Marx).\57\ 
According to Dr. Marx, three basic reasons supported her use of a 
Bayesian regression:
---------------------------------------------------------------------------

    \57\ See also Marx ACWDT ] 101 (``Bayesian regression is a well-
accepted tool in economic and scientific research that is well-
suited to situations in which the researcher has a `prior belief' 
about the distribution (e.g., mean and variance) of parameters of 
interest and wishes to use additional data in order to update 
conclusions about the parameters.'').

    1. In the prior proceeding, the Judges found Dr. Crawford's 
approach to be appropriate for allocating, inter alia, 2013 
royalties.
    2. The 2014 data largely patterns the 2013 data analyzed by Dr. 
Crawford because (unlike the 2015-2017 data) the 2014 data had not 
been affected by the growing predominance of excess capacity CSOs, 
reductions the number of SGs, or the reclassification of PTV 
stations.
    3. Although the 2014 data alone would not be robust enough to 
adequately or reliably model a regression, the Bayesian approach 
incorporates a methodological technique that helps to resolve 
concerns regarding the quantity of data.

4/11/23 Tr. 4207-08 (Marx).
    Accordingly, Dr. Marx ran her Bayesian fee-based regression only 
for 2014. The estimates she generated from her regression generated 
2014 shares aligned with the shares calculated from Dr. Crawford's fee-
based regression in the 2010-13 Determination. 4/11/23 Tr. 4126:16-
4127:4. (Marx).\58\
---------------------------------------------------------------------------

    \58\ In her Bayesian model, Dr. Marx adopted Dr. Crawford's 
model that had removed simultaneous ``duplicated minutes'' (i.e., 
minutes of distantly retransmitted programming that were also 
transmitted on local stations), opining that CSOs would not realize 
incremental value from offerings of duplicative programming. 4/11/23 
Tr. 4213 (Marx). In this regard, Dr. Marx's approach deviated from 
the Judges' prior determination in which they found a problem with 
Dr. Crawford's duplicated minutes analysis and elected instead to 
rely upon his nonduplicated minutes analysis. See 2010-13 
Determination at 3562. Dr. Marx's specific change in this regard 
does not materially affect the Judges' consideration of her Bayesian 
approach in this proceeding.
---------------------------------------------------------------------------

    As noted supra, Dr. Marx found that the data generated for the 
2015-17 period was insufficient to allow her to use a fee-based 
regression for those years. To be clear, the paucity of data she 
identified was not a data collection problem, but rather what she 
considered to be an insufficient quantity of data borne from 
significant ``changed circumstances,'' namely the 2015 conversion of 
WGNA to a cable station from a local station that had previously been 
the most distantly transmitted. These changed circumstances led Dr. 
Marx to highlight as a key finding from her analysis that ``a 
regression similar to [Dr.] Crawford's would [be] less informative and 
less reliable.'' Marx ACWDT ] 9(c) (emphasis added); see also Marx 
ACWDT ] 67 (reiterating after her full analysis that in her opinion a 
Crawford-style regression would be ``less informative and less reliable 
for estimating relative marketplace value after 2014.'') (emphasis 
added).
    In granular detail, Dr. Marx identified the following dramatic 
modeling ramifications arising from the WGNA conversion:

    1. The fulsome data set utilized by Dr. Crawford in the 2010-13 
proceeding did not exist for the 2015-2017 period.
    2. The number of CSOs carrying at least one distant signal 
declined substantially after 2014. More particularly, more than 800 
CSOs carried distant signals in 2014, but only approximately 500 
CSOs carried distant signals by 2017.
    3. Total royalties declined by approximately 32% from 2014 to 
2017.
    4. There was a dramatic reduction in the number of subscriber-
weighted minutes.
    5. The number of ``excess capacity'' CSOs increased 
dramatically.\59\
---------------------------------------------------------------------------

    \59\ In her rebuttal testimony, Dr. Marx coined the apt phrase 
``excess capacity CSO'' as an identifier of a CSO that distantly 
retransmitted less than one Distant Signal Equivalent (DSE), had the 
capacity to distantly retransmit one or more additional distant 
signals without increasing its royalty obligation above the minimum 
fee, and yet chose not to make any such additional retransmissions. 
Marx WRT ]] 6, 13. The Judges adopt this phrase throughout this 
Determination.
---------------------------------------------------------------------------

    6. More than 90% of royalties in 2016 and 2017 were paid by 
these ``excess capacity'' CSOs, i.e., systems that could have 
carried more DSEs but declined, notwithstanding the zero marginal 
royalty cost associated with additional carriage.
    7. Alternately stated, less than 10% of the SG-level calculated 
royalties reported by CSOs reflect royalties actually paid for 
retransmission of signals by CSOs in 2016 and 2017.
    8. Consequently, all the royalties calculated for each 
subscriber group in a cable system do not represent actual or 
incremental costs paid by the CSO because of the minimum fee 
requirement.\60\
---------------------------------------------------------------------------

    \60\ The minimum fee issue is separately discussed elsewhere in 
this determination. It is referenced in this section discussing the 
experts' models to provide a more complete context.
---------------------------------------------------------------------------

    9. Underscoring the impact of the WGNA conversion, 92% of CSOs 
that had previously carried WGNA (with or without an additional 
distant signal) in 2014, were paying only the minimum fee.
    10. Finally, whereas the percentage of all CSOs that carried no 
distant signals had increased from only 13% in 2014, 30% in 2015, 
44.6% in 2016, and then to 44.8% in 2017.

CTV PFF ]] 93-94; 156-163; 167; 170; 195-199 (and record citations 
therein).
    With regard to the effect of these changed circumstances on a fee-
based regression, Dr. Marx testified that Dr. Crawford's regression 
model relies on variation between the distant retransmission decisions 
at the SG level--but only within a given CSO. Marx ACWDT ] 57. Thus, 
the Crawford Model included a CSO only if the CSO had at least two SGs. 
But with the dramatically changed circumstances caused principally by 
the WGNA conversion and the resulting increase in the number of excess-
capacity CSOs, there were far fewer CSOs in the 2015-2017 period who 
created the necessary multiplicity of SGs. Id. More particularly, Dr. 
Marx relied on the following facts:

    1. In 2015, 62% of CSOs--accounting for almost 35% of total 
royalties--did not meet the Crawford regression threshold that a CSO 
have at least two subscriber groups.
    2. The proportion of CSOs with fewer than two SGs increased from 
54.9% to 68.8%.
    3. The percent of CSOs with zero SGs increased from 13% to 44.8% 
from 2014 to 2017.
    4. The number of CSOs qualified to be included in a Crawford 
fee-based regression continued to decline throughout the relevant 
time period, with only 31.2% of CSOs included in 2017.

Marx ACWDT ]] 58-59 & fig.12; 4/11/23 Tr. 4178 (Marx).
    These are the detailed changed circumstances, referred to supra, 
which Dr. Marx found to render a Crawford fee-based regression less 
informative and reliable in the present proceeding than in the 2010-13 
proceeding. Marx ACWDT ]] 64, 67. More particularly, she noted that, in 
her opinion, the relatively small percent of CSOs that otherwise 
satisfied the requisites for inclusion in a Crawford-style regression 
could not be considered a representative sample or a representation of 
the Willingness to Pay of the larger CSO market. 4/11/23 Tr. 4161, 4173 
(Marx).\61\
---------------------------------------------------------------------------

    \61\ Dr. Marx testified that the other regression experts 
essentially agreed with her opinion that the Crawford-style fee- 
based regression would suffer from an absence of sufficient data on 
SG variations within a CSO. She identified such agreement in the 
testimonies of Drs. George, Johnson and Tyler by their relaxation of 
the number and types of ``fixed effects'' used by Dr. Crawford to 
isolate the correlation of category minutes and royalties which his 
regression seeks to identify. However, as discussed in more detail 
infra, Dr. Marx criticizes the removal of some or all of these 
``fixed effects'' by these other experts as introducing ``omitted 
variable bias'' into their regressions, thus compromising their 
usefulness in this proceeding. See Marx WRT ]] 14, 20 & 37; 4/11/23 
Tr. 4179, 4181, 4255 (Marx) (removing ``fixed effects'' in order to 
introduce into the model different variations across CSOs and across 
time to address the problem of fewer subscriber groups is improper 
because it generates a new problem--the introduction of ``omitted 
variable bias,'' which metaphorically was adding ``garbage'' into 
their regressions). The Judges consider the alteration of ``fixed 
effects'' by these other experts, and the criticisms of that 
decision infra, in their consideration of those proffered regression 
models.

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[[Page 54194]]

    For the foregoing reasons, Dr. Marx utilized a fee-based regression 
only to estimate the regression coefficients and share allocations for 
2014. Her results--are set forth in the figures below:
[GRAPHIC] [TIFF OMITTED] TN28JN24.008

[GRAPHIC] [TIFF OMITTED] TN28JN24.009

    Dr. Marx then multiplied the subscriber-weighted minutes for each 
program category, as calculated by another CTV expert, Dr. Christopher 
Bennett,\63\ by her Bayesian coefficients (as adjusted pursuant to her 
PTV analysis) and she estimated the following allocation shares for 
2014:
---------------------------------------------------------------------------

    \62\ In her Bayesian regression for 2014, Dr. Marx adjusted the 
valuation analysis for PTV by addressing certain alleged anomalies 
in the PTV minutes, including those arising from the presence of PTV 
``must carry'' stations, the transition of PTV stations from exempt 
(no royalty paid) to non-exempt (royalty paid) and the 
indemnification of CSOs for royalties paid to transmit PTV signals. 
The figures reproduced in the text, supra, from Dr. Marx's WRT 
embody Dr. Marx's conclusions in these regards. The Judges consider 
these PTV-specific issues elsewhere in this Determination.
    \63\ See Bennett ACWDT figs.1 & 2.
---------------------------------------------------------------------------

    (A) Applying Dr. Marx's 's preferred analysis excluding duplicated 
minutes: \64\
---------------------------------------------------------------------------

    \64\ In the 2010-13 Determination, the Judges adopted Dr. 
Crawford's model that included duplicate minutes because the 
duplicated minutes calculation was more accurate than the 
unduplicated minutes calculation. See 2010-13 Determination at 3565. 
Dr. Marx calculates coefficients (and thus shares) under both 
scenarios, noting that there is minimal difference between the two 
approaches. Marx ACWDT ] 38.

Estimated 2014 Shares
    PS--19.73%
    JSC--43.89%
    CTV--15.56%
    PTV--16.41%
    SDC--0.48%
    CCG--3.93%.

    (B) Applying the inclusion of duplicated minutes as in the 2010-13 
Determination:

Estimated 2014 Shares
    PS--20.69%
    JSC--41.73%
    CTV--13.94%
    PTV--18.85%
    SDC--0.47%
    CCG--4.31%.

Marx ACWDT ] 39.

[[Page 54195]]

1. Dr. Marx's ``Directional'' Analysis for 2015-2017
    Having rejected the use of a fee-based regression to estimate 
relative marketplace value for the 2015-2017 period, Dr. Marx switches 
gears in two contexts. First, she shifts the demand-side focus, by 
analyzing how choices of downstream consumers of cable television 
programming have purportedly changed--and how those changes impact the 
``derived demand'' \65\ for categories of programming delineated in 
this proceeding. Second, Dr. Marx uses this analysis to provide what 
she describes as a ``directional'' approach, which she opines should 
guide the Judges regarding the relative increases or decreases in 
category royalty shares. This ``directional'' approach is in contrast 
to both the regression and the survey methods for ascertaining relative 
marketplace value, which seek to provide specific estimates of the 
category values. See Marx ACWDT ] 83 (``This is a `directional' 
analysis in that I do not quantitatively measure the effect of 
streaming on relative market values.'').\66\
---------------------------------------------------------------------------

    \65\ In the 2010-13 Determination, the Judges explained that the 
concept of ``derived demand'' was applicable to ``[t]he demand for 
programming at each step in the [distribution] chain . . . all the 
way to the television viewer,'' although, with regard to distant 
retransmissions of local stations, this derived demand is impacted 
by ``the role of bundling and `niche' programming'' that can affect 
``the premium that certain categories of programming fetch in an 
open market'' that would impact ``value among disparate program 
categories'' in these allocation proceedings. 2010-13 Determination 
at 3600.
    \66\ Dr. Marx's ``directional'' analysis is akin to the 
testimony of television industry witnesses discussed infra. In fact, 
Dr. Marx opines that her ``directional'' analysis is consistent with 
the testimonies of five industry witnesses--Mr. Singer, Mr. Warren, 
Ms. Witmer, Mr. Hartman and Ms. Alany. 4/11/23 Tr. 4234 (Marx).
---------------------------------------------------------------------------

    More particularly, Dr. Marx evaluates the changes in how consumers 
viewed cable television programming content in the 2014-2017 period, 
compared to viewing in prior years. Specifically, Dr. Marx examined how 
the introduction and growth of streaming of programming through over-
the-top (OTT) platforms during the 2014-2017 period affected not only 
how consumers chose to access content but also, derivatively, the 
``differential effects'' of this change in distribution ``across the 
claimant groups.'' Marx ACWDT ] 82.
    Dr. Marx's directional ``derived demand'' evaluation proceeds as 
follows:

    1. She summarizes the expansion of streaming prior to and during 
the 2014-2017 period.
    2. Dr. Marx then uses viewership data \67\ to identify evidence 
indicating how the growth of streaming was likely to have increased 
or decreased the relative value of the claimants' respective program 
categories groups to a CSO. More particularly, Dr. Marx opines that 
a program category with ``content [that] had a larger shift to 
streaming would, all else equal, be likely to have a decrease in 
relative importance when it comes to delivery as a distant signal by 
CSOs [and] [c]onversely, claimant groups whose content had smaller 
shifts to streaming likely would, all else equal, have an increase 
in relative importance.''
---------------------------------------------------------------------------

    \67\ Dr. Marx relies on local viewing data generated by the 
Nielsen audience research firm. The probative value, vel non, of 
viewership data, and local viewership in particular, as a proxy for 
changes in the relative marketplace value of distantly retransmitted 
local stations, is discussed infra.
---------------------------------------------------------------------------

    3. She next reviews data on household viewership over the 
relevant period, focusing on the ``directional relative effects of 
streaming growth on CTV, PTV, and Program Suppliers categories . . . 
.'' \68\
---------------------------------------------------------------------------

    \68\ Dr. Marx focuses on these three categories because her data 
source only contains one Canadian station, and because the small 
size of the SDC category renders it less reliable and impactful. She 
also testifies that ``sports content is more challenging to evaluate 
with this [Nielsen] data due to geographic and temporal variation in 
ratings driven by factors unrelated to the growth of streaming,'' 
and that she understood ``streaming of [JSC] content was limited 
during the 2014-2017 period.'' Marx ACWDT ] 84 n.66.

Marx ACWDT ]] 83-84.
    Through this analysis, Dr. Marx reaches the following conclusions:

    1. From as far back as 2010, ``streaming and smart device 
penetration have increased while CSOs have lost subscribers.''
    2. Viewership data reveals a reduction in TV viewership over the 
2014-2017 period.
    3. Because of increased streaming and lower cable subscribership 
the ``importance of ``PTV and Program Suppliers content appear[s] to 
have diminished . . . relative to CTV content.''
    4. Although the data reveal a decline in the absolute number of 
households watching content within the CTV, PTV, and Program 
Suppliers categories, the relative declines were greater for PTV's 
and Program Suppliers' content than for CTVs' content.
    5. The absolute and relative decline in the share of viewership 
on cable of Program Suppliers content is consistent with the 
contemporaneous improvement in the ``quality of streaming video 
content provided on platforms such as Netflix, Amazon Prime Video, 
and Hulu.''
    6. In addition to licensed TV shows, these streaming platforms 
also transmit original content which they have produced, with 
quality levels generating Emmy Award nominations, indicating the 
growing and high quality of content carried by streaming platforms.

Marx ACWDT ]] 85-98 & figs.21-24.
    Applying the foregoing to the Judges' present task of estimating 
relative marketplace value across the claimant categories, Dr. Marx 
concludes as follows:

    In sum, streaming grew rapidly during 2014-2017 [and] Nielsen 
data show concomitant declines in viewership of the PTV and Program 
Suppliers claimant groups' content. CTV content viewership also 
declined, but that decline was smaller than for PTV and Program 
Suppliers. This implies that the growth of streaming likely had a 
greater adverse impact on Program Suppliers and PTV claimants than 
on CTV claimants. All else equal, this is consistent with a higher 
relative market value for CTV claimants over the 2014-2017 period as 
compared with Program Suppliers and PTV claimants.

Marx ACWDT ] 99.
2. Rebuttals to Dr. Marx's Analyses
a. Rebuttals to Dr. Marx's WDT by SDC Witness Dr. Erdem
    One of the SDC's expert economic witnesses, Dr. Erkan Erdem,\69\ 
characterizes Dr. Marx's rejection of the applicability of the fee-
based regression approach in a broader context than Dr. Marx. Instead, 
Dr. Erdem avers that the inconsistency between the 2010-2013 data and 
the data over the entirety of the 2014-2017 period reveals something 
more profound: that the ``Crawford model was made specifically only for 
the 2010-2013 data . . . [and] is not robust enough to measure the 
market value of distant minutes per claimant to fit data from other 
proceedings.'' Erdem WRT ] 126. By this criticism, Dr. Erdem tacitly 
criticizes Dr. Marx's Bayesian approach for not applying her criticism 
with appropriate breadth, maintaining that ``[e]ven if there is a shift 
in the trend of this proceeding's data, [her modeling] should still 
theoretically be useful for this proceeding, if one were to believe it 
was useful in the first place, since they are dealing with the same 
variables.'' Erdem WRT ] 126. See also Erdem WRT ] 130 (opining that 
Dr. Marx was wrong to maintain that after the WGNA conversion all that 
was needed was ``an adjustment . . . in the Crawford model'' because, 
although ``[t]he underlying trends in the data . . . shifted, . . . the 
variables used are still the same, as well as the computation of 
distant minutes and distant signals.'').
---------------------------------------------------------------------------

    \69\ Dr. Erdem was received as an expert in the fields of 
economics, econometrics, and data analysis. 4/5/23 Tr. 3395 (Erdem).
---------------------------------------------------------------------------

    Whereas Dr. Erdem finds the forgoing criticism of the use of a 
Crawford fee-based regression as incomplete, he finds a second 
criticism by Dr. Marx to be exaggerated. Specifically, he takes issue 
with her concern that the number of CSOs with two or more subscriber 
groups had decreased after 2014, thereby reducing the presence of the

[[Page 54196]]

sufficient observations of programming decisions arising from the 
different stations retransmitted by such subscriber groups. Erdem WRT ] 
131. Dr. Erdem finds this criticism overblown because the percentage of 
CSOs with fewer than two subscriber groups only increased from 54.9% to 
68.8% from 2014 to 2017, and the CSOs thus excluded from the fee-based 
regressions would ``only account for 38% of the total royalties.'' 
Erdem WRT ] 131. Thus, he finds Dr. Marx's reliance on this changed 
circumstance as obscuring his essential point, to wit, that if the 
Crawford Model had been ``correctly specified in the first place'' it 
would not need ``to be adjusted for changes in the data,'' but rather 
``should be able to withstand [data changes] to remain accurate.'' 
Erdem WRT ] 131.
    Finally, but in the same vein, Dr. Erdem disagrees with Dr. Marx's 
conclusions that the reduction in the percentage of CSOs paying only 
the minimum fee limits only the applicability of the fee-based 
regression approach, as opposed to (as Dr. Erdem maintains) 
demonstrating the overall incorrectness of the model's specifications. 
Erdem WRT ] 132. More specifically, Dr. Erdem characterizes the 39% of 
CSOs paying only the minimum fee in 2014 as itself a ``large 
proportion,'' which would have required the Crawford Model, or a model 
fashioned in the manner of the Crawford Model, to have been 
``specified'' for this effect. Instead, Dr. Marx treats the increase in 
the shift in CSOs paying minimum fees after 2014 only as grounds to 
find the fee-based regression model inapplicable for 2015-2017, rather 
than misspecified, and she wrongly deemed the 39% figure in 2014 
sufficient to incorporate into her Bayesian regression. Erdem WRT ] 
132.\70\
---------------------------------------------------------------------------

    \70\ The SDC's other econometric expert, Dr. Rubinfeld, 
criticizes Dr. Marx's use of a fee-based regression in her Bayesian 
approach for the same reasons he criticizes fee-based regressions 
writ large, and those criticisms are addressed elsewhere in this 
determination. But the Judges note here that Dr. Rubinfeld found Dr. 
Marx's ``directional'' analysis for 2015-2017, relating to the 
growth of streaming as impacting relative share values, as proof 
that ``the regression specification put forth by Dr. Crawford was 
not robust or informative [because] the model does not adequately 
characterize the changing U.S. video distribution marketplace.'' 
Rubinfeld WRT ] 95.
---------------------------------------------------------------------------

b. Rebuttals to Dr. Marx's WDT by Program Suppliers Witness Dr. Tyler
    Dr. Tyler \71\ levies three criticisms at Dr. Marx's direct 
testimony. First, he criticizes Dr. Marx's regression-based approach 
for estimating 2014 values for the same reason he criticizes all the 
other fee-based regression proffered in this proceeding (and Dr. 
Crawford's model as well).\72\ That is, Dr. Tyler criticizes Dr. Marx's 
2014 modeling because her dependent variable, as in the models of Drs. 
Crawford, George and Johnson, is ``a royalty amount.'' Written Rebuttal 
Testimony of Cleve B. Tyler, Ph.D., Trial Ex. 7601, ] 30 (Tyler WRT). 
Dr. Tyler's criticism of this form of dependent variable is that it 
``contain[s] a substantial amount of variability due to factors other 
than categories of distantly retransmitted minutes for a subscriber 
group.'' Tyler WRT ] 31. According to Dr. Tyler, these models then need 
to include fixed effects to limit this unrelated variability, but Dr. 
Crawford's model--subsumed in Dr. Marx's 2014 model--suffers from a 
loss of information arising from these fixed effects.
---------------------------------------------------------------------------

    \71\ Dr. Tyler was received as an expert in the fields of 
economics, data analysis, and econometrics. 4/19/23 Tr. 5428 
(Tyler).
    \72\ To be clear, Dr. Tyler does not criticize Dr. Marx's 
application of a Bayesian approach to the 2014 allocation issue.
---------------------------------------------------------------------------

    Moreover, Dr. Tyler notes that, for the 2015-2017 period, Professor 
Marx's inability to apply a fee-based regression arises from data 
limitations generated by the WGNA conversion, but such data limitations 
are obviated by the change in the dependent variable to his Subscriber 
Group Royalty Percentage (``SGRP''), which he avers does not require 
fixed effects, and thus his model does not discard information from the 
substantial number of CSOs that have just one Subscriber Group. Tyler 
WRT ] 70.
    Dr. Tyler also maintains that because Dr. Marx relies on Dr. 
Crawford's 2010-2013 model, she began her regression analysis from an 
``imprecise starting point'' and a potentially biased ``prior belief.'' 
Tyler WRT ] 57. That is, because Dr. Tyler is of the opinion that Dr. 
Crawford's process in generating his model generates ``serious 
questions,'' \73\ she has implicitly ported those problems into her 
model, which ``cast[s] a substantial shadow of doubt on any of her 
conclusions.'' Tyler WRT ] 57.
---------------------------------------------------------------------------

    \73\ Dr. Tyler's criticisms of Dr. Crawford's work are set forth 
at Tyler ACWDT ]] 106-127 tech. app. A. The Judges discuss elsewhere 
in this determination the impact of the criticism of Dr. Crawford's 
work on the fee-based regressions proffered in this proceeding.
---------------------------------------------------------------------------

    Finally, Dr. Tyler takes aim at Dr. Marx's default to a directional 
analysis in which she opined that expanded streaming services likely 
``reduc[ed] the value of Program Suppliers and PTV claimants' 
retransmitted programming relative to the programming offered by CTV 
claimants.'' While not disputing the relative value shift posited by 
Dr. Marx, Dr. Tyler maintains that an appropriate regression analysis, 
such as his approach, would capture this effect and in a manner 
superior to the inappropriate speculation embodied in Dr. Marx's 
``directional'' analysis. Tyler WRT ] 72.
c. Rebuttals to Dr. Marx's WDT by Program Supplier Expert Dr. Gray
    Dr. Gray \74\ raises the following criticisms of Dr. Marx's 
approach:
---------------------------------------------------------------------------

    \74\ The Judges received Dr. Gray as an expert in the fields of 
economics, statistics, and econometrics. 4/13/23 Tr. 4850 (Gray).

    1. In support of her ``directional'' analysis, Dr. Marx claims 
only that local viewership declined for each of the Program 
Suppliers, Commercial Television, and Public Television claimant 
categories, but she fails to provide information on the level or 
trend of distant viewing of these locally produced programs. Written 
Rebuttal Testimony of Jeffrey S. Gray, Trial Ex. 7606, ]] 47-48 
(Gray WRT).
    2. Relatedly, although the Judges have previously ruled that 
local viewing patterns are not probative of distant viewing 
patterns, absent contemporaneous local and distant measures 
demonstrating that local viewing patterns are sufficiently 
informative as to subscribers' distant viewing patterns, Dr. Marx 
offers only local viewing data, which the Judges have previously 
found not probative of distant viewing pattern rather than evidence 
of distant viewing patterns. Gray WRT ] 48 n.40 (citing Order 
Reopening Record and Scheduling Further Proceedings, Consolidated 
Docket Nos. 2012-6 CRB CD 2004-2009 (Phase II) and 2012-7 CRB SD 
1999-2009 (Phase II) at 3-4 (May 4, 2016)).
    3. Dr. Marx fails to account for the substantially diminished 
number of households which even had distant-retransmitted access to 
CTV programming in the years 2015-2017. Thus, she fails to address 
the fact that ``the relative number of subscribers receiving [CTV] 
programming on a distant basis declined precipitously over the 2014-
2017 royalty years,'' as shown even in ``[s]tatistics presented in 
Dr. Marx's direct testimony show[ing][CTV's] share of claimant 
category minutes weighted by the number of distant subscribers 
reached [had] declined 72% between 2014 and 2017.'' Gray WRT ] 49.
d. Rebuttals to Dr. Marx's WDT by PTV's Expert Dr. Johnson
    Dr. Johnson \75\ recognizes that he and Dr. Marx essentially agree 
as to the use of fee-based regressions and allocation methodologies for 
2014, but that they disagree with regard to the usefulness of a fee-
based regression to determine allocation shares for the 2015-2017 
period. Johnson WRT ] 88. With regard to the latter three years, Dr. 
Johnson takes issue with Dr. Marx's opinion that the WGNA conversion 
would

[[Page 54197]]

necessarily `` `exclude a large proportion of CSOs and royalties from 
the analysis,' '' rendering a fee-based regression approach `` `less 
informative and reliable.' '' Johnson WRT ] 89. More particularly, Dr. 
Johnson criticizes Dr. Marx for not presenting in her WDT ``any 
regression analysis or testing that would support this claim,'' and, 
moreover, that although she produced what appeared to be ``computer 
code . . . appl[ying] Dr. Crawford's model to the entire 2014-2017 
period,'' she did not provide any explanation how that code might have 
supported her otherwise conclusory opinion that a fee-based regression 
for the 2015-2017 period would be `` `less informative and less 
reliable.' '' Johnson WRT ] 89 n.163.
---------------------------------------------------------------------------

    \75\ The Judges received Dr. Johnson as an expert in the fields 
of economics and econometrics. 3/21/23 Tr. 362 (Johnson).
---------------------------------------------------------------------------

    Regarding Dr. Marx's substitution of her ``directional'' analysis 
for a regression approach to analyze the 2015-2017 period, Dr. Johnson 
raises two criticisms. First, he finds her decision to not apply any 
modeling approach for that period to be too severe. Johnson WRT ] 91. 
Second, Dr. Johnson criticizes Dr. Marx's ``directional analysis'' as 
lacking any specificity, information or guidance as to what any 
particular claimant groups' royalty shares should be in the 2015-2017 
period. Rather, her analysis is nothing more than a recitation of 
purported ``qualitative changes Dr. Marx believes were `likely' to have 
happened.'' Johnson WRT ] 92.
e. Rebuttals to Dr. Marx's WDT by CCG's Expert Dr. George
    Dr. George \76\ first addresses Dr. Marx's critique of Dr. 
Crawford's model somewhat obliquely--not by disputing the critique that 
his model reduces the available number of meaningful variations (among 
subscriber groups within CSOs) but by purportedly failing to recognize 
(as Dr. George opines) that relaxing fixed effects in Dr. Crawford's 
model would increase the number of subscriber group variations, thus 
salvaging the use of a fee-based regression. That is, an adjustment 
allowing for ``estimating coefficients from variations within systems 
over time rather than within each system each accounting period,'' 
allows for a regression to analyze ``all systems carrying distant 
signals in two or more accounting periods [to be] included, regardless 
of the number of subscriber groups.'' George WRT at 18.\77\
---------------------------------------------------------------------------

    \76\ The Judges received Dr. George as an expert in the fields 
of economics, with experience in econometrics, media markets, and 
industrial organization. 4/18/23 Tr. 5111 (George).
    \77\ Dr. George acknowledges that relaxing Dr. Crawford's 
``fixed effects'' in this manner risks the introduction of bias from 
omitted variables created by industry and system changes over time 
left unobserved by the regression, but she believes this trade-off 
is acceptable. George WRT at 18. By contrast, Dr. Marx maintains 
that allowing for the introduction of potential ``omitted variable 
bias'' would invite application of the metaphor ``garbage in, 
garbage out.''
---------------------------------------------------------------------------

    Further, Dr. George ``agrees with Dr. Marx that programming on 
streaming services is likely a closer substitute for [PTV] and Program 
Supplier programming than other claimant types,'' Dr. George finds that 
Dr. Marx's analysis ``likely overstates the relative decline of Program 
Supplier and Public Television programming relative to Commercial 
Television content.'' George WDT at 21. She reaches this finding by 
noting that Dr. Marx's reliance on local (rather than distant) viewing 
neglects the likely fact that local CTV news programming would be less 
popular in distant markets, whereas Program Suppliers' content is not 
geographically distinct and would not be less valued for this reason. 
George WRT at 21.
    Finally, Dr. George takes issue with Dr. Marx's use of a Bayesian 
regression incorporating 2013 data into the methodology used to 
calculate 2014 share estimates.
    Dr. George emphasizes that pooled data from 2010-2013 reflects the 
choices made by CSOs in that earlier period with different market 
conditions. In this regard, Dr. George notes that decisions in 2010-
2013 reflect neither the WGNA conversion nor later cable industry 
acquisitions and entry. George WDT at 22.\78\
---------------------------------------------------------------------------

    \78\ None of the JSC witnesses levied substantive criticisms of 
Dr. Marx's 2014 Bayesian regression or her 2015-2017 ``directional'' 
analysis. This is perhaps unsurprising, because a JSC expert 
witness, Dr. Majure, does not take issue with the results of Dr. 
Marx's 2014 Bayesian regression or with her ``directional'' 
analysis.
---------------------------------------------------------------------------

3. The Judges' Analysis and Findings Regarding the Marx Model and 
Directional Approach
    Having considered all aspects of the CTV Marx Model and directional 
analysis presented by Dr. Marx, as well as all the criticisms of those 
approaches contained in the submissions by the other parties, the 
Judges find as follows:

    1. Dr. Marx's Bayesian modeling, ceteris paribus, is an 
appropriate econometric tool to use in the process of estimating 
relative marketplace value across the program categories for 2014. 
The Judges do not credit Dr. George's criticism that Dr. Marx's 
Bayesian approach is deficient because it pools 2014 data with data 
from the 2010-2013 period. Dr. Marx opined, and the Judges agree, 
that 2014 was sufficiently similar to this prior period to justify 
the Bayesian approach.\79\
---------------------------------------------------------------------------

    \79\ The Judges also note that Dr. George herself pooled data 
from 2014 with the 2015-2017 data, where the data distinction was 
dramatic, having arisen from the WGNA conversion.
---------------------------------------------------------------------------

    2. Dr. Marx's directional analysis for the 2015-2017 period can 
be useful, despite the absence of any allocation share estimates, in 
that it suggests to the Judges which of the quantitative estimates 
on which the Judges do rely could be more probative, in that they 
are consonant with Dr. Marx's directional analysis. However, in the 
present proceeding, as discussed infra, the Judges adopt the Tyler 
Model as a regression model that is probative of relative 
marketplace values over the entire 2014-2017 period. Accordingly, 
the Judges find Dr. Marx's `directional'' analysis, although useful, 
not as probative or definitive as the Tyler Model. Nonetheless, the 
Judges will utilize the Marx Model, as appropriate, to reconcile 
differences between the Tyler Model and the adjusted Bortz approach 
undertaken infra.
    3. Nonetheless, the Judges emphasize the appropriateness of Dr. 
Marx's `directional'' analysis, because they do not want to leave 
the implication that such qualitative analyses are inappropriate. 
Dr. Marx's 2015-2017 directional analysis was an appropriate 
alternative to a fee-based regression--because (as discussed 
elsewhere in this determination) the WGNA conversion substantially 
increased the number of minimum-fee-only CSOs and the number of CSOs 
with less than two subscriber groups--reducing significantly the 
number of CSOs and subscriber groups that was accepted by the Judges 
in the 2010-13 Determination. In this regard, the Judges do not 
credit Dr. Erdem's reliance on separate arguments, seeking to 
discredit Dr. Marx's use of the regression approach have evidentiary 
weight commensurate for 2014, regarding the impact of (a) the 
reduction in the number of CSOs with two or more subscriber groups; 
and (b) the increase in the number of minimum-fee-only CSOs. Rather, 
Dr. Marx has considered the combined effect of these factors.
    4. Although Dr. Marx's ``directional'' approach is probative and 
useful, she overstated the point that the reduction in above-
minimum-fee-paying CSOs rendered their revealed preferences without 
benefit. Rather, their channel selections/programming preferences 
are also probative and useful, even if less so than in the 2010-13 
Determination because of the reduction in the number of such CSOs 
and in the percentage of royalties they represent.
    5. Dr. Marx's allocation shares related to ``duplicated'' 
minutes is superior to her share allocation excluding ``duplicated'' 
minutes, because the Judges adopted the former in the 2010-13 
proceeding, because of problems relating to the latter as described 
in the prior determination. See 2010-13 Determination at 3565, 3569, 
3591, and 3610-11.
    6. The evidentiary weight of Dr. Marx's ``directional'' analysis 
for the 2015-2017 period is not diminished due to her reliance on 
local viewership data, because the evidence in this proceeding 
indicates that a substantial percentage of distant viewing is 
retransmitted to areas in close proximity to the origin of the local 
signal. See, e.g., Erdem WRT 59 (``91% of systems are retransmitting 
the same signal on a local basis to some

[[Page 54198]]

subscriber groups and on a distant basis to other subscriber groups 
[and] [of]f these systems, on average, 76% of the channels that are 
distant to a subscriber group are retransmitted as local to another 
subscriber group . . . .'').
    7. Dr. Marx's ``directional'' analysis provides evidence 
suggesting that PTV and Program Suppliers content declined in 
viewership relative to CTV, implying, ceteris paribus, a higher 
relative share value for CTV. The Judges note that Dr. George agrees 
with this point (but see point (8) below).
    8. However, the Judges' prior reluctance to use viewership as a 
direct proxy for value in the allocation (Phase I) proceedings 
cautions against applying too much probative weight to this 
``directional'' analysis. Accordingly, the Judges adopt Dr. Gray's 
criticism regarding Dr. Marx's reliance on local viewership data, 
but only as a caution regarding its evidentiary weight. In this 
regard, Dr. George agrees that the weight placed on Dr. Marx's 
viewership-based approach be limited.
    9. The Judges further limit the evidentiary weight of Dr. Marx's 
``directional ``analysis, because, as Dr. Gray further notes, Dr. 
Marx's own data shows that CTV's share of claimant category minutes 
declined significantly between 2014 and 2017.

C. Program Suppliers' Regression Approach: The Tyler Model

    On behalf of Program Suppliers, its expert witness, Dr. Tyler, 
proffered a regression analysis that, while within the broad category 
of fee-based regressions, is differentiated in ways that Dr. Tyler 
opines to be important in this proceeding. The Judges' review of his 
testimony, infra, highlights these broad similarities and the 
assertedly important differences.
    At a high level, Dr. Tyler agrees with the finding in the 2010-13 
Determination that regression analysis is very informative for 
estimating relative marketplace value in this case. But by way of 
differentiating his approach, Dr. Tyler notes that a regression seeking 
to establish relative marketplace value should estimate incremental 
value, which he posits here to be the marginal value of an additional 
minute of different types of programming content relative value--rather 
than a value relative to a reference or base category, as in the other 
proffered regressions. Tyler ACWDT ] 65; 4/19/23 Tr. 5439-40 (Tyler).
    Next, Dr. Tyler notes that--although the statutory royalty formula 
in section 111 prevents the setting of market prices for distantly 
retransmitted stations--a regression can observe how CSOs reveal their 
preferences for different types of stations bundling various types of 
programming content, given the pre-existing section 111 royalty rate 
provisions. In turn, the observations of the decision-making by CSOs 
provides insight into their willingness-to-pay (WTP) for different 
programming categories on their distantly retransmitted local stations. 
The final link in this analytic chain, according to Dr. Tyler, is that 
the regression can measure this WTP and thus estimate the ``relative 
values of market outcomes'' that cannot be directly observed. Tyler 
ACWDT ] 65.
    More particularly, Dr. Tyler explains that regression analysis as 
applied to determine relative marketplace value in these proceedings 
``exploits the fact that CSOs make choices as to which bundles of 
content they retransmit.'' Tyler ACWDT ] 66. He adds that the 
regression will estimate the incremental royalty amount that CSOs paid 
(or, more accurately appeared willing to pay) \80\ to acquire different 
types of content, which, he opines, ``is akin to finding the relative 
value of programming content, based on actual choices made by 
marketplace participants.'' Id. Finally, Dr. Tyler explains that the 
``marginal values'' calculated via his regression must be multiplied by 
the quantities of minutes ``to compute relative marketplace value.'' 
Tyler ACWDT ] 68.
---------------------------------------------------------------------------

    \80\ The Judges understand that Dr. Tyler found it necessary to 
include this qualifier because in a majority of instances in the 
2015-2017 period, CSOs paid the minimum fee rather than the ``base 
fee'' calculated on a subscriber group basis. See Tyler ACWDT ] 67 
(tacitly acknowledging that where the minimum fee is binding, a fee-
based regression does not provide the CSOs' actualized revealed 
preferences, but rather only ``insight into how the CSOs would 
actually value these program categories in an unregulated 
market.'').
    In this regard, the Judges discuss elsewhere in this 
determination the distinction in evidentiary value between instances 
where the CSO actually pays the calculated subscriber group base 
fee, and instances where the CSO actually pays the minimum fee (not 
the calculated subscriber group base fee).
---------------------------------------------------------------------------

    Notwithstanding his broad agreement with other experts in this and 
prior proceedings that fee-based regressions are useful, he parts 
company with them in an important way. Rather than start from the 
assumption that Dr. Crawford's 2010-13 model is useful or correct, Dr. 
Tyler constructed a regression model that differed from the approach 
taken by Dr. Crawford and from Drs. Johnson George and Marx (for 2014), 
whose approaches were modified versions of Dr. Crawford's model. More 
specifically, he avers that the Tyler Model diverges importantly and 
beneficially from prior fee-based regressions and from the fee-based 
regressions proffered by the other experts here, because of his model's 
use of a Rate as the dependent variable.
    In this regard, Dr. Tyler explains that Crawford-style regressions 
use actual dollar royalty amounts as the dependent (left-hand side) 
variable, which is problematic because ``substantial variability exists 
across the royalty amounts calculated for each subscriber group . . . . 
'' More particularly, because ``copyright royalties are determined on 
the basis of gross receipt percentages . . . greater [dollar] royalty 
amounts . . . for a subscriber group [may occur] for no other reason 
than that one CSO has more subscribers or higher prices, or both, than 
another CSO.'' Tyler ACWDT ] 83.
    Accordingly, a regression model using royalty amounts calculated 
(such as the Crawford Model) ``must control for these sources of 
variability to attempt to isolate the incremental value of minutes by 
category type.'' Tyler ACWDT ] 83. This control is made in the 
Crawford-style regression by the use of ``fixed effects,'' which 
``discard information from the substantial number of CSOs that have 
just one subscriber group,'' a loss of data that is unnecessary in the 
Tyler model. Tyler WRT ] 70.
    Dr. Tyler's use of royalties as a percentage of gross receipts, at 
the subscriber group level, allows him to calculate what he coins (as 
noted supra) the ``Subscriber Group Royalty Percentage'' (``SGRP''). 
When the SGRP is regressed against the number of transmitted minutes 
for each category, Dr, Tyler obtains coefficients for his regression 
equation that he describes as ``represent[ing] a type of price.'' Tyler 
ACWDT ] 84.
    This attempt by Dr. Tyler to characterize the SGRP dependent 
variable as a ``type of price'' is no mere academic detail. By making 
this characterization, Dr. Tyler claims that his model sits within a 
well-accepted class of econometric regressions known as ``hedonic 
regressions,'' which he defines as follows:

    Hedonic regression . . . model[s] . . . estimate the influence 
that various factors have on the price of a good, or sometimes the 
demand for a good. In a hedonic regression model, the dependent 
variable is the price (or demand) of the good, and the independent 
variables are the attributes of the good believed to influence 
utility for the buyer or consumer of the good. The resulting 
estimated coefficients on the independent variables can be 
interpreted as the weights that buyers place on the various 
qualities of the good.

Tyler ACWDT ] 85.
    Dr. Tyler then constructs his purported hedonic regression by using 
what he describes as the calculated ``actual'' \81\ royalty rate per 
subscriber--

[[Page 54199]]

determined by the base fee royalty as a percent of each subscriber 
group's gross receipts. Tyler ACWDT ] 87. He proceeds to weight the 
regression model by the gross receipts of the CSOs, which he opines is 
``consistent with assessing relative marketplace value [because] 
[s]ubscriber groups with larger gross receipts would tend to contain 
more information [and] CSOs would be expected to scrutinize decisions 
regarding distantly retransmitted signals more carefully when there are 
more dollars at stake.'' Tyler ACWDT ] 88.\82\
---------------------------------------------------------------------------

    \81\ The word ``actual'' in this context is rather Orwellian. 
For the 2015-2017 period, a substantial majority of the CSOs in 
which the subscriber groups are situated ``actually'' paid the 
minimum fee. A Base Fee was ``actually'' calculated, as required by 
the regulations, but not ``actually'' paid, because the Minimum Fee 
bound. Dr. Tyler's misleading semantic use of the adjective 
``actual'' does not assist the Judges in deciding whether any or all 
of the Base Fee calculations have objective evidentiary weight.
    \82\ The use of weights in hedonic regressions has support in 
the economic literature. See Tyler ACWDT ] 88 n.72 (citing sources). 
(Dr. Tyler also includes a sensitivity analysis in which he shows 
the results of his model without weights Tyler ACWDT Sec.  VI.G. 
(tech. app. C)).
---------------------------------------------------------------------------

    Dr. Tyler's regression model ``includes interaction terms for each 
year . . . which allows for estimated valuations that vary'' for each 
year in the 2014-17 period. This annualizing of the valuations is 
distinguishable from the ``pooled'' approach of other regression 
experts in this proceeding, who (in the models proffered in their 
direct testimonies) ``pool'' their data across all four years. Dr. 
Tyler rejects this approach and utilizes an annualized approach 
instead, because, he opines, utilizing the same coefficient across the 
four years is both (1) legally inappropriate because calculating share 
allocations for specific years is statutorily required and (2) 
inconsistent with ``best practices'' for hedonic regressions (data 
permitting), which allow the underlying relationships between types of 
minutes and SGRP to vary over time. Tyler ACWDT ] 91.
    Summing up, Dr. Tyler identifies what he understands to be the many 
advantages of his model:

    1. SGRP--as a type of price--reflects a ``minimum willingness to 
pay'' and thus has a ``clear economic interpretation.'' PS PFF ] 285 
(and record citations therein).
    2. The focus of the regression is on ``nearly 20,000 
observations/data points, and more than 2,000 distinct pricing 
relationships, providing the variation needed for a meaningful 
regression. PS PFF ] 286 (and record citations therein).
    3. By using SGRP as the dependent variable instead of royalties 
(in any functional form), the Tyler Model is not influenced by 
variability in gross receipts caused by the number of subscribers in 
a subscriber group or higher CSO subscription prices arising from 
for example, the number and type of cable networks carried, the 
quality of (or deficiency in) customer service, and the bundled 
pricing of cable, internet and/or phone. Unlike the regressions that 
use royalties as the dependent variable, the Tyler Model does not 
need to control for these statutorily unrelated effects, thus 
avoiding the potential for bias when fixed effects are introduced. 
PS PFF ]] 290-292 (and record citations therein).
    4. Because the SGRP is a ``type of price'' the Tyler Model is 
``closer'' to the definition of a traditional hedonic regression and 
``closer to the definition of a traditional hedonic model.'' PS PFF 
] 293 (and record citations therein).
    5. By establishing values and shares for each year, rather than 
pooling the results over the four-year period, the Tyler Model: (a) 
is in line with the Judges' statutory task; (b) captures annual 
industry changes; and (c) is consistent with ``best practices for 
hedonic regressions.'' PS PFF ]] 294-296 (and record citations 
therein).
    6. The Tyler Model looks at the more economically logical 
hypothetical marginal expansion per minute of a program type to 
determine value rather than the hypothetical shift of minutes among 
program categories. PS PFF ] 298 (and record citations therein).
    7. The Tyler Model avoids the problem inherent in the other 
regressions that must rely on incorrect subscriber number estimates. 
PS PFF ]] 299-300, 358, 360-3623 (and record citations therein). 
Unlike the models proffered by Drs. George, Johnson and Marx, the 
Tyler Model is not based on the Crawford Model. Therefore, unlike 
those models, the Tyler Model is not tainted by the potential 
``specification searching'' suggested by the high number of models 
and specifications tested by Dr. Crawford. Moreover, Dr. Tyler only 
considered the results of fewer than two dozen models (all linear in 
functional form) many of which were robustness/sensitivity checks 
and not generated as potential alternative base models. PS PFF ]] 
305, 307, 311-313, 315-316, 376-379 (and record citations therein).
    8. Despite its differentiation from the Crawford Model, 
particularly with regard to the SGRP as the dependent variable in 
the Tyler Model and in the absence of a need for fixed effects, the 
Tyler Model is an improvement of the fee-based regression approach, 
not a departure. PS PFF ] 317 (and record citations therein).
    9. The Tyler Model does not cherry-pick or otherwise overstate 
an allocation share for Program Suppliers, for whom Dr. Tyler 
presented testimony. PS PFF ] 308-309 (and record citations 
therein).

    Applying his model in the foregoing manner, Tyler estimates royalty 
shares (and standard errors) for each year as follows:
[GRAPHIC] [TIFF OMITTED] TN28JN24.010


[[Page 54200]]


1. Criticisms of the Tyler Model
a. Criticisms of the Tyler Model by SDC Expert Witness Dr. Erdem
    Dr. Erdem opines that, notwithstanding Dr. Tyler's claim that his 
model is differentiated to address defects in the approach used by Dr. 
Crawford, the Tyler Model ``essentially carries the same flaws.'' Erdem 
WRT ] 43. But before examining alleged flaws in the Tyler Model, Dr. 
Erdem acknowledges that, in his opinion, the other regression experts' 
modeling is more ``egregious'' than Tyler's model. Erdem WRT ] 121. 
More particularly, Dr. Erdem recognizes that Dr. Tyler has made what 
Dr. Erdem understands to be the following salutary changes from the 
approach used by Dr. Crawford:

    1. A change in the dependent variable from the log of royalties 
into a fees/revenue ratio.
    2. The removal of fixed effects.\83\
---------------------------------------------------------------------------

    \83\ Dr. Erdem opined that the inclusion of fixed effects 
obscured the more impactful predictive effects of other independent 
variables on the royalty-based related dependent variable.
---------------------------------------------------------------------------

    3. Division of each claimant category into ``Canada'' and ``non-
Canada'' zone minutes.\84\
---------------------------------------------------------------------------

    \84\ The experts' treatment of issues relating specifically to 
the Canada Zone is set forth infra in this determination.
---------------------------------------------------------------------------

    4. Removal of the effect of ``the number of subscribers'' by 
``divid[ing] the . . . fees paid by a metric [gross receipts] that 
scales with the number of subscribers.''

Erdem WRT ]] 43, 61.
    However, according to Dr. Erdem, despite the positive significance 
in these model changes, the core principle of the Tyler Model remains 
unchanged from other regressions, because ``the dependent variable Dr. 
Tyler uses is still driven by fees [and] attempt[s] to estimate the 
relationship between fees and programming minutes.'' Erdem WRT ] 
43.\85\ More granularly, Dr. Erdem criticizes Dr. Tyler's use of the 
SGRP as the dependent variable because it ``basically boils down to the 
number of DSEs.'' In this regard, Dr. Erdem further opines:
---------------------------------------------------------------------------

    \85\ This is a reprise of the overarching criticism that Dr. 
Erdem made in the 2010-13 Determination, which was rejected by the 
Judges.

    This is because a system's royalty fees are calculated by 
multiplying their revenues by a specified amount that increases as 
the system adds more DSEs, so dividing the fees by revenue will 
produce a number that correlates strongly with the number of DSEs 
the system carried. As a result, Dr. Tyler is essentially saying 
---------------------------------------------------------------------------
that DSEs equate to market value.

Erdem WRT ] 122. Dr. Erdem asserts that this change in the dependent 
variable from the log of royalties to the SGRP does not cure the 
fundamental problem in all fee-based regressions, to wit: fee-based 
regressions are ``trying to calculate market value when no market 
exists, using variables determined by regulation.'' Erdem WRT ] 122.
b. Criticisms of the Tyler Model by SDC Expert Witness Dr. Rubinfeld
    Dr. Rubinfeld testifies about the deficiencies in all the fee-based 
regressions, but he pointedly criticizes Dr. Tyler for characterizing 
his regression as a hedonic regression. Rubinfeld WRT ] 71. Dr. 
Rubinfeld levies this objection because he is of the opinion that Dr. 
Tyler's dependent variable, the SGRP, does not equate or analogize to a 
``market price''--a necessary element for a regression to qualify as 
hedonic. Rubinfeld WRT ] 71. Thus, according to Dr. Rubinfeld, Dr. 
Tyler's dependent variable, the SGRP, falls victim to the same 
deficiency as the other regressions, in that there is ``no reason to 
believe that a regression based on statutory royalty fees--whether in 
dollar terms or expressed as a percentage of gross receipts--will 
identify the marginal value of programming that would prevail if the 
royalty fees were determined in a free market.'' Rubinfeld WRT ] 75.
    However, Dr. Rubinfeld approvingly cites Dr. Tyler's testimony (in 
the same vein as Dr. Erdem) for its critique of the modeling undertaken 
by Dr. Crawford. In this regard, Dr. Rubinfeld notes:

    1. Dr. Tyler examines Dr. Crawford's regression model to the 
2014-2017 data available in the current proceeding and finds a 
``serious'' underlying modeling problem in the fact that ``the 
Crawford Model estimates zero shares for JSC in 2014 (as well as the 
other years) . . . .''
    2. Dr. Tyler analyzes the troubling pattern of the regression's 
``residuals'' in Dr. Crawford's model--again using 2014-2017 data--
and finds that the latter's regression model is ``not well specified 
for the 2014-2017 data.'' \86\
---------------------------------------------------------------------------

    \86\ More technically, Dr. Rubinfeld (like Dr. Erdem) finds the 
``hammer-shaped pattern of residuals violates the classical zero 
conditional mean of the disturbance assumption for the OLS estimator 
to be unbiased.'' Erdem WRT ] 93. This means that the residuals 
exhibit non-random data points, whereas a well-specified regression 
would contain have random error terms. In (perhaps) somewhat less 
technical terms, Dr. Rubinfeld is agreeing with Dr. Tyler that the 
unexplained portions of the Crawford Model are actually correlated 
with one or more omitted independent variables.

Rubinfeld WRT ] 93.
    In sum, Dr. Rubinfeld does not find economic support for Dr. 
Tyler's regression model, but does find common cause with Dr. Tyler' 
broad criticism of other fee-based regressions.\87\
---------------------------------------------------------------------------

    \87\ Another SDC expert witness, Mr. John Sanders, likewise does 
not ``endorse'' Dr. Tyler's modeling, but relies on Dr. Tyler's 
critiques to discredit the fee-based regressions proffered by other 
experts. See, e.g., Sanders WRT ] 3 nn.4, 9, & 20. Mr. Sanders also 
notes the divergence of Dr. Tyler's estimated share for PTV and, 
respectively, SDC content, from the results of other fee-based 
regressions as, in his opinion, indicative of the unreliability of 
such regressions in these proceedings. Sanders WRT ]] 11, 18.
---------------------------------------------------------------------------

c. Criticisms of the Tyler Model by CTV Expert Witness Dr. Bennett
    As an initial criticism, Dr. Bennett avers that Dr. Tyler's use of 
his SGRP as the dependent variable, instead of royalties, may 
potentially and illogically fail to link ``variation in the composition 
of minutes [to] value unless that variation is also accompanied with a 
change in . . . the SGRP.'' Bennett WRT ] 124. To make this point, Dr. 
Bennett hypothesizes a scenario in which two minimum-fee-paying CSOs 
make subscriber-increasing changes in distantly retransmitted stations, 
thus increasing royalties, but each maintains the same SGRP because 
royalties have not increased (remaining at the minimum fee level). 
Bennett WRT ] 125.
    Moving to another critique, Dr. Bennett opines that Dr. Tyler's 
regression sample ``is based on a relatively small and non-
representative sample of the CSOs whose royalty payments comprise the 
aggregate of the royalty pool.'' Bennett WRT ] 135. Dr. Bennett does 
not suggest that this small sample is unique to Dr. Tyler among the 
regression experts, acknowledging that this applies to ``the other 
witnesses relying on regressions for 2014-2017.'' Bennett WRT ] 
136.\88\
---------------------------------------------------------------------------

    \88\ Although Dr. Bennett does not state here why the sample is 
so truncated, the Judges understand this point to be based on the 
growing number of CSOs, without any distant retransmissions and thus 
no subscriber groups, which Dr. Bennett indicates increased over the 
2015-17 period.
---------------------------------------------------------------------------

d. Criticisms of the Tyler Model WDT by JSC Expert Witness Dr. Majure
    In addition to his general criticisms of all fee-based regressions, 
Dr. Majure levies criticisms that he aims most particularly against Dr. 
Tyler's regression approach. Dr. Majure acknowledges that ``[p]rior to 
WGNA's conversion, there was some variation in the royalty rate a CSO 
would pay for incremental content,'' such that only ``[t]he regressions 
that rely on data for 2015-2017 have little to no connection with how 
much CSOs value the content.'' Majure WRT ]] 75, 77. Thus, he opines 
that ``only after the WGNA conversion [the regressions] do not--and 
cannot--estimate the value of a minute of content to CSOs.'' Majure WRT 
] 75.
    Dr. Majure maintains that the Tyler Model well-demonstrates the 
foregoing

[[Page 54201]]

point, and that the Tyler Model essentially estimates only ``the 
equation given by the statutory formula . . . .'' Majure WRT ] 78. 
Thus, he opines that the SGRP in the Tyler Model does not establish a 
``price'' that can be explained and applied as in a bona fide hedonic 
regression. Majure WRT ]] 78-79 (``For example, [in the Tyler Model] 
the `price' calculated for the subscriber groups of a CSO carrying a 
full DSE or less than a full DSE across all subscriber groups would be 
1.064 percent of the subscriber group's revenues multiplied by its 
total number of DSEs.'').
    However, Dr. Majure is careful to acknowledge that ``the statutory 
formula could lead to variation in Dr. Tyler's `price' beyond what 
comes from the DSE value'' in 2014 but ``this is not the case after 
2014 [because] after 2014, the vast majority of subscriber groups 
belong to CSOs that paid the minimum fee, leaving little variation in 
the percentage of royalties they would owe.'' Majure WRT ] 80. Thus, 
Dr. Majure appears to recognize that for 2014 the Tyler Model presented 
an acceptable proxy for ``price'' as its the dependent variable.
e. Criticisms of the Tyler Model WDT by JSC Expert Witness Mr. Harvey
    Although Mr. Harvey opines that the Tyler Model, like the other 
regression models, is unable to correctly value JSC programming for the 
2015-17 period, he acknowledges that the Tyler Model is superior to the 
others in one respect: it calculates annual coefficients rather than 
``pooled'' coefficients for all four years (2014-2017). Harvey WRT ]] 
28, 35.
    But Mr. Harvey is otherwise decidedly critical of the Tyler Model--
maintaining first that it does not ``reliably estimate[e] [JSC] value[ 
] in 2015-2017,'' because ``[s]ixty-six percent (4 of 6) of the 
compensable sports coefficients are not statistically significantly 
different than zero.'' Harvey WRT ] 45 & tbl.9.
    Next, Mr. Harvey separates out minimum fee systems from the Tyler 
Model, in order to isolate those CSOs making retransmission decisions 
that Mr. Harvey asserts had economic consequence in terms of royalty 
payments. Harvey WRT ] 46 & tbl.10. He then turns to various 
``sensitivity tests'' undertaken by Dr. Tyler, that were not contained 
in the Tyler Written Direct Testimony but which were produced in 
discovery by Program Suppliers. Harvey WRT ] 68. Looking at these 
tests, Mr. Harvey notes that Dr. Tyler ``selected a specification that, 
among his many sensitivity analyses, resulted in one of the lowest 
shares for JSC and one of the highest for Program Suppliers.'' Harvey 
WRT ] 70. See also Harvey WRT fig.6.\89\
---------------------------------------------------------------------------

    \89\ To be clear, figure 6 generated by Mr. Harvey shows that 
the share allocations arising from the proffered Tyler Model were 
neither higher than all the Program Supplier shares nor lower than 
all the JSC shares generated by the sensitivity tests. Moreover, Mr. 
Harvey does not state why the sensitivity test results should have 
led Dr. Tyler to alter his share allocations, nor does Mr. Harvey 
state why Dr. Tyler should have abandoned the Tyler Model merely 
because the shares differed in the sensitivity test, albeit not in a 
manner that even Mr. Harvey avers had called into question the 
model's robustness.
---------------------------------------------------------------------------

f. Criticisms of the Tyler Model by CCG Expert Witness Dr. George
    At the outset, Dr. George, avers that Dr. Tyler's model ``diverges 
from economic theory'' through his consideration of the SGRP, rather 
than a measure of royalties, as the dependent variable affected by 
claimant programming minutes. George WRT at 11-12. More particularly, 
Dr. George maintains that this change in the dependent variable:

removes the link between the value of distant signal programming to 
[CSO] and royalty cost that lies at the heart of the theoretical 
framework [and] effectively replicates the regulatory formula 
[rather than] reflect value.

George WRT at 12. Further to this point, Dr. George asserts that the 
inclusion of the SGRP as the dependent variable ``attenuate[s]'' the 
differentiated marginal value of assorted types of programs. She 
explains that by looking at royalties from all retransmitted 
programming as a proportion of gross receipts, the Tyler Model 
``understates the value of high-quality, differentiated program and 
overstates the value of undifferentiated, low-quality programming.'' 
George WRT at 12.
    Another criticism levied against the Tyler Model by Dr. George is 
that (as with the Johnson Model, discussed infra) it suffers from the 
consequential defect of:

includ[ing] no fixed effects at all [and the] coefficients [thus] 
are estimated using variation across different cable systems . . . 
the variation most likely to be contaminated by the effect of 
unobserved factors, also known as bias from omitted variables . . . 
[the coefficients therefore] cannot be relied on to reflect 
underlying value.

George WRT at 13 (emphasis added).
g. Criticisms of the Tyler Model by PTV Expert Witness Dr. Johnson
    Although Dr. Johnson finds that he and Dr. Tyler agree on a number 
of points, see Johnson WRT ] 26, Dr. Johnson takes issue with the 
following aspects of Dr. Tyler's WDT.
    At the outset, Dr. Johnson criticizes Dr. Tyler's use of the SGRP 
as the dependent variable in the Tyler Model because, according to Dr. 
Johnson, ``the SGRP does not capture the CSO decision-making process 
and identify their valuation of such programming,'' because the SGRP 
essentially replicates the statutory formula without regard to ``the 
type of programming . . . on the signals the CSO retransmits.'' Johnson 
WRT ] 34. Thus, according to Dr. Johnson, the SGRP dependent variable 
in the Tyler Model fails to capture the ``chain of logic'' of the 
correlation in the fee-based regressions, i.e., that ``[t]o the extent 
. . . a CSO's bundle of programming includes more valuable programming, 
the price of that bundle will be higher, the CSO's gross receipts will 
be higher, and thus the amount of royalties that the CSO pays will be 
higher.'' Johnson WRT ] 35.
    Next, Dr. Johnson looks at the ``sensitivity tests'' Dr. Tyler 
applied to his own model and notes ``the extreme variability in Dr. 
Tyler's regression results'' uncovered by these tests relative to Dr. 
Johnson's more stable results, which, according to Dr. Johnson 
``suggests that modeling royalty amounts rather than the statutory 
royalty rate is more appropriate.'' Johnson WRT ] 40.
2. The Judges' Analysis and Findings Regarding the Tyler Model \90\
---------------------------------------------------------------------------

    \90\ The Judges' analysis and findings in this section are 
separate and apart from their analysis and findings on the specific 
issues considered in separate sections of this determination.
---------------------------------------------------------------------------

    The Judges make the following findings with regard to the Tyler 
Model:

    1. Dr. Tyler's measurement of ``an additional minute'' of 
programming content, as contrasted with a ``value relative to a 
reference or base category'' in other regressions, is appropriate, 
but neither approach is superior inter se.
    2. The base fee calculations of minimum-fee-only CSOs do provide 
some ``insight'' into how those CSOs might actually value different 
program categories, but that ``insight'' is limited, because it is 
predominantly informative as to ordinal rankings of relative value, 
rather than cardinal measures, as required in these proceedings. See 
2010-13 Determination at 3578 (``the Judges do not place much weight 
on the relative rankings of the program categories''); cf. 
Phonorecords III, Initial Ruling and Order after Remand at 38 (July 
1, 2022) (distinguishing the benefit of an economic model's 
``insight'' from a useful ``real-world relationship'').
    3. A CSO whose base fee calculations are more proximate to the 
minimum fee it eventually paid would be more probative of CSOs' 
willingness-to-pay than when there is a large gap between the 
calculated base fee and the paid minimum fee, because the CSO could 
have understood that the base fee might bind. However, the record 
provides

[[Page 54202]]

insufficient evidentiary basis to apply this point in the present 
proceeding.
    4. On the present factual record, the Tyler Model's SGRP is 
preferable to the log of royalties, or royalties themselves, as the 
dependent variable in a fee-based regression, because it does not 
require the use of questionable controls and fixed effects, and 
remains appropriate even in the absence of such controls and fixed 
effects. However, the log of royalties, or royalties themselves, are 
appropriate dependent variables, provided the factual record and the 
specifications of the regression are appropriate.
    5. The Tyler Model is not a hedonic regression as generally 
understood by economists, because it is not based on actual market 
prices. Dr. Tyler at times acknowledges this point, by describing 
his SGRP as a ``type'' of price, rather than an actual price and by 
also describing the SGRP as ``closer'' to the definition of a 
traditional hedonic model. However, the approach taken by the Tyler 
Model is in the nature of a hedonic regression, in that it utilizes 
a similar approach by creating a useful proxy for price proxy in the 
form of a budget constraint, i.e., the SGRP. (See also the 
discussion regarding ``relative marketplace value'' supra and the 
section, infra, comparing the Tyler Model to a ``fee generation'' 
approach).
    6. The Tyler Model's use of weighting of each CSO's gross 
receipts is appropriate of the CSOs because the decisions by CSOs 
with larger gross receipts will have a greater impact on the royalty 
pool making the programming category information they provide more 
important.
    7. The Tyler Model, calculating coefficients for each year, is 
superior to the other regression models in this proceeding to the 
extent those models were originally proffered as ``pooled'' models, 
using one coefficient for the entire 2014-2017 period. (However, 
this advantage is mitigated where there is evidence or testimony 
that such ``pooled'' models were themselves subsequently 
recalculated on an ``unpooled'' basis either by the proffering 
regression expert or by other expert witnesses in their rebuttal 
testimonies.)
    8. The Tyler Model provides sufficient variation among the CSOs' 
decisions because it contains approximately 20,000 data points for 
observation, and more than 2,000 distinct pricing relationships. 4/
19/23 Tr. 5436 (Tyler).
    9. The Tyler Model is superior to the other fee-based 
regressions by not requiring as a control variable an estimate of 
the number of subscribers in a subscriber group, which cannot be 
estimated without measurement error. PS PFF ]] 300, 360-362 (and 
record citations therein). This issue is a critical reason why the 
Judges give greater weight to the Tyler Model vis-[agrave]-vis the 
other regression models, and thus necessitates getting ``into the 
weeds'' for a more detailed explanation.
    The control for the number of subscribers is very important in 
the other fee-based regressions where the dependent variable is a 
functional form of royalties, because the number of subscribers 
clearly would have a substantial effect on the level of royalties 
(i.e., more subscribers = more royalties). Moreover, the number of 
subscribers must be controlled because the number of subscribers 
could also be positively correlated with the number of minutes. 
Thus, it must be controlled in order to isolate the ``effect'' of 
interest, which is the impact of different program category minutes 
on the royalties. However, there is no data available regarding the 
number of subscribers in a subscriber group, and the other fee-based 
regression experts are forced to make an estimate by 
``proportionally assigning the number of overall CSO subscribers to 
each subscriber group based on the gross receipts for each 
subscriber group.'' Tyler WRT ] 41 (emphasis added).
    The problem with this estimate is two-fold, inaccuracy and 
impact on the regression. As Dr. Tyler explains:
    The estimate is ``inaccurate because allocating the number of 
subscribers based on the distribution of gross receipts is akin to 
assuming that customers in each subscriber group are paying the same 
monthly rates on average. [T]his assumption is flawed because, as 
Dr. Johnson acknowledges, CSOs may broadcast one set of stations to 
one set of subscribers and a different set of stations to another 
set of subscribers [and] cable prices vary across customer type, 
geography, and over time. . . . The only way that subscriber groups 
would have the same average prices is if they all bought the same 
products at the same prices in the same proportions across groups. 
Thus, one would expect the average prices to be different across 
subscriber groups, not the same as assumed by Dr. Johnson and Dr. 
George.'' Tyler WRT ]] 42-43; 45-46.\91\
---------------------------------------------------------------------------

    \91\ Dr. Tyler provides an empirical example of the varying 
subscription rates among a CSO's subscribers. Tyler WRT ] 44.
---------------------------------------------------------------------------

    This inaccurate estimate of the number of subscribers is also 
impactful on the other fee-based regressions that must use the 
number of subscribers as a control variable. Dr. Tyler explains:
    For example, assume that customers in suburbs have a higher 
average price than downtown customers, such that Dr. George and Dr. 
Johnson undercount subscribers in the suburbs and overcount 
subscribers in urban areas. The types of distantly retransmitted 
signals that are broadcast to these two types of customers are 
likely to vary. Thus, the use of inaccurate subscriber group numbers 
would lead to a mismeasurement of the incremental value of the 
minute categories in the regression analysis.
    In short, the use of inaccurate subscriber group numbers is 
potentially a serious problem for Dr. George and Dr. Johnson. The 
use of ``filled-in'' data when actual numbers are not available may 
have introduced bias into their results and this could have 
important consequences for their estimates. Tyler WRT ]] 49, 52.
    10. Because the Tyler Model is not based on the Crawford Model, 
it is not tainted by the potential ``specification searching'' that 
haunts the Crawford Model through its consumption of ``phantom 
degrees of freedom,'' as discussed in the 2010-13 Determination. 
Moreover, there is no persuasive evidence that Dr. Tyler engaged in 
anything that could be construed as specification searching.
    11. The Tyler Model is also not the subject of the criticisms 
levied against the other fee regressions. For example. Dr. Erdem 
applauds the Tyler Model for its abandonment of the royalty-based 
dependent variable, the unnecessity and removal of fixed effects and 
the use of a dubious measure of the number of subscribers as a 
control variable.
    12. The overarching criticism that Dr. Erdem does levy against 
the Tyler Model are insufficient to damage its usefulness. 
Specifically, Dr. Erdem states the obvious as a criticism: 
``[T]rying to calculate market value when no market exists . . . .'' 
Erdem WRT ] 122. But that is simply a restatement of the problem 
created by the structure of section 111. As the Judges explain in 
more detail elsewhere in this determination, as they explained in 
the 2010-13 Determination and as acknowledged by the D.C. Circuit, 
the regressions identify market-based behavior among CSOs, in the 
form of revealed preferences for different program categories, and 
such behavior is relevant evidence useful for estimating relative 
marketplace value. And, with specific reference to the Tyler Model, 
the SGRP is reflective of, first, the budget constraint that limits 
the CSOs' distant retransmittals and, second, the program categories 
they select when so constrained. (This point is discussed further 
infra in the discussion of the Tyler Model to a fee-generation 
approach.)
    13. The other SDC expert, Dr. Rubinfeld, likewise applauds Dr. 
Tyler's approach to the problem, agreeing with him that there exist 
serious modeling problems in connection with the Crawford Model and 
those based on that model. However, Dr. Rubinfeld--like Dr. Erdem--
restates the statutory problem--the absence of a ``market price,'' 
in order to argue that the Tyler Model is not a true ``hedonic'' 
regression. (Dr. Majure makes the same argument.) As noted supra, 
the Judges find that the Tyler Model is not a true ``hedonic'' 
regression, as Dr. Tyler (albeit sometimes grudgingly) seems to 
concede. However, as discussed in more detail elsewhere in this 
determination, the Judges find the Tyler regression to be a 
``Hedonic-inspired'' regression, useful in this proceeding to 
identify an appropriate market-factor driven allocation of royalty 
shares.
    14. Dr. Bennett's attacks on Dr. Tyler for originally engaging 
in an erroneous critique of the Crawford Model is inconsequential. 
Dr. Tyler acknowledged his error and withdrew the portion of his 
original WDT that contained his erroneous critique of the Crawford 
Model. There is no reason to consider this issue relevant, and, if 
anything, it indicates that Dr. Tyler is willing to acknowledge a 
mistake.
    15. More broadly, the Judges do not find the criticisms by Dr. 
Bennett or by Dr. George that relate to Dr. Tyler's other criticisms 
of the Crawford Model to be relevant to the issues pertaining to the 
Tyler Model itself.
    16. Dr. Bennett's Tyler Model-specific criticism--regarding the 
impact of channel lineup changes by two hypothetical CSOs paying the 
minimum fee--is of no

[[Page 54203]]

consequence in the Judges' analysis, because the Judges--as 
discussed elsewhere in this determination--are focusing on the 
above-minimum-fee CSOs in their application of the Tyler Model. More 
specifically, the Judges credit the testimony of JSC's expert, Mr. 
Harvey, who separated out the minimum-fee-only systems from the 
Tyler Model, in order to isolate those CSOIs making transmission 
decisions that had economic consequences in terms of royalty 
payments. See Harvey WRT ] 46 & tbl.10.
    17. The Judges do not question the Tyler Model for selection a 
specification that resulted in ``one of the lowest shares for JSC 
and one of the highest for Program Suppliers.'' Absent a showing of 
specification searching, which is not even alleged against Dr. 
Tyler, these results are not indicative of any wrongdoing.
    18. Dr. Majure's criticism that the Tyler Model essentially 
estimates only ``the equation given by the statutory formula'' is 
incorrect. See the discussion of the Tyler Model as related to a 
``fee generation'' approach, infra.
    19. The absence of a ``reference category (a/k/a ``numeraire'' 
or index) in the Tyler Model is not a fault. As noted above, the 
Tyler Model measures the minimum willingness to pay for an 
additional minute of distant programming across each program 
category, not the value of a minute of one program replacing minutes 
from a reference category.
    20. Any greater precision or stability in the Johnson Model 
compared with the Tyler Model is a consequence of Dr. Johnson's 
decision to remove ``fixed effects'' from his model where, unlike in 
the Tyler Model, the dependent variable was royalty-based, not the 
SGRP. That is, Dr. Johnson obtained more precision, but at the 
expense of generating ``omitted variable bias.'' Although this 
econometric jargon suggests an analysis ``deep in the weeds,'' it is 
of great importance: Precision and stability are not particularly 
helpful if the model is measuring the wrong thing--here, with the 
Johnson Model more in the nature of predicting the royalty level by 
omitting ``fixed effects'' rather than focusing on the effect of 
program category minute on royalties (subject to the cost constraint 
reflected in the SGRP).

D. CCG's Regression Approach: The George Model

    Dr. Lisa George, a CCG expert witness,\92\ explicitly relied on Dr. 
Crawford's approach from the 2010-13 proceeding, ``[b]ecause [Dr.] 
Crawford's approach was determined by the Copyright Royalty Board to be 
`highly useful in estimating relative values' . . . . .'' George WDT at 
26-27.\93\ More particularly, Dr. George followed Dr. Crawford's 
approach by ``estimat[ing] a regression model at the subscriber group 
level with fixed effects and [royalties as] a logged dependent 
variable.'' George WDT at 27.
---------------------------------------------------------------------------

    \92\ Dr. George was received as expert witness in the ``field of 
economics, with experience in econometrics, media markets, and 
industrial organization.'' 4/18/23 Tr. 5111 (George).
    \93\ The Judges must emphasize here the fact that the SDC 
provided to CCG (and all of the other participants), in voluntary 
discovery in the present proceeding, promptly after the filing of 
written direct statements, copies of materials from the 2010-13 
satellite allocation proceeding that at the least suggested Dr. 
Crawford may have engaged in inappropriate specification searching 
in the development of his regression framework. However, neither Dr. 
George nor any other CCG witness specifically addressed in written 
rebuttal testimony the discovery from the 2010-13 satellite 
proceeding suggesting Dr. Crawford's potential specification 
searching. (However, Dr. George more generally explained how she was 
able to evaluate Dr. Crawford's regression work, even though she did 
not address the discovery suggestive of Dr. Crawford's specification 
searching and of dissembling in his testimony before the Judges in 
the 2010-13 proceeding. See George WRT at 50-54.)
---------------------------------------------------------------------------

    However, Dr. George adjusted the specifications in her model in a 
manner that differentiated her model from Dr. Crawford's model in two 
ways to reflect: (1) changes in the distant signal market; and (2) to 
address comments from the Judges in the 2010-13 Determination. George 
WDT at 27. The key differentiators are (1) Dr. George's inclusion of 
separate ``system accounting period fixed effects'' rather than Dr. 
Crawford's ``interacted system-accounting period fixed effects'' and 
(2) the elimination of an interacting of controls for the (a) top 
multi-system operators (MSOs) with (b) lagged subscribers (i.e., 
subscribers from the preceding accounting period). George WDT at 27.
    More particularly, Dr. George significantly reduced the number of 
fixed effects in her preferred regression model compared to Dr. 
Crawford's number of fixed effects. Specifically, Dr. George testifies 
that her preferred model ``includes one fixed effect for each system 
plus one for each accounting period (number of systems plus 8 [six-
month accounting periods]),'' whereas Dr. Crawford's model included 
``one fixed effect for every system every accounting period (number of 
systems times 8 [six-month accounting periods])''. George WDT at 27 
(emphasis added). According to Dr. George, this deviation for Dr. 
Crawford's approach was measured and beneficial:

    Since fixed effects operate by narrowing the variation used to 
identify coefficients, my specification is less restrictive than 
[Dr.] Crawford's. In other words, I make use of variation within 
cable systems over time but not across cable systems. [Dr.] 
Crawford's specification did not make use of variation within cable 
systems over time or across cable systems, identifying coefficients 
using only variation within systems each accounting period.

George WDT at 27 (emphasis added).
    As in the Crawford Model, Dr. George's dependent variable is the 
natural log \94\ of royalty fees and, as in the Crawford Model, is 
related by the regression to the subscriber groups' respective distant 
programming minutes for each claimant's program category. George WDT at 
51. The regression process produces an estimate of coefficients, one 
for each claimant program category, showing the effect of one 
additional programming minute on the natural log of royalty payments. 
George WDT at 51. She then uses these coefficients to calculate, in 
dollars, the ``average marginal value'' of an additional programming 
minute for each claimant category. George WDT at 51-52.
---------------------------------------------------------------------------

    \94\ Technically, the ``natural log'' (shorthand for logarithm) 
is ``[a] mathematical function defined for a positive argument; its 
slope is always positive but with a diminishing slope tending to 
zero,'' and it ``is the inverse of the exponential function X = 
ln(ex).'' James H. Stock & Mark W. Watson, Introduction to 
Econometrics 821 (3d ed. 2015). Practically, for purposes of applied 
econometrics, using the logarithmic functional form, which shows the 
percentage changes in the variables, may be more practical.
---------------------------------------------------------------------------

    To calculate shares, Dr. George likewise adopts the method used by 
Dr. Crawford and, indeed, consistently across fee-based regression 
models. That is, she multiplies these average marginal values by 
compensable programming minutes for each subscriber group, thus 
producing a value of compensable programming for each claimant program 
category. For each category, she uses that category's values as a 
numerator in a fraction where the denominator is the sum of the totals 
over each claimant.
    Dr. George reported the following claimant shares:

[[Page 54204]]



                                                      Table 22--Implied Claimant Shares, 2014-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Program suppliers                                                               Devotional          Canadian
                                               (%)         Joint sports  (%)  Commercial TV (%)    Public TV (%)      claimants (%)      claimants (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014..................................              20.86              25.64              14.88              30.21               1.91               6.49
                                                   (1.99)             (5.16)             (2.13)             (2.74)             (0.49)             (0.95)
2015..................................              31.71               3.61              12.04              36.56               2.41              13.67
                                                   (1.75)             (0.94)             (1.72)             (1.89)             (0.55)             (1.91)
2016..................................              29.53               3.45              11.43              41.59               1.70              12.30
                                                   (1.61)             (0.90)             (1.65)             (1.99)             (0.39)             (1.75)
2017..................................              26.11               3.23              10.19              47.03               1.40              12.03
                                                   (1.43)             (0.85)             (1.49)             (2.08)             (0.32)             (1.73)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The table reports the implied claimant shares of distant signal royalties each year derived from the regression model, which includes system and
  accounting period fixed effects. Standard errors in parentheses

Highlighting an important aspect of her analysis, Dr. George states 
that ``[a]s expected, estimated shares for 2014 are substantially 
different from those for 2015-2017 due to exit of WGNA.'' George WDT at 
57.
    Delving deeper into her regression equation, Dr. George explains 
that she includes a number of control variables. As she explains, 
``[T]hese control variables are included in the econometric model based 
on the expected economic relationship with royalty payments [and] 
[e]ach of these terms has been included in prior regression models for 
these proceedings.'' George WDT at 54.
    Specifically, Dr. George includes, explicitly or implicitly, the 
following controls:

CSOs paying minimum fees
CSOs paying into the 3.75 fund
CSOs paying into the Syndex fund
Canada Zone System in Canadian re-transmission zone
Number of permitted stations in the subscriber group
Number of distant stations in the subscriber group
Number of local stations in the subscriber group
Activated channels in the prior accounting period (lagged channels in 
subscriber group)
Subscribers in prior accounting period (lagged subscribers in 
subscriber group)
Median income in primary county served by the system
System operated by top MSO, i.e., Comcast, Verizon, AT&T, Charter, Cox, 
Time Warner, Cablevision, Altice.

George WDT at 53 tbl.19. Dr. George explained her reasons for including 
these controls as follows:

    [I]indicators for systems paying minimum fees, syndicated 
exclusivity surcharges, or 3.75 fees as well as the number of 
permitted stations carried in the subscriber group [are] all 
variables expected to be correlated with royalty payments.
    An indicator for systems in the Canadian Zone is needed because 
re-transmission rules are different in this region and may affect 
subscribers and royalty payments.
    The (lagged) number of subscribers is an important control 
because royalties increase with gross receipts, which in turn 
increase with the number of subscribers. The number of subscribers 
is entered in lagged form to avoid the possibility of reverse 
causality biasing the coefficients on program minutes. (Channels 
activated enters as a lag for the same reason.)
    The number of distant stations is included to ensure that the 
coefficients on programming minutes are estimated all else equal. In 
other words, estimates of the . . . coefficients should measure how 
a change in claimant minutes affects royalty payments holding 
constant the total number of distant minutes broadcast, which is a 
function of the number of distant signals re-transmitted.
    Indicators for each of the top MSO's (Comcast, Verizon, AT&T, 
Charter, Cox, Time Warner, Cablevision and Altice) are included to 
account for potential differences in strategies that might affect 
the demand for system offerings not otherwise included in the 
econometric model. For example, changes in strategy by Time Warner 
Cable systems acquired by Charter Communications would be captured 
by the MSO indicators. While [Dr.] Crawford included indicators for 
only the top six MSO's, I add Cablevision and Altice because the 
largest transaction in the 2014-2017 period was the Altice 
acquisition of Cablevision, which was the 7th largest MSO at the 
time of acquisition.

George WDT at 53-54.
    To determine whether her regression model was robust to certain 
specification changes, Dr. George conducted sensitivity checks whereby 
she made certain changes to her model. Specifically, she conducted the 
following three robustness/sensitivity checks:

    (1) Changing her regression model specifications to include 
``interacted system-accounting period fixed effects (number of 
systems times 8).''
    (2) Changing her regression model specifications to include 
``not only indicators for the top MSO's but also these indicators 
interacted with lagged subscribers.''
    (3) Changing her regression model to include ``both adjustments 
[i.e., (1) and (2) above] . . . thus correspond[ing] to the model 
estimated by [Dr.] Crawford for his 2010-2013 analysis.''

George WDT at 58.
    Dr. George found that the estimated shares in these three 
robustness/specification tests ``are close to those derived from the 
preferred model.'' George WDT at 59; see also id. at tbls.25-26. She 
also notes that the confidence intervals are tighter in the third 
alternative robustness/sensitivity checks, see George WDT tbl.27, 
reflecting the smaller standard errors contained in that check, which 
she attributes to the fact that the changed specifications in that 
checks are ``restricting the variation on which coefficients are 
estimated.'' George WDT at 61-62. Despite her acknowledgement that this 
greater precision is ``useful,'' \95\ Dr. George is willing to tolerate 
``the point estimates from [her preferred] baseline model because they 
make use of more variation in the data while still precisely 
estimated.'' George WDT at 62.
---------------------------------------------------------------------------

    \95\ The Judges understand that the usefulness of this greater 
precision is that the increased types of fixed effects limit the 
variation in the regression to variation caused by the difference in 
programming category minutes, whereas Dr. George prefers to obtain 
additional data points in order to observe more variation, 
notwithstanding that relaxing fixed effects in these manners opens 
the door for bias, in the form of variations caused by unobserved 
variables otherwise captured by the fixed effects. The Judges 
discuss this tradeoff in greater detail elsewhere in this 
determination.
---------------------------------------------------------------------------

1. Criticisms of the George Model
a. Criticisms of the George Model by SDC Expert Witness Dr. Erdem
    Beyond his criticisms of the Crawford Model that are derivatively 
applicable to Dr. George's model, Dr. Erdem levies further criticisms 
of the George Model. He asserts that although she has altered and 
reduced the number of fixed effects from the Crawford Model, her 
alterations do nothing to redeem her approach. Rather, he notes that 
Dr.

[[Page 54205]]

George's specifications continue to remain very close to those in 
versions that Dr. Crawford ran in the previous proceeding.
    But, Dr. Erdem acknowledges that, unlike in the Crawford Model, Dr. 
George applies two separate fixed effects for accounting period and 
system ID, and yet he finds this to be a difference that fails to 
rescue her model from the overfitting defects that he claims to pervade 
Dr. Crawford's regression approach. Dr. Erdem also opines that. Dr. 
George retains some variables from the Crawford Model which lack a 
``clear basis for their helpfulness in the model, such as the lag of 
subscribers (subscribers in the previous accounting period).'' Erdem 
WRT ] 41. Finally, he opines that Dr. George aggravates an already-
present overfitting problem by adding ``other variables such as median 
county income,'' without adequately supporting her decisions. Erdem WRT 
] 41.
b. Criticisms of the George Model by SDC Expert Witness Dr. Rubinfeld
    Dr. Rubinfeld likewise notes that although Dr. George essentially 
``applied Dr. Crawford's specification to the 2014-2017 data,'' she 
``replaced system-period fixed effects with separate system and period 
fixed effects [and dropped] [s]ome explanatory variables . . . . '' 
But, like Dr. Erdem, he did not find that these alterations salvaged 
her model from the defects that, in his opinion, pervade the Crawford 
Model and, indeed, all fee-based regressions. Rubinfeld WRT ] 94.\96\
---------------------------------------------------------------------------

    \96\ Another SDC Expert, Mr. Sanders, essentially echoes and 
refers to the critiques by Drs. Erdem and Rubinfeld. But Mr. Sanders 
also notes that Dr. George's approach is remarkable when compared 
with other fee-based regressions proffered in this proceeding, in 
that ``the various regressions yield significantly divergent results 
which raise[] the questions not just of which ones are wrong but 
whether any of them could be right,'' and he particularly notes the 
divergence among the SDC share across the fee-based regressions. 
Sanders WRT ] 18.
---------------------------------------------------------------------------

c. Criticisms of the George Model by JSC Expert Witness Mr. Harvey \97\
---------------------------------------------------------------------------

    \97\ The criticism of the George WDT by the two other JSC expert 
witnesses, Drs. Majure and Asker, relate to broader themes common to 
the fee-based regression, discussed separately in this 
determination. Mr. Harvey also raises the broad-based criticisms 
that are discussed separately herein.
---------------------------------------------------------------------------

    Mr. Harvey opines that Dr. George introduced ``multicollinearity'' 
\98\ into her regression by including ``a variable on the independent 
side of [her] regression equation[ ] that controls for the number of 
distant stations broadcast to the subscriber group.'' Harvey WRT ] 170. 
Mr. Harvey understands that this control variable was likely introduced 
``to control for non-compensable broadcast minutes, such as Big-3 
minutes,'' but he asserts that the regression should have been 
specified by ``simply includ[ing] the `Big-3' variables . . . 
achiev[ing] the same stated goal more directly while avoiding problems 
of multicollinearity.'' Harvey WRT ] 174.
---------------------------------------------------------------------------

    \98\ For a definition of ``multicollinearity,'' see 2010-13 
Determination at 3562 n.47.
---------------------------------------------------------------------------

    There is a formal statistical test to identify multicollinearity 
called the variance inflation factor (VIF). Harvey WRT ] 176. When he 
ran the VIF test on the George Model, Mr. Harvey found meaningful 
multicollinearity between these variables. Harvey WRT ] 182. 
Accordingly, Mr. Harvey performed a sensitivity test on the George 
Model in which he removed the distant stations and permitted stations 
variables. Harvey WRT ] 183. The resultant change in the coefficients 
for the program categories translated into revised share allocations 
that included substantially higher JSC shares, as set forth in the 
table below: \99\
---------------------------------------------------------------------------

    \99\ Mr. Harvey also administered two other sensitivities to 
address this multicollinearity: (1) adding a control variable for 
non-compensable minutes to the model and (2) including compensable 
claimant minutes in the regression and dropping the number of 
permitted and distant stations. In both tests, he reports that the 
multicollinearity fades, and the share allocations also change, with 
JSC shares again increasing compared to the JSC shares in the George 
Model. Harvey WRT ]] 185-187.

                            Table 31--George Regression Model Share Estimates Exclude Distant and Permitted Station Variables
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Joint Sports                                    Commercial TV      Program
                                                          Educational  %         %         Devotional  %    Canadian  %          %         suppliers  %
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014....................................................             7.0            71.8             1.1            10.5             3.3             6.4
2015....................................................            15.5            18.6             2.5            40.6             4.9            17.9
2016....................................................            18.6            18.7             1.8            38.4             4.9            17.5
2017....................................................            21.5            18.0             1.5            38.5             4.5            15.9
2014-2017...............................................            12.0            48.9             1.4            22.8             3.9            11.0
% Change in Total vs Base Model.........................           -67.8           290.7           -22.5           124.9           -69.0           -57.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources:
 Electronic file ``programs/208_george_regressions.do''.

d. Criticisms of the George Model by CTV's Expert Witnesses Dr. Marx 
and Dr. Bennett
    CTV's experts criticize the George Model for the following reasons:

    1. Because of the dramatic increase in the number of minimum-
fee-only CSOs, the George Model relies too heavily on royalty 
payments that do not reflect the revealed preferences of CSOs. CTV 
PFF ]] 289, 302 (and record citations therein).
    2. The ``pooling'' of data to generate common coefficients 
within each claimant category skews the share allocations because of 
the sharp distinction between 2014 and 2015-2017 due to the WGNA 
conversion. Moreover, the ``precision'' generated by lumping all the 
data points together across these four years is overhyped, because 
it is a statistical precision unreflective of reality, and Dr. 
George did not perform any statistical tests to confirm that pooling 
was appropriate. CTV PFF ]] 331, 334 (and record citations therein); 
Bennett WRT, figs.12-13; see also 4/18/23 Tr. 5309, 5366-68 
(George).
    3. Dr. Bennett unpooled Dr. George's calculations, revealing the 
lack of actual precision compared with her pooled approach. CTV PFF 
]] 335-36, 342 (and record citations therein).
e. Criticisms of the George Model by Program Suppliers' Expert Witness 
Dr. Tyler
    Dr. Tyler levied the following criticisms at the George Model:

    1. Royalties in any functional form are inferior as the 
dependent variable compared with the SGRP in the Tyler Model. PS PFF 
]] 351-52 (and record citations therein).
    2. Pooling of data across all four royalty years is 
distortionary and improper. PS PFF ] 363 (and record citations 
therein).
    3. Dr. George's reliance on the Crawford Model, without regard 
to the potential specification searching that may have marred its 
genesis, calls into question the reliability of the George Model. By 
way of example, Dr. Tyler takes note of the ``hammer-shaped'' 
graphical plotting of residuals in the George Model, which would 
typically be random rather than concentrated (in ``hammer-shaped'' 
form), as indicative of one or more model specification errors, such 
as the omission of important independent variables or improper or 
mismatched functional forms (e.g., the misapplication of the linear 
form or

[[Page 54206]]

an improper log transformation of data). PS PFF ] 365.
2. The Judges' Analysis and Findings Regarding the George Model \100\
---------------------------------------------------------------------------

    \100\ The Judges' analysis and findings in this section are 
separate and apart from their analysis and findings on the specific 
issues considered in separate sections of this determination.
---------------------------------------------------------------------------

    The Judges make the following findings with regard to the George 
Model:

    1. The George Model reasonably altered the Crawford Model by 
estimating a model with fewer fixed effects, in an attempt to 
increase the number of observations lost after the WGNA conversion, 
by attempting to balance precision with an acceptable increase in 
omitted variable bias.
    2. The George Model reasonably included control variables in 
order to isolate the effect of interest, the correlation between 
program category minutes and royalties.
    3. Dr. George utilized appropriate sensitivity tests that 
modified her fixed effects, which showed a level of robustness in 
the George Model.
    4. But Dr. George's tolerance for greater bias, in the form of 
omitted variable bias, eliminated the benefit created by the 
Crawford Model that gave the Crawford Model a level of primary 
weight vis-[agrave]-vis other methodologies for estimating relative 
marketplace value.
    5. There is no sufficient evidence that the George Model suffers 
from overfitting, and her decision to include certain control 
variables, such as a control for ``median county income,'' was a 
reasonable exercise of discretion that an econometrician could make 
in specifying her model.
    6. The George Model reasonably utilized the Big 3 network 
minutes as a reference category (a/k/a numeraire or index). Contrary 
to Mr. Harvey's critique, this which was unrelated to the separate 
control in the George Model for the number of distant stations, 
which was included in order to avoid a cause of changes in the 
number of minutes that would bias the relationship between program 
category minutes and royalties which was the ``effect'' the 
regression was seeking to evaluate.
    7. The pooling of all four years over the 2014-2017 period in 
the George Model was inappropriate, given the substantial break in 
market conduct created by the WGNA conversion commencing in 2015.
    8. Dr. Bennett's recalculation of an unpooled version of the 
George Model is a more probative model.
    9. Dr. Bennett's further revision of the George Model, 
correcting for an admitted error in her JSC programming mis-
categorization, is more accurate than the George Model originally 
proffered by Dr. George.
    10. The non-random (hammer-shaped) residuals in the George Model 
are suggestive of omitted variables or misspecification of 
functional form, as in the Crawford Model upon which the George 
Model is predicated, and appear to be examples of the problems that 
may have arisen because of Dr. Crawford's alleged specification 
search.

E. PTV'S Regression Approach: The Johnson Model

    Dr. Johnson, PTV's expert witness,\101\ constructed a fee-based 
regression model based on the framework of a ``Waldfogel-type'' 
regression. Johnson WDT ] 55. He also acknowledges that he reviewed Dr. 
Crawford's testimony from the 2010-13 proceeding, and that his model 
``generally follows the framework used by [Dr.] Crawford'' and, 
parenthetically, he notes a general consistency with the model 
proffered by Dr. Joel Waldfogel in a prior proceeding. Johnson WDT ] 
57. See also 3/21/23 Tr. 367-68 (``[T]he starting point . . . was to 
look at the prior work, particularly [Dr.] Crawford's Waldfogel-type 
regression model that was adopted in the prior proceeding. . . . 
However, I did not, and my assignment was not to just simply blindly 
accept Dr. Crawford's work, but to put it to the test, understand what 
it did, understand how it worked, and then build that model and 
determine whether it could apply here.'').\102\
---------------------------------------------------------------------------

    \101\ Dr. Johnson was received as an expert in ``economics and 
econometrics.'' 3/21/23 Tr. 362 (Johnson).
    \102\ However, Dr. Johnson testified that he did not review--or 
even have access to--Dr. Crawford's underlying regression workpapers 
from the 2010-13 satellite allocation proceeding (regarding the same 
regression model as in the 2010-13 cable allocation proceeding), 
even though PTV's counsel had received those workpapers in voluntary 
disclosures made by the SDC. 3/21/23 Tr. 340-41 (Johnson). (The 
hearing record does not indicate whether or not PTV's counsel 
provided those workpapers to Dr. Johnson.). See also 3/21/23 Tr. 617 
(Johnson) (Dr. Johnson acknowledging that he also never saw 
designated testimony filed in the present proceeding by the SDC 
comprising their experts' testimony in the satellite proceeding, 
with Dr. Crawford's documents attached).
---------------------------------------------------------------------------

    Dr. Johnson also ``assessed the Judges' deliberation from the 
previous proceeding,'' and ``address[ed] econometric modeling concerns 
. . . raised by the Judges in the previous proceeding [and] changes in 
the industry from the 2010-2013 to the 2014-2017 period.'' Johnson WDT 
] 57.
    Dr. Johnson identifies the following aspects of his regression 
model:

    1. The regression analyzes each subscriber group in each six-
month accounting period.
    2. The dependent variable is the ``natural log'' of the base 
royalties accrued by a CSO for each subscriber group in an 
accounting period.
    3. The explanatory variables include--as the variable of 
interest--the number of minutes of each claimant group's programming 
content distantly retransmitted to that subscriber group in that 
accounting period.
    4. The coefficients for this explanatory variable for each 
claimant group's content, which estimate the percentage change in 
base royalties (the dependent variable) associated with an 
additional minute of that type of content.
    5. The control variables below:
    a. A control for the number of subscribers in each subscriber 
group and accounting period, because, ``[in] addition to being 
driven by CSOs' distant retransmission decisions, royalties paid 
also increase with the number of subscribers (and associated gross 
receipts) in each subscriber group.'' By adding a control variable 
for the number of subscribers, the regression accounts for this 
relationship.
    b. A control for the number of distant broadcast stations 
retransmitted by each CSO to its subscriber groups because it 
``creates a `control group' against which the relative marketplace 
valuations for each claimant group at issue are estimated[,]'' with 
this control group consisting of ``programming that is either `off-
air,' `Big 3' network programming that is not compensable or 
associated to any relevant claimant group, or content for which 
program information was not specified in the data, including `To Be 
Announced' programs.''
    c. An indicator variable for CSOs that paid the minimum fee, in 
order to account for the possibility that decision-making is 
systematically different between CSOs that paid the minimum fee 
(i.e., those that potentially could have retransmitted distant 
signals without experiencing an increase in their royalty payment) 
and CSOs that paid royalties above the minimum fee (and thus, would 
have faced an incremental cost to any additional distant signal). 
This indicator variable does not separate out the model's reported 
coefficients, but ``allows [the] model'' to generate information 
``to account for these differences . . . . ''
    d. An indicator variable distinguishing between subscriber 
groups that also generated 3.75 fees (in addition to the base fee 
payments included in the regression) and subscriber groups that did 
not generate 3.75 fees.

Johnson WDT ]] 55-56.\103\
---------------------------------------------------------------------------

    \103\ Note that the Johnson Model includes far fewer control 
variables than the George Model. See text following this footnote.
---------------------------------------------------------------------------

    Dr. Johnson also emphasizes what he has omitted from his regression 
model that had been included in Dr. Crawford's model. First, Dr. 
Johnson omits a set of controls in the form of ``system-accounting 
period fixed effects.'' Although Dr. Johnson acknowledged that these 
fixed effects had attempted to establish a relative value unbiased by 
factors irrelevant to the correlation at interest (the effect of 
programming minutes on the log of royalties) by isolating and comparing 
variation only in ``a given CSO's retransmission decisions across its 
subscriber groups,'' Dr. Johnson wanted to address the Judges' 
statement that in the 2010-13 Determination that they were ``troubled'' 
by Dr. Crawford's inadequate response to the argument that these 
controls ``effectively

[[Page 54207]]

discarded'' approximately 15% of his observations [generated by] 
``approximately half of all systems in his data set . . . . '' Johnson 
WDT ] 59. Dr. Johnson claimed that the same issue exists to a greater 
extent in the present proceeding, because ``49 percent of CSOs that 
retransmitted at least one distant signal reported only one subscriber 
group,'' thus excluding them from the regression through the inclusion 
of these ``system-accounting period fixed effects.'' Johnson WDT ] 
59.\104\
---------------------------------------------------------------------------

    \104\ To be clear, in the 2010-13 proceeding, the Judges found 
that Dr. Crawford's use of these fixed effects and other controls 
did not ``diminish the Judges' reliance on Professor Crawford's 
regression analysis.'' More particularly, the Judges explained that 
Dr. Crawford's ``use of ``system-accounting period fixed effects'' 
was the ``result of a tradeoff,'' necessitated by Dr. Crawford's use 
of a ``subscriber group analysis [which] reduced the number of 
observations in [Dr.] Crawford's data set.'' Although this decision 
could result in an ``overfitting'' of the model (see 2010-13 
Determination at 3565 defining ``overfitting''), his use of data 
from the entire population of Form 3 CSOs provided him with a wealth 
of data that mitigated a potential problem with regard to potential 
overfitting arising from sampling that provided too little data 
relative to the number of parameters.'' 2010-13 Determination at 
3566-67 & n.65. The Judges discuss elsewhere in this determination 
the impact of the decision by Dr. Johnson (and Dr. George) to make a 
different trade-off in their regression models through their 
handling of this specific fixed effects issue, particularly in the 
context of the purpose of these fee-based regressions as 
``explanatory'' of an isolated ``effect,'' rather than 
``predictive'' of the total royalties paid.
---------------------------------------------------------------------------

    Second, Dr. Johnson also omits from his regression several so-
called ``lagged'' variables included by Dr. Crawford, because these 
``lagged'' variables ``assume[ ] that outcomes from an earlier point in 
time affect outcomes in the present time.'' Johnson WDT ] 59 & n.84. 
Whatever merit lie in these lagged variables was a moot point for Dr. 
Johnson, because he found that the available data was insufficient to 
measure this ``lagged'' effect, and because the data did not allow for 
subscriber groups to be ``consistently tracked over time'' (due to, 
most noteworthily, the WGNA conversion and the cable system 
acquisitions by Charter Communication). More particularly, and by way 
of example, Dr. Johnson explained that there was insufficient data to 
construct a ``prior period'' for the first six-month period of 2014, 
which (if he had retained the lagged subscriber variable) would have 
``effectively discard[ed] data on CSO distant retransmission decisions 
[for] about one-eighth of all data.'' Johnson WDT ] 59.\105\
---------------------------------------------------------------------------

    \105\ That is, if the lagged variable control was included 
despite the unavailability of data for the second accounting period 
of 2013, the model would not have generated results in a consistent 
manner for the first accounting period of 2014, and one accounting 
period reflects \1/8\ of the eight six-month accounting periods in 
the four-year 2014-2017 period.
---------------------------------------------------------------------------

    Further, Dr. Johnson excluded from his model the following 
additional controls included by Dr. Crawford in his model, which Dr. 
Johnson found to be ``redundant or inappropriate . . . [and] also 
hind[rances] to the model's ability to perform the task at hand'': 
\106\
---------------------------------------------------------------------------

    \106\ Dr. Johnson also discarded controls from the Crawford 
Model ``for whether a CSO lies in the area where it is permissible 
to carry Canadian signals (``Canada zone'').'' The Judges consider 
the Canada zone issues separately, infra.

    1. A control for county-level median income, which Dr. Crawford 
had included to account for variation in demand for cable services 
by impacting the number of subscribers, the total CSO revenue and, 
accordingly, ``the royalty paid by that CSO. Dr. Johnson omitted 
this control because he found it to be redundant and confounding, in 
that it seeks to control for the number of subscribers, which is 
already included in the model at the more informative subscriber 
group level. This subscriber count at the subscriber group level, 
according to Dr. Johnson, implicitly takes into account of 
variations in demand and the impact of relatively different values 
in high-demand areas.
    2. Controls for the number of local stations and the (lagged) 
number of activated channels. Although Dr. Crawford opined that 
these controls would have the salutary effect of ``account[ing] for 
other features of the cable service on which distant signals may be 
offered which could influence the number of subscribers to that 
service,'' Dr. Johnson found these controls unnecessary and 
potentially problematic because (1) Dr. Crawford did not explain how 
the second of these controls, i.e., the number of local and 
``activated'' channels would impact CSOs' decision-making process 
with respect to distant channels and (2) as proffered proxies for 
factors that might ``influence the number of subscribers,'' they too 
are redundant and potentially confounding, given the presence in the 
regression model of a direct control for the number of subscribers.
    3. Controls for the six largest MSOs, which Dr. Crawford 
included ``to capture potential differences in factors not included 
in the econometric model that could shift demand for bundles that 
include imported distant broadcast signals.'' Dr. Johnson notes that 
Dr. Crawford provided no explanation as to what ``factors'' these 
controls were intended to reflect, and Dr. Johnson asserts that 
these controls are redundant and potentially confounding. Dr. 
Johnson avers that potential differences between and among the six 
largest MSOs ``could shift demand,'' and thus ``[r]eflect[ ] 
valuable information for the model's estimation of relative value.''

Johnson WDT 60.
    Dr. Johnson further explains that his regression (like the 
regressions of Dr. George and Dr. Crawford, and the 2014 Bayesian 
regression by Dr. Marx) calculated the relative coefficients for the 
six compensable program categories by relating them to a ``control 
group'' of program minutes that are ``non-compensable'' in section 111 
proceedings. Specifically, Dr. Johnson testified:

    The number of distant broadcast stations [compensable and non-
compensable] retransmitted by each CSO represents the universe of 
that CSO's distantly retransmitted content. . . . [T]he difference 
between the universe of content and that corresponding to the 
claimant groups at issue is content that does not correspond to any 
claimant group at issue. This non-claimant content ``control group'' 
is a mix of programming that is either ``off-air,'' ``Big 3'' 
network programming that is not compensable or associated to any 
relevant claimant group, or content for which program information 
was not specified in the data, including ``To Be Announced'' 
programs. [The] model is specified in a way that allows for the 
``control group'' content to have absolute value to subscribers (and 
thus to cable operators), even if it is not compensable in this 
proceeding. However, using this content as a control group allows my 
model to estimate relative valuations for the compensable claimant 
groups.

Johnson WDT 55 n.76.\107\
---------------------------------------------------------------------------

    \107\ This ``control group'' is alternatively denominated by the 
experts in this proceeding as a ``numeraire,'' a ``reference 
group,'' and a ``benchmark.'' The Judges discuss the use of this 
device to stablish coefficients in their Analysis, infra.
---------------------------------------------------------------------------

    Utilizing the foregoing inputs, Dr. Johnson calculates regression 
coefficients estimated by his model, as well as the associated standard 
errors. Johnson WDT fig.11. In words, Dr. Johnson helpfully describes 
these coefficients, which are the common output of fee-based 
regressions, as

measur[ing] the percent change in royalties associated with an 
additional minute of each claimant's programming, after controlling 
for the other relevant factors present in the regression [and] 
represent[ing] the relative value of each claimant group's content 
on a per-minute basis.

Johnson WDT ] 61. Dr. Johnson, in the model he recommends (his 
``baseline'' model), and like Dr. George and Dr. Crawford--but unlike 
Dr. Tyler--did not generate separate coefficients for each of the four 
years. Crawford WDT fig.14. (However, Dr. Johnson did an annualized 
break-out as well. See 3/21/23 Tr. 467-68 (Johnson).)
    Dr. Johnson reports that the estimated regression coefficients in 
his preferred ``baseline'' model ``are all statistically significant, 
at the 99 percent level or higher.'' Johnson WDT ] 62. In lay terms, he 
again helpfully explains that this level of statistical significance 
means that ``given the data analyzed, [the] regression can reject with 
99 percent (or higher) certainty the

[[Page 54208]]

hypothesis that an additional minute of programming of each of the 
claimant groups has no effect on royalties.'' Johnson WDT ] 62. 
According to Dr. Johnson, his regression can estimate coefficient value 
with this high level of ``precision'' because the model is based on 
``over 18,000 subscriber group-level observations . . . . '' Johnson 
WDT ] 62.
    Next, Dr. Johnson uses these coefficient values to generate his 
estimated royalty shares, in dollars, undertaken in all fee-based 
regressions. Specifically, and as in regressions proffered in previous 
proceedings and in this case, he multiplies the coefficient by the 
total number of compensable minutes for the respective program 
category. This product generates the shares of base royalties 
associated with each claimant group in each year. Johnson WDT ] 63.
    In the figure below, Dr. Johnson presents the implied shares of the 
Basic Fund royalty, but excluding the 3.75 Fund and the Syndex Fund 
royalties that can also accrue to one or more of the six claimant 
groups:
BILLING CODE 1410-72-P
[GRAPHIC] [TIFF OMITTED] TN28JN24.011

    Dr. Johnson explains why the implied relative share values are 
starkly different:
BILLING CODE 1410-72-C

    [A]lthough the relative value of a minute of [JSC] content, on 
average, is typically larger than that of other content types, the 
quantity of compensable [JSC] content is relatively small (and 
decreased substantially after the WGN conversion). As a result, the 
implied royalty share for Sports claimants is smaller than . . . for 
. . . Program Suppliers, which had a lower per-minute value but much 
more distantly retransmitted content during the relevant period.

Johnson WDT ] 66.

    In addition to his foregoing proffered regression model, Dr. 
Johnson performed what he described as a sensitivity analysis, to test 
the robustness of that model against alternative specifications and to 
assess the ``key drivers'' of the results of his model. Johnson WDT ] 
68.\108\ Specifically, Dr. Johnson conducted two such analytical tests.
---------------------------------------------------------------------------

    \108\ Dr. Johnson also asserted that he performed two ``other 
sensitivities,'' on missing CCG programming data and program 
descriptions that were ambiguous as to the claimant category to 
which they belonged, respectively. Johnson WDT ] 49 n.64 & ] 50 
n.68. But although he tried to categorize these tests in this 
manner, by his own acknowledgement, the ``purpose of those tests 
[was to] assess[ ] the effects of different approaches to treating 
the imperfections in the available data.'' Johnson WDT ] 68 n.102.
---------------------------------------------------------------------------

    First, he looked at the subset of CSOs from his proffered model 
that only ``paid above the minimum fee.'' Johnson WDT ] 68. His purpose 
in performing this test was to address the concern in the 2010-13 
Determination that the ``carriage decisions of CSOs . . . pay[ing] 
minimum fees [were] `potentially less informative than discretionary 
decisions by CSOs to incur an additional royalty expense in order to 
distantly retransmit particular stations.' '' Johnson WDT ] 68 (citing 
2010-13 Determination at 3575). This first sensitivity test, according 
to Dr. Johnson, found ``positive relative valuations'' for the 
coefficients of all six claimant categories, although the valuations 
were ``not statistically significant'' for the JSC and SDC content. 
Johnson WDT ] 69 fig.14, cols. [a]-[c]; and app. K.\109\ Apparently

[[Page 54209]]

focusing on the absence of statistical significance for the JSC and SDC 
content, Dr. Johnson concludes that this sensitivity test shows the 
appropriateness--indeed, the ``importance''--of his proffered model's 
inclusion of ``CSOs that paid minimum fees,'' because exclusion of such 
CSOs ``would cause the model to lose precision with respect to'' the 
JSC and SDC claimant content. Johnson WDT ] 69. In further support of 
his interpretation of this sensitivity test results, Dr. Johnson adds 
that CSOs paying only the minimum fee nonetheless ``still make 
affirmative distant retransmission decisions that can be informative 
about the relative value of content.'' Johnson WDT ] 69 & n.103.
---------------------------------------------------------------------------

    \109\ Dr. Johnson does not report share allocations for minimum-
fee-only CSOs in his WDT. However, in response to criticism of his 
direct testimony, Dr. Johnson included in his WRT figures showing a 
close relationship between: (a) the allocation shares based on the 
subscriber group Base Fees calculated (but not paid) by these 
minimum-fee-only CSOs on an annualized (unpooled) basis for 2014-
2017; and (b) the allocation shares in his proffered baseline model 
(presented on an unpooled basis) for all CSOs considered in his 
analysis. Johnson WRT app. D, figs.D-6 and D-7.
---------------------------------------------------------------------------

    In his second sensitivity/robustness analysis, referred to supra, 
Dr. Johnson ``allow[s] the coefficients to vary from year to year.'' 
Johnson WDT ] 68; see also id. at fig.14, cols. [a], [d]-[g]. He opines 
that this analysis ``indicates . . . there is a statistically 
significant difference'' in the coefficient values between 2014 and 
2015-2017 for JSC program content. Johnson WRT ] 121 fig. K-3 (notes).
    According to Dr. Johnson, this second sensitivity test shows the 
following:

    1. Relative marketplace values for the PTV, SDC, CCG, CTV and 
Program Suppliers claimant categories were not statistically 
different across the 2014 to 2017 period.
    2. However, the relative marketplace value of JSC content 
significantly declined from 2014, when WGNA was the most distantly 
retransmitted signal (broadcasting high volumes of MLB, NBA, and NFL 
game content), to the 2015-2017 period, after WGN converted to a 
cable network, and the volume of such games was concomitantly 
significantly reduced.\110\
---------------------------------------------------------------------------

    \110\ The coefficient for JSC content in the 2015-2017 period 
remained high, but was not statistically significant. Johnson WDT ] 
70 & fig.14.
---------------------------------------------------------------------------

    3. This second sensitivity test demonstrates that Dr. Johnson's 
proffered baseline model has ``appropriately captur[ed]'' the 
declining value of JSC content in the average ``over the entire 
2014-2017 period. . . .''

Johnson WDT ]] 70-71; see also id., fig.15.
1. Criticisms of the Johnson Model \111\
---------------------------------------------------------------------------

    \111\ An overarching procedural critique of the manner in which 
Dr. Johnson generated his model--alleging that he engaged in 
improper econometric activities, in the form of what is known as 
``specification searching'' and George WRT at its related 
questionable activities, ``data mining'' and ``p-hacking'', is 
separately discussed elsewhere in this determination.
---------------------------------------------------------------------------

a. Criticisms of the Johnson Model by CCG Expert Witness Dr. George
    Dr. George levies the following criticisms of the Johnson Model:

    1. The Johnson Model produces biased results because it excludes 
3.75% fees, failing therefore to reflect the full willingness-to-pay 
of all claimant categories, either in the base fee or the separate 
3.75% calculations made by Dr. Johnson. George WRT at 23-24.
    2. The Johnson Model is ``subject to bias from unobserved market 
characteristics and time trends'' because Dr. Johnson abandoned all 
system effects and accounting-period effects, whether separately 
considered (as in the George Model) or interacted (as in the 
Crawford Model), without appropriately considering how that 
abandonment would likely generate omitted variable bias. The omitted 
variables risk inclusion of bias regarding variations in 
programming. Moreover, Dr. Johnson misconstrued the 2010-13 
Determination as justification for this error. George WRT at 24-25.
    3. Dr. Johnson's substitution of ``contemporaneous'' for 
``lagged'' subscribers ``undermines causal inference'' because 
``[l]agged control variables . . . common in applied regression . . 
. minimize the potential for unobserved shocks [that can] bias 
coefficients . . . such as the acquisition of a cable system by a 
large MSO . . . . '' Further, the lagged subscriber input has been 
used in fee-based regressions since Dr. Waldfogel's regression in 
the 2004-05 proceeding and Dr. Johnson wrongly claims that ``lagged 
subscriber'' data was unavailable, because they are readily 
available from Cable Data Corporation. George WRT at 26-27.
    4. The Johnson Model excludes controls--included in past 
proceedings--for unobservable factors that undermine causal 
interpretation, specifically excluding controls for market income, 
the number of local stations offered, and MSO ownership of CSOs. Dr. 
Johnson fails to recognize that ``these controls establish the `all 
else equal' conditions that allow coefficient estimates to take a 
causal interpretation as value per minute.'' \112\ Because ``it is 
not possible to express, let alone control for, all the factors that 
vary across cable systems,'' the econometrician must judiciously use 
control variables (and fixed effects, discussed supra), or otherwise 
bear ``the burden . . . to justify why coefficients are not 
absorbing the effects of omitted variables and warrant the desired 
causal interpretation.'' George WRT at 27-30.
---------------------------------------------------------------------------

    \112\ For example, Dr. George notes that FCC data indicates that 
cable subscription prices (and thus royalties) are lower in less 
wealthy markets. Likewise, Dr. Crawford showed in 2010-2013 that 
``top MSO's earned higher revenues per subscriber than other 
systems, suggesting that large MSO's are able to charge higher 
prices for cable packages.'' George WRT at 28.
---------------------------------------------------------------------------

b. Criticisms of the Johnson Model by PTV Expert Witness Dr. Bennett
    Dr. Bennett lodges the following criticisms specific to the Johnson 
Model:

    1. The base fees and the 3.75% Fees reported by CSOs are 
decoupled from each other and are often less than the CSOs' actual 
royalty payments. Bennett WRT ]] 66-69, figs.24-26. This is 
problematic because CSO carriage decisions underlying the base fees 
and the 3.75% fees are ``inextricably linked,'' in that the cost 
factor in the decision whether to add a station is based on the 
total royalty cost, which includes both the (1) the base fee or 
minimum fee, as applicable, and (2) the 3.75% fee. But by treating 
the two royalty funds separately, the Johnson Model materially 
increases PTV's overall share, compared to what it would be if the 
two royalty funds were jointly considered. Bennett WRT ]] 74-78, 
figs.27-28.
    2. Dr. Johnson provides no basis for extrapolating from the 
subset of Subscriber Groups with positive Base Rate fees to the 
broader royalty pool. Bennett WRT ]] 70-73.
    3. The Johnson Model excludes fixed effects, which means that 
his regressions do not account for omitted variable bias. But Dr. 
Johnson introduces the risk of such bias based on a trumped-up 
concern that the Judges noted in the 2010-13 Determination but which 
had no impact. Moreover, the resulting bias in the regression 
coefficient is caused by eliminating fixed effects that would have 
impacted royalties but were unrelated to program category minutes, 
for example, where different CSOs charge different subscription 
prices because of differences in the number of specialty channels 
they provide in their basic service. Similar omitted variables arise 
when fixed effects are eliminated because of uncontrolled 
differences in subscription revenue (and thus section 111 royalties) 
between and within MSOs. Bennett WRT ]] 79-89, figs.29-35.
    4. Dr. Johnson's decision to eliminate fixed effects was 
particularly puzzling, because he had the endorsed Dr. Crawford's 
``regression framework'' as ``appropriate'' for present purposes and 
acknowledges that he ``generally follows the framework used by [Dr.] 
Crawford.'' Nonetheless, he eliminated Dr. Crawford's fixed effects, 
inflating PTV's shares as reported in the Johnson WDT. See Bennett 
WRT ]] 90-92, figs.36-37.
c. Criticisms of the Johnson Model by PTV Expert Witness Dr. Marx
    Dr. Marx essentially echoes the criticisms of Dr. Bennett with 
regard to Dr. Johnson's allegedly improper removal of fixed effects 
from the regression. She emphasizes that Dr. Johnson did not appear to 
test or evaluate the size or direction of the bias created by 
eliminating fixed effects, even for 2014, which was ``a year that in 
most significant respects was similar to 2010-2013, which is the time 
period for which the Judges found the Crawford regression with fixed 
effects to be `highly useful.''' Marx WRT ] 39.
d. Criticisms of the Johnson Model by Program Suppliers Expert Witness 
Dr. Tyler
    Dr. Tyler does not raise any specific criticisms of the Johnson 
Model. Rather, he criticizes it in the same way he criticizes all the 
other regressions that use a form of royalties as the dependent

[[Page 54210]]

variable (as explained supra, in the Judges' summary of Dr. Tyler's 
advocacy for the model he has proffered in this proceeding). See Tyler 
WRT ] 29. To summarize, Dr. Tyler rebutted the Johnson Model by 
asserting the following:

    1. The Johnson Model needed to avoid the substantial degree of 
variability, causing a loss of observations.
    2. The Johnson Model, like the George Model, ``guesses'' at the 
number of subscribers in each Subscriber Group, introducing 
potential bias into the regression.
    3. The Johnson Model, like the George Model, has ``hammer-
shaped'' residuals, which indicate that a regression is 
misspecified.

See Tyler WRT ]] 29-55.

e. Criticisms of the Johnson Model by SDC Expert Witnesses Dr. Asker, 
Dr. Majure, and Mr. Harvey
    JSC's several expert economic witnesses levy the following 
criticisms at the Johnson Model:

    1. The Johnson Model (like the George Model) improperly engages 
in the pooling of data across the 2014-2017 period to estimate a 
single coefficient for each program category. According to the JSC 
economic witnesses, such pooling generally results in ``unreliable'' 
coefficients and, specifically, led in this case to an 
underestimation of JSC's 2014 share. More particularly, three JSC 
experts testified as follows:
    a. Dr. Asker testified that ``there was a significant change in 
behavior following the conversion of WGNA in 2015. . . . To adopt a 
specification that doesn't recognize that change and then allow the 
regression to adjust . . . is a considerable flaw.'' 3/30/23 Tr. 
2431 (Asker); see also Asker WRT ] 103.
    b. Dr. Majure testified that ``[t]he data are very different 
between these two periods, reflecting changes in distant signal 
carriage patterns from the exit of WGNA. Given the differences in 
the data, it is important to run separate regressions on the 
different time periods.'' Majure WRT ] 38.
    c. According to Mr. Harvey, the Johnson Model estimates that JSC 
went from the highest per minute value in 2014 to the lowest in 
2015-2017 and, moreover, CSOs would pay less for a minute of JSC 
content during 2015-2017 than for a minute of any of the other 
claimant categories. Harvey WRT ] 37 tbl.5; 3/28/23 Tr. 1883-87, 
1889-90 (Harvey).
    d. Mr. Harvey further testified that for the 2015-2017 period 
data alone, using the Johnson Model (and the George Model) generated 
JSC sports coefficients that were not statistically significant and, 
according to Mr. Harvey, were thus unreliable in that the data 
implied that JSC programming had no value in those years. Harvey WRT 
]] 37-38 & tbl.5.
    e. Mr. Harvey calculated that when a 2015-17 coefficient is 
estimated only for systems paying more than the minimum fee, the 
Johnson Model then estimates a statistically significant negative 
coefficient for JSC content. Harvey WRT ] 38 & tbl.6; 3/28/23 Tr. 
1895-96 (Harvey).
    2. The Johnson Model lacks ``robustness'' and is ``unstable.'' 
According to Mr. Harvey, these defects are evidence that Dr. Johnson 
had engaged in a specification search (discussed elsewhere in this 
Determination). But Mr. Harvey asserts that even if Dr. Johnson had 
not engaged in an intentional specification search, his many 
specifications generated results that evidenced the lack of 
robustness and stability. 3/28/23 Tr. 2091 (Harvey); Harvey WRT ] 
155 & tbl.26; see also JSC PFF ] 196.
    3. Reiterating a criticism rejected in the 2010-13 
Determination, the Johnson Model (like the George Model) wrongly 
utilizes a log-linear specification, with the dependent variable 
(royalties) expressed in log form and the subscriber count variable 
expressed in linear form. Harvey WRT ] 170; 3/28/23 Tr. 1965-66 
(Harvey).
    4. The Johnson Model wrongly omits fixed effects (as also noted 
by other witnesses, discussed supra). According to Mr. Harvey, 
applying the fixed effects contained in the George Model triples Dr. 
Johnson's estimate of the JSC share. Harvey WRT ] 111 & tbl.5.
f. Criticisms of the Johnson Model by SDC Expert Witness Dr. Erdem 
\113\
---------------------------------------------------------------------------

    \113\ In addition to the specific criticisms by Dr. Erdem of the 
particulars of the Johnson Model, Dr. Erdem criticizes Dr. Johnson 
for engaging in the improper process of specification searching 
(also described as ``data mining'' and ``p-hacking''). The Judges 
consider that issue separately in this Determination.
---------------------------------------------------------------------------

    Dr. Erdem levies the following criticisms at the Johnson Model:

    1. The specifications in the Johnson Model (i.e., Dr. Johnson's 
preferred ``baseline'' model) is but ``a stripped-down version'' of 
the fatally flawed Crawford Model, shorn of ``numerous control 
variables such as MSO indicators and the lag of subscribers and . . 
. fixed effects . . . . '' Erdem WRT ] 42.
    2. When the Johnson Model's regression was run ``using the CCG 
data that Dr. George used for her regressions . . . PTV shares 
decreased by eight points [and] [e]very other claimant . . . had 
their implied shares . . . with] JS[C] [gaining] a five-point 
increase in shares.'' This allegedly indicated that ``[t]he 
processed data that PTV used for their regression was clearly made 
to benefit their shares . . . . '' Erdem WRT ]] 98-99.
    3. All of Dr. Erdem's sensitivity tests showed a similar 
tendency, i.e., compared to the Johnson Model, ``all the 
sensitivities . . . [gave] PTV lower implied shares.'' Erdem WRT ] 
101.
2. The Judges' Analysis and Findings Regarding the Johnson Model \114\
---------------------------------------------------------------------------

    \114\ The Judges' analysis and findings in this section are 
separate and apart from their analysis and findings on the specific 
issues considered in separate sections of this determination.
---------------------------------------------------------------------------

    The Judges make the following findings with regard to the Johnson 
Model:

    1. Although Dr. Johnson used the Crawford Model as his 
``starting point,'' he made changes to the Crawford Model.
    2. A major change Dr. Johnson made to the Crawford Model was to 
eliminate all ``fixed effects'' in the Johnson Model.
    3. By removing all ``fixed effects,'' Dr. Johnson altered the 
Crawford Model by eliminating the protection against ``omitted 
variable bias.'' That is, Dr. Johnson failed to capture the effects 
of differences among systems (CSOs) and across accounting -periods 
that impacted the dependent variable in the Johnson Model, i.e., the 
log of royalties. The absence of these ``fixed effects'' therefore 
rendered significantly reduces the evidentiary usefulness of the 
Johnson Model.\115\
---------------------------------------------------------------------------

    \115\ The irony of this criticism is that Dr. Johnson relied on 
the Crawford Model as a ``starting point'' for his modeling, 
deemphasizing the need to develop an independent economic theory, 
and ignored the potential specification searching in Dr. Crawford's 
modeling, but removed the feature of the Crawford Model (``fixed 
effects'') that was the positive basis for the Judges' elevation of 
the regression approach to a position of evidentiary primacy in the 
2010-13 Determination.
---------------------------------------------------------------------------

    4. A purpose in Dr. Johnson's removal of ``fixed effects'' from 
his regression model was to generate what he understood to be a 
sufficient number of observations of CSO decisions regarding program 
category retransmittal decisions (through their retransmitted 
channel selections) to generate the variation needed for a useful 
regression. These additional observations were required because, 
after the WGNA conversion, there was a significant reduction in the 
number of CSOs with two or more subscriber groups, reducing the 
variation created by the ``fixed effects'' control in the Crawford 
Model. But, as Dr. Marx, for example, has explained, this attempt at 
greater ``precision'' came at the unacceptable expense of the 
generation of ``omitted variable bias'' discussed above.
    5. Dr. Johnson's further claim--that he eliminated ``fixed 
effects'' in response to a statement in the 2010-13 Determination 
that the Judges were troubled by the resulting loss of 15% of the 
otherwise observable CSO decisions--is a red herring. The Judges in 
the 2010-13 Determination did not rely on the loss of such 
observations as a basis for diminishing the evidentiary weight of 
the Crawford Model. And regardless, if the lost number of 
observations increased in the present proceeding because of the 
aforementioned reduction in useful subscriber groups, the more 
appropriate response was not to inject ``omitted variable bias'' 
into the regression, but rather to utilize other approaches (as, for 
example, in the Tyler Model).
    6. Dr. Johnson's inclusion in his regressions of data regarding 
the programming decisions of the vast majority of CSOs paying the 
minimum fee or less significantly reduces the evidentiary weight of 
the Johnson Model for the three-year 2015-2017 period. (This finding 
of course also applies to the George and Tyler Models.) These 
decisions did not reveal their preferences in a cardinal manner, 
that is, these CSOs did not reflect relative values because their 
choices did not affect the actual fees paid. At most, their 
decisions reflected ordinal values, in terms of which program 
categories they valued more than others, but

[[Page 54211]]

not how much more, which is necessary for the distribution of the 
royalty fund.\116\
---------------------------------------------------------------------------

    \116\ In the 2010-13 Determination by contrast, as Dr. Marx has 
explained, the Judges found there was a sufficiently high percentage 
of CSOs paying above the minimum fee and thus making decisions with 
an economic (royalty) impact that served as a strong evidentiary 
basis for allocating shares.
---------------------------------------------------------------------------

    7. But Dr. Johnson properly relied on the data relating to the 
subset of CSOs in his model that only paid above the minimum fee. 
The Judges credit that data as reflective of actual economic 
decision-making that is useful in determining the allocation shares 
in this proceeding. This cohort of CSOs can properly be viewed as 
essentially the only CSOs who provide revealed preference 
information as to the variation in relative values among the program 
categories (in contrast with CSOs who did not retransmit any distant 
local stations or those with ``excess capacity''), which in that 
sense is a cohort unto itself, rather than a sub-sample. On the 
other hand, this cohort can also reasonably be viewed as but a small 
sample of all the CSO, which reduces the evidentiary weight of their 
preferences. Both perspectives on the revealed preferences of these 
above-minimum-fee-paying CSOs are properly considered in weighting 
the various strands of useful evidence in order to allocate royalty 
shares in this proceeding.
    8. The probative value of the Johnson Model is incomplete and 
thus weakened, because it excludes the 3.75% fees paid by most of 
the claimants, thus not reflecting the full willingness-to-pay of 
all claimant categories. Further, Dr. Johnson's separation of the 
basic royalty fund and the 3.75% royalty fund materially increased 
PTV's overall share.
    9. The probative value of the Johnson Model is weakened because 
it wrongly substitutes ``contemporaneous'' for ``lagged'' 
subscribers. This substitution is incorrect because: (a) lagged 
controls minimize the subsequent impact of potential unobserved 
factors such as the acquisition of a CSO by a large MSO; 
(b)''lagged'' subscribers were used since the Waldfogel regression 
in the 2004-05 proceeding; and (c) contrary to Dr. Johnson's 
assertion, ``lagged subscriber'' data was available from Cable Data 
Corporation, the source of much of the data utilized in the 
regressions proffered in this and prior allocation proceedings.
    10. The probative value of the Johnson Model is weakened because 
its omission of certain control variables lessens its ability to 
identify the causal interpretation of interest, i.e., the 
correlation between program category minutes and the log of 
royalties. Specifically, the evidentiary weight of the Johnson Model 
is compromised by its exclusion of control variables for market 
income, the number of local stations offered and MSO ownership of 
CSOs. In this regard, Dr. Johnson has essentially ignored the 2010-
13 Determination which explains at length why the inclusion of an 
MSO control variable is necessary. 2010-13 Determination at 3566-67 
(describing ``differences . . . among the six largest MSOs in terms 
of their average receipts per subscriber . . . . suggest[ing] . . . 
important differences . . . regarding their signal carriage 
strategies, pricing, and other relevant dimensions,'' and 
contrasting ``a regression without the six MSO Interaction variables 
[where] unobserved differences in average revenue per subscriber 
could bias estimates of relative value of different 
programming.'').\117\
---------------------------------------------------------------------------

    \117\ One might fairly ask: Why rely on Dr. Crawford's 
specification decisions now, after raising the concerns about his 
potential specification searching? The answer is that Dr. Crawford's 
detailed and persuasive explanation for adding this additional 
control variable in the course of specifying his model was a reason 
why the Judges did not agree with the SDC in the 2010-13 proceeding 
that it was evidence of inappropriate specification searching. The 
troublesome facts were generated subsequently, in the discovery 
phase of the companion 2010-13 satellite proceeding.
---------------------------------------------------------------------------

    11. The Johnson Model improperly ``pools'' data across the 2014-
2017 period to estimate a single coefficient for each program 
category. Although ``pooling'' in this manner is not inherently 
improper in these allocation proceedings, when there is a sharp 
demarcation in the relevant data, as existed here as of 2015 upon 
the WGNA conversion, ``pooling'' data to generate a single 
coefficient obscures reality. The most consequential impact of 
``pooling'' was the underestimating of the JSC share for 2014 and 
its overestimation for the years 2015-2017.

IX. A General Criticism of the Regressions: Dr. Erdem's Eight-Model 
Argument In Rebuttal to the Use of the Proffered Regressions

    Undaunted by the Judges' findings in the 2010-13 Determination 
discussed supra, Dr. Erdem endeavors to convince the Judges to reverse 
course by once more presenting an argument that all fee-based 
regressions should be rejected as probative evidence of relative market 
value, as that standard has been defined by the Judges and their 
predecessors.\118\ To this end, Dr. Erdem presented in rebuttal eight 
models as pedagogical tools only (not as proposed models for use in 
allocating shares). He and the SDC aver that his are ``simple models,'' 
demonstrating that ``all fee-based regression models'' do not estimate 
``any plausible measure of fair market value,'' \119\ but rather are 
``leveraged on correlations driven predominantly by geography (location 
of cable systems and the subscriber groups) and other features of the 
copyright royalty system . . . .'' SDC PFF ] 44 (quoting Erdem WRT ] 
2).\120\
---------------------------------------------------------------------------

    \118\ Nothing in the prior determinations precludes the Judges 
from considering what appear to be new arguments by Dr. Erdem, 
because the Judges' (and their predecessors') reliance on fee-based 
regressions constitutes a factual finding, not a legal conclusion, 
and thus there is no ``precedent'' that precludes a new line of 
factual expert argument. See 2010-13 Determination at 3557 & n.26 
(distinguishing ``legal precedent'' from the oxymoronic concept of a 
``factual precedent.'' See also 17 U.S.C. 803(a) (directing the 
Judges to act on the basis of both: (1) ``a written record'' which 
includes record evidence; and (2) prior ``determinations and 
interpretations'' of identified judicial and administrative 
entities.).
     However, factual matters that the Judges decided in the 2010-13 
Determination need not be fully revisited in this proceeding, in the 
absence of any new persuasive argument to the contrary. Such factual 
matters include: (1) the rejected sweeping claim that fee-based 
regressions do not embody economic principles such as profit 
maximization (see 2010-13 Determination at 3560), (2) the rejected 
characterization of fee-based regressions as merely ``volume 
analyses'' (see id. at 3560-61), (3) the rejected argument that it 
was wrong for fee-based regressions to ignore distant local signals 
that CSOs chose not to carry (see id. at 3563), and (4) the rejected 
argument that the fee-based regressions used the wrong form for the 
control variable for number of subscribers (see id. at 3563-64).
    \119\ It is not lost on the Judges that Dr. Erdem uses the 
phrase ``fair market value'' here, rather than the actual standard 
of ``relative marketplace value.'' In the 2010-13 Determination, the 
Judges explicitly distinguished the two concepts. 2010-13 
Determination at 3555 n.17 (``Because the royalties at issue in this 
proceeding are regulated and not derived from any actual market 
transactions, they do not correspond with absolute dollar royalties 
that would be generated in a market and thus would not reflect 
absolute ``fair market value.'') See also the Judges' discussion of 
the ``relative marketplace value'' standard, supra.
    \120\ Elsewhere in his testimony, Dr. Erdem offers a more 
sinister conclusion from his ``eight-model'' analysis: ``[A]s I will 
show, it is precisely these modeling choices that allow the analyst 
to select a model based on expected or desired results.'' Erdem WRT 
] 51. Thus, his argument is that the very structure of the fee-based 
regressions provides all the expert witnesses, not just the two he 
singled out, Drs. Crawford and Johnson, with the opportunity to 
engage in specification searches.
---------------------------------------------------------------------------

    The Judges go through each of the eight models below. Also set 
forth below are the rejoinders to these models presented 
comprehensively through the submission by CCG and the testimony of 
CCG's economic expert, Dr. George.

A. Erdem's Rebuttal Model 1

    Model 1 shows ``a negative correlation between the number of 
minutes retransmitted on a distant basis and the amount of subscriber 
group base fees.'' SDC PFF ] 45 (citing Erdem WRT ]] 52-53). This 
means, according to Dr. Erdem, that subscriber groups retransmitting 
fewer distant minutes tend to pay more in royalty fees. Erdem WRT ] 53. 
Dr. Erdem interprets these negative coefficients as a ``hedonic'' 
regression, implying that CSOs place negative value on retransmission 
of distant signals.'' SDC PFF ] 45 (citing Erdem WRT ] 53) (emphasis 
added).\121\ Given the perverse nature of this result, the SDC 
maintains that its negative value puts the lie to the claim that the 
number of minutes has something ``to do with value,'' but rather shows 
that the regression coefficients are artifacts ``of the regulatory 
structure.'' SDC PFF ] 45.\122\
---------------------------------------------------------------------------

    \121\ The Judges discuss elsewhere in this determination the 
concept and label of a hedonic regression and their significance in 
this proceeding.
    \122\ Dr. Erdem states that to test the hypothesis of a positive 
correlation, on average, between royalties and minutes, he would 
need to ``control[] for appropriate variables.'' Erdem WRT ] 52. 
However, there is no sufficient indication in the record that Dr. 
Erdem applied control variables, or any other controls through fixed 
effects with regard to his Model 1.

---------------------------------------------------------------------------

[[Page 54212]]

    Dr. Erdem advances what he argues is an alternative explanation for 
the inverse relationship between minutes and royalties that he claimed 
to identify: ``[This] result can be explained by distance between the 
signal and the subscriber group [because] I argue that the number of 
subscribers reduce with distance, implying that the signal is being re-
transmitted to fewer subscribers over longer distances.'' Erdem WRT ] 
53. See also Erdem WRT ] 59 (``91% of systems are retransmitting the 
same signal on a local basis to some subscriber groups and on a distant 
basis to other subscriber groups[,] . . . [and] on average 76% of the 
channels that are distant to a subscriber group are retransmitted as 
local to another subscriber group''); SDC PFF ]] 46-47; see also 
Bennett ACWDT ] 33 (Across 2014-2017, nearly 95% of the distant signals 
imported were within 150 miles of the community served, and over 97% 
were within 200 miles.).

B. Erdem's Rebuttal Model 2

    In his second rebuttal model, Dr. Erdem analyzed the relationship 
between claimant category minutes and base royalty fees. He testified 
that, quite similar to the results from his Model 1, he found that a 
negative or statistically insignificant relationship largely persists 
(except for JSC minutes). As with Model 1, Dr. Erdem interprets this 
result through the lens of a hedonic regression, finding that it 
implies that CSOs place a negative value on all distant retransmissions 
of local programming, except for JSC. Erdem WRT ] 54. And also as with 
Model 1, Dr. Erdem recognizes that these results are 
``counterintuitive'' in the context of reflecting value, but rather are 
a function of the fragmentation of subscriber groups. Erdem WRT ] 54. 
See also SDC PFF ] 48.\123\
---------------------------------------------------------------------------

    \123\ Again, Dr. Erdem does not indicate whether he applied 
control variables, and, if he did, what they were.
---------------------------------------------------------------------------

C. Erdem's Rebuttal Model 3

    In his third rebuttal model, Dr. Erdem tested the effect of the 
number of subscribers in a subscriber group (the independent variable) 
on subscriber group royalty fees and found a strong positive 
correlation. Erdem WRT ] 58. Dr. Erdem, again viewing the modeling as a 
hedonic regression, has a ready and what he describes as an obvious 
explanation for this positive correlation: [C]able systems place a high 
positive value on the number of subscribers in a subscriber group.'' 
Erdem WRT ] 58. As alternatively stated by Dr. Erdem, ``[W]e may need 
to treat the number of subscribers as a measure of volume.'' Erdem WRT 
] 58. Relatedly, Dr. Erdem opines that ``there is a negative 
correlation between the number of subscribers in a subscriber group and 
the number of distant minutes the subscriber group receives''--meaning 
that, for the more populous subscriber groups, fewer distant signals 
(and minutes) are retransmitted to them and, thus, the more sparse the 
number of subscribers in a subscriber group, the greater the number of 
distant signal minutes. According to Dr. Erdem, this negative 
correlation is inconsistent with the positive correlation between 
distant minutes and royalties posited by the theoretical underpinnings 
of the fee-based regressions. See Erdem WRT ] 59.\124\
---------------------------------------------------------------------------

    \124\ The Judges note Dr. Tyler's testimony, discussed elsewhere 
in this determination, that there is no data identifying the number 
of subscribers in a subscriber group, in the course of his positive 
differentiation of the Tyler Model from the other regression models 
(which unlike the Tyler Model, must estimate the number of such 
subscribers in an inaccurate manner). It is not apparent from the 
record that Dr. Erdem had estimated the number of such subscribers 
in an accurate manner.
---------------------------------------------------------------------------

D. Erdem's Rebuttal Model 4

    Dr. Erdem's Model 4 seeks to address a finding from his Model 3: 
``[T]he relationship between the number of subscribers and royalty fees 
is positive.'' Erdem WRT ] 58 & fig.4. Keeping with his interpretive 
context, which treats these regressions as hedonic in nature, Dr. Erdem 
posits that ``[a]n analyst . . . will conclude that [CSOs] place a high 
positive value on the number of subscribers in a subscriber group,'' 
such that ``we may need to treat the number of subscribers as a measure 
of volume.'' Erdem WRT ] 58. But he then asks, rhetorically: Could it 
be that, on average, subscriber groups with fewer subscribers receive 
more distant minutes of programming? Erdem WRT ] 58 (emphasis added). 
Dr. Erdem then turns to his next pedagogical regression model, Model 4, 
to address this issue.
    Dr. Erdem's Model 4 indeed demonstrated a ``negative correlation 
between the number of subscribers in a subscriber group and the number 
of distant minutes the subscriber group receives.'' Erdem WRT ] 59. Dr. 
Erdem explained his intuitive explanation for this negative 
correlation:

    One of the principal reasons why a rational CSO might choose to 
use subscriber groups is because the cable system's reach straddles 
the edge of the 35-mile radius in which a station is considered 
``local'' for cable royalty purposes. In this situation, a signal is 
``local'' to some subscribers and ``distant'' to other subscribers. 
The cable system can save money by breaking its subscribers into 
geographically based subscriber groups so that it is paying for the 
distant retransmission only for the subscribers receiving it on a 
``distant'' basis.

Erdem WRT ] 59 (emphasis added). Dr. Erdem then presents the data 
(discussed supra) regarding the localized emphasis on ``distant'' 
retransmission contiguous to the 35-mile legal boundary between local 
and distance transmissions. Erdem WRT ]] 59-60.
    Dr. Erdem recognizes that the several regression experts sought to 
remove this cost-based negative effect of the number of subscribers in 
a subscriber group on the number of distant minutes a subscriber group 
receives. First, he noted that Dr. Tyler, with his SGRP divided the 
dollar value of fees (the numerator in Dr. Tyler's SGRP) by ``a metric 
that scales with the number of subscribers,'' i.e., total receipts. 
(the denominator in Dr. Tyler's SGRP). Second, as an alternative 
approach, Drs. George and Johnson (and apparently Dr. Crawford 
previously) introduced a control variable to remove the influence of 
the number of subscribers (whose increasing numbers would increase 
receipts and potentially increase royalties either through higher 
binding base fees or by triggering a base fee obligation in excess of 
the minimum fee that would otherwise bind). Erdem WRT ] 61.\125\
---------------------------------------------------------------------------

    \125\ Note that when discussing Model 7 considered infra, Dr. 
Erdem admits that ``inclusion of a variable for subscribers . . . 
could be justified as a volume-based control.'' Erdem WRT ] 69.
---------------------------------------------------------------------------

E. Erdem's Rebuttal Model 5

    Dr. Erdem then apparently adds to his pedagogical model the control 
variable that Drs. George and Johnson include, ``controlling for the 
number of subscribers.'' When Dr. Erdem does so (using lagged and 
unlagged subscriber numbers, respectively in his modeling), he finds 
that his ``correlation between total minutes and royalty fees is now 
positive.'' Erdem WRT ] 62 & fig.6 (emphasis added). He emphasizes that 
what he terms the ``fixed price'' for the retransmissions in his 
modeling is ``based primarily on the type and number of signals and 
revenues for the subscriber group,'' despite the fact that ``[r]evenues 
are largely based on the number of subscribers.'' Erdem WRT ] 62.
    What still remains uncontrolled, Dr. Erdem, notes, is the ``impact 
. . . from the number of distant signals.'' Erdem

[[Page 54213]]

WRT ] 62. He notes the perhaps self-evident point that ``[t]he more 
signals there are, the more minutes there are, so I would expect a 
positive relationship after controlling for subscribers.'' Erdem WRT ] 
62.

F. Erdem's Rebuttal Model 6

    Dr. Erdem then breaks the retransmitted minutes into their 
respective programming categories, and proceeds to test whether the 
positive correlation between total minutes and royalties (which the 
regression experts understood to exist) continues to hold on a per-
category basis. Erdem WRT ] 63. He finds that this positive 
relationship between minutes and royalties--on a program category 
basis--remains positive and is statistically significant for four of 
the six category participants--PTV, Program Suppliers, JSC, and the 
SDC. However, his modeling resulted in mainly positive but 
statistically insignificant results for CTV and CCG, and, for a 
minority of CCG observations, a negative relation. (Dr. Erdem's 
modeling also showed negative correlations for ``network programming'' 
(not a category at issue). Erdem WRT ]] 63-64 & fig.7. Dr. Erdem 
interpreted these results to mean that ``the control for the number of 
subscribers lifted the coefficients for program categories into 
positive territory by removing the influence of the number of 
subscribers, but not enough to give all categories a positive and 
statistically significant coefficient.'' Erdem WRT ] 64.
    Dr. Erdem asserts that these results ``pose a problem for any 
analyst hoping to interpret the model as a hedonic regression.'' Erdem 
WRT ] 65. More particularly, continuing from the binary perspective of 
whether the fee-based regressions are hedonic or not, he unambiguously 
opines that these regressions are invalid because they are not hedonic, 
in that ``[t]he price is not actually varying based on the valuation of 
minutes,'' but rather varying based on ``other factors such as the type 
of signal or the revenue-per-subscriber for the subscriber group or 
system.'' Erdem WRT ]] 65-66.
    Dr. Erdem then states that the regression analyst who nonetheless 
``wishes'' to describe his or her regression as hedonic must manipulate 
the negative coefficients into positive coefficients, so that they 
``appear'' plausible as proxies for prices. Erdem WRT ] 67.
    It is in this context that Dr. Erdem accuses the regression experts 
of ``leveraging'' the ``negative coefficients for network programming'' 
(which are ineligible for an allocation of the royalties to be divided 
in this proceeding). Erdem WRT ] 68. To generate this leverage, Dr. 
Erdem asserts that the fee regression analysts engage in two 
manipulations (1) they add another control variable for ``the number of 
distant signals, which correlates directly with the total number of 
minutes'' and (2) they exclude the variable for ``the number of distant 
minutes of network programming,'' ``render[ing] all category 
coefficients `relative' to the negative coefficient for network 
programming.'' Erdem WRT ] 68. Dr. Erdem emphasizes the elementary 
point that ``[b]ecause any number is positive in relation to the 
largest negative number, the exclusion of the variable for network 
programming has the effect of lifting the variables for all category 
minutes comfortably into positive territory, creating an apparent 
positive and statistically significant correlation where there 
previously was none in some categories.'' Erdem WRT ] 68.

G. Erdem's Rebuttal Model 7

    To the adjustments included through Models 1-6, Dr. Erdem now 
injects a control for ``the number of distant stations on royalty 
fees.'' Also, his Model 7 ``drops network distant minutes in order to 
get relative numbers'' in the manner undertaken by the fee regression 
experts. Erdem WRT ] 69.
    Although (as noted supra) Dr. Erdem concedes that the prior 
``inclusion of a variable for subscribers . . . could be justified as a 
volume-based control,'' he finds ``no econometric justification for 
seeking to value category minutes relative to the negative coefficient 
value of network programming.'' Erdem WRT ] 69. He states that as a 
general matter, ``even if one believed that the coefficients were 
related to value, there could be no justification for trying to measure 
value relative to an arbitrarily chosen category with a negative 
value.'' Erdem WRT ] 69 (emphasis added).
    Dr. Erdem also characterizes the negative coefficient for network 
programming as ``an artifact of the operation of the copyright royalty 
system, not a measure of how much anyone values programming, and 
certainly not a measure of how programming would be valued in the free 
market.'' Erdem WRT ] 70. Alternately stated, he declares that [t]here 
is no intuitive reason why network programming would be expected to 
have negative market value when retransmitted on a distant basis.'' 
Erdem WRT ] 70.
    Dr. Erdem does acknowledge that, through what he calls this 
excluded network minute ``manipulation,'' all the coefficients in the 
categories of interest (for the distant retransmission that is 
permitted by law) now become positive. Erdem WRT ] 70 (``This is 
exactly how Professor Crawford's model--and, by extension, Dr. George's 
model and Dr. Johnson's model--works.'').\126\
---------------------------------------------------------------------------

    \126\ To be clear, Dr. Erdem does not lodge this criticism at 
Dr. Tyler's model.
---------------------------------------------------------------------------

    From this point forward, Dr. Erdem maintains that the fee-based 
regression experts ``are free from the constraints of econometric 
reasoning.'' More particularly, he asserts they can, without 
appropriate justifications use various (1) control variables, (2) fixed 
effects, (3) transformations and functional forms, and (3) unspecified 
miscellaneous fine-tuning, all in the service of ``generat[ing] 
whatever coefficients [they] desire or expect.'' Erdem WRT ] 71.

H. Erdem's Rebuttal Model 8

    The final model, Model 8, is actually not a ``model'' at all, but 
rather Dr. Erdem's more particular catalog of ``manipulations'' in 
which a fee-based regression expert could engage, with a model built up 
through Dr. Erdem's Models 1-7. Without linking any of the following 
``manipulations'' specifically to any of the experts in this 
proceeding, Dr. Erdem states in this ``Model 8'' that the following 
``manipulations'' are possible:

    1. ``bringing in variations in the number of subscribers to 
increase or decrease the effect on the dependent variable. For 
example, we can try the lagged number of subscribers;''
    2. ``add[ing] interactions with the number of subscribers'' (as 
he states Dr. Crawford did in his model); and
    3. ``add[ing] fixed effects, which controls for any variation 
due to inherent characteristics of a subscriber group.''

Dr. Erdem does not assert that such additions would be ad hoc, but 
rather that, consistent with the fundamental defect he finds in the 
fee-based regressions, they would ``merely leverage the features of the 
copyright royalty system.'' Erdem WRT ] 72.

I. Dr. George's and CCG's Rejoinder to Erdem's Modeling Exercise 
127
---------------------------------------------------------------------------

    \127\ CCG and Dr. George, among the other regression experts and 
parties, were the ones who responded to Dr. Erdem's testimony, 
apparently because Dr. Erdem's pedagogical modeling was based on 
``Dr. George's methodology and production.'' Erdem WRT ] 51 n.23.
---------------------------------------------------------------------------

    At a high level,\128\ CCG takes issue with the SDC's emphasis on 
the

[[Page 54214]]

assertion that fee-based regressions are predominantly rooted in 
correlations with (a) the geographic location of CSOs and their 
constituent subscriber groups and (b) statutory features of the 
copyright royalty system. In this regard, CCG essentially attacks this 
assertion as much ado about nothing, because the reason why CSOs and 
their subscriber groups retransmit signals as they do does not bear on 
the fundamental point of the regressions, i.e., to identify what the 
CSOs actually retransmit in order to appropriately compensate copyright 
owners. Dr. George emphasizes that whether or not subscriber group 
configurations are geographic artifacts, they nonetheless reflect the 
strategic profit-maximizing decisions of CSOs as to where they will 
transmit distant signals. It is this profit maximizing retransmission 
decision that is the kernel of information that provides insight into 
``what would determine relative market value absent regulation.'' See 
George WDT at 15-17, 27-28; The Canadian Claimant Groups' Reply to 
Proposed Findings of Fact and Conclusions of Law (CCG RPFF) ]] 21-22.
---------------------------------------------------------------------------

    \128\ This high-level ``General Criticism'' also responds 
specifically to Dr. Erdem's Model 4 discussed supra, regarding 
``geographic'' effects, which are ``key'' elements of Dr. Erdem's 
general critique of fee-based regressions. See 4/6/23 Tr. 3643-44 
(Rubinfeld) (identifying ``changes in the number or size of 
subscriber groups'' as a ``key issue.'').
---------------------------------------------------------------------------

    More broadly, CCG characterizes Dr. Erdem's eight-model analysis as 
incomplete and economically flawed. In this regard, Dr. George 
criticizes Dr. Erdem's rebuttal pedagogical modeling because therein he 
analyzes relationships in the data across CSOs, whereas the George 
Model emphasizes variation within CSOs to identify coefficients. Thus, 
CCG and Dr. George essentially attack Dr. Erdem's modeling as a straw 
man exercise. CCG RPFF ] 22; George WDT at 27-28.
    At the conceptual economic level,\129\ Dr. George takes note of the 
point (identified by the Judges supra) that Dr. Erdem has 
contextualized his analysis in the wrong economic and legal standard:
---------------------------------------------------------------------------

    \129\ All the economic experts in this proceeding agree that the 
initial step in building a regression model is to identify ``a 
theory that describes the variables to be included in the study.'' 
American Bar Association, Econometrics, Legal, Practical and 
Technical Issues 8 (1st ed. 2005) (``ABA Econometrics''). See also 
Stock & Watson, supra note 92, at 282 (``First, a core or base set 
of regressors should be chosen,'' which includes the ``variables of 
primary interest'' and the ``control variables'' suggested by, inter 
alia, ``economic theory.'') (emphasis added); Kennedy, supra, at 391 
(identifying as ``Rule 1'' of applied econometrics: ``Use common 
sense and economic theory.'') (emphasis added).'' Perhaps even more 
pertinent here is Professor Kennedy's ``Rule 2,'' which states that 
an econometrician must avoid attempting to ``produce[ ] the right 
answer to the wrong question.'' Id. at 391.

    SDC's false criticism that regressions are not driven ``by any 
plausible measure of fair market value'' suggests that measuring 
fair market value was a goal of regression. . . . No pro-regression 
expert claims that correlations are driven by ``fair market value.'' 
As the Judges wrote in the prior proceeding: ``In this proceeding, 
the Judges distinguish between `relative values' (to describe the 
allocation shares), and absolute `fair market values.' Because the 
royalties at issue in this proceeding are regulated and not derived 
from any actual market transactions, they do not correspond with 
absolute dollar royalties that would be generated in a market and 
---------------------------------------------------------------------------
thus would not reflect absolute `fair market value.' ''

CCG RPFF ] 12 (quoting 2010-13 Determination at 3555 n.17) (emphasis 
added).
    More granularly, CCG asserts that the negative correlations in Dr. 
Erdem's modeling between royalties (the dependent variable) and, 
respectively, (a) total distant minutes (Model 1), (b) claimant distant 
minutes (Model 2), and (c) subscriber group size (Model 3), do not, as 
Dr. Erdem claims, reveal a modeling ``hurdle'' or ``problem'' that 
bedevils the fee-based regressions. Rather, it is claimed that Dr. 
Erdem's first three pedagogical rebuttal models fail to consider that 
CSOs configure their subscriber groups strategically to maximize 
profits and therefore will only retransmit distant signals to groups of 
subscribers when the anticipated benefit (essentially, more new or 
retained subscriptions) exceeds the anticipated costs (royalties). CCG 
RPFF ] 24 (citing, from the 2010-13 proceeding, Crawford CWDT ]] 66-68; 
Israel WDT ]] 12-14.).
    CCG also takes note of the finding in Dr. Erdem's Model 3 \130\ of 
``a positive relationship between the number of distant signals and 
subscriber group royalties,'' suggestive of the regression experts' 
hypothesis that cable systems place a high positive value on the number 
of subscribers in a subscriber group.'' CCG RPFF ] 24. Unsurprisingly, 
CCG and Dr. George do not disagree with his finding.\131\
---------------------------------------------------------------------------

    \130\ CCG misidentifies this point as within Dr. Erdem's Model 
4. CCG RPFF ] 24.
    \131\ As noted supra regarding CCG's and Dr. George's ``General 
Criticisms'' of Dr. Erdem's pedagogical modeling, they dispute his 
assertion in Model 4 that fee-based regressions do not reflect the 
category-by-category preferences of CSOs as revealed by the minutes 
of program categories retransmitted.
---------------------------------------------------------------------------

    CCG and Dr. George then address Dr. Erdem's next point regarding: 
(1) the purportedly problematic ``negative correlations'' in Models 4 
and 6 ``between the number of subscribers in a subscriber group and the 
number of distant minutes the subscriber group receives'' (Erdem WRT ] 
59); and (2) the attempt to control for the number of subscribers 
considered in Model 5 (Erdem WRT ] 62). In defending the use of a 
control for the ``number of subscribers'' as an important feature for a 
fee-based regression, CCG states:

    The negative correlations documented in Dr. Erdem's models are 
not ``problems.'' The negative correlation with subscriber group 
size results from the strategic choices of cable systems to minimize 
the cost associated with distant signal carriage. The negative 
coefficient for one category of minutes reflects the fact that 
programming minutes per station sum to a total of 24 hours per day. 
The goal of the regression is to evaluate how royalty expenditure 
correlates with claimant programming on distant signals 
retransmitted, all else equal. A control variable for the number of 
subscribers in a subscriber group creates these all-else-equal 
conditions.

CCG RPFF ] 25 (citing George WDT at 52-54; George WRT at 60) (emphasis 
added).
    Turning to Dr. Erdem's pedagogical rebuttal Model 7, Dr. George and 
CCG assert that Dr. Erdem has changed the fee-based regression modeling 
in two ways by (1) ``excluding the variable for network minutes'' and 
(2) ``including a variable for the number of distant signals.'' CCG 
RPFF ] 26. Regarding the alleged error in Dr. Erdem's exclusion of the 
network minutes variable, CCG avers:

    Since all stations broadcast approximately 24 hours per day, and 
subscriber groups must have whole numbers of distant signals, 
programming minutes sum to a constant equal to the number of distant 
signals times 24 hours per day for 6 months. Dr. Erdem has . . . 
effectively forc[ed] one of the program categories to produce a 
negative coefficient. [Dr.] Crawford and [Dr.] George address th[is] 
. . . by specifying a model with a control for . . . a reference 
category of ``big-3'' network minutes. Network minutes are a 
convenient reference choice because they are non-compensable and no 
coefficient for this category need be estimated.

CCG RPFF ] 26 (citing George WRT at 31-32, 57-58, 63-64) (emphasis 
added).\132\
---------------------------------------------------------------------------

    \132\ Moreover, Dr. George pointed out that, at first, Dr. Tyler 
made the same mistake as Dr. Erdem, neglecting to include or address 
this reference category when critiquing the Crawford Model. When he 
realized his error, Dr. Tyler withdrew his attempted replication of 
the Crawford Model. See George WRT at 31-32; see also Bennett WRT ]] 
127-134.
---------------------------------------------------------------------------

    Turning to her objection to Dr. Erdem's second alteration 
identified in the immediately preceding paragraph, viz., removing of 
the control for the number of distant signals, Dr. George responded as 
follows:

    [R]emoving the control for distant stations changes the 
interpretation of program coefficients so that they no longer show 
the effect of an additional program minute taking away a minute of 
network or off-air

[[Page 54215]]

programming. . . . removing the control for distant signals [thus] 
alters the ``all else equal'' framework of the model so that program 
coefficients no longer isolate the effect of additional program 
minutes, but instead also capture the (omitted) incremental value of 
additional distant signals.

George WRT at 57-58 (emphasis omitted); see also id. at 63-64.\133\
---------------------------------------------------------------------------

    \133\ Dr. George had the opportunity to express this criticism 
in her WRT because Dr. Erdem had made this particular criticism in 
his amended direct testimony (which he later incorporated it into 
his eight-model exercise.)
---------------------------------------------------------------------------

    Finally, in responding to Dr. Erdem's conclusory Model 8, CCG 
concludes by describing Dr. Erdem's pedagogical exercise as merely his 
recapitulation and criticism of ``his own incomplete models,'' rather 
than ``a criticism of the well-specified Crawford [M]odel or those 
presented in this proceeding.'' CCG RPFF ] 21. See also George WRT at 
53 ``(just as there is the potential for experts to `cherry-pick' 
results, there is the potential for adversaries to `cherry-pick' their 
critiques.'').

J. The Judges' Analysis and Conclusions

    The Judges find that Dr. Erdem's pedagogical eight-model approach 
does not support an abandonment of the Judges' long-standing reliance 
on fee-based regressions as evidence of relative market value in these 
section 111 allocation proceedings. The Judges make this finding based 
on the following:

    The Judges agree with SDC's counsel that Dr. Erdem's eight-model 
analysis is not substantively any different than what he presented 
in the 2010-13 proceeding. As such, it does not raise new factual 
arguments.
    1. Dr. Erdem acknowledges at the outset that his critique is 
intended to show that the fee-based regressions fail to generate 
``fair market value.'' This is a consequential error on his part, 
because (a) the Judges' long-existing standard is ``relative 
marketplace value,'' (b) the Judges expressly distinguished their 
standard from ``fair market value'' in the 2010-13 Determination, 
and (c) Dr. Erdem did not attempt to explain his switch in 
standards. Accordingly, it appears to the Judges that Dr. Erdem 
expressly characterized his eight-step modeling approach in a manner 
that attempted to answer ``the wrong question,'' in violation of 
Professor Kennedy's econometric ``Rule #2'' discussed supra.
    2. Dr. Erdem's approach is to build up from models which lack 
control variables, and then to posit that the relationships he finds 
are inconsistent with the hypothesis behind the fee-based 
regressions. But that approach leaves out all the control variables 
that the fee-based regression experts have included in their models, 
essentially causing Dr. Erdem's simple models to be burdened by 
omitted variables, which cause regressions to suffer from the 
eponymously named ``omitted variable bias.'' Moreover, in Models 1 
and 2, Dr. Erdem is thus not even engaged in ``multiple regression'' 
analysis, because he is analyzing only the effect of a single 
independent variable.
    3. Related to the immediately preceding criticism, Dr. Erdem's 
rebuttal modeling approach thus reflects his own modeling choices 
and approach, not one utilized by the fee-based regression experts. 
Thus, his approach is in the nature of a straw man argument. 
Moreover, his approach does not appear to be so much pedagogical in 
nature, but rather more of an attempt to utilize his rebuttal 
testimony to set forth the rudiments of an alternative modeling 
exercise--after SDC had declined to proffer any such modeling 
approach in its original or amended written direct statement (when 
it was fully aware of the points it subsequently raised on rebuttal 
through Dr. Erdem's eight-model approach).
    4. Dr. Erdem does not clearly explain how he estimated the 
number of subscribers in a subscriber group. If he did so by the 
same estimation approach as Drs. George, Johnson, and Marx (via Dr. 
Crawford) then his criticism is as questionable as their analyses in 
this regard. Moreover, the deficiency of this criticism underscores 
the relative strength of the Tyler Model, which did not require a 
control for the number of subscribers, given its use of SGRP as the 
dependent variable.
    5. The Judges cannot credit Dr. Erdem's criticism of the 
relationship between the negative coefficients he discussed and the 
use of a ``reference category'' of ``Big-3'' network minutes in the 
fee-based regressions. The Judges are struck by the fact that Dr. 
Erdem ignored the rationale given by Dr. George (and other 
regression experts), viz., that a ``reference category'' serves as a 
measure of value generated by the regression but not a value at 
issue under the statutory scheme, and thus the six categories of 
value can be measured against that ``reference category.'' (Other 
experts have characterized such a ``reference category'' approach as 
an ``index'' or ``numeraire.'' \134\). Any sufficient criticism of 
this approach would need to address the ``reference category'' 
purpose head-on, rather than ignore it.
---------------------------------------------------------------------------

    \134\ See, e.g., 4/11/23 Tr. 4141-42 (Marx) (referring to ``the 
Big 3 network programming''--which is already available on local 
affiliates in the CSO system and therefore has the lowest 
coefficient--as the ``numeraire'' that allows for the six category 
values coefficient values to be positive in relationship to those 
``numeraire''/''reference category'' minutes.)
---------------------------------------------------------------------------

    6. Further, with regard to the reference category issue, the 
Judges agree with Dr. George that Dr. Erdem's rejection of a 
referenced category/numeraire effectively forced program categories 
at issue in this proceeding to produce a negative coefficient, 
because in a 24-hour day, absent this control, any increase in one 
royalty-generating category's minutes would necessarily reflect a 
decrease in another category's minutes.

    Separate and apart from the Judges' evaluation of Dr. Erdem's 
testimony, as discussed above, the Judges note an aspect of Dr. Erdem's 
testimony that called into question its reliability. By way of brief 
background, Dr. Erdem testified in the 2010-13 proceeding as well as 
the present proceeding, and his testimony was consistently reliable and 
thought-provoking, regardless of whether the Judges ultimately agreed 
with his opinions. But he also inexplicably endorsed in his testimony 
the present Bortz Survey as ``very useful.'' 4/5/23 Tr. 3465 (Erdem). 
Dr. Erdem's testimony in this regard was inexplicable--and jarring--
because SDC did not seek to have Dr. Erdem qualified as a survey 
expert, he was not received as such by the Judges, and, perhaps even 
more unsettling, he pronounced his endorsement of the Bortz Survey 
``sight unseen,'' that is, he endorsed it without reading it. 4/5/23 
Tr. 3466 (Erdem) ([Q]: ``[I]n your initial testimony that was submitted 
in this proceeding, you expressed your support for the Bortz Survey 
sight unseen, correct? [Dr. Erdem] That's correct.'') (emphasis 
added)). Nonetheless, Dr. Erdem continued to attempt to justify this 
testimony in colloquy with Judge Strickler:

    Q: Dr. Erdem, but you are not qualified as a survey expert. How 
can you weigh the value of a survey . . . . I understand [you] to 
say while there may be no perfect way to estimate relative market 
value, you say I'll tell you one way that isn't, and that's these 
fee-based regressions. I understand your testimony. But why would we 
credit your testimony about the survey being appropriate when it 
comes to that issue? You're just a lay witness.
    Dr. Erdem: You are correct, Your Honor, I am not a survey expert 
as an economist.

4/5/23 Tr. 3476 (colloquy) (emphasis added). Dr. Erdem could have 
chosen to stop there, but he elected to keep digging, seeking to 
justify his Bortz Survey endorsement:

    Dr. Erdem: I am involved in projects and analyses that rely on 
survey methodologies and survey data. I have a team that supports me 
in those.
* * * * *
    Judge Strickler: Before you gave your testimony in this case 
about the Bortz Survey being an appropriate tool to measure relative 
market value, did you consult with that survey team?
    Dr. Erdem: I did, Your Honor. You may recall the name Hilary 
Johnson, who is my director. She is a statistician by training. And 
I also have a Ph.D. statistician who supported me in the 2010-'13 
proceeding. He reviewed the materials. . . . I had conversations 
with him about methodology. So I had a team that supported me in my 
reports.
    Judge Strickler: Well, I don't remember you saying anything in 
your testimony that you relied on your survey team in any way. 
Hilary Johnson's name I recall, [but] [s]he

[[Page 54216]]

didn't testify in her written testimony . . . about the survey at 
all, did she?
* * * * *
    Dr. Erdem: Correct.
    Judge Strickler: Why didn't she give testimony that the Bortz 
Survey was a good and proper way to estimate value if she's an 
expert in this field and you're not?
    Dr. Erdem: That's a good question.
    Judge Strickler: That's why I asked it.
    Dr. Erdem: [W]e didn't specifically focus on the methodology 
aspects of Bortz Survey, you are correct in that.
    Judge Strickler: Thank you, Doctor.

4/5/23 Tr. 3476-79 (colloquy) (emphasis added).
    The foregoing rather remarkable testimony damaged Dr. Erdem's 
credibility, suggesting he would be willing to testify regarding 
matters as to which he lacked both expertise and knowledge. Moreover, 
it is ironic that he would attempt to salvage his Bortz Survey opinion 
by reference to his ``team'' of other professionals with the necessary 
background to offer such an opinion, only to admit in short order under 
questioning from the bench that they did not ``specifically focus on 
the methodology aspects of the Bortz Survey.'' His testimony in this 
regard is rich with irony because Dr. Erdem is the witness who has most 
forcefully attacked Dr. (John) Johnson of PTV for delegating work to 
his team of professionals without personal involvement or knowledge of 
the work of the team.
    Thus, separate and apart from the enumerated points set forth above 
that lead to the Judges' finding that Dr. Erdem's eight-model analysis 
is insufficient to invalidate the use of fee-based regressions, his 
foregoing survey-related testimony casts doubt as to his credibility.
    In sum, the Judges find that Dr. Erdem's eight-model pedagogical 
exercise is insufficient to discredit fee-based regressions as a form 
of evidence on which the Judges may rely.

X. Sub-Category Values

    JSC, through its statistical expert, Mr. Harvey, ran what he 
described as ``validity tests'' that decomposed certain program 
categories to isolate the coefficients attributable to the decomposed 
elements. Specifically, he concentrated on (1) paid programming 
(including ``infomercials'') within the Program Suppliers category and 
(2) the rare NFL football games that appeared on distantly 
retransmitted local stations (as opposed to being broadcast on network 
or cable stations, which are noncompensable in these section 111 
proceedings). Harvey WRT ]] 71-90.
    With regard to paid programming, Mr. Harvey separated the paid 
programming out of the Program Suppliers category and created a new 
category for paid programming. Joint Sports Claimants' Post-Hearing 
Brief in Support of Proposed Royalty Allocations at 32-33 (and 
citations therein) (JSC PHB). Performing this task on the Johnson 
Model, Mr. Harvey calculated that the coefficient for paid programming 
is larger than the coefficients for the other Program Suppliers 
content, PTV content, SDC content, and CCG content, and that, on 
average, the Johnson regression would assign paid programming a share 
of about 6.8% of the royalty pool per year. JSC PFF ] 176. For further 
perspective, Mr. Harvey computed that this paid programming share is 
greater than the share of royalties that the Johnson Model assigned to 
the approximately 2,000 annual JSC games, and approximately three times 
greater than all the 2015-2017 royalties for all JSC content. Id.
    In response, Program Suppliers argues that Mr. Harvey failed to 
properly place his findings within the context of the regression 
approaches in these proceedings. Specifically, PTV's expert, Dr. 
Johnson, testified that it was incorrect to decompose the entire 
category of Program Suppliers' programming and focus on any one sub-
category, because the regressions offer ``average relative valuations'' 
for entire categories. More granularly, Program Suppliers take note of 
the following testimony on this issue by PTV's expert, Dr. Johnson:

    [I]t is an average relative valuation, so I don't think that's 
an appropriate use of the model. But his theory is that paid-
programming has no value at all, but he didn't remove them from the 
model. If he had simply removed the minutes that he thinks are 
problematic, he would have found that the estimates really don't 
change very much at all. So I just don't think that's a valid 
critique.

3/21/23 Tr. 605 (Johnson).
    As a second response, Program Suppliers assert that Mr. Harvey's 
paid programming argument is ``cherry-picked,'' because he admitted to 
running other ``validity tests whose subject matters and results he and 
JSC did not produce in these proceedings.'' PS PFF ] 346 (and record 
citations therein).
    CCG, relying on the testimony of its economic expert, Dr. George, 
also levied Program Suppliers' first criticism above, asserting that 
Mr. Harvey's validity test on paid programming ignores the very purpose 
of the fee-based regressions: to estimate the average relative values 
of the six programming categories at issue. CCG PFF ] 148 (and record 
citations therein). CCG adds, in this regard, that none of the economic 
expert witnesses who proffered fee-based regressions in this proceeding 
has maintained that it was the purpose or capacity of their models to 
precisely estimate the relative value of sub-groups of programs. Id.
    At the hearing, Dr. George provided further detail with regard to 
this criticism:

    So the paid programming is fixed hours at night. There's just 
not independent variation with other Program Supplier category. So . 
. . when [Mr. Harvey] breaks this up, he effectively forces one of 
the coefficients to be negative because . . . you can't really 
independently increase paid programming without decreasing the other 
Program Suppliers' programming.
* * * * *
    [T]he coefficients for claimant programming . . . reflect an 
average. So right now the values per minute are telling us the 
average of the different--like the diversity of this kind of 
programming. So, Program Supplier programming has different sorts of 
things. And so the value per minute is an average [a]nd we're 
applying it to quantities. And so if I were to design a regression 
that really wanted to get at the value of paid versus non-paid 
programming, I could do that, but it would be a pretty different 
model.

4/18/23 Tr. 5163, 5166-67 (George).
    In their post-hearing filings, JSC responds by emphasizing more 
narrowly that this ``validity'' test reveals the pitfall of the 
regression models' use of retransmission decisions by minimum fee-
paying CSOs:

    The failure of the regressions to accurately capture revealed 
preferences from Minimum Fee CSOs is clearly demonstrated by Mr. 
Harvey's validity tests, which reveal that the regressions would 
attribute substantial value to programming with no value (i.e., 
infomercials) . . . .

JSC PHRB at 16-17 (and citations therein) (emphasis added).
    With regard to the rare NFL game that appeared on a distantly 
retransmitted station (as opposed to a broadcast or cable network), Mr. 
Harvey performed an additional ``validity'' test. Specifically, he 
separated NFL games from other JSC content, in order to ascertain 
whether the regression models had the capacity to realistically 
estimate the relative value of NFL programming. JSC PFF ] 180. Mr. 
Harvey found that across the Johnson, George, and Tyler Models, the NFL 
retransmissions had lower coefficients than other JSC programming (and 
sometimes negative coefficients). JSC PFF ]] 181-85 (and record 
citations therein). Based on these results, Mr. Harvey opined that 
these regression models were unable to identify realistic values 
because the high value of NFL games on television is common knowledge 
and undisputed,

[[Page 54217]]

and should have been confirmed by this validity test. JSC PFF ] 180.
    In response, Program Suppliers and Dr. Tyler first reiterate the 
same points they made with regard to Mr. Harvey's ``validity test'' 
pertaining to paid programming, i.e., (1) that the regressions offer 
average relative values across a category, (2) the program category is 
too small to generate meaningful results, and (3) the test was 
``cherry-picked'' out of a number of validity tests that Mr. Harvey 
elected not to disclose. But Program Suppliers specifically hones in on 
the second criticism above, that the program category is simply too 
small. In this regard, Program Suppliers maintain:

    During the 2014-17 time period, WNBC (one of the handful of 
distant signals that Mr. Harvey chose to highlight) carried just one 
compensable regular season NFL game, meaning that compensable 
regular season NFL content accounted for less than one one-hundredth 
of one percent of the content on that station.

    PS PHB at 3 & 25 (citing to PS PFF ] 174 (and record citations 
therein)). See also 3/29/23 Tr. 2062-64 (Harvey) (admitting to this 
percentage calculation).
    Regarding this NFL ``validity test,'' CCG made the same argument it 
made in criticism of Mr. Harvey's ``validity test'' relating to paid 
programming, described supra. In her oral testimony, Dr. George 
elaborated more broadly regarding the attempt to decompose JSC 
programming into the rarely retransmitted NFL games, stating that Dr. 
Harvey failed to appreciate that because ``there's a fixed number of 
regular season and post-season games in the NFL . . . we don't have 
independent variation there [and] our 24 model isn't capable of [that] 
separation . . . and it doesn't need to. 4/18/23 Tr. 5162 (George).
    In his oral testimony, Dr. Johnson had a response to Mr. Harvey's 
NFL de-composition of JSC programming that was consonant with the 
former's response regarding the paid programming issue. Dr. Johnson 
testified:

    Mr. Harvey argues that he can change the model and try to 
separate out NFL or playoffs. He says: Look, I get nonsensical 
results. I get negative values for these things. The problem is . . 
. he is trying to parse the regression so finely that he has got 
less than .01 and .04 of the total minutes that are used in the 
entire estimation. . . . The model wasn't intended to only estimate 
isolated values for NFL and playoffs. It's an average relative 
valuation for the claimants. It can do that well. And that's the 
purpose of the model.

3/21/23 Tr. 605-06 (Johnson).\135\
---------------------------------------------------------------------------

    \135\ The Judges find no merit in the allegation that Mr. Harvey 
may have ``cherry-picked'' which ``validity tests'' to produce. The 
issue here is the importance, vel non, of his validity tests. In 
that regard, the Judges find that the tests he discussed in his WRT, 
including but not limited to the ones highlighted here, all suffer 
from the problems inherent in de-composing the regression results. 
Moreover, because Mr. Harvey is a JSC witness, it was incumbent upon 
JSC to bear the burdens of production and persuasion regarding the 
impact of these de-composed sub-categories on the regression 
results, burdens which they have not satisfied.
---------------------------------------------------------------------------

    The Judges find that Mr. Harvey's ``validity tests'' do not serve 
to invalidate the usefulness and relevance of the regressions proffered 
in this proceeding. There are several reasons for this finding.
    First, the Judges agree with the criticisms that Mr. Harvey's 
``validity tests'' fail to appreciate the fact that the regressions are 
estimated average valuations. When an average is de-composed, looking 
at any one element in the average fails to consider the average itself 
and, depending on the question at hand, may offer an interpretation 
that is off-point.\136\
---------------------------------------------------------------------------

    \136\ For example, consider the grade point average (GPA) of a 
college student for a semester, where the student received 3 As in 
English Literature, World History, and Economics, and one C in 
biology. Assuming an A = 4.0 points and a C = 2.0 points, the 
student has a GPA of 3.5. This is the relevant data point if one 
wants to know generally whether the student is performing well. But 
if the question is whether the student is showing an aptitude to 
perform well in medical school, the de-composition is more 
appropriate, because the 2.0 in biology is the more relevant data 
point. Here, there is no reason why the paid programming or the NFL 
data points should be separated out, when the purpose of the 
regression is to obtain the average.
---------------------------------------------------------------------------

    Second, if it in fact is the case that paid programming, by some 
other metric, or by the use of common sense, can clearly be found to 
have far less value than other program types, the fact that the 
regression provides paid programming with value via the averaging 
function of the regression does not mean that the Program Suppliers 
category (where paid programming is situated) received an inflated 
coefficient. In this regard, the Judges note Dr. Johnson's testimony, 
cited above, in which he notes that Mr. Harvey did not even attempt to 
show how, if at all, the coefficients in the regression would have 
changed if he had simply removed the paid programming minutes from the 
regression.\137\
---------------------------------------------------------------------------

    \137\ It appears that there would be no change. A simple thought 
experiment is instructive. Assume the Program Suppliers category 
consists of two types of programs: (1) situation comedies and (2) 
paid programming. For simplicity, assume equal subscriber minutes 
for both categories and that each situation comedy has the same 
value to a CSO as any other situation comedy, and each Paid 
Programming segment has the same value as another such segment to a 
CSO. Also assume a reality, such as Mr. Harvey has not unreasonably 
posited, that all paid programming has zero value to a CSO.
    Because the regression is constructed to correlate royalties 
with minutes of programming, none of the minutes attributable to 
paid programming would correlate with royalties because it is 
assumed CSOs do not value paid programming. So, all the royalties 
attributable to Program Suppliers would have been generated by the 
situation comedies. However, the total subscriber minutes would 
include both situation comedy and paid programming minutes, reducing 
the per minute coefficient value (and diluting (by 50%) the value 
generated by the situation comedies).
    Consider some hypothetical numbers: Situation comedies and paid 
programming each accounted for 262,800 minutes (50% of the 525,600 
minutes in a year). The regression, de-composed, gives situation 
comedies, hypothetically, a .0005 coefficient. But paid programming 
gets a zero coefficient. The average coefficient across both 
categories is .00025 which, when multiplied by the number of annual 
programming minutes (as the regressions do) of 525,600, yields 
131.4, and that is the figure that would be compared to the figure 
similarly computed for the other claimant categories.
    What if we excluded paid programming from the regression? There 
would be 262,800 minutes of situation comedy programming, with a 
coefficient value of .0005, as assumed. What would be the figure to 
be used for allocation purposes? It would be 262,800 x .0005, which 
also equals 131.4. Thus, there is no reason to assume zero-value 
paid programming is inflating the value of the category in which it 
is situated if the validity/reality assumption of zero value is 
correct. (Economists will recognize this result as analogous to the 
point made by Nobel laureate George Stigler in his explanation of 
block-booking of movies by a studio to a theatre. See G. Stigler, 
United States v. Loew's Inc.: A Note on Block-Booking, 1963 Sup. Ct. 
Rev. 152 (1963)).
---------------------------------------------------------------------------

    Third, Mr. Harvey indicates that the paid programming issue is a 
factor (or perhaps more of a factor) as it pertains to minimum-fee-only 
CSOs, as noted supra. But because the Judges are relying on the results 
from the cohort of above-minimum-fee-only CSOs, Mr. Harvey's point in 
this regard is of less importance.
    Further, the program categories were configured by the parties. 
Although the parties have raised the issue of whether the definitions 
of the program categories should be changed, the categorizations in 
this proceeding are the same as the parties have long utilized. The 
Judges understand these program categories to have been designed to 
reduce transaction costs, so that each sub-category, or each program, 
does not make its own claim for royalties, rendering the process 
prohibitively costly. (The bifurcation of the process into allocation 
(formerly Phase I) and distribution (formerly Phase II) proceedings is 
in furtherance of the reduction in transaction costs.) \138\
---------------------------------------------------------------------------

    \138\ If paid programming indeed contributes little or nothing 
in royalties, the Program Suppliers' representative may address that 
in the distribution (Phase II) process, but that is of no moment in 
this proceeding.

---------------------------------------------------------------------------

[[Page 54218]]

    However, these tests do underscore the importance of integrating 
the Bortz Survey as an approach to ascertaining relative marketplace 
value. It may be the case that a small number of games has value, 
outside of what is measured by the regression, in retaining 
subscribers, a measure of value which might be captured by the Bortz 
Survey, but not by the regressions.
    More broadly, the question of the value of different sub-categories 
of programming takes on salience when the issue is whether certain 
types of programming have a relative marketplace value independent of 
the number of minutes they contribute to the category in which they are 
situated. And an entire category may have value not reflected in the 
minutes of programming associated with that category and its 
programming. That is, because these various categories and sub-
categories are bundled together in the local stations that are 
distantly retransmitted, minutes alone may well not reflect the 
relative values of key drivers of the decision of a CSO to retransmit a 
station with a bundle of programming category content. For this reason, 
the Judges are also utilizing the results of the Bortz Survey, which 
reflect (albeit imperfectly) how CSOs value different types of 
programming.

XI. Regression Decision

A. Regression Analyses

    In the 2010-13 Determination, the Judges placed ``primary 
reliance'' on a regression analysis \139\ to allocate royalty shares 
among the six program categories. 2010-13 Determination at 3610. In 
particular, they found a regression model presented by CTV's 
econometric expert, Dr. Gregory Crawford, ``on balance . . . to be 
highly useful in estimating relative values in this proceeding.'' Id. 
at 3569. Accordingly, the Judges gave greater weight to regression 
analysis than they had in prior proceedings, both in absolute terms and 
relative to other evidence and approaches, such as surveys and 
descriptive industry witness testimony. An important reason for the 
Judges' increased reliance on regression analysis was that this 
methodology approached the relative marketplace value from the 
perspective of what CSOs actually had done in terms of deciding which 
distant signals to retransmit on their systems.'' Id. at 3610 (emphasis 
in original).
---------------------------------------------------------------------------

    \139\ For an overview of the general concept of regressions, see 
2010-13 Determination at 3556.
---------------------------------------------------------------------------

    The general form of this regression model is identified, 
alternatively, as a ``fee-based'' regression, a ``Waldfogel-style'' 
regression, and, subsequent to the 2010-13 proceeding, a ``Crawford-
style'' regression.\140\ At a high level, a fee-based regression is 
characterized by the following elements:
---------------------------------------------------------------------------

    \140\ The Judges use these monikers interchangeably in this 
determination.

    1. It attempts to correlate variation in the program category 
composition of distant signal bundles with the royalties paid by 
CSOs to estimate the relative marketplace value of programming;
    2. It regresses observed royalty payments for the bundle on the 
numbers of minutes in each programming category; and
    3. It may employ econometric controls in the form of ``control 
variables'' and ``fixed effects'' in order to isolate the 
correlation between the dependent variable (some measure of 
royalties) and the independent (explanatory) variable of interest 
(the number of programming minutes) from the controlled other 
drivers of CSO payments.

See 2010-13 Determination at 3557 (record citations omitted).
    In proceedings prior to the 2010-13 Determination, the Judges (and 
their predecessors) relied on fee-based regressions but did not place a 
primary weight on this approach. In the allocation proceeding for 1998-
99 royalties, a Copyright Arbitration Royalty Panel (CARP) relied on 
such a regression model put forth by an economist, Dr. Gregory Rosston, 
not as a primary allocation measure, but rather as corroboration of the 
allocation shares generated by the Bortz survey. See 1998-99 CARP 
Report at 46. Subsequently, in the allocation proceeding for 2004-05 
royalties, the Judges relied on the fee-based regression model advanced 
by Dr. Joel Waldfogel (the now eponymous ``Waldfogel-regression'') as 
``generally reasonable'' and thus ``helpful to some degree'' because it 
``more fully delineat[es] all of the boundaries of reasonableness with 
respect to the relative value of distant signal programming'' and 
``provid[es] some additional useful, independent information about how 
cable operators may view the value of adding distant signals based on 
the programming mix on such signals.'' 2004-05 Distribution Order at 
57063, 57068. Accordingly, the Judges found, as did their predecessors 
in the 2004-05 proceeding, that the fee-based regression approach 
served to ``corroborate'' some aspects of the Bortz survey and that it 
also served ``to provide an independent reasoned basis'' for departing 
in one respect from the Bortz methodology. Id. at 57069.
    Chronologically, the 2010-13 Determination was the next allocation 
decision to consider the evidentiary weight to be given to a fee-based 
regression. In that case, the Judges elevated the regression 
methodology, namely the model proffered by Dr. Gregory Crawford (the 
Crawford Model), to a primary body of evidence in terms of explanatory 
power. The Judges noted that the Crawford Model, like the Rosston and 
Waldfogel regressions that preceded it, contained a useful 
differentiating feature: In contrast with the survey approach, 
regression modeling ``analyzed value from the perspective of what CSOs 
actually had done in terms of deciding which distant signals to 
retransmit on their systems.'' 2010-13 Determination at 3610.\141\ But 
why did the Judges elevate the fee-based regression approach from the 
junior status of corroborative tool to a position of evidentiary 
primacy?
---------------------------------------------------------------------------

    \141\ By contrast, the survey approach, as in the Bortz Survey 
proffered in this proceeding, asked each CSO-employed survey 
respondent, for a given year: ``What percentage, if any, of [a] 
fixed dollar amount would your system have spent for each category 
or programming?'' Bortz Survey, app. B, attached to Trautman WDT 
(emphasis added).
---------------------------------------------------------------------------

    The answer mainly lies in the improved way in which the Crawford 
Model was constructed. Explaining this answer requires the Judges to 
present a brief tutorial on regressions, based upon the testimony of 
the econometricians in this proceeding, the textbooks they cited, and 
the background information set forth in the 2010-13 Determination.
    Regression analysis is a ``method of determining the relationship 
between two or more variables, and it can be a valuable tool for 
resolving factual disputes.'' 2010-13 Determination at 3556 (citation 
omitted). When a regression attempts to identify the correlation 
between a ``dependent variable'' \142\ and more than one ``independent 
variable,'' \143\ the approach is known as a ``multiple regression 
analysis.'' \144\ This is the technique that was employed by Dr. 
Crawford (and Dr. George) in the 2010-13 proceeding and in the present 
proceeding by Drs. George, Johnson and Tyler.\145\ Multiple regression 
``is the technique used in most econometric

[[Page 54219]]

studies, because it is well-suited to the analysis of diverse data 
necessary to evaluate competing theories about the relationships that 
may exist among a number of explanatory facts.'' 2010-13 Determination 
at 3556 (citing ABA Econometrics, supra note 127, at 4). The basic 
notation for a multiple regression would be, for example:
---------------------------------------------------------------------------

    \142\ Typically, the dependent variable has been a functional 
form of royalties, see 2010-13 Determination at 3557 n.27, but in 
this proceeding, Dr. Tyler specifies a different dependent variable, 
the SGRP.
    \143\ An ``independent variable'' serves to explain the 
dependent variable and is therefore also described as an 
``explanatory'' variable. 2010-13 Determination at 3567.
    \144\ Multiple regression analysis ``is the technique used in 
most econometric studies, because it is well suited to the analysis 
of diverse data necessary to evaluate competing theories about the 
relationships that may exist among a number of explanatory facts.'' 
2010-13 Determination at 3556 (citing ABA Econometrics, supra note 
127, at 4).
    \145\ Dr. Marx utilized a Bayesian regression (described in 
detail infra) for 2014 that builds upon the multiple regression work 
done by Dr. Crawford for 2013.

---------------------------------------------------------------------------
Y = a + bX + cZ + u

where

Y is the dependent variable
X is an independent (explanatory) variable
Z is a different independent (explanatory) variable
a is the intercept with the vertical axis (on a graphed regression)
b is the coefficient (value) of X
c is the coefficient (value) of Z
u is the error term, a/k/a the ``regression residual'' (reflecting 
unobserved factors that determine Y)

See 2010-13 Determination at 3556 n.23; Stock & Watson, supra note 92, 
at 158-59. If econometricians are specifically interested in the impact 
of, say, independent (explanatory) variable X on dependent variable Y, 
they will hold constant the effect of any other independent 
(explanatory) variable, such as Z in the above example, which 
reclassifies Z as a ``control variable.'' \146\
---------------------------------------------------------------------------

    \146\ For the definition of a ``control variable'' see 2010-13 
Determination at 3558 n.33.
---------------------------------------------------------------------------

    Because of changes in generated data as a result of statutory 
changes that occurred subsequent to the determination covering the 
2004-05 royalty years, Dr. Crawford was able to construct a fee-based 
regression with more granular detail. The Judges explained this change 
in data generation in their 2010-13 Determination:

    Between the time of the last adjudicated cable royalty 
allocation proceeding and the present [2010-13] proceeding, Congress 
passed the Satellite Television and Localism Act of 2010 (STELA). 
Before STELA, cable operators were required to pay for the carriage 
of distant signals on a system-wide basis, even though each signal 
was not made available to every subscriber in the cable system. . . 
. STELA . . . amend[ed] section 111(d)(1) of the Copyright Act, 
which details the method by which cable operators can calculate 
royalties on a community-by-community or subscriber-group basis. Id. 
From the 2010/1 accounting period and all periods thereafter, cable 
operators have been required to pay royalties based upon where a 
distant broadcast signal is offered rather than on a system-wide 
basis.

2010-13 Determination at 3554 (emphasis added).
    This statutory change permitted the participants in these section 
111 allocation proceedings to analyze relative value at the subscriber-
group level. 2010-13 Determination at 3554 (citing Corrected Written 
Direct Testimony of Gregory Crawford, Ex. 2004 (Crawford CWDT) ] 66). 
More particularly, Dr. Crawford's regression ``looked for a correlation 
in a subscriber group between changes in the number of minutes of 
programming the subscribers watched by categories and changes in the 
percentage of royalties the subscriber group paid while holding 
constant other potential explanatory variables (called control 
variables).'' 2010-13 Determination at 3558. As Dr. George succinctly 
explained in her testimony in the present proceeding, ``[w]ith [Dr.] 
Crawford's specification, coefficients are identified using only 
variation within systems in each accounting period.'' George WDT at 9 
(emphasis added).
    Dr. Crawford's approach thus required the existence of at least two 
subscriber groups in a cable system in order for the retransmission 
(and thus the programming) decisions of a cable systems operator (CSO) 
to be used in the regression. The purpose of so limiting the regression 
was to focus on the relationship at interest in the regression, which 
is the association between the minutes of per-category programming 
retransmitted and the CSO's royalties calculated at the subscriber 
group level. However, by so doing, the Crawford Model reduced the 
number of observations that it could utilize. In the 2010-13 
proceeding, the Crawford model was criticized by the SDC and one of its 
experts, who argued that his regression approach was ``compromised'' by 
this limitation, which `` `effectively discarded' approximately 15% of 
his observations by disregarding observations from systems with a 
single subscriber group . . . `approximately half of all systems in his 
data set' . . . .'' 2010-13 Determination at 3566 (citations omitted).
    But what the SDC saw as vice, Dr. Crawford (and ultimately, the 
Judges) understood as virtue. That is, Dr. Crawford included this 
combined control limiting the observations to intra-cable system 
subscriber group variations in a particular six-month accounting period 
in his regression to avoid introducing (i.e., to control for) effects 
on royalties of different business strategies among CSOs (``system'' 
effects) and different economic conditions over time (``accounting 
period'' effects). In a regression, these two joint interactive 
controls are examples of a particular form of control known as a 
``fixed effect.'' \147\
---------------------------------------------------------------------------

    \147\ For the definition of ``fixed effects,'' see 2010-13 
Determination at 3563 n.52. Graphically, the inclusion of ``fixed 
effects'' generates different intercepts, such that ``a'' in the 
example supra would have a different value for each ``fixed 
effect.'' (Econometricians sometimes describe ``fixed effects'' as a 
type of ``control variable,'' but they are more often specifically 
characterized as ``indicator'' or ``dummy'' variables. See 2010-13 
Determination at 3562 n.45.
---------------------------------------------------------------------------

    Additionally, while his regression was a work in process, Dr. 
Crawford added another fixed effect for the ``top-six'' MSOs \148\ for 
similar reasons, i.e., to control for their variable ``average receipts 
. . . signal carriage strategies, pricing, and other relevant 
dimensions.'' 2010-13 Determination at 3567 (record citations omitted).
---------------------------------------------------------------------------

    \148\ ``MSO'' is an acronym for a ``multi-system operator,'' for 
example Verizon, 3/21/23 Tr. 347 (Johnson), and refers to ``an 
operator of multiple cable or direct-broadcast satellite television 
systems [and is] usually reserved for companies that own multiple 
cable systems, such as Altice USA, Charter Communications, Comcast 
and Cox Communications . . . .'' List of Multiple-System Operators, 
Wikipedia, https://en.wikipedia.org/wiki/List_of_multiple-system 
operators (last visited Aug. 10, 2023).
---------------------------------------------------------------------------

    More broadly, Dr. Crawford explained that his fee-based regression 
was intended to explain the association between program category 
minutes and royalties paid. To that end, it was necessary to control 
for other factors, specifically including ``the numbers of local and 
distant stations, the number of activated cable channels, and the size 
of the CSO.'' 2010-13 Determination at 3558 (record citations omitted). 
These were in addition to other independent variables that Dr. 
Waldfogel identified as ``control variables'', including ``the number 
of subscribers, local median income, and the number of local 
channels.'' 2010-13 Determination at 3557.
    In the present proceeding, Dr. George has well stated the role of 
control variables in multiple regressions relied upon by Dr. Crawford 
and by experts in the present proceeding:

    The purpose of control variables is to account for factors other 
than coefficients of interest that might affect the dependent 
variable. In the case at hand, control variables are chosen to 
account for market factors other than distant signal programming 
minutes that might affect royalty payments. Of particular concern 
are factors that affect demand for cable services, which in turn can 
affect the number of subscribers, system revenue, and royalty 
payments. Failing to control for factors that shift demand and are 
correlated with programming minutes can lead to bias in the . . . 
coefficients that are of primary interest. Income, the number of 
local stations and (lagged) number of activated channels are all 
factors that might affect the number of subscribers or revenue so 
are included as controls.

George WDT at 52. Indeed, as the Judges explained in the 2010-13

[[Page 54220]]

Determination, Dr. Crawford's approach was designed so as to accept 
some loss of precision (i.e., a greater variance and larger standard 
errors) in exchange for less bias (by excluding other independent 
variables). This tradeoff is an inevitable problem for an 
econometrician, and how an econometrician balances these impacts is 
just as much an art as it is a science. 2010-13 Determination at 3565 & 
n.59. The Judges noted though, that the tradeoff was moderated because 
Dr. Crawford ``used the universe of all programming on all distant 
signals, rather than a sampling'' which created a ``rich data set'' 
that served to ``mitigate'' the impact of his fixed effects ``so that 
his parameters remained relatively precise.'' 2010-13 Determination at 
3569.
    Accordingly, in the 2010-13 Determination, the Judges essentially 
agreed with Dr. Crawford's modeling decision to include his fixed 
effects, because he threaded the needle, minimizing bias while 
maintaining a sufficiently precise relationship between per-category 
programming minutes and royalties generated. Indeed, a key reason the 
Judges elevated the Crawford Model to primary evidentiary status was 
that ``his use of a fixed effects approach avoided the criticism that 
he had omitted key variables.'' 2010-13 Determination at 3569 (citing 
Crawford CWDT ] 107; 2/28/18 Tr. 1398 (Crawford)) (emphasis added).
    According to all the experts utilizing fee-based regressions, in 
whole or in part, this econometric virtue extended through 2014. But in 
2015, a commercial earthquake struck the retransmission market: WGNA, 
by far the most distantly retransmitted channel, converted from a 
broadcast station into a cable channel. See, e.g., Majure WDT ] 75 (JSC 
expert witness noting that ``[t]he removal of the widely carried WGNA 
materially changed the manner in which CSOs used the section 111 
license.''). This metamorphosis had several dramatic effects, one of 
which was the diminished evidentiary value of Dr. Crawford's new 
approach of limiting the observations to subscriber group variations 
within a cable system (accomplished by imposing his systems-accounting 
period fixed effects.) \149\
---------------------------------------------------------------------------

    \149\ The WGNA conversion also (1) substantially reduced the 
number of CSOs paying the base fee (and concomitantly increased the 
converse, the number of CSOs paying only the minimum fee) and (2) 
drastically reduced the number of JSC subscriber-minutes distantly 
retransmitted.
---------------------------------------------------------------------------

    After the WGNA conversion, commencing in 2015, the number of cable 
systems with more than one subscriber group declined significantly. 
Moreover, what had been a robust source of data for analysis of 
variation of distantly retransmitted program categories among the local 
channels distantly retransmitted by CSOs had shrunk. To address the 
loss of this robust set of data, the fee-based regression experts in 
the present proceeding each constructed a model that, although premised 
on the Crawford Model, sought a work-around for this significant 
change.
    Dr. Johnson addressed the problem by eliminating all fixed effects 
from his preferred model, i.e., the ``baseline'' model presented in his 
WDT. In doing so, the Johnson Model was able to generate observable 
data points that showed programming variations not just among 
subscriber groups within a cable system in a specific accounting period 
(as the Crawford Model had done), but also program variations among 
subscriber groups across systems and across (not within) the six-month 
accounting periods in the SOAs.
    Curiously, Dr. Johnson's justification for this change was that it 
allowed for an increase in the number of observations for his 
regression, thus addressing what he understood to be a key concern of 
the Judges in the 2010-13 Determination. Compare Johnson WDT ] 59 
(``Professor Crawford's model was criticized because it `effectively 
discarded' approximately 15% of his observations . . . which totaled 
approximately half of all systems in his data set'') with id. at ] 62 
(touting his model for containing ``18,000 subscriber group-level 
observations'').
    The Judges in that proceeding did not find the level of number of 
Dr. Crawford's observations to be a debilitating problem, declining to 
find that the Crawford Model was overfit. Rather, the Judges instead 
found that Dr. Crawford's balancing of a minimization of explanatory 
bias with an acceptable loss of measurement precision was appropriate 
to the task the regression was seeking to measure, i.e., the 
correlation between program category minutes and the log of royalties 
paid. In so finding, the Judges had acknowledged the value of the fixed 
effects (and the control variables) in his model in allowing for the 
isolation of the correlation. 2010-13 Determination at 3569.
    Accordingly, Dr. Johnson's claimed justification for eliminating 
all of these important fixed effects rings hollow. Moreover, their 
absence from his model increased the bias in his measurements, which 
meant that the correlation was subject to mismeasurement. More 
particularly, the bias in question is what econometricians and 
statisticians in general refer to as ``omitted variable bias.'' Here, 
the ``omitted variables'' are the ones that the Crawford Model had 
accounted for with its fixed effects, but which Dr. Johnson injects 
into his model by eliminating the fixed effects. Accordingly, by this 
change, the Johnson Model became less probative of the claimed 
correlation between program category minutes and royalties, and for 
that reason alone the Judges place less weight on the Johnson Model in 
this proceeding than they did on the Crawford Model in the 2010-13 
Determination.
    Dr. George, unlike Dr. Johnson, did not eliminate all fixed 
effects. Rather, as discussed supra, she eliminated some, retained and/
or modified others, and included new fixed effects. Most importantly, 
the George Model modified Dr. Crawford's ``systems-accounting period 
fixed effects.'' Whereas the Crawford Model limited the observed data 
points to differences among subscriber groups within a cable system 
during an accounting period, Dr. George relaxed that fixed effect. 
Specifically, she only limited the number of observed data points by 
separately fixing the effect at the ``systems'' level and at the 
``accounting period'' levels. So, for example, if there were two 
subscriber groups in the Verizon Buffalo cable system, the Crawford 
Model would only observe the variations between them in a given (six-
month) accounting period. By contrast, the George Model would: (1) 
observe variations between those two subscriber groups in the given 
(six-month) accounting period; and also (2) beyond the (six month) 
accounting period. Thus, Dr. George maintained a fixed effect that 
still controlled for the difference in CSO business practices and a 
fixed effect control for changes over time (the ``accounting period'' 
control), but, unlike Dr. Crawford, she did not combine the two fixed 
effects.
    Alternately stated, Dr. George sought to address the loss of 
observable data points caused by the 2015 WGNA conversion by making a 
different tradeoff in the inevitable bias/variance dilemma faced by the 
econometrician in this context. She opted for somewhat more bias, 
accepting somewhat less precision, in order to generate what she 
understood to be a useful number of observations for her regression to 
analyze.
    Although Dr. George makes a less draconian change from the Crawford 
Model than the Johnson Model does in this regard, she nonetheless 
introduces ``omitted variable bias'' into her regression. That is, by 
allowing variations over time (within a cable system) to impact the 
correlation, the

[[Page 54221]]

George Model treats temporal changes as reflective of a correlation 
between program category choices and royalties.\150\ In sum, the George 
Model introduces omitted variable bias that was absent from the 
Crawford Model, but to a lesser degree than the Johnson Model. 
Accordingly, ceteris paribus, the Judges give more evidentiary weight 
to the George Model than to the Johnson Model.
---------------------------------------------------------------------------

    \150\ This bias is particularly pertinent vis-[agrave]-vis the 
cleave between 2014 and the 2015-2017 period, given the WGNA 
conversion that shook the distantly retransmitted sector. Moreover, 
Dr. George (like Dr. Johnson) ``pooled'' her data and applied it to 
generate one set of coefficients spanning the entire four-year 
(2014-17) period. By relaxing the fixed effects to obscure the 
impact of changes over time, the George Model failed to 
appropriately address the WGNA-conversion effect.
---------------------------------------------------------------------------

    By contrast, Dr. Tyler's approach circumvents this fixed effects 
dilemma. As explained supra, the Tyler Model does not use royalties 
(linear or log form) as the dependent variable. Rather, the Tyler Model 
uses the SGRP as the dependent variable. Recall that the SGRP is a 
fraction: the dollar amount of base fee royalties calculated by a 
subscriber group divided by the SG's gross receipts. The Tyler Model 
then looks at the variability in this SGRP across all cable systems. 
So, what happens to the effects arising from different CSOs (the 
``systems'' effects) and the changes over time (the ``accounting 
period'' effect) for which Drs. Crawford and George (but not Dr. 
Johnson) sought to control with ``fixed effects''? As Dr. Tyler 
explains, the system and temporal (``accounting period''), indeed, 
essentially all fixed effects, are rendered inapplicable when the 
dependent variable is the SGRP, rather than a form of royalties:

    The Crawford Model used fixed effects. The inclusion of fixed 
effects would make sense if the SGRPs varied across CSOs due to 
unobserved factors in the marketplace (other than and apart from 
choices related to stations, and the minutes in those stations). If 
that were the case, the use of . . . fixed effects would focus the 
model on the economic decision-making by a CSO for an accounting 
period across subscriber groups, having controlled for these 
unobserved factors.
    However, my model . . . instead . . . us[es] SGRP for the 
dependent variable. The SGRPs for each subscriber group are 
specified by statute (following the carriage decisions made by 
CSOs)--an industry characteristic that greatly reduces (and possibly 
eliminates) concerns over unobserved factors that might impact 
SGRPs.

Tyler ACWDT ] 87 n.71. Program Suppliers added an equivalent 
explanation of this point in their post-hearing briefing:

    Substantial irrelevant variability exists across the royalty 
amounts calculated for each subscriber group. For example, greater 
royalty amounts might be determined for a subscriber group for no 
other reason than one subscriber group has more subscribers or 
higher prices, or both, than another subscriber group. PFF ]] 290, 
351. And those prices may vary based on factors like cable networks 
carried, customer service, bundling with internet and phone, or 
other factors unrelated to distant signal carriage. PFF ] 290. A 
regression model using royalty amounts calculated as the dependent 
variable must control for these sources of variability in an attempt 
to isolate the incremental value of minutes by category type. PFF ] 
290. Unlike royalty dollar amounts, SGRP does not vary across CSOs 
due to unobserved factors in the marketplace--other than from 
choices related to distant signals. Thus, because the Tyler Model 
uses the more targeted SGRP, and not royalties, the Tyler Model can 
more precisely measure the incremental value of various types of 
minutes within each year. PFF ]] 291-92. With less irrelevant 
variability to explain in the dependent variable, the Tyler Model 
can focus on the relationships at issue in a way that other models, 
which use royalties as the dependent variable, cannot. PFF ]] 291-
92. Furthermore, because SGRP does not vary for reasons unrelated to 
distant signal carriage, fixed effects (meant to control for 
unobserved sources of irrelevant variability) are not necessary. PFF 
] 292.

PS PHB at 38.
    Thus, the Judges understand that other demand effects (such as the 
impact on demand from differences in, e.g., service quality, pricing, 
etc.) impact the gross receipts, not the royalty decisions.\151\ The 
Judges further note that--although other parties and their experts 
criticize the Tyler Model for not including fixed effects and note how 
shares would change in fixed effects were added--none of the partis or 
experts addresses Dr. Tyler's point, discussed supra, that when the 
dependent variable is the SGRP rather than a form of royalties, fixed 
effects are unnecessary because there is no variable omitted that will 
impact the dependent variable.
---------------------------------------------------------------------------

    \151\ Critics of the Tyler Model maintain that by avoiding the 
fixed effects problem in this manner, the Tyler Model throws out the 
baby with the bathwater, in that it fails to correlate the royalties 
paid with the discrete categories of program minutes, which is the 
entire point of the exercise. That is, the Tyler Model allegedly 
fails to uncover the variation in royalties associated with 
different categories of programming minutes. (And, as some 
econometric critics of the Tyler Model have testified, it merely 
``reproduces the statutory formula.''). As explained infra, the 
Tyler Model, like the other regression approaches, multiplies its 
derived coefficients by the number of program minutes associated 
with each of the six program categories, generating allocation 
shares on a per-program category basis.
---------------------------------------------------------------------------

    Another way to understand the evidentiary problem caused by 
eliminating or relaxing the fixed effects (as in the Johnson and George 
Models (but not the Tyler Model)) is to consider a crucial point made 
in the 2010-13 Determination and again in this proceeding--the 
difference between an ``explanatory'' regression and a ``prediction'' 
regression. In this regard, the Judges stated in the 2010-13 
Determination:

    The Waldfogel-type regression is an example of modeling utilized 
to explain the effects of different program categories on the 
relative payment of royalties--rather than an attempt to predict the 
level of royalties. Thus, . . . the choice of variables can 
reasonably be based on the ``underlying theoretical model.'' [G. 
Shmueli, To Explain or to Predict?, 25 Statistical Science 289, 290-
91, 297 (2010)]; see also F.M. Fisher, Econometricians and Adversary 
Proceedings, 81 J. Am. Stat. Ass'n 277, 279 (1986) (``There is a 
natural view that models are supposed to do nothing other than 
predict . . .'' resulting in the ``danger'' of ignoring ``better 
models that do not fit or predict quite so well but are in fact 
informative about the phenomena being investigated.'') (emphasis 
added).

2010-13 Determination at 3564. As in that prior proceeding, the purpose 
of the fee-based regressions is to ``explain'' the posited correlation 
between distantly retransmitted program minutes and royalties. It is 
unsurprising that other variables may be more useful as ``predictors'' 
of royalties, but that is quite another matter. In this regard, in the 
2010 Determination the Judges approvingly cited the following testimony 
by Dr. Crawford:

    Dr. Erdem misunderstands the purpose of an econometric analysis 
in this proceeding . . . . For the goal of prediction, the focus is 
on finding the explanatory variables that best predict the outcome 
of interest . . . . [I]f the goal is to predict stock prices[,] and 
the price of tea in China helps, then . . . include it in the model 
(and don't worry about the economic interpretation of its 
coefficient).
    That is not the purpose in this proceeding, however. In this 
proceeding, experts are using econometric analyses to help the 
Judges determine . . . relative marketplace value . . . . The 
dependent variable in these regressions, the royalties cable 
operators pay for the carriage of the distant signals, are 
informative of this relationship . . . . The key explanatory 
variables in this relationship, the minutes of programming of the 
various types carried on distant signals, are informative as the 
impact they have on royalties reveals the relative market value of 
each programming type. Other explanatory variables are included in 
the model to control for other possible determinants of cable 
operator royalties. This helps improve the statistical fit of the 
regression (to ``reduce its noise''), providing more precise 
estimates of the impact of programming minutes that are the focus of 
the analysis. . .
    The goal here is to find the econometric model that can best 
reveal relative

[[Page 54222]]

marketplace value. Doing so means crafting the econometric model to 
reflect the institutional and economic features of the environment 
that is generating the data being used . . . . Crawford WRT ]] 91-94 
(footnotes omitted) (emphasis added).

2010-13 Determination at 3564. No critic of the regression approach has 
persuasively addressed this finding in the 2010-13 Determination that 
relies on the distinction between a regression designed for 
``prediction'' and a regression designed to measure the ``effect'' of a 
variable of interest, has persuasively addressed this finding in the 
2010-13 Determination that relies on the distinction between a 
regression designed for ``prediction'' and a regression designed to 
measure the ``effect'' of a variable of interest,
    Consistent with this testimony, the Judges held that it is not 
their ``statutory task . . . to identify and rank all the causes of a 
change in total royalties.'' Rather, the Judges' ``legal, regulatory, 
and economic task . . . is to determine the relative market value of 
different categories of programming,'' and thus correlations between 
royalties and other independent variables, for example, between 
royalties and the number of subscribers, ``is not in furtherance of 
that objective.'' 2010-13 Determination at 3564.
    The WGNA conversion not only reduced the number of subscriber 
groups, as discussed supra, but also significantly reduced the number 
of CSOs that actually paid the base fee, as opposed to the minimum fee. 
A number of experts captured this undisputed effect, and Dr. Marx's 
testimony below in this regard is clear and illustrative:
    For necessary context, it is instructive at the outset of this 
section to consider how the minimum fee issue was addressed in the 
2010-13 Determination. There, the Judges found as follows:

    1. ``[A] CSO's decision to distantly retransmit any particular 
station, when that CSO is otherwise obligated to pay the minimum 
royalty fee, does not indicate a direct correlation between the 
decision to retransmit and the decision to incur a royalty 
obligation.'' 2010-13 Determination at 3568.
    2. ``[D]uring the 2010-2013 period, on average 527 out of the 
1,004 Form 3 CSOs analyzed (52.5%) chose to retransmit the exact or 
fewer number of signals than the regulated fees permitted [and] 83 
paid the minimum fee yet elected not to retransmit any local 
stations. . . . Those decisions reveal that the CSO has concluded 
(whether by analysis or resort to a heuristic) that any of the 
marginal costs (physical or opportunity) associated with 
retransmission likely exceed the value to the CSO of such 
retransmission, even accounting for minimum royalties, which the CSO 
must pay in any event.'' 2010-13 Determination at 3568.
    3. ``Although there is no marginal royalty cost associated with 
th[e] decision [to retransmit stations when . . . obligated to pay 
only the minimum royalty], the CSO's decision as to which stations 
to retransmit remains a function of choice, preference, and ranking. 
Thus, the CSO in this context would still have the incentive to 
select distant local stations for retransmission that are more 
likely to maximize CSO profits, through either an increase in 
subscribership or, as Ms. Hamilton emphasized, by avoiding the loss 
of subscribers through the preservation of `legacy carriage' through 
the non-analytical heuristic of maintaining the status quo.'' 2010-
13 Determination at 3569.
    4. ``There are substantial economic bases for this finding. 
Because the `tax' of the minimum fee is paid regardless of whether 
distant retransmission occurs, that `tax' is also in the nature of a 
sunk cost. Fundamental economic analysis provides that a seller 
should ignore sunk costs when making marginal decisions (although 
they should try to recoup these costs if the buyers' willingness-to-
pay allows it). Nonetheless, a CSO that decides to distantly 
retransmit a station when the marginal royalty cost is zero has 
revealed that the particular station contains programming that would 
increase marginal value to that CSO, over and above the next best 
alternative `retransmittable' local station and above any other 
marginal costs (e.g., physical retransmission costs or the 
opportunity cost of foregoing a different type of cable channel in 
the CSO's channel lineup).'' 2010-13 Determination at 3569.
    5. ``CSOs that pay only the minimum royalty fee and elect to 
distantly retransmit one station might have elected to pay a 
positive fee in the absence of the minimum fee. For example, 
assuming Program Suppliers' programs were more valuable to a CSO 
than the minimum fee and disproportionately more valuable than any 
other program category, that CSO would have retransmitted a station 
that disproportionately included Program Supplier content and 
willingly paid the minimum fee (or more).'' 2010-13 Determination at 
3659.
    6. ''[A]n analysis of the CSOs paying only the minimum fee might 
provide some useful information. However, . . . the record does not 
provide an adequate basis to incorporate any ``relative value'' 
differences based on a distinction between CSOs that do and do not 
pay only the minimum fee.'' 2010-13 Determination at 3582. See also 
id. at 3575 (``[T]he Judges find no basis in the record by which 
they could or should make a reasonable `relative value' adjustment 
based on whether a CSO did or did not pay only the minimum fee.'').
    7. ``[T]he data regarding the carriage decisions of CSOs who pay 
only the minimum fee should not be disregarded [because] even when a 
CSO is obligated to pay the minimum royalty fee, it still has the 
incentive to select stations for distant retransmission that it 
believes will maximize the benefits (or, in economic terms, utility) 
to the CSO. However, because carriage decisions are not tied even 
indirectly to a contemporaneous discretionary decision to pay 
royalties (beyond the mandatory minimum 1.064% for the first DSE), 
they strike the Judges as potentially less informative than 
discretionary decisions by CSOs to incur an additional royalty 
expense in order to distantly retransmit particular stations.'' 
2010-13 Determination at 3575.

    The Judges consider these minimum-fee-related points in the context 
of the present factual record, which reveals a dramatically different 
retransmittal landscape for the final three years of the period at 
issue, 2015 through 2017.\152\
---------------------------------------------------------------------------

    \152\ The Judges discuss the minimum fee issues separately and 
in depth elsewhere in this determination.
---------------------------------------------------------------------------

    There is a sub-group within the minimum-fee-only CSOs that decided 
not to distantly retransmit any local signals despite their duty to pay 
the minimum fee. Exactly what this decision indicates as to their 
revealed preferences is unclear from the record. One industry witness 
suggests that some or all of these CSOs had alternative uses for their 
bandwidth, for, e.g., other cable programming or internet traffic. 
Written Rebuttal Testimony of Lynne Costantini, Trial Ex. 7304, at 4-5 
(Costantini WRT); 3/27/23 Tr. 1597-1605 (Costantini). But several other 
witnesses testified that bandwidth concerns no longer existed in the 
2014-2017 period, because cable television had converted from analog to 
digital signals. Written Direct Testimony of Allan Singer, Trial Ex. 
7108, ] 15 n.1 (Singer WDT); Written Rebuttal Testimony of Allan 
Singer, Trial Ex. 7109, ] 8 n.1; (Singer WRT); 4/3/23 Tr. 2764-65 
(Singer); Written Rebuttal Testimony of Melinda Witmer, Trial Ex. 7115, 
] 13 n.3 (Witmer WRT); 4/10/23 Tr. 4069-70 (Witmer).
    Other evidence indicated that CSOs that previously retransmitted 
WGNA until its conversion to a cable channel simply found no other 
value in alternative out-of-market local channel programming 
sufficiently attractive to existing or potential new subscribers that 
was worth retransmitting. Of course, this argument raises its own 
questions, because, given that the marginal royalty cost is zero, the 
presumption of economic rationality strongly suggests that, ceteris 
paribus, these CSOs would have distantly retransmitted some out-of-
market local channels' programming.\153\ But the reasonable presumption 
of economic rationality requires the presumption that these CSOs were 
incentivized not to distantly retransmit additional stations.

[[Page 54223]]

One logical reason would be that they saw no value at all in 
retransmitting those stations and programming, such that any 
organizational effort in that regard would be a soft cost sufficient to 
preclude such transmissions. In this regard, the Judges again take note 
of Ms. Hamilton's designated testimony, in which she emphasized the de 
minimis nature of the revenues at issue with regard to these potential 
retransmissions.\154\
---------------------------------------------------------------------------

    \153\ This point also applies to CSOs that distantly 
retransmitted some local stations, but had excess capacity, i.e., 
the capacity to distantly retransmit more of these stations and 
still not pay more than the minimum fee.
    \154\ Ms. Hamilton's point would tend to explain more than why 
some CSOs do not retransmit any signals. It may explain, for 
example, why Bortz Survey respondents have a myriad of job titles, 
and why the respondents are not consistently the same from year-to-
year (i.e., that no one is really dedicated to this function). Her 
point would also seem to explain why the CSO decisions from 2010-13 
and from 2014 were so consistent: because concomitant with Ms. 
Hamilton's de minimis argument is her point that the CSOs focused on 
preserving existing subscribers whose subscription decisions might 
turn on the continued presence of niche programming from distantly 
retransmitted stations. Indeed, Ms. Hamilton seems to have been 
prescient: After 2014, the abandonment of all distant 
retransmissions by CSOs that had only distantly retransmitted WGNA 
is consistent with her emphasis on legacy carriage. (That is, 
viewers who had valued WGNA enough to subscribe to a CSO on that 
basis were no longer legacy viewers who could be retained once WGNA 
converted.)
    The Judges are also struck by the absence of evidence that would 
be compelling, to wit, the absence of evidence that any CSO has 
marketed its service to any subscribers who might be induced to 
remain or become subscribers based on the program offerings by out-
of-market stations they distantly retransmit. The Judges decline to 
take administrative notice that CSOs (or their subscribers) actually 
contemplate these offerings when considering subscription decisions; 
in fact, the Judges' own ``reality filter'' would suggest that the 
opposite presumption would be more realistic.
---------------------------------------------------------------------------

    But the foregoing points hardly end this analysis. When CSOs have 
``excess-capacity'' to retransmit signals/programming at zero marginal 
royalty cost, or when a CSO has declined to exercise its section 111 
``privilege'' to retransmit any signals or programming, they have 
differentiated themselves from above-minimum-fee-paying CSOs in a 
manner that is of both significant economic and of evidentiary 
importance. The minimum-fee-paying CSOs have revealed a marginal 
willingness-to-pay of zero for the distant retransmittal of local 
broadcast stations. The several parties and their economic experts 
opposing the regression approach in this proceeding make a reasonable 
objection that it is improper to treat the calculated-but-unpaid base 
fees of these CSOs as any evidence of the revealed preferences and 
willingness-to-pay of a minimum-fee-only CSO. But, assuming, arguendo, 
that this reasonable objection is entirely correct,\155\ what is the 
appropriate way to consider the decisions of CSOs who do not reveal a 
positive value for such distant retransmittals?
---------------------------------------------------------------------------

    \155\ It is not entirely correct. As noted by Dr. Tyler, 
discussed infra, the calculated-but-unpaid base fees of CSOs that 
ultimately pay the minimum fee would have some probative weight as 
those base fees approach the minimum fee, given the uncertainty, ex 
ante royalty payment, as to whether the base fee or the minimum fee 
would ultimately bind. However, the record does not provide the 
Judges with disaggregated data sufficient to analyze the minimum-
fee-paying CSOs on this basis.
---------------------------------------------------------------------------

    The Judges find that these CSO decisions can be construed in two 
ways. First, they can be considered to reveal a zero value for these 
retransmittals, given that the marginal royalty cost of retransmittal 
is zero through a retransmittal of 1.0 DSE. And second, they could be 
construed as simply not providing any useful data regarding the value 
the CSOs assign to these retransmittals, because that value, although 
perhaps positive, is still less than the (non-royalty) cost of 
retransmitting.\156\ But in either construal, the relevant takeaway is 
that these CSO decisions do not provide the Judges with any useful 
information \157\ regarding the relative value of the retransmittal of 
the various programming categories, the determination of which is the 
statutory task assigned to the Judges under section 111.
---------------------------------------------------------------------------

    \156\ These non-royalty costs include, but are not necessarily 
limited to, (1) the physical cost of retransmittal and (2) the 
transaction costs and opportunity costs associated with expending 
effort making retransmittal choices regarding distant local stations 
that had de minimis value (the choices, if not the stations and 
programming themselves) relative to the other decision-making 
undertaken by CSOs.
    \157\ That is, a zero value for all retransmitted programming is 
invariant and thus uninformative of relative value, and an absence 
of a revealed value fails to provide absolute value as well as 
relative value.
---------------------------------------------------------------------------

    So understood, why should the decisions of these minimum-fee-only 
CSOs serve to diminish the economic and evidentiary usefulness of the 
decisions of the other CSOs who pay base fees above the minimum fee. 
That is, it is misleading, to say the least, to categorize the base-
fee-paying CSOs as merely a small cohort of the larger population of 
CSOs, when they are differentiated by the key marker for section 111 
purposes: whether they assign a relative value to the retransmittals 
and thus relative values to the retransmitted programs. The Judges find 
it more accurate and appropriate to consider the base-fee-paying CSOs 
essentially as a separate cohort of CSOs whose decision-making is 
pertinent to a regression analysis in this statutory context.
    Indeed, this is precisely how the Judges perceived the issue in the 
2010-13 Determination. There, only a minority of CSOs, 47.5% paid above 
the minimum fee, but their decisions were extrapolated to the entire 
market. 2010-13 Determination at 3568 (``during the 2010-2013 period, 
on average 527 out of the 1,004 Form 3 CSOs analyzed (52.5%) chose to 
retransmit the exact or fewer number of signals than the regulated fees 
permitted [and] 83 paid the minimum fee yet elected not to retransmit 
any local stations''--meaning that less than half of CSOs ``voluntarily 
paid a royalty greater than the minimum fee.''). Nonetheless, the 
Judges deemed that minority of CSOs sufficient to justify using the 
entirety of the base fee calculations (whether paid or unpaid) to 
establish relative marketplace value.
    But that extrapolation was hardly precise in the context of the 
slight majority presence of minimum-fee-only CSOs, a context which 
could have suggested a need for a proportionate weighting of the 
decisions of the base-fee-paying CSOs.\158\ But, when the base-fee-only 
CSOs are considered as the separate and only cohort actually revealing 
their relative programming valuations, rather than a mere subsample of 
the entire population of CSOs, then their revealed preferences are seen 
to reflect 100% of the information regarding relative value generated 
from CSO decision-making. Implicitly, that is what the Judges did in 
the 2010-13 Determination.
---------------------------------------------------------------------------

    \158\ Dr. Marx noted that the 52.5% of CSOs not covered in the 
Crawford Model included many that had only one subscriber group and 
would have been excluded from Dr. Crawford's regression anyway, so 
80% of all the CSOs eligible for inclusion in the Crawford Model 
(and their programming and royalty data) were in the regression. 
There are two problems with this point. First, because only 80-85% 
of the CSOs were covered, even then the evidentiary weight of the 
decision-making of those CSOs should have been discounted 
proportionately, if proportionality is relevant. Indeed, in this 
proceeding, Dr. Marx testified that, in her opinion, whether to 
consider the revealed preferences of some CSOs should be a matter of 
``degree,'' which is distinct from treating some proportion as a 
tipping point sufficient to be used en toto. Second, the reason why 
``only'' 47.5% of the CSOs were included in the Crawford Model is 
not really relevant to the question of why this minority cohort 
should generate the entirety of revealed preference value for 
regression purposes.
---------------------------------------------------------------------------

    Further, the Judges are mindful of the testimony by Dr. Marx 
(herself no fan of the application of the fee-based regression for the 
2015-2017 period) that ``the most informative observations in a 
Crawford-style regression are ones in which a CSO elects to pay more 
than the minimum fee in royalties in order to carry additional distant 
signals . . . .'' Marx WRT ] 64 (emphasis added).\159\
---------------------------------------------------------------------------

    \159\ Dr. Marx also equates a CSO paying above the minimum fee 
with a CSO that ``pays the minimum fee with no capacity for carrying 
additional signals.'' Marx WRT ] 64. The Judges disagree. Such a 
minimum-fee-paying CSO is not revealing a preference in the same 
manner as a CSO paying above the minimum fee, but rather is taking 
full advantage of the zero-marginal-royalty cost feature of the 
minimum fee obligation. The Judges find it more appropriate to treat 
such minimum-fee/no-excess-capacity CSOs in the same manner as an 
excess-capacity CSO because the actual marginal cost of their 
respective retransmittal preferences is zero.

---------------------------------------------------------------------------

[[Page 54224]]

    Colloquially, the issue may be characterized as whether the Judges 
should let the perfect be the enemy of the good. Here, the ``perfect'' 
fact pattern would be where all or most of the data is generated by 
CSOs paying above the minimum fee. That is not the factual context 
here. But there is ``good'' evidence from the CSOs who did retransmit 
enough programming to trigger the base fees of their subscriber groups, 
and that the Judges do not ignore that data.\160\
---------------------------------------------------------------------------

    \160\ Even information from data that includes CSOs paying only 
the minimum fee has an evidentiary purpose, as noted infra regarding 
an adjustment to the allocations based on the Tyler Model.
---------------------------------------------------------------------------

    Accordingly, the Judges will give due weight to the minority of 
CSOs that, in the 2015-2017 period, paid above the minimum fee and thus 
revealed their preferences by paying an additional royalty in order to 
retransmit one or more additional stations. To be clear, in their 
weighing of this evidence, the Judges perceive the above-minimum-fee 
CSOs as providing evidence from three perspectives: (1) reflecting 100% 
of all the CSOs who did reveal their preferences in a cardinal manner, 
which supports the assignment of due weight to their station and 
programming choices; and (2) reflecting only a minority of the revealed 
preferences of the CSOs that found the value in distant retransmissions 
of local broadcast stations sufficient to add such stations to their 
lineup--a lower percentage which therefore would support a lower 
evidentiary weight; and (3) reflecting the revealed preference of an 
even smaller slice of CSOs and their programming, thus supporting the 
lowest level of evidentiary weight among these three perspectives.\161\
---------------------------------------------------------------------------

    \161\ As noted supra, the Judges will discuss infra the 
evidentiary weights they apply, in combination with the evidentiary 
weights they give to all of the probative evidence.
---------------------------------------------------------------------------

B. A Separate Criticism: The Tyler Model as a ``Fee Generation'' Model

    Two parties, SDC and PTV, ask the Judges to reject the Tyler Model 
by characterizing it as ``similar'' to a ``fee generation'' approach to 
the section 111 royalty allocation issue, asserting that this approach 
is improper and has been rejected previously by the Judges and their 
predecessors. SDC and JSC are incorrect, and this criticism deserves 
its own separate section.
    The fee generation approach has been defined as ``a valuation 
method that attempts to measure the amount of royalties actually 
generated by a particular claimant group.'' Report of the Copyright 
Arbitration Royalty Panel to the Librarian of Congress, Docket No. 
2001-8 (CARP CD 98-99) at 60. In its attempt to characterize the Tyler 
Model as a fee generation approach, SDC maintains as follows:

    [Dr. Tyler's] approach could be viewed as similar in notion to 
the ``fee generation'' approaches that the Judges and their 
predecessors rejected in days long past (see, e.g., 2004-05 
Distribution Order, 75 FR at 57071-73 (``[F]ee generation is not 
persuasive as the best method for determining relative marketplace 
value because of the Canadian Claimants' failure to firmly link the 
relationship between section 111 royalties to that value'')).

SDC PFF ] 138. See also 6/12/23 Tr. 6007 (SDC counsel's closing 
argument) (describing the Tyler Model as ``a fee-generation 
methodology.'').
    Similarly, PTV argues:

    Dr. Tyler's regression resembles the fee generation methodology, 
which attempts to assess relative value based on statutory royalties 
generated by cable retransmissions. [The] [j]udges have repeatedly 
considered and rejected the fee generation methodology because the 
statutory royalties do not relate to the relative value of the 
distantly retransmitted programming.

PTV PFF ] 159.
    Of course, to assert, as SDC and PTV do, that the Tyler Model may 
merely ``resemble,'' or be ``similar to'' a fee generation model, is 
also to say that the Tyler Model is not a fee generation model. 
Moreover, the Judges disagree with these fee-generation-based arguments 
for two further reasons. First, the assertion that the Judges have 
rejected the fee generation methodology is simply wrong. Second, the 
argument (that the Tyler Model's passing resemblance to a fee-
generation approach invalidates its use) fails to address the 
particular merit of this approach given the evidentiary record.
    With regard to the prior rulings regarding fee-generation 
approaches, Program Suppliers accurately and compellingly demonstrate 
the incorrectness of the claim that these rulings have rejected a fee-
generation approach and precluded its use (or the use of any similar 
model) in these allocation proceedings. Specifically, Program Suppliers 
emphasize the Judges' most recent ruling on this issue, in the 2010-13 
proceeding:

    [T]he Judges ruled that fees-based regression analyses are 
distinguishable from analyses of fees-generated. In their post-
Initial Determination Order Denying Rehearing [in the 2010-13 
proceeding] . . . the Judges specifically rejected the claim that 
fee-based regressions are the same as ``fee generation'' approaches. 
They held that fee-based regressions ``identif[y] a positive 
statistical relationship between (a) royalties paid by CSOs; and (b) 
program categories on distant local stations that had been 
retransmitted to subscribers by CSOs. Clearly, any `fee generation' 
approach that did not make use of this regression approach is 
distinguishable.'' See Order Denying Rehearing at 5 (emphasis 
added).

    Even if the Tyler Model could be likened to a fee generation 
approach, SDC and PTV are wrong to suggest that such approaches have 
been categorically rejected by the Judges and their predecessors. 
Again, the Judges considered and rejected the identical argument in 
their Order Denying Rehearing:

    [N]either the Judges nor their predecessors have categorically 
rejected use of the broad category of fee generation approaches to 
ascertain relative value in section 111 allocation proceedings. As 
the Librarian concluded when accepting in full the CARP Report for 
the 1998-99 distribution years: ``[W]hile it is true that fees 
generated do not measure the absolute value of programming, it does 
not mean that they are not capable of measuring the relative value 
of programming between the claimant groups.'' Librarian's Order, 69 
FR at 3618 (emphasis added). In that Order, the Librarian expressly 
noted that `there does exist precedent,' in the 1990-1992 CARP 
Report, for using the ``fee generation'' approach to determine 
relative market value. Id. When the Judges succeeded to the CARP's 
jurisdiction, they likewise stated that ``we are not persuaded that 
we are precluded from ever considering fee generation as a 
distribution methodology. . . .'' 2000-03 Determination, 75 FR at 
26805. In fact, in the [Initial 2010-13] Determination, the Judges 
acknowledged the ongoing use of a fee generation approach in 
particular instances, notwithstanding that it had been ``generally 
discounted'' in some prior cases. See Determination at 48 n.45; 78 
n.145.

Program Suppliers' Reply to Proposed Findings of Fact and Conclusions 
of Law (PS RPFF) ] 88 (and record citations therein). See also id. ] 
96. Program Suppliers have also properly relied on the earlier rulings 
of the Judges and their predecessors in this regard. See 2000-03 
Distribution Order at 26805 (after detailing the ``origins'' and the 
``history'' of the fee generation approach, the Judges stated this 
approach never had been ``flatly rejected . . . as a methodology,'' and 
the Judges thus held that they were ``not persuaded that we are 
precluded from ever considering fee generation as a distribution 
methodology. . . .''); 1998-99 Librarian Order at 3606, 3618

[[Page 54225]]

(the CARP panel rejecting opposition to ``the fee generation method'' 
because ``there does exist precedent'' for using this methodology). 
More broadly, the Judges' predecessors have long understood the 
appropriateness of incorporating fee-generation models in the precise 
process in which the present Judges are now engaged--analyzing, 
weighing, and combining multiple approaches to the allocation of 
royalties--when, as now, the Judges cannot identify only ``a single 
formula or rationale adequate to reach our determination and 
allocations in [the] proceeding.'' 1979 Cable Royalty Distribution 
Determination, 47 FR 9879, 9892 (Mar. 8, 1982) (considering a fee 
generation approach together with eight other allocation methods) 
(emphasis added).
    As to the second point, assuming arguendo the Tyler Model bears a 
passing resemblance to a fee-generation approach, the Judges find, on 
this evidentiary record, such affinity constitutes virtue rather than 
vice. A key criticism of the Tyler model's fee-generation resemblance 
is premised on the fact that both appear to ``ignore[ ] variation 
relevant to revealing CSO preferences'' among program categories. CTV 
PFF ] 354 (and record citations therein); accord CCG PFF ] 186 (and 
record citations therein) (``Dividing the royalty payment by gross 
receipts removes the variation different signals contribute to 
revenue.''). However, that argument misapprehends Dr. Tyler's approach. 
It is decidedly not merely a ``measure [of] the amount of royalties 
actually generated by a particular claimant group,'' which is the 
definition of a fee-generation model, as set forth supra. Rather, the 
Tyler Model calculates coefficients that ``represent the incremental 
impact on the SGRP for each type of compensable minute.'' Tyler ACWDT ] 
90. Further, the Tyler Model then weights these coefficient values by 
total receipts, Tyler ACWDT ] 88, and then multiplies these weighted 
coefficients by the number of minutes of each claimant's program 
category. Tyler ACWDT ] 144. That is quite different from the basic 
fee-generation approach.
    But the proponents of the other fee-based regressions are onto 
something in their observation that the Tyler Model generates less 
variation than would otherwise be captured when the dependent variable 
is royalty-specified rather than specified as the SGRP. However, the 
Judges see this distinguishing feature of the Tyler Model as an 
improvement over the other fee-based regressions proffered in the 
present case.
    From the perspective of the parties proffering fee-based 
regressions, the only way to estimate the appropriate variations among 
program categories is by utilizing a royalty-based parameter (the log 
of royalties to be precise) as the dependent variable. That is, these 
more traditional forms of fee-based regressions posit that there is an 
ascertainable and measurable correlation between program category 
minutes and the log of royalties, detectable once sufficient fixed 
effects and control variables are specified. So, there is a black-and-
white debate: Which is the preferrable dependent variable for the fee-
based regressions in the present case, a royalty based variable or Dr. 
Tyler's SGRP?
    Recall that the first step in any regression modeling is to 
identify an economic theory which will guide the selection of model 
specifications. What is that economic theory? Perhaps the more salient 
phrasing of this question is: What economic theory is most consonant 
with the record evidence of the industry details? Let's take stock:

    1. The royalties paid by CSOs for 1.0 DSE is a minimum of 1.064% 
of gross receipts, with two marginally lower brackets of percentage 
rates for additional DSEs, flattening out at 0.330% at 5.0 DSE. A 
CSO needs to decide how many, if any, local broadcast stations to 
distantly retransmit.
    To answer this question, all the economist witnesses attempt to 
zero-in on what, in their respective opinions, would constitute 
economically rational decision-making. However, in identifying what 
is rational, they implicitly assume a CSO would be able to determine 
if it is retransmitting a profit-maximizing or a sub-optimal bundle 
of distant programming, but there is no record evidence as to how a 
CSO would know this.
    More particularly, there is no evidence of a measure of 
estimated subscribers retained, obtained, or lost, or of a change in 
subscription rates, caused by distant retransmission decisions. Are 
such changes even occurring because of the configuration of 
distantly retransmitted stations? On this, the record is 
barren.\162\
---------------------------------------------------------------------------

    \162\ The Judges also find it telling that there is no evidence 
in this proceeding, nor apparently in any other allocation 
proceeding, that any CSO has solicited subscriptions by touting its 
distantly retransmitted lineup. That this dog has not barked speaks 
loudly as to the de minimis impact of the distant retransmission 
market. Also absent from the record is any evidence that there is a 
derived-demand effect at play. That is, there is no evidence that 
consumers make subscription decisions based on the programming 
content of distant retransmissions. In this regard, a corollary to 
the need for identifying an economic theory from the record evidence 
to guide this Determination is the concomitant need for a ``reality 
filter,'' by which the Judges can address the reality that the 
market in question is relatively miniscule (although substantial 
royalty dollars are most certainly at stake!).
---------------------------------------------------------------------------

    2. But, as all the witnesses acknowledge, over the last three 
years of the relevant period, 2015-2017, the overwhelming percentage 
of CSOs pay only the minimum fee, and the vast majority of section 
111 royalties are generated by those minimum-fee-paying CSOs. That 
is, most CSOs do not even retransmit enough distant signals to 
trigger a base fee obligation. Moreover, a large minority of those 
CSOs elect not to retransmit any signals, demonstrating, as Dr. 
George notes, that they have a zero willingness-to-pay for 
programming that is royalty costless. Why have these changes 
occurred?
    3. The answer is to be found in the evidentiary record. An 
industry expert witness, Sue Ann R. Hamilton (whose 2010-13 
testimony was properly designated as evidence in this proceeding by 
Program Suppliers), stated (as summarized in the 2010-13 
Determination) that:

    [A] CSOs' selection of stations for distant retransmission is 
marked by inertia, not by an affirmative analysis and weighing of 
alternative stations, [because: (1)] distant retransmission costs 
represent a non-material expenditure for CSOs compared with their 
other more expensive programming and carriage decisions [and (2)] 
CSOs are more concerned with losing existing subscriber [`legacy 
distant carriage'] if they drop certain stations and the associated 
programs than they are with whether or not any new retransmitted 
station and its associated programs might entice new subscribers[, 
or with] adjusting the roster of distantly retransmitted stations.

2010-13 Determination at 3567 (emphasis added).
    4. Ms. Hamilton's testimony regarding the CSO's primary concern 
over retaining legacy subscribers proved prescient when CSOs did not 
meaningfully substitute for the lost sports programming on WGNA, but 
rather just retransmitted fewer stations and programs, and thus 
defaulted to a binding minimum fee rather than a calculated base 
fee. That is, the phenomena that Ms. Hamilton described has been 
validated by the impact of the WGNA conversion. JSC professional and 
college team sports that were retransmitted on WGNA clearly were 
valuable, both in terms of the regressions (with the highest 
coefficients) and in terms of the survey results. But when WGNA 
converted to a cable station, despite the high value of JSC 
programming (its coefficient fell but remained higher than other 
category coefficients), JSC programming value vis-[agrave]-vis the 
retransmission sector, as measured by the regression methodologies, 
dropped precipitously, because the number of subscribers to whom JSC 
sports were transmitted dropped by over 90%. Although at first blush 
it may seem odd given the high value of JSC programming that CSOs 
did not ``backfill'' that loss, Ms. Hamilton's ``inertia'' and 
``legacy'' arguments explain the absence of such a ``backfill.'' 
\163\ Such inertia, and the

[[Page 54226]]

loss of WGNA as a legacy channel, apparently made it not worth the 
effort for CSOs to search for and retransmit a sufficient number of 
replacement channels and programs.
---------------------------------------------------------------------------

    \163\ The loss of WGNA should be contrasted with the loss years 
earlier of TBS, another sports-based superstation that had been 
distantly retransmitted. That loss did not eliminate all such 
sports-based-superstation retransmittals, because WGNA remained 
available. But after WGNA transformed itself into a cable station, 
there was no other sports-based superstation to substitute in order 
to satisfy legacy viewers of such programming. (Also, recall that 
the JSC is simply a representative of the major professional sports 
leagues and the NCAA, and the record does not reflect that they 
suffered any economic loss because of the reduction of subscriber 
minutes distantly retransmitted. Indeed, the Judges take 
administrative notice that their games have been aired on ESPN and 
other cable stations, national networks, and regional sports 
networks. The Judges decline to assume that these leagues and 
associations voluntarily abandoned local broadcasting and thereby 
deprived themselves of profits, but rather they assume these sports 
leagues and associations moved to these more lucrative distribution 
methods.)
---------------------------------------------------------------------------

    5. In the context of this backdrop, Dr. Erdem's drumbeat that 
CSOs' priority is to minimize their costs takes on a bit more 
significance. CSOs appeared to be relatively less concerned with the 
``demand side'' for distantly retransmitted channels and 
programming, and thus, relatively more concerned with the ``supply 
side,'' particularly with the royalty costs.
    6. In this more cost-centric context, Dr. Tyler's regression 
appears to the Judges to better reflect the realities of the market 
than the other fee-based regressions. The Tyler Model does not put 
the cart before the horse; that is, it does not place priority on 
program category (``demand side'') decisions. Rather, it prioritizes 
the ``budget constraint'' (``supply side'') decisions of CSOs, by 
which they calculate the percentage of their subscriber group's 
gross receipts they will pay in royalties.
    7. However, for those CSOs transmitting above 1.0 DSE, they have 
economic decisions to make regarding the mix of programming they 
will transmit via their signal decisions. Given the economics and 
reality of this retransmission market, as described above, only then 
will the relative value of program categories be of material 
economic importance. It is at this stage that the Tyler Model 
generates information as to relative value, through the Tyler 
model's coefficients.
    8. To return to the issue at hand, as its critics assert: Does 
the Tyler Model identify fewer variations across program categories 
compared to the other regression models? Apparently, the answer is 
yes. But those other regressions, although not without evidentiary 
value, do not appear to be as consonant with the evidentiary record 
as the Tyler Model.

C. The Economics of the Tyler Model

    The foregoing points help to focus on the underlying economics of 
the Tyler Model. By using the SGRP as the dependent variable, the Tyler 
Model reflects economic principles relating to the value of a ``public 
good,'' which is a good ``for which the marginal costs of providing it 
to an additional person are strictly zero and for which it is 
impossible to exclude people from receiving the good.'' Joseph E. 
Stiglitz & Jay L. Rosengard, Economics of the Public Sector 107 (4th 
ed. 2015). But when the good is excludable, but still bears a marginal 
cost of zero (non-rivalrous in ``econo-speak''), it is considered an 
``impure'' (or ``quasi-'') public good. See also 3/27/23 Tr. 1496 
(Boyle) (a PTV expert witness with a Ph.D. in applied economics 
agreeing that there are ``characteristics'' and ``elements'' of a 
``quasi-public good'' in these distantly retransmitted channels and 
programs.).
    Unlike ``private goods'' (rivalrous and excludable), the demand 
curve for public goods, impure or otherwise, ``can be thought of as a 
`marginal willingness-to-pay' curve [which], at each level of output of 
the public good, . . . says how much the individual would be willing to 
pay for an extra unit of the public good.'' Stiglitz & Rosengard, 
supra, at 107. This is consistent with the economic logic of the Tyler 
Model. See Tyler ACWDT ] 67 (``Even though the amount of the royalty is 
determined by statute--and so constitutes a measure of minimum 
willingness to pay as opposed to the outcome of a negotiation--the 
estimated incremental royalties for the different program types 
relative to one another provide insight into how the CSOs would 
actually value these program categories in an unregulated market.'') 
(emphasis added). Also, the Tyler Model's SGRP is in the nature of an 
economist's ``budget line'' (a/k/a ``budget constraint''), limiting the 
combinations of goods that a buyer can purchase. See Robert S. Pindyck 
& Daniel L. Rubinfeld, Microeconomics 82 (8th ed. 2013).\164\ The Tyler 
Model's SGRP identifies the percentage of total costs (including 
profits, which reflect opportunity costs) incurred by CSOs across their 
subscriber groups in the form of section 111 royalties. With that 
percentage/budget line established, the Tyler Model then allocates the 
portions of the weighted category minutes attributable to that SGRP 
calculation.
---------------------------------------------------------------------------

    \164\ The Judges examined two of the expert witnesses at the 
hearing regarding the concept of the ``budget line'' as it relates 
to the estimation of section 111 royalties. See 3/23/23 Tr. 1080-86 
(PTV's Johnson); 4/3/23 Tr. 2671-73 (JSC's Majure). Dr. Johnson 
found the concept applicable to the regressions at issue, but Dr. 
Majure disagreed.
---------------------------------------------------------------------------

    In sum, there is a real economic and market-based foundation for 
the Tyler Model in the context of the present record relating to the 
2014-2017 retransmission market. Moreover, the Tyler Model is 
essentially a fee-based regression, with characteristics of the fee-
generation approach, constructed in a manner that reflects both Ms. 
Hamilton's persuasive testimony and the reduction in distant 
retransmissions following the WGNA conversion.

XII. Canada Zone

    CTV maintains that Dr. George's calculation of the CCG share is 
incorrect for two related reasons: (1) the George Model as specified 
implies that CCG had compensable programming outside the Canada Zone; 
and (2) the George Model overrepresents the Canada Zone. CTV PFF ] 330.
    This problem arises because the George Model assumes that CCG 
programming would be available and valuable throughout the United 
States (i.e., outside of the Canadian Zone) if one assumes the 
inapplicability of this geographic limitation in the section 111 
license for purposes of estimating relative marketplace value for CCG 
programming. Dr. George explains why this assumption is adopted in the 
George Model:

    It is in most circumstances right to infer that programming on 
distant signals re-transmitted has higher value than other 
programming not transmitted. The primary exception is when cable 
systems are prohibited from carrying particular signals, such as the 
case with Canadian signals outside of the Canadian re-transmission 
zone.
. . .
Failing to control for the fact that transmission of Canadian 
stations is prohibited outside of the Canadian re-transmission zone 
introduces downward bias in the value of Canadian Claimant 
programming since the absence of carriage is equated with zero 
value.
. . .
It is worth repeating that the underlying economic framework is what 
governs model specification. The prohibition on distant signal 
carriage on its face imposes a restriction on cable system choices 
so must be reflected in the model. No further ``evidence'' is 
needed, or, in fact, possible, since we cannot observe prohibited 
carriage.

George WRT at 16, 25-26 (emphasis added).
    Program Suppliers, through Dr. Tyler, makes the same argument as 
CTV, and responds to Dr. George's point above as follows:

    Within the Canada zone, CSOs can choose among all of the content 
categories. But outside the Canada zone, CSOs do not have the option 
of choosing CCG content. There is a difference between having 
something available and not chosen versus not having something 
available at all. Estimating the relationships separately when the 
Canadian minutes are available or not recognizes this, and this 
approach makes more economic sense.


[[Page 54227]]


PS PFF ] 297 (and record citations therein).
    Dr. Bennett, on behalf of CTV, calculated and tabulated the impact 
on allocation shares of the difference between the approaches of Drs. 
George and Tyler as summarized above: \165\
---------------------------------------------------------------------------

    \165\ Dr. Bennett also accounted for the fact that the George 
Model ``assigns too much weight to the minutes within the Canada 
Zone . . . because [the George Model] bases [its] weights on the 
minutes within [its] non-representative regression sample (which is 
over-representative of the Canada Zone) instead of on the 
contribution that each zone makes to the aggregate royalty pool.'' 
Bennett WRT ] 54. See also id. ] 50 & fig.17.
[GRAPHIC] [TIFF OMITTED] TN28JN24.012

    Based on the foregoing, the Judges find that the George Model of 
Canadian programming's relative marketplace value is not adequately 
proven by her assumptions regarding the value of such signals if 
Canadian signals had been made available outside the Canada Zone. 
Rather, such values are speculative, and no extrapolations can be 
credibly made from the royalty data. To be clear, the Judges are not 
saying that programming on Canadian signals would not have value 
outside of the Canada Zone. But, like the programming retransmitted by 
minimum-fee-only CSOs, the value of retransmitted programming is not 
subject to accurate measurement via a revealed preference approach that 
is the economic concept behind these regressions. Indeed, because this 
point applies even with regard to minimum-fee-only CSOs who actually 
retransmitted distant programming, a fortiori it applies to the 
hypothetical retransmission of programming outside of the Canada Zone. 
Further, not only is the value of any hypothetical retransmission 
outside the Canada Zone speculative, there is also no showing that, as 
a technical matter, such transmissions further away from the Canada 
Zone would be feasible. See SDC PFF ] 219 (``[W]hile the statutory 
limitation restricting carriage of Canadian television stations to 
within 150 miles of the U.S.-Canada border or north of the forty-second 
parallel (the ``Canadian Zone'') is set forth in section 111(c)(4) and 
could therefore be rendered inapplicable in a hypothetical market 
without the section 111 compulsory license, the laws of physics would 
still operate as a practical physical limitation on Canadian station 
broadcast signals, absent an alternative (and more costly) delivery 
method such as fiber or satellite feeds.'') (emphasis added).\166\
---------------------------------------------------------------------------

    \166\ The Judges note CCG's argument that in prior proceedings, 
including one applying the fee-generation approach, the Judges and 
their predecessors did not make this geographic distinction. See CCG 
PFF ] 567-568 (and cases cited therein). But those cases either did 
not involve regression analysis or did not rely on the regression 
approach (Dr. Rosston's model) as anything other than corroboration. 
In the regression context, the Judges find it too speculative to 
assign value by correlating royalties to distant minutes that were 
never retransmitted. Moreover, although the Tyler Model, on which 
the Judges place the most evidentiary weight among the regression 
models, resembles a fee-generation approach, it is not a fee-
generation approach, as discussed supra. As the Judges have also 
noted supra, a benefit of the Tyler Model is that it better looks at 
the actual nature of the market and uses the evidence available over 
the years in question. To allow for value to be estimated by 
consideration of hypothetical programming retransmission outside of 
the Canada Zone would be inconsistent with this ``real-world'' 
rationale for crediting the Tyler Model. Additionally, because the 
regression approach, unlike the constant sum survey approach, is 
based on what CSOs actually retransmitted, in order to identify 
their market-based revealed preferences from those actual decisions, 
a grafting of the hypothetical retransmission of Canadian signals 
onto that approach appears inconsistent to the Judges. However, the 
Judges emphasize that these critiques apply only to the regression 
models of relative marketplace value, and are not intended to 
address any other adjustments that have been proffered in connection 
with the Bortz Survey, or with any other evidence, in this 
proceeding.
---------------------------------------------------------------------------

XIII. The Judges' Allocation of Shares Pursuant to the Regression 
Approach

    The Judges have considered all of the regression models proffered 
by the parties in this proceeding. None of the models were excluded 
from consideration. Based on the Judges' analysis and conclusions 
regarding each model, as set forth supra, and comparing each of them, 
the Judges find the Tyler Model to be the most appropriate regression 
model in this record.\167\ To recapitulate the principal reasons:
---------------------------------------------------------------------------

    \167\ The Judges also considered variations proffered by Drs. 
Johnson and George on their preferred models in their direct and 
rebuttal testimonies. Although some of those iterations mitigated 
certain problems in their models, none of them was sufficient to 
overcome the Judges' preference for the Tyler Model.

    1. On the present factual record, the Tyler Model's SGRP is 
preferable to the log of royalties, or royalties themselves, as the 
dependent variable in a fee-based regression.
    2. The Tyler Model avoids the conundrum of the variance/bias 
dilemma that is of particular concern in this case for other 
proffered regression models. By contrast, Drs. George and Johnson 
found themselves on the horns of this dilemma. They require fixed 
effects to avoid bias by isolating the effect of program category 
minutes on royalties. But given the post-WGNA conversion, the use of 
fixed effects, as in the model applied in the prior proceeding, 
would not generate enough observations. And yet relaxing or 
eliminating fixed effects to obtain more observations weakens the 
isolation of the effect of interest, the impact of program minutes 
on royalties, and creates bias.
    3. Among the control variables which the Tyler Model does not 
require is the control for the number of subscribers in a subscriber 
group, which is required in the other fee-based regressions, but 
cannot be estimated without measurement error.
    4. The Tyler Model utilizes as a useful analogy to price a price 
proxy in the form of a budget constraint, i.e., the SGRP.

[[Page 54228]]

    5. Although the Tyler Model is not based on a hedonic 
regression,\168\ it can reasonably be described as a ``hedonic-
inspired'' regression.\169\
---------------------------------------------------------------------------

    \168\ Dr. Tyler at times appears to describe his approach as a 
``hedonic'' regression, see Tyler ACWDT ]] 10(e), 85, perhaps on the 
mistaken belief that such a label was necessary to enhance his 
approach.
    \169\ Cf. Final rule and order, Determination of Royalty Rates 
and Terms for Making and Distributing Phonorecords (Phonorecords 
III), 84 FR 1918, 1947-48, 1950 (Feb. 5, 2019) (the Judges relied in 
part upon an economic model that was admittedly not an established 
model (the Shapley Model), but rather was a Shapley-``inspired'' 
model), vacated and remanded on other grounds sub nom. Johnson v. 
Copyright Royalty Board, 969 F.3d 363 (D.C. Cir. 2020).
---------------------------------------------------------------------------

    6. The Tyler Model's use of weighting by each CSO's gross 
receipts is appropriate.
    7. The Tyler Model calculates coefficients for each year, rather 
than ``pooling'' the data to generate a single coefficient for each 
program category across all four years.
    8. The Tyler Model provides sufficient variation among the CSOs' 
decisions.
    9. There is no credible evidence (or even a credible allegation) 
that Dr. Tyler engaged in anything that could be construed as 
specification searching. In fact, the SDC and JSC experts--who 
criticize the other regression models (including Dr. Marx's) for 
ignoring the impact of potential specification searching--
acknowledge that the Tyler Model alone is free from this infirmity. 
The Judges agree, because the absence of specification searching in 
connection with the Tyler Model allows it to be transparent and, 
specifically, free from the consumption of ``phantom degrees of 
freedom.''
    10. The alleged superficial resemblance of the Tyler Model to a 
fee-generation model is not only factually off-the-mark and legally 
irrelevant, the shared characteristics of the two models in fact 
better reflect the real-world decision-making of CSOs, as described 
in Ms. Hamilton's testimony.

    However, as also discussed supra, the Judges cannot simply adopt 
(for all circumstances) the Tyler Model to the extent it includes the 
base fees of CSOs who only paid the minimum fee from 2015-2017. Rather, 
for those years, the Judges, for the most part, rely on Dr. Tyler's 
calculation of allocation shares as derived from the coefficients he 
calculated for the CSOs paying more than the minimum fee.
    In applying Dr. Tyler's approach, the Judges first note that, for 
2014, the allocation of shares can be identified by reference to all 
the CSOs, including those who paid the minimum fee, as explained, for 
example by Dr. Marx. See Marx ACWDT ] 34 (``data on programming minutes 
and royalties based on the carriage of distant signals for 2014 are a 
close match to comparable data from the 2010-2013 proceeding.'') The 
allocation shares for 2014 in the Tyler Model, using the data for all 
CSOs in the regression, are the following:

                                                      Allocation Shares for 2014 in the Tyler Model
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Program
                       Year                          suppliers (%)       JSC (%)          CTV (%)          PTV (%)          SDC (%)          CCG (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014..............................................            26.6             37.2             11.3             14.0              4.3              6.5
                                                             (3.8)            (7.5)            (2.6)            (1.7)            (0.9)            (0.9)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(standard errors in parentheses).

See Tyler ACWDT fig.3.2.
    However, for the years 2015-2017, the Judges principally rely on 
Dr. Tyler's allocation share calculations pertaining only to the CSOs 
who paid more than the minimum fee, i.e., those whose preferences were 
revealed by their retransmission decisions. These allocation shares as 
calculated by Dr. Tyler are the following:
[GRAPHIC] [TIFF OMITTED] TN28JN24.013

    Dr. Tyler noted that these 2015-2017 share allocations were not 
``strikingly'' different from the share allocations he recommended by 
reliance on his regression results for all CSOs, even if they paid only 
the minimum fee. Tyler ACWDT ] 103. Moreover, as a theoretical economic 
matter, Dr. Tyler opined that he was not aware of ``any logic, a 
priori,'' that there would be any difference in ``relative marketplace 
values'' as between ``Above Minimum Fee CSOs'' and ``Positive Carriage 
Minimum Fee CSOs'' (i.e., including excess capacity CSOs). Id. In this 
regard, compare Tyler ACWDT fig.6.3 (above) with Tyler ACWDT fig.3.2 
(below):

[[Page 54229]]

[GRAPHIC] [TIFF OMITTED] TN28JN24.014

    However, Figure 6.3 reports an anomalous increase in the share 
allocated to the CCG claimants. This anomaly is explainable.
    CCG programming is unique among the program categories in this 
proceeding because it is limited in geographic scope to CSOs located 
within a 150-mile belt below the U.S./Canadian border. See CCG PFF ] 59 
(``Under the section 111 compulsory license, it is prohibited for a 
cable company to distantly retransmit a Canadian broadcast signal to 
communities located more than 150 miles from the United States-Canada 
border and also south of the 42nd parallel.'') (citing 17 U.S.C. 
111(c)(4)(A)).
    As such, the data reported in Tyler ACWDT fig.6.3--limited to CSOs 
paying above the minimum fee--would reflect the unique value of 
Canadian programming in that region. More particularly, CCG programming 
is uniquely valuable in the Canada Zone in good measure because of the 
retransmittal of French language programming, a niche sub-category. See 
CCG PFF ] 20 (``The programming on Canadian French-language stations 
plays an important role for Americans living in the northeast United 
States and either speak French or have French ancestry. . . . An 
example . . . is in the successful grassroots campaign of Sanford, 
Maine residents who lobbied the Metrocast cable company and their local 
government to restore carriage of the CBC's French-language station 
CKSH.''); see generally id. ] 19 (noting the distinct nature of French 
language programming in demand by CSOs to serve residents of ``New 
York, Vermont, Maine, New Hampshire, and Massachusetts--that have a 
sizeable proportion of residents with connections to the French 
language through a current spoken language or ancestry.''); see also 
Written Direct Testimony of Beverley Kirshenblatt, Trial Ex. 7400, p. 6 
(Kirshenblatt WDT) (the CBC programming on Canadian stations 
retransmitted into the Canada Zone is provided ``in English, French, 
and eight Indigenous languages . . . broadcast . . . from around the 
world [as] a pan-Canadian service reflect[ing] Canada and Canadians in 
both official languages . . . and is a significant contributor to the 
cultural fabric of Canada through the promotion and creation of a 
variety of programming.'').
    Thus, in addition to the demand for the usual complement of 
distantly retransmitted programming that exists throughout the wider 
United States, in the Canada Zone there exists this additional demand. 
Such greater demand means that CSOs would choose to pay more than the 
minimum fee by adding CCG stations, and thus Canadian claimant 
programming, to their channel lineup. Accordingly, CSOs in the Canada 
Zone would very likely be overrepresented in the cohort of above-
minimum-fee-paying CSOs in Tyler ACWDT fig.6.3.
    The problem this creates, for present purposes, is that the Judges 
are allocating a royalty pool for which, over the period 2015-2017, 
more than 90% of the funding came from minimum-fee-only CSOs. Thus, 
while the data from above-minimum-fee-paying CSOs (i.e., in Tyler ACWDT 
fig.6.3) provides useful economic evidence of CSOs' revealed 
preferences for other claimant categories, with regard to CCG content 
and value, this data is distortionary as applied to the Judges' task of 
allocating all U.S. royalties.
    Confirmatory of this distinction is the fact that CCG itself has 
not proposed that it receive the anomalously high allocations suggested 
by the data in Tyler ACWDT fig.6.3 (23.2% in 2015, 31.1% in 2016, and 
34.6% in 2017). Rather, CCG has proposed that it receive 14.8% for 
2015, 13.7% for 2016, and 13.6% for 2017. CCG PFF ] 617 fig.53. 
Further, CCG filed its Proposed Findings of Fact on June 15, 2023, and 
it was aware of the higher CCG shares in Tyler ACWDT fig.6.3 since that 
document was filed on September 2, 2022. And yet at no time did CCG 
ever seek to adopt the higher CCG share set forth in Tyler ACWDT 
fig.6.3.
    Accordingly, in their allocations based on the Tyler Model 
regression, for 2015-2017, the Judges utilize the CCG shares reported 
at Tyler ACWDT, Fig.3.2. The difference in shares, compared to the CCG 
share in Tyler ACWDT 6.3, is allocated proportionately among the other 
five categories, as set forth in the table for Adjustment A below:

                                                                   Adjustment A Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Program
                          Year                             suppliers (%)      JSC (%)         CTV (%)         PTV (%)         SDC (%)         CCG (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014....................................................            26.6            37.2            11.3            14.0             4.3             6.5
2015....................................................           46.29            2.37           12.76           14.34           10.95            13.3
2016....................................................           39.25            1.63           16.68           18.43           10.41            13.6

[[Page 54230]]

 
2017....................................................           42.79            0.65           12.84           18.41           10.11            15.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Judges recalculated the shares of the other five claimant categories by: (1) calculating the percentage each category represents of all the
  categories' shares except CCG; (2) multiplying each percentage by the reduction in the CCG share generated by replacing the CCG column of Tyler ACWDT
  fig.6.3 with Tyler ACWDT fig.3.2; and (3) adding that product to the shares of each claimant category.

    A further adjustment is still required. As noted supra regarding 
the PTV share, the Judges are adopting the downward adjustments made by 
Dr. Bennett to reflect the presence of Must Carry PTV stations. See 
Bennett WRT fig.52. The Judges apply those adjustments, and recalculate 
the shares of the other parties as set forth in the table for 
Adjustment B below:

                                                                   Adjustment B Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Program
                          Year                            suppliers  (%)     JSC  (%)        CTV  (%)        PTV  (%)        SDC  (%)        CCG  (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014....................................................           26.80           37.48           11.38           13.36            4.33            6.55
2015....................................................           47.67            2.44           13.14           11.78           11.28           13.70
2016....................................................           40.75            1.69           17.32           15.32           10.81           14.12
2017....................................................           44.07            0.67           13.23           15.96           10.41           15.66
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Must Carry adjustment in Bennett WRT fig.52 was based on the PTV shares of all CSO royalties, whereas the Judges are applying this adjustment to the
  shares of CSO royalties attributable to shares generated by CSOs paying above the minimum fee (subject to the prior adjustment for CCG, discussed
  supra). So, for 2014, the percentage point adjustment to the PTV share is the percentage point adjustment in Bennett WRT fig.52. For 2015-2017, the
  percentage point adjustment to the PTV share is calculated for each year by (1) finding the percentage of PTV shares reflected by the PTV shares from
  Tyler WRT fig.6.3 / PTV's shares from Tyler WRT fig.3.2, (2) multiplying that percentage by the percentage point adjustment in Bennett WRT fig.52, and
  (3) subtracting that product from the PTV share from the table above.
The shares of the other claimants are adjusted upward by: (1) calculating the percentage each category represents of all the categories' shares except
  PTV, (2) multiplying each percentage by the Bennett Must Carry adjustment (reduced as set forth above), and (3) adding that product to the shares of
  each claimant category.

    There remains a final adjustment. The Judges note that PTV argued 
that a significant number of its stations were retransmitted by CSOs 
together with WGNA prior to the WGNA conversion, thereby generating a 
base fee royalty and an expressly revealed preference and willingness-
to-pay. PTV further notes that post the WGNA conversion, many of these 
CSOs continued to retransmit the same PTV station, but this did not 
trigger the base fee because the minimum fee applied (with WGNA gone). 
PTV maintains that the pre-WGNA conversion carriage is probative of the 
fact that the post-WGNA conversion evidences economic value as if it 
were generating base fee royalties. PTV PFF ] 60 (and record citations 
therein). The Judges agree.
    On this issue, there is evidence in the form of Mr. Harvey's 
analysis done on behalf of JSC. Specifically, Mr. Harvey reported:

    The number of PTV Only systems increased after the WGNA 
conversion from 44 at the end of 2014 to 173 by the end of 2017. PTV 
Only Systems that had carried WGNA and PTV in 2014 account for 
three-fifths of that increase.

Harvey WDT ] 106. The Judges find that Mr. Harvey's reporting 
demonstrates that 44% of the PTV stations that were identified as 
retransmitted by minimum-fee-paying CSOs after the WGNA conversion had 
been transmitted pre-conversion and generated base fee royalties. That 
is persuasive evidence of ongoing marketplace value. Accordingly, the 
Judges use that factual finding to increase by 44% the PTV share 
modification, as set forth in the table for Adjustment C below:

                Adjustment C Table--Applying The PTV Adjustment To Reflect WTP of CSOs That Maintained PTV Carriage After WGNA Conversion
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Program
                          Year                            suppliers  (%)     JSC  (%)        CTV  (%)        PTV  (%)        SDC  (%)        CCG  (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015....................................................           44.87            2.30           12.37           16.96           10.62           12.90
2016....................................................           37.51            1.56           15.94           22.06            9.95           13.00
2017....................................................           40.39            0.61           12.12           22.98            9.54           14.35
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Judges recalculated the shares of the other five claimant categories by: (1) calculating the percentage each category represents of all the
  categories' shares except PTV, (2) multiplying each percentage by the increase in the PTV share generated by adjusting to reflect WTP of CSOs that
  maintained PTV carriage after WGNA conversion, and (3) subtracting that product from the shares of each claimant category.

    Returning to Tyler ACWDT fig.6.3, upon which the Judges principally 
rely, the Judges' decision to utilize and adjust the share allocations 
therein is strengthened by consideration of the confidence intervals at 
various levels of statistical significance, relating to those share 
allocations. That is, those confidence intervals serve to confirm the 
reasonableness of their share allocation approach. In that regard, as 
set forth in the table below, only one claimant category, JSC, has a 
negative low range bound in its confidence interval at the 90%, 95%, 
and 99% confidence intervals. Moreover, the negative value diminishes, 
as the confidence interval widens. The Judges

[[Page 54231]]

do not find that this one lower bound issue is sufficient to call into 
question the usefulness of the share allocations on which they rely.
    Additionally, at the 55% confidence interval, this lower bound in 
fact turns positive, as also noted in the table below.

55%/90%/95%/99% Confidence Intervals for Claimant Shares From Tyler Only CSOs Paying More Than Minimum Fee Model
----------------------------------------------------------------------------------------------------------------
                                           55% Confidence    90% Confidence    95% Confidence    99% Confidence
           Claimant              Share        interval          interval          interval          interval
----------------------------------------------------------------------------------------------------------------
                                                      2015
----------------------------------------------------------------------------------------------------------------
Program Suppliers............      41.0%  39.19% to 42.81%  37.05% to 44.95%  36.3% to 45.7%..  34.82% to 47.18%
                                  (2.4%)
JSC..........................       2.1%  0.97% to 3.23%..  -0.37% to 4.57%.  -0.84% to 5.04%.  -1.76% to 5.96%
                                  (1.5%)
CTV..........................      11.3%  9.64% to 12.96%.  7.68% to 14.92%.  6.99% to 15.61%.  5.63% to 16.97%
                                  (2.2%)
PTV..........................      12.7%  12.10% to 13.30%  11.38% to 14.02%  11.13% to 14.27%  10.64% to 14.76%
                                  (0.8%)
SDC..........................       9.7%  8.79% to 10.61%.  7.73% to 11.67%.  7.35% to 12.05%.  6.61% to 12.79%
                                  (1.2%)
CCG..........................      23.2%  22.52% to 23.88%  21.72% to 24.68%  21.44% to 24.96%  20.88% to 25.52%
                                  (0.9%)
----------------------------------------------------------------------------------------------------------------
                                                      2016
----------------------------------------------------------------------------------------------------------------
Program Suppliers............      31.3%  29.04% to 33.57%  26.37% to 36.24%  25.42% to 37.18%  23.57% to 39.03%
                                  (3.0%)
JSC..........................       1.3%  -0.13% to 2.735%  -1.83% to 4.43%.  -2.42% to 5.02%.  -3.59% to 6.19%
                                  (1.9%)
CTV..........................      13.3%  10.73% to 15.87%  7.71% to 18.89%.  6.64% to 19.96%.  4.54% to 22.06%
                                  (3.4%)
PTV..........................      14.7%  14.10% to 15.30%  13.38% to 16.02%  13.13% to 16.27%  12.64% to 16.76%
                                  (0.8%)
SDC..........................       8.3%  7.55% to 9.06%..  6.66% to 9.95%..  6.34% to 10.26%.  5.72% to 10.88%
                                  (1.0%)
CCG..........................      31.3%  30.04% to 32.16%  28.80% to 33.40%  28.36% to 33.84%  27.49% to 34.71%
                                  (1.4%)
----------------------------------------------------------------------------------------------------------------
                                                      2017
----------------------------------------------------------------------------------------------------------------
Program Supplier.............      33.0%  31.34% to 34.66%  29.38% to 36.62%  28.69% to 37.31%  27.33% to 38.67%
                                  (2.2%)
JSC..........................       0.5%  -0.26% to 1.26%.  -1.15% to 2.15%.  -1.46% to 2.46%.  -2.08% to 3.08%
                                  (1.0%)
CTV..........................       9.9%  8.39% to 11.41%.  6.61% to 13.19%.  5.98% to 13.82%.  4.75% to 15.05%
                                  (2.0%)
PTV..........................      14.2%  13.60% to 14.80%  12.88% to 15.52%  12.63% to 15.77%  12.14% to 16.26%
                                  (0.8%)
SDC..........................       7.8%  7.05% to 8.56%..  6.16% to 9.45%..  5.84% to 9.76%..  5.22% to 10.38%
                                  (1.0%)
CCG..........................      34.6%  33.01% to 36.19%  31.15% to 38.05%  30.48% to 38.72%  29.19% to 40.01%
                                  (2.1%)
----------------------------------------------------------------------------------------------------------------
Source: Derived from data in Tyler ACWDT fig.6.3.
Note: standard errors in parentheses.

    The Judges take note of the 55% confidence level because, as they 
stated in the 2010-13 Determination, there is nothing sacrosanct about 
the three confidence levels of 90%, 95%, and 99% when a court is 
considering econometric analyses. In this regard, the Judges take note 
of the position of the United States Supreme Court regarding the 
limited evidentiary value of confidence intervals/statistical 
significance. See Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 
40 (2011) (``the premise that statistical significance is the only 
reliable indication of causation . . . is flawed.'').
    In this regard, the Judges stated in the 2010-13 Determination:

    A statistical significance level of .01, .05 and .1 . . . is 
``often referred to inversely as the . . . confidence level,'' 
equivalent to 99%, 95% and 90%, respectively. [ABA Econometrics at 
18]. Although ``[s]ignificance levels of five percent and one 
percent are generally used by statisticians in testing hypotheses . 
. . this does not mean that only results significant at the five 
percent level should be presented or considered [because] [l]ess 
significant results may be suggestive, even if not probative, and 
suggestive evidence is certainly worth something.'' [F. M. Fisher, 
Multiple Regression in Legal Proceedings, 80 Colum. L. Rev. 717-718 
(1980)]. Thus, ``[in] multiple regressions, one should never 
eliminate a variable that there is a firm foundation for including, 
just because its estimated coefficient happens not to be significant 
in a particular sample.'' Id. However, care must be taken not to 
confuse the ``significance level'' with the ``preponderance of the 
evidence'' standard, because ``the significance level tells us only 
the probability of obtaining the measured coefficient if the true 
value is zero,'' so one cannot ``subtract[ ] the significance level 
from one hundred percent'' to determine whether a hypothesis is more 
or less likely to be correct. Id. See also D. Rubinfeld, 
Econometrics in the Courtroom, 85 Col. L. Rev. 1048, 1050 (1985) 
(``[I]f significance levels are to be used, it is inappropriate to 
set a fixed statistical standard irrespective of the substantive 
nature of the litigation.''); D. McCloskey & S. Ziliak, The Standard 
Error of Regressions, 34 J. Econ. Lit. 97, 98, 101 (1996) 
(``statistically significant'' means neither ``economically 
significant'' nor ``significant [in] everyday usage [where] 
`significant' means `of practical importance' . . . .'').


[[Page 54232]]


2010-13 Determination at 3571 n.78. The Judges apply the foregoing 
principles here. To be clear, the Judges are not substituting the 
significance levels/confidence levels for the preponderance of evidence 
(marginally greater than 50%) standard. Rather, the Judges are looking 
to various levels of statistical significance/confidence intervals to 
determine the probability of obtaining Dr. Tyler's measured coefficient 
if the true value was in fact zero. And, the Judges are not wedded to 
the convention of the 90%, 95% and 99% confidence levels, because they 
agree with Dr. Rubinfeld, whose treatise is cited above, for the 
proposition that ``if significance levels are to be used, it is 
inappropriate to set a fixed statistical standard irrespective of the 
substantive nature of the litigation.''
    The nature of this litigation, as the D.C. Circuit has held 
(discussed elsewhere in this determination) is an intensely practical 
endeavor, one in which mathematical precision is not possible, and 
where ``rough justice'' is the norm. In this regard, the Judges also 
follow--in addition to the Supreme Court holding in Matrixx--the 
guidance of two scholars (also quoted above in the 2010-13 
Determination) who have written extensively to caution, as a matter of 
economic ethics, against a fixation on statistical significance:

    Statistical significance is not equivalent to economic 
significance nor to . . . legal . . . significance. . . . The core 
problem is that statistical significance is neither necessary nor 
sufficient for testing . . . material fact in a court of law. . . .

Stephen T. Ziliak & Deirdre McCloskey, Lady Justice Versus Cult of 
Statistical Significance, in George F. DeMartino & Deirdre McCloskey, 
The Oxford Handbook of Professional Economic Ethics 352-53 (2016). The 
need to avoid overreliance on low levels of statistical significance 
(i.e., large confidence intervals) has been emphasized by Dr. Kennedy, 
in his textbook cited by the parties and the Judges in this proceeding. 
See Kennedy, supra, at 366 (listing as one of his ``Ten Commandments of 
Applied Econometrics'': ``Do not confuse statistical significance with 
meaningful magnitude.'').
    Accordingly, the Judges note specifically that the table above 
shows, with regard to the confidence intervals for Dr. Tyler's shares, 
only positive numbers for all claimant categories in 2015 at the 55% 
level. Further, the table also shows only positive numbers for all 
claimant categories for all confidence levels in all years except for 
JSC, with a lower bound value for JSC of only -0.13 in 2016 and -0.26 
in 2017.\170\
---------------------------------------------------------------------------

    \170\ The negative JSC number at the higher confidence intervals 
may be the consequence of the lower number of minutes in the 
regression after the full WGNA conversion. As noted supra with 
regard to small sub-categories of programming, when there are very 
few minutes in the regression, the estimates can be inaccurate.
---------------------------------------------------------------------------

    Although the Judges find these data to be persuasive in 
demonstrating that Dr. Tyler's shares are reasonable, they are 
concerned that the intervals remain somewhat wide, and they do not 
simply dismiss out-of-hand the one negative lower bound at the higher 
confidence intervals. Relatively wide ranges in regression results have 
been a previous concern in these proceedings, as noted with regard to 
the Waldfogel Model applied to the 2004-05 proceeding:

    [W]hile the Waldfogel regression analysis provides useful 
information, we also find that there are limits to that usefulness 
in corroborating the Bortz survey, largely stemming from the wide 
confidence intervals for the Waldfogel coefficients. Thus, the 
implied share of royalties calculated by Dr. Waldfogel would change 
substantially if the true value of the variable was at one end of 
the confidence interval rather than at the point estimate value used 
by Dr. Waldfogel in his calculations. . . . Nevertheless, while one 
may question the precision of the results on this basis, it only 
cautions against assigning too much weight to its corroborative 
value.

2004-05 Distribution Order at 57063, 57068.
    The reconciliation is different here than in the 2004-05 
proceeding, because here the Judges are considering the regression 
evidence and the Bortz Survey evidence as essentially equally weighted 
and useful (but not flawless) evidence, rather than treating the 
regression evidence as merely corroborative of the survey evidence. 
Likewise, the reconciliation will be different than in the 2010-13 
proceeding, because the Judges are not giving any primacy to the 
regression evidence in this proceeding, given how the changes in the 
retransmission sector after the WGNA conversion have affected the 
available data. But the overall point remains: As in prior proceedings, 
the Judges take note of the wide confidence intervals (and the negative 
JSC coefficient at the lower bound), as one reason to balance the 
shares implied by the Tyler Model, as adjusted above, against the 
results of the Bortz Survey, also as adjusted.

XIV. 3.75% Fund

    In the 2010-13 Determination, the Judges made no distinction within 
the regression approaches themselves between allocation shares 
attributable to the Basic Fund and to the 3.75% Fund. Rather, as here, 
the Judges first made their overall allocation share decision after 
applying all the useful evidence, including evidence from the surveys 
and regressions. Only then did the Judges consider how to allocate the 
claimants' royalty shares as between the Basic Fund and the 3.75% Fund.
    Specifically, the Judges in the 2010-13 Determination engaged in 
the following approach in reconciling the 3.75% Fund with the Basic 
Fund: (1) The Basic Fund percentage allocations were made without 
disaggregating royalties attributable to the 3.75% Fund and (2) the 
3.75% Fund percentage allocations were made by ``reallocat[ing] the PTV 
share from [the Basic Fund] proportionally among the categories that 
participate in that fund.'' 2010-13 Determination at 3611. In reaching 
this ruling, the Judges ``considered and rejected PTV's arguments that 
the allocations of Basic Fund royalties must be adjusted to account for 
PTV's non-participation in the 3.75% Fund.'' Id. (It is undisputed that 
PTV cannot receive any share from the 3.75% Fund.)
    In the present case, all the parties, except PTV, made arguments 
and presented testimony proposing that the Judges make the 3.75% Fund 
allocations in the same manner as in the 2010-13 Determination.\171\ 
PTV, however, through the Johnson Model, has departed from the prior 
approach and calculated, via regression analysis, separate allocations 
for the Basic Fund and for the 3.75% Fund. According to PTV, this is 
warranted because, even though it was not the method used previously, 
the Judges have acknowledged the ``need to allocate the Basic Fund and 
the 3.75% Fund separately.'' PTV PHRB at 36-37. But PTV elides the fact 
that Dr. Johnson's separate modeling of the two rates is not how the 
separate allocations were accomplished in the 2010-13 Determination, as 
noted supra.
---------------------------------------------------------------------------

    \171\ CTV, through its counsel, proposed an alternative method 
for allocating the 3.75% Fund in its RPHB at 64-65. However, this 
proposed alternative was not linked to any portion of the record, 
directly or indirectly. Factual assertions cannot be made after the 
close of evidence and, in any event, cannot be made by counsel. The 
Judges therefore do not consider CTV's alternative 3.75% Fund 
proposal. See Johnson v. Copyright Royalty Board, 969 F.3d 363, 383 
(D.C. Cir. 2020) (rejecting the Judges' reliance on a party's 
proposal made ``for the very first time after the evidentiary record 
was closed.'').
---------------------------------------------------------------------------

    As other parties note, the approach sought by PTV and Dr. Johnson 
is not only inconsistent with the Judges' prior approach, but also 
inconsistent with the facts and with economic theory. As Dr. George 
comprehensively explained:


[[Page 54233]]


    Dr. Johnson's model produces biased results because it excludes 
3.75% fees. Dr. Johnson's model relates base rate royalties rather 
than total royalties to claimant programming minutes. . . . 
[T{time} his approach does not align with the economic theory that 
supports regression estimates in these proceedings. Specifically, 
profit maximization dictates that systems add distant signals if the 
full incremental value exceeds the full incremental cost. By 
excluding royalties associated with 3.75% fees, coefficient 
estimates do not reflect the full cost of distant signal carriage 
and hence do not reflect the full value of claimant programming. 
Stated another way, a cable system's choice to carry a signal 
subject to 3.75% fees reveals the system's willingness to pay for 
signals to be higher than the royalty expenditure Dr. Johnson 
includes in his regression. Omitting 3.75% fees from the dependent 
variable will produce regression coefficients that systematically 
overstate the value of public television programming not subject to 
3.75% fees and systematically understate the value of other 
programming.
    Dr. Johnson separately estimates his regression model using only 
fees paid to the 3.75% fund. This model suffers from the same 
problem as considering base rate royalties alone: the dependent 
variable does not reflect the full incremental costs of carriage, so 
the model produces biased estimates of program values. These 
estimates also cannot be used to estimate the relative market value 
of programming because they do not reflect the economic choices of 
systems in the cable marketplace.

George WRT at 23-24 (emphasis added). See also Commercial Television 
Claimants' Post-Hearing Brief in Support of Proposed Royalty 
Allocations at 48 (CTV PHB) (``Dr. Johnson's isolation of the base and 
3.75% fees is inconsistent both with basic economic intuition and 
statistical evidence of a correlation between those carriage decisions 
and thus does not account for the link between these retransmission 
decisions.''); PS PHB at 55 (``There is no rational economic reason to 
exclude decisions relating to the carriage of non-permitted stations in 
assessing CSO preferences.'').
    The Judges agree that it makes no economic sense to separate out 
the two royalty fund payments when the CSOs would economically make no 
distinction between the two funds when identifying their royalty costs 
and benefits. (That is, money is fungible, and the CSOs would be 
indifferent as to how their royalty payments were divided between the 
two funds.) Further, the Judges are struck by the fact that PTV and Dr. 
Johnson did not take note of this point when proposing their novel 
approach, and that PTV's novel approach just so happened to 
significantly increase PTV's allocation share in the Basic Fund. See 
CTV PHB at 48 (and record citations therein) (``[I]f Dr. Johnson had 
estimated his regression using both the base fee and 3.75% fee, the 
implied shares for PTV would have dropped by more than 5% . . . from 
2015 to 2017.''). See also Johnson WRT tbl.4 (acknowledging a five-
percentage point increase in PTV's Basic Fund over the 2014-2017 
period, from 43.5% to 48.5% (an 11.5% increase in PTV's share), by 
separating out the allocations for the two funds).
    Accordingly, nothing was persuasively presented in the regression 
analyses to support a deviation by the Judges from establishing the 
3.75% fund allocations as they adopted in the 2010-13 Determination.

XV. Industry Experts

A. Assumptions Regarding CSO Behavior

    PTV offered industry expert testimony Lynne Costantini who 
testified that cable companies evaluate whether to add, delete or 
maintain channels on their lineups by analyzing the overall value a 
particular channel adds to their content offerings and the ability of 
the programs on the channel to attract and retain pay TV subscribers, 
within the context of the programming mix on the then-current lineup, 
as well as technological and economic constraints.\172\ Written Direct 
Testimony of Lynne Costantini, Trial Ex. 7301, at 5 (Costantini WDT); 
3/27/23 Tr. 1591-92 (Costantini). She then offered her opinion that, 
based on the aforementioned programming goals of CSOs, the relative 
value to cable companies of programs included in PTV Distant Broadcast 
Stations had increased. Costantini WDT at 8-10. Several other industry 
experts attested to the value of programming that attracts and retains 
subscribers. See, e.g., Written Direct Testimony of Kate Alany, Trial 
Ex. 7302, at 2 (Alany WDT); Singer WDT at 7-8; Written Direct Testimony 
of Daniel Hartman, Trial Ex. 7110, at 7-9 (Hartman WDT); Witmer WRT at 
7; Written Direct Testimony of Alex Paen, Trial Ex. 7603, at 13.
---------------------------------------------------------------------------

    \172\ This testimony is consistent with the Judges' findings in 
prior distribution proceedings 2010-13 Determination at 3590 (``CSO 
executives' valuations reflect their conclusions regarding the 
extent to which the category of programming contributes to the 
return on that investment; i.e., helps the cable system attract and 
retain subscribers.'').
---------------------------------------------------------------------------

    Sue Ann Hamilton, an industry expert whose testimony on behalf of 
Program Suppliers in the 2010-13 Cable Proceeding has been submitted as 
designated testimony in this proceeding, testified that a CSO's 
selection of stations for distant retransmission is marked by inertia, 
not by an affirmative analysis and weighing of alternative stations. 
Written Direct Testimony of Sue Ann Hamilton (2010-2013), Trial Ex. 
7061, at 7 (Hamilton WDT (2010-13)). She identified two reasons for CSO 
inertia. First, distant retransmission costs represent a non-material 
expenditure for CSOs compared with their other more expensive 
programming and carriage decisions. Id. at 9. Second, she testified 
that CSOs are more concerned with losing existing subscribers if they 
drop certain stations and the associated programs than they are with 
whether or not any new retransmitted station and its associated 
programs might entice new subscribers. Id. In industry jargon, CSOs are 
more concerned with legacy distant signal carriage than with adjusting 
the roster of distantly retransmitted stations. Id. at 15. Thus, Ms. 
Hamilton implied, any correlation between program categories and 
royalties is spurious, because it is ``inconsistent with [her] 
understanding of how CSOs actually make distant signal carriage 
decisions.'' Id.
    The Judges again find that Ms. Hamilton was a knowledgeable and 
credible witness, particularly with regard to the de minimis impact of 
distantly retransmitted stations on CSOs and the importance of ``legacy 
carriage.'' Moreover, the Judges take note that CSO time and effort are 
themselves finite resources (opportunity costs), and, as Ms. Hamilton 
implied, it would behoove a rational CSO to expend more of those 
resources making carriage and programming decisions with a greater 
financial impact.\173\
---------------------------------------------------------------------------

    \173\ Given the low value of retransmitted stations, a CSO might 
rationally emphasize the value of ``legacy carriage'' as a heuristic 
(without further analytical effort), assuming as Ms. Hamilton 
implies, that eliminating a distantly retransmitted legacy station 
and its programs is more likely to cause a loss in subscribers than 
a change in station lineup is likely (without further and costly 
analytical effort) to increase the number of subscribers.
---------------------------------------------------------------------------

    Based on the entirety of the record, the Judges do not find that 
the relative unimportance of distantly retransmitted stations to a CSO 
has deprived the regressions in evidence of value in this proceeding. 
Even if CSOs emphasize legacy carriage over potential increases in 
value from adding or substituting different local stations for distant 
retransmission, otherwise well-constructed regressions remain a 
reliable approach to capture the relative values of those legacy-based 
decisions. The Judges are mindful that regression analyses provide 
benefit because they look for a correlation between economic actors' 
choices (the independent explanatory variables) and the dependent 
variables as potential circumstantial evidence of a causal

[[Page 54234]]

relationship, but they do not purport to explain what lies behind such 
a potential causal relation.

B. Value

1. Volume of Programming Minutes
    Several industry expert witnesses testified that, from a 
distributor's perspective, the value and volume of certain categories 
of programming are not correlated. See, e.g. Witmer WRT at 11; 4/10/
2023 Tr. 4050:11-4051:8 (Witmer); 4066:1-3, Singer WDT at 19; Singer 
WRT at 8; Hartman WDT at 23; Written Rebuttal Testimony of Daniel 
Hartman, Trial Ex. 7111, at 9 (Hartman WRT); Written Direct Testimony 
of John S. Sanders, Trial Ex. 7500, at 25 (Sanders WDT).\174\ Such 
testimony was generally offered to challenge the regression analyses 
that look to the relationship between the total royalties paid by cable 
operators for carriage of distant signals and the quantity of 
programming minutes by programming category a reliable methods to 
assign relative market value. A similar indication, that value and 
volume of certain categories of programming are not necessarily 
correlated, was also expressed by industry experts who testified on 
behalf of proponents of regression analyses using minutes of 
programming. For instance, Lynne Costantini, industry expert offered by 
PTV, testified that ``you don't sell programming or buy programming 
based upon the number of minutes.'' 3/28/23 Tr. 1735-36 (Costantini). 
However, industry experts also cautioned against simply looking at the 
price of programming and not weighing the volume of licensed content 
available to consumers when assessing relative marketplace value. 4/19/
23 Tr. 5406-07 (Homonoff).
---------------------------------------------------------------------------

    \174\ At the same time, several of the same JSC experts conceded 
that there is a relationship between price, or willingness to pay, 
and quantity of live team and professional sports games. 4/3/23 Tr. 
at 2798-99 (Singer); 4/05/23 Tr. at 3317, 3318 (Warren); 4/10/23 Tr. 
at 4072-73 (Witmer).
---------------------------------------------------------------------------

    Based on the entirety of the record, the Judges are not persuaded 
by industry expert testimony that the value and volume of programming 
are not correlated. The industry expert evidence is set against the 
more well-established sound economic reasoning underlying the 
regression analyses in this proceeding. The explanation for the Judges 
finding logical economic bases to rely on allocations based on 
programming minutes by programming category from the regression 
analyses is addressed supra.
    That is not to say that regressions correlating program category 
minutes and a measure of royalties is necessarily the only way to 
determine value. As discussed elsewhere in this determination, and as 
confirmed by some of the industry testimony, the Judges recognize that 
certain categories of programming, particularly JSC programming, 
bundled together with programming from other claimant categories, can 
have a value (in terms of retaining or adding subscribers) necessarily 
that is not well-correlated with overall program minutes. To the extent 
that this bundling of programming with varying values is not smoothed 
out by the averaging undertaken by the regressions, survey analysis 
would be an appropriate tool to identify such value to a CSO within a 
station bundle.
2. Unique Niche Content
    CCG, JSC, and SDC assert that the regression analyses fail to 
adequately capture the value of ``niche'' programming or to 
appropriately reflect the testimony of industry expert fact witnesses 
concerning the salient market conditions in the cable industry during 
the years at issue in this proceeding. CCG PFF at 178-79 and record 
citations therein; SDC PFF at 64 and record citations therein; JSC PFF 
at 58-59 and record citations therein.\175\ The Judges were urged to 
test the validity of regression analyses against other evidence of 
value, as a ``reality filter.'' \176\
---------------------------------------------------------------------------

    \175\ JSC also asserted that regression analysis was unreliable 
as it overvalued certain content types in relation to JSC content, 
pointing to valuations of paid programming, devotional content, and 
public television content. JSC PFF at 60-65 and record citations 
therein
    \176\ Asker WRT at 45 (``It is standard practice in econometric 
research to test the external validity of findings whenever 
alternative methods are available to answer the same question.''); 
Harvey WRT at 38-41; 3/28/23 Tr. 1910:3-1911:3 (Harvey) (agreeing 
with Judge Strickler that ``validity test'' is synonymous with 
``reality filter''); 4/18/23 Tr. at 5168:8-5169:8 (George) (urging 
that the reality filter should reflect the relevant marketplace 
being considered/measured), See also, CCG PPFCOL at 31 and record 
citations therein.
---------------------------------------------------------------------------

    JSC's industry expert witnesses testified that JSC content is 
unique as ``perishable'' content. 4/3/23 Tr. 2750 (Singer). That is, 
each live game is a singular, real-time event. Mr. Singer asserted that 
JSC content is largely unique in the marketplace as among the last 
regularly scheduled ``tune-in'' programs. He added that live sports 
competitions are mostly only important while they are taking place, do 
not lend themselves to recording, and are not compelling on replay. He 
further stated that sports are popular with a passionate segment of 
customers of the type that television distributors focus on retaining. 
Singer WRT at 4-5.\177\ Such sentiments, offered as an indication of 
the unreliability of regression analyses and their results, were 
reiterated by additional JSC industry expert witnesses. 4/5/23 Tr. 
3349-50 (Hartman); Witmer WRT at 9; 4/10/23 Tr. 4061-62 (Witmer); 
Hartman WDT at 10; JSC PFF at 134-41 and record citations therein.
---------------------------------------------------------------------------

    \177\ Mr. Singer asserted that games are particularly valuable 
cases of retransmission to geographic areas with deep affinity to 
specific teams. Singer WDT at 17-18. Several examples of such 
transmissions were cited to by JSC. JSC PFF at 28-30 and record 
citations therein. This assertion was disputed by Program Suppliers 
as merely anecdotal. PS PFF at 43-44 and record citations therein.
---------------------------------------------------------------------------

    SDC points to similar assertions from industry experts regarding 
the value of its niche content. Written Direct Testimony of Toby 
Berlin, Trial Ex. 7508, at 7-10; Written Rebuttal Testimony of John S. 
Sanders, Trial Ex. 7501, at 27 (Sanders WRT); SDC PFF at 76-79 and 
record citations therein. Program Suppliers noted that niche 
programming is not limited to devotional content, and that non-JSC 
``Other Sports'' programming is valued as niche programming. PS PFF at 
18-19, citing 4/10/23 Tr. at 3824-25 (Berlin), and other record 
citations therein. Similarly, CCG observed that its programming, 
including French content, qualifies as unique and valuable niche 
programming that attracts and retains subscribers. CCG PFF at 178-79, 
citing Kirshenblatt WDT at 10-18.
    The Judges find Mr. Singer and Mr. Berlin to be particularly 
credible witnesses in relation to their testimony regarding the unique 
value of JSC content and SDC content in relation to the other content 
categories during the relevant time period. Based on the entirety of 
the record, the Judges are persuaded that evidence of the unique value 
of CCG, JSC, and SDC content serves as a limitation on the 
applicability of certain proposed regression analyses and their 
resulting proposed allocation results. These validity test or reality 
filter findings do not negate valid application of regression analyses 
as a basis for allocation. However, these factors are taken into 
account within the Judges' weighting of the allocation methodologies, 
including application of the Bortz survey, as addressed infra.
3. Streaming and Availability on Other Platforms
    JSC testified that the value of programming is diminished when that 
same type of content is available elsewhere, especially for cheaper or 
no cost. 4/3/23 Tr. 2749 (Singer); 4/5/23 Tr.

[[Page 54235]]

3357 (Hartman); Hartman WDT at 18-19. The JSC industry expert witnesses 
testified that there is a lower risk of losing any subscribers when 
such content is not carried. Witmer WRT at 14; 4/5/23 Tr. 3378:12-24 
(Hartman); Hartman WDT at 18-19. These sentiments were echoed by PTV's 
industry expert Lynne Costantini. Costantini WDT at 7; 3/28/23 Tr. 
1718-19 (Costantini).
    SDC pointed to testimony of a similar dilutive effect from 
streaming, regarding Program Suppliers' programming. SDC noted that 
syndicated series and movies, represented in Program Suppliers content, 
historically had often exclusively run on broadcast stations, but were 
increasingly becoming available on streaming platforms, which grew in 
popularity during the relevant period. SDC PFF at 108, citing 
Costantini WDT at 7; Hartman WRT at 10-11. SDC also argued that its 
content did not suffer from a dilutive effect from streaming, as 
streaming services were not designed to cater to devotional audiences, 
thus preserving the retentive value of SDC content to CSOs. SDC PFF at 
109-10 and record citations therein.
    Program Suppliers asserted that while syndicated shows and movies 
are available on streaming platforms, that does not necessarily detract 
from the value of such programs on distant signals. It noted that that 
as streaming rose, the volume of Program Supplier content carried on 
distant signals rose as well. 4/19/23 Tr. at 5408 (Homonoff).
    CCG testified that while significant CCG content was offered 
through streaming, it was generally only after exclusive premier via 
broadcast. Kirshenblatt WDT at 11-13; see also Written Direct Testimony 
of Tom Cox, Trial Ex. 7401, at 1-2. PTV offered testimony that during 
the relevant years significant portions of PBS programming were offered 
and viewed free through various digital streaming options. PTV also 
testified that PBS sold streaming devices related to such free 
streaming content. 3/27/23 Tr. 1545-50 (Alany).
    CTV offered that during the relevant period, the dilutive effects 
of streaming were not present for original live and local CTV 
programming or for JSC programming, which was largely unavailable on 
streaming platforms. Written Rebuttal Testimony of Robert Papper, Trial 
Ex. 7206, at 45 (Papper WRT); Written Rebuttal Testimony of Mike 
Vaughn, Trial Ex. 7205, at 4. CTV PFF at 11-15, and record citations 
therein. CTV's industry experts, as well as Professor Marx, were 
especially convincing in distinguishing the effects that streaming had 
on CTV content versus other types of programming. See, e.g., 4/11/23 
Tr. 4240:22-4241:12; Tr. 4234:6-10 (Marx).
    The Judges find credible evidence that Program Suppliers' content 
was more predominantly available through streaming channels during the 
relevant period. Therefore, based on the entirety of the record, the 
Judges find evidence of dilutive effects to be persuasive as an 
indicator of decreased relative value of Program Suppliers content. 
Additionally, the Judges find that CTV content, especially original 
live local news content, was generally not diluted by streaming and 
that this is a persuasive indicator of relative increased value of CTV 
content. The Judges apply these factors into their weighting of 
allocation methodologies. Duplication
    Industry executives testified that duplicative content does not add 
value as it does not further CSOs' goals of subscriber retention. 
Singer WRT at 15-16; Hartman WRT at 12; Witmer WRT at.15. JSC asserted 
that a significant proportion of the programming on distant PBS signals 
was duplicative of what was already available from CSOs to subscribers, 
and reiterated that such duplication did not provide value. Harvey CWDT 
at 51; Witmer WRT at 14; 4/10/23 Tr. 4064:18-4065:4 (Witmer).\178\ JSC 
pointed to a study that found rates of duplication for these programs 
to be as high as 98.9%. Harvey CWDT at 55 tbl.28. Mr. Papper also 
asserted that programming on PTV stations is mostly duplicative and 
much of it at the exact same time. Papper WRT at 15. Mr. Papper 
provides specific examples to demonstrate duplicative airing of 
programming, all demonstrating higher duplication than the overall 
result average. Id at 16-41. Mr. Papper notes that the duplication was 
a bit lower in 2016 and 2017, but there still is significant 
duplication of programming. Id. at 41. In contrast, duplication with 
CTV signals was perceived as minimal. Id. at 42. Mr. Papper argues the 
large amount of duplicative programming rarely provides a good reason 
to import a distant PTV signal unless there really is not a local one. 
He argues this is supported by the data in which during the 2014-2017 
period, only slightly more than a third of the systems and slightly 
over a quarter of the subscriber groups had both a distant and local 
PTV signal. Id.
---------------------------------------------------------------------------

    \178\ SDC offered a similar view of PTV content. See SDC PPFCOL 
at 112, record citations therein.
---------------------------------------------------------------------------

    The assertions against finding value of duplicative programming 
were criticized for treating programs as duplicative even if they did 
not air at the same time on both the distant and the local signal or 
even if the distant and local signals aired different episodes of the 
same program. Johnson WRT Ex. 7303 at 40-44.\179\ Dr. Johnson argued 
that different episodes of the same program are distinct programming, 
and a single episode of a program can create incremental value if shown 
at a different time. Dr. Johnson conducted an analysis of duplication 
and found that only approximately 20 percent of PTV programs were 
retransmitted to subscriber groups at the same time as a local 
broadcast. Id. at 41. JSC addressed the former point by the minimal 
value of time-shifted programming does not accrue to retaining cable 
subscribers. 4/3/23 Tr. 2764:13-19 (Singer).
---------------------------------------------------------------------------

    \179\ PTV's witness Ms. Alany acknowledged duplication as an 
issue, suggesting that local public television stations may adjust 
programming schedules in order to avoid or minimize duplication, but 
did not offer any evidence of such adjustments having taken place. 
Alany WDT at 21; 3/27/23 Tr. 1557:20-25 (Alany).
---------------------------------------------------------------------------

    Based on the entirety of the records, the Judges find that 
significant duplicative content does not, in general, have the same 
value as non-duplicative programming. The industry experts presented 
reliable testimony that simultaneous or near simultaneous programming 
does not enhance the ability to attract and retain customers. However, 
the Judges also find that time shifted programming does have some value 
to customers, affording them greater flexibility in their viewing, and 
therefore provides customer retention value to CSOs. The Judges address 
this factor in making adjustments to regression methodologies (the 
Bennett adjustment) and in the Judges' weighting of the allocation 
methodologies.
4. Bandwidth
    Ms. Costantini testified that CSOs' programming decisions should 
reflect the highest and best use of scarce bandwidth, and that all 
decisions to carry programming are thus necessarily indicative of 
value. Regarding bandwidth issues, Ms. Costantini challenged the 
testimony of other industry experts (addressed below) by asserting that 
bandwidth considerations were a significant factor in the programming 
decision-making of cable companies during the relevant time period. 
Costantini WRT at 3-6. She testified that during the relevant period, 
many cable companies provided three distinct products: pay TV, 
broadband internet (important to support internet video products) and 
IP phone, each of which competed within the CSO that was seeking the 
most profit able uses of

[[Page 54236]]

appropriate amounts of bandwidth. Ms. Costantini testified that CSOs 
placed more value on broadband internet than CSO television 
programming. Costantini WRT at 4; 3/27/23 Tr. 1597-1605 (Costantini). 
In support of this view, she pointed to her professional experience 
while seeking cable distribution during the period 2012-2016, including 
negotiations with CSOs that oftentimes cited bandwidth allocation as a 
reason not to carry a new channel. Costantini WRT at 5-6. However, Ms. 
Costantini also testified to an inability to determine whether ``most 
or many or the majority'' of CSOs even provided internet service 
(bandwidth) during the relevant time period. 3/27/23 Tr. 1613 
(Costantini).
    Ms. Witmer testified that during the relevant period, advances in 
digital technology meant that bandwidth was no longer a significant 
driver of carriage decisions. Witmer WRT at 7 n.3. Ms. Witmer asserted 
that deployment of switched digital technology, headend consolidations, 
and reclamation of analog bandwidth cable channels opened up 
considerable digital bandwidth on systems that enabled the launch of 
more channels and other consumer products such as telephone and 
broadband services. Several other industry experts also testified that 
bandwidth was no longer a constraint during the relevant period. Singer 
WDT at 7; Singer WRT at 5; 3/30/23 Tr. 2595:13-2597:24 (Majure); 4/3/23 
Tr. 2764:20-2765:14 (Singer).
    Based on the entirety of the record, the Judges are not persuaded 
that bandwidth remained a significant concern for most CSOs who the 
record established employed more advanced technology than in previous 
periods. Bandwidth allocation may have been a legitimate but un-
specific concern for smaller CSOs that had not employed improved 
digital technologies in the early years of the relevant time period. 
However, on the current record, the Judges are not able to perceive any 
reliable scope of bandwidth being a significant concern for CSOs in 
relation to programming decisions. Therefore, the issue does not impact 
the Judges consideration of the methodologies or resulting allocations 
offered this proceeding.
5. Other Factors: Cost, Acclaim, Trust
    Ms. Alany's offered testimony to indicate relative market value of 
PTV content is demonstrated by production cost and quality/acclaim of 
content as well as the level of trust that PBS enjoys in the public 
eye. See, e.g., Alany WDT at 6-12, citing PBS Trust Brochures 2014-
2018; 3/27/23 Tr. 1535:16-1537:1 (Alany). Other industry experts also 
offered similar testimony regarding production cost matters and 
quality/acclaim. 4/13/23 Tr. at 4918-21 (Paen).
    In response, other expert witnesses argued that such 
characteristics do not equate to the ability to attract and retain 
subscribers and economic value. Singer WRT at 17-18; Hartman WRT at 13-
15; Witmer WRT at 16. Ms. Witmer, on behalf of JSC, added that the 
notion that costs of such programming should be considered in royalty 
share allocation is contrary to the standard for determining the share 
allocation, namely what would a cable system pay for the content absent 
the section 111 license. Witmer WRT at 15.
    Based on the entirety of this record, the Judges are not persuaded 
that issues of production cost, quality/acclaim of content or the level 
of trust that a producer enjoys in the public eye are meaningful toward 
the Judges' determination of relative market value. The Judges 
understand that, at some level, programming cost and acclaim may impact 
value. However, the present record does not equip the Judges to 
evaluate these factors on a comparative level. Sufficiently established 
studies of comparative public trust in a producer's content especially, 
news content, might be properly presented as a valid indication of 
relative market value. However, the present record, including PBS-
commissioned trust survey, does not provide a reliable basis for 
determining the ability to attract and retain subscribers or for 
adjusting the Judges' determination of relative market value. In this 
regard the Judges note that PTV did not adequately correlate levels of 
public trust with what CSO might be willing to pay for programming. 
Therefore, these factors do not impact the Judges' weighting of the 
main methodologies or resulting allocations offered this proceeding.

C. Industry Experts Regarding Bortz Survey Respondents' Identity and 
Capacity

    In her rebuttal and hearing testimony, for PTV, Ms. Costantini 
challenged the Bortz survey by asserting that the survey likely did not 
reach the correct executive that is most responsible for carriage 
programming decision-making in more than 75 percent of the surveyed 
cable systems across the four years for the following reasons. 
Costantini WRT at 6-10, 18-47; 3/27/23 Tr. 1621-25, 1595-96 
(Costantini). She maintained that the survey likely did not interview 
the individuals most responsible for programming carriage decisions for 
these cable systems. Id. She appeared to accept that Bortz Media used 
the Television & Cable Factbook (Factbook) to identify contacts for 
each respective system, particularly telephone numbers, and that Bortz 
Media usually selected the senior-most executive from that cable system 
to list as the initial point of contact or the survey questionnaire. 
Costantini WRT at 6-7. However, she indicated the approach was faulty 
because the Factbook does not specifically identify programming 
carriage decision-makers. She stated that in her experience job 
position titles at cable companies are insufficient without other data 
points to assess whether the individual is likely to be most 
responsible for programming decisions. She testified that in the 
majority of instances, the description of Bortz respondents' positions 
do not indicate programming decision-making responsibilities. 
Costantini WRT at 8.
    Ms. Costantini also noted that while some respondents are unlikely 
to be most responsible for programming carriage decisions, especially 
for larger cable companies, in some instances, they may provide 
valuable input regarding programming carriage to the ultimate decision-
makers. She added that the persons holding regional management 
positions are not necessarily more likely to be most responsible for 
making programming decisions and that at larger cable companies persons 
holding regional management positions would not be the persons most 
responsible for making programming decisions. 3/27/23 Tr. 1621-22 
(Costantini). She also found that it would be highly unlikely for the 
title or position of the person most responsible for making programming 
decisions at a cable system to change year to year, as was alleged to 
be the case in the Bortz survey. Costantini WRT at 9. These factors led 
Ms. Costantini to opine that Bortz likely did not interview the persons 
most responsible for programming carriage decisions for more than 75% 
of the surveyed cable systems across the four survey years. A summary 
of these issues was included as Table 1 to her rebuttal testimony. 
Costantini WRT at 18-47.
    Ms. Costantini added that the Factbook data are potentially 
unreliable as a foundation from which Bortz could ascertain the persons 
most responsible for making programming decisions at the surveyed CSOs. 
Costantini WRT at 6-7. She also found fault with the Bortz survey's 
failure to attempt to independently validate the respondents' roles and 
responsibilities utilizing publicly available sources such as LinkedIn 
or cable companies' websites, or by asking other questions to confirm 
they were speaking to the appropriate person. Costantini WRT at 6-7.

[[Page 54237]]

    Ms. Costantini testified that the questions asking respondents to 
assign importance, cost, and value to programming on distant broadcast 
stations are inconsistent with how programming carriage decisions are 
made by cable companies. Costantini WRT at 10. She maintained that 
station carriage decisions are not made based upon inclusion or 
exclusion of a category or genre of programming, but rather on the 
entire bundle of the distant broadcast station's programming schedule. 
Costantini WRT at 9.
    Ms. Costantini opined that the Bortz survey questions lacked the 
qualitative and quantitative specificity needed for respondents to 
accurately answer questions and that respondents would not necessarily 
understand the terminology used in the questions, and that the 
questions do not sufficiently address the interplay and overlap across 
some categories. Costantini WRT at 12-13. A similar concern was also 
asserted by Sue Ann Hamilton who testified in the 2010-13 Cable 
Proceeding that the programming categories adopted in royalty 
distribution proceedings are unique and ``quite different from the 
industry understanding of what programming typically falls in a 
particular programing genre.'' Hamilton WDT (2010-13) at 10. Oral 
Testimony of Sue Ann Hamilton (2010-13), Trial Ex. 7063, at 4309, 4312; 
Written Rebuttal Testimony of Sue Ann Hamilton (2010-13), Trial Ex. 
7062, at 17-18 (Hamilton WRT (2010-13)). For example, she testified 
that ``most cable operators'' would not recognize that pre- and post-
game interviews and highlight compilation telecasts would fall into the 
Program Suppliers category, or that locally produced high school team 
sports would fall into the Commercial Television category. Id. at 11. 
Ms. Hamilton further opined that cable operators were not likely to 
differentiate between network and non-network sports telecasts and that 
migration of live team sports programming to regional cable networks 
further complicates the equation. See Hamilton WRT (2010-13) at 17-18.
    Ms. Costantini criticizes the Bortz Survey for not providing enough 
information and time for the respondents to answer the questions 
accurately. Ms. Costantini expressed doubt that any respondent could 
accurately answer the survey questions in the course of the telephone 
interview. She also testified that it is highly doubtful that the 
respondent would need access to extensive information that would not be 
readily available to most respondents. Costantini WRT at 10-13.
    Mr. Singer and Ms. Witmer, testifying on behalf of JSC, disagreed 
with Ms. Costantini regarding inappropriate respondents in the Bortz 
survey. They testified that, while ultimate responsibility for carriage 
decisions may be at the corporate level, the individuals with the 
knowledge of why specific distant signals were carried, and why they 
were valuable to the system in a specific area, would be at the local 
or regional level. 4/3/23 Tr. 2769-73 (Singer); 4/10/23 Tr. 4054-55, 
4061 (Witmer). Mr. Trautman also agreed with this assessment, adding 
that there is no one-size-fits-all standard for what position or level 
within a cable system is going to be associated with the person most 
responsible for programming decisions. 4/3/23 Tr. 2845-46; 2849 
(Trautman).\180\ Mr. Singer noted that the relevant titles at cable 
systems for individuals responsible for programming were ``all over the 
place'' and that there was not necessarily just one person responsible 
for programming carriage decisions at CSOs. 3/20/23 Tr. 2770-71 
(Singer). Ms. Witmer also testified that the titles of relevant 
executives were a legacy of the history of lots of small systems that 
rolled up into bigger consolidated systems, and often had various 
titles, and they were not necessarily consistent from one system to the 
next. 4/10/23 Tr. 4060-61 (Witmer).
---------------------------------------------------------------------------

    \180\ JSC also noted that in a prior proceeding the Judges noted 
that it is not unreasonable to think that CSOs have maintained an 
institutional memory of the requirements of these proceedings. JSC 
RPFF at 32 and citations therein.
---------------------------------------------------------------------------

    Mr. Trautman testified that use of the Factbook as an initial point 
of contact or the survey questionnaire is a feature, not a flaw, of the 
Bortz survey that is an effective tool for assuring survey respondents 
are qualified. 4/3/23 Tr. 2848-49 (Trautman). He added that while the 
initial target is often not the survey respondent because ultimately, 
the survey's goal is to speak with the person most responsible for 
carriage decisions. Id.
    Regarding the alleged difficult of accurately answer the survey 
questions or understand the categories at issue, Ms. Witmer testified 
that the respondents would have been able to answer the questions. She 
further testified that the categories of programming listed in the 
questionnaire make sense to her as a cable executive. She explained 
that it is common in the cable industry for channels to have different 
kinds of content on them, but that people working the cable industry 
and the programming area would be more than capable of understanding 
the categories of content separate and apart from particular linear 
channels. 4/10/23 Tr. 4052-55 (Witmer).
    Regarding the alleged complexity of addressing the complexity of 
the Bortz questions, JSC pointed to designated testimony from the 2010-
13 proceeding from Mr. Hartman who explained that ``when you look at 
the type of linear channels that we negotiate for, they really do fall 
into categories.'' Mr. Hartman also testified that ``it's our day-to-
day job to kind of know . . . that type of programming.'' 2010-13 
Hartman Oral Testimony Tr., Trial Ex. 7056, at 74-75.
    While Ms. Costantini raises some reasonable concerns about the 
Bortz survey, including concerns that the titles of some respondents 
may not be indicative of those most responsible for programming 
carriage decisions, the Judges observe that her criticisms were 
routinely accompanied by significant caveats, such as being generally 
applicable, and focused on larger cable companies. Furthermore, the 
Judges note her acknowledging that ``there are lots of corner cases'' 
regarding appropriate titles of respondents.\181\ 3/27/23 Tr. at 1621-
22 (Costantini). Based on the entirety of the record, the Judges are 
not persuaded that the issue of the respondents' titles is reason to 
disregard reliance on the Bortz survey. Furthermore, the Judges find 
that use of the Factbook as a starting point in pursuing the 
appropriate respondents is not unreasonable. The Judges do not discount 
the reasonable concerns that were established regarding titles, which 
is a factor the Judges take into account within the Judges' weighting 
of the Judges' reliance on the various allocation methodologies.
---------------------------------------------------------------------------

    \181\ The reference to lots of ``corner cases'' represents the 
use of an engineering term indicating a situation that occurs 
outside normal operating parameters. See Corner Case, Wikipedia, 
https://en.wikipedia.org/wiki/Corner_case (last visited Aug. 28, 
2023).
---------------------------------------------------------------------------

    Additionally, the Judges find some aspects of Ms. Costantini's 
criticism of the Bortz survey questions are undermined by her 
testimony, which depicted a high level of competency as a cable 
industry executive who possessed a detailed understanding of nuances 
underlying the questions in the Bortz survey. The Judges note Ms. 
Costantini's testimony of her own prior roles in which she held 
significant responsibility for programming carriage decisions for the 
Time Warner cable system and was [REDACTED] 3/27/23 Tr. at 1642-43 
(Costantini). Ms. Costantini's written and oral testimony indicated 
that she would be capable of providing meaningful responses to the sort 
of questions posed in the Bortz

[[Page 54238]]

survey, including while in roles that she was not the person most 
responsible for programming carriage decisions.
    With regard to the categories in the Bortz survey questions and the 
categories in this proceeding, the Judges observe that they have not 
changed for decades, giving CSOs time to acquaint themselves fully with 
the programming comprising each agreed category. In the Judges view, it 
is not unreasonable to conclude that, even with changes in personnel, 
the CSOs have maintained an institutional awareness of the subjects and 
categories at issue in the survey and in this proceeding, and therefore 
that the Bortz respondents had adequate ability to understand the 
relevant terminology in the Bortz questions.
    Based on the entirety of the record, the Judges find that the 
industry experts that responded to the Bortz survey were sufficiently 
equipped to offer reliable evidence indicative of relative marketplace 
value. The Judges do not find that the respondents' capacity to 
accurately answer the survey questions or understand the categories at 
issue serves as a reason to disregard the Bortz survey. Furthermore, 
the Judges do not find that respondents' capacity serves as a 
significant negative factor in the weighting of the various allocation 
methodologies at issue in this proceeding.
    In sum, the Judges agree that the Bortz surveys are far from a 
perfect measure of relative market value, as discussed infra. However, 
based on the entirety of the record, the Judges find that despite the 
offered criticisms, the surveyed cable system executives were 
sufficiently identified, competent and familiar with the subject matter 
to provide reasonably reliable responses.\182\
---------------------------------------------------------------------------

    \182\ Regarding faulting the survey for excluding PTV-only CSOs 
from the 2014 through 2017 surveys received in this proceeding, the 
Judges address and account for the issue infra/supra (addressing 
application of adjustment).
---------------------------------------------------------------------------

XVI. Changed Circumstances

    The Judges may vary from prior decisions when there are (1) changed 
circumstances from a prior proceeding or (2) evidence on the record 
before the Judges that requires prior conclusions to be modified 
regardless of whether there are changed circumstances.\183\
---------------------------------------------------------------------------

    \183\ 2010-13 Determination at 3557 citing 1998-99 Librarian 
Order at 3613-14.
---------------------------------------------------------------------------

    In the 2014-2017 period, several widely agreed upon changed 
circumstances have taken place including (1) WGNA's conversion to a 
cable network,\184\ (2) the reclassification of PTV signals from exempt 
to non-exempt,\185\ and (3) the rise in streaming on alternative 
platforms.\186\ Additionally, the Judges observe that the record 
regarding the conduct and development of the survey and regression 
methodologies has become more detailed than in prior proceedings. Based 
on the agreed upon record and Judges' findings here and throughout the 
determination, the Judges find that significant changed circumstances 
occurred across the relevant period.
---------------------------------------------------------------------------

    \184\ See, e.g., Harvey CWDT ] 7. (Distant signal carriage 
patterns in 2014 closely resembled those from the 2010-2013 period. 
By contrast, starting in 2015, following the conversion of WGNA from 
a superstation to a cable network at the end of 2014, CSOs 
significantly decreased their use of the section 111 license, with 
the vast majority of systems electing to carry far fewer distant 
signals.); See also, Marx WRT ]] 6, 60; Marx ACWDT at 16, 20-26, ] 
43; Bennett ACWDT at 11.
    \185\ See, e.g., Marx ACWDT ]] 76-77, pp.28-29.
    \186\ See, e.g., Witmer WRT ] 33, p.14; Costantini WDT ] 20, 
p.7; Alany WDT at 12.
---------------------------------------------------------------------------

XVII. Survey Evidence and Expert Testimony Relying On Surveys

A. Background

    Three of the six parties in this proceeding rely on survey evidence 
to support their arguments concerning the allocation of shares of the 
subject royalty funds. For more than 40 years, a survey approach has 
been offered in royalty distribution proceedings before the CRB and its 
predecessor bodies (the CRT and CARP), more recently in Distribution of 
the 2004 and 2005 Cable Royalty Funds \187\ and Distribution of Cable 
Royalty Funds, Docket No. CONSOLIDATED 14-CRB-0010-CD (2010-2013).\188\ 
In the latter proceeding, data from three separate surveys administered 
to cable system operators (CSOs) were offered during the hearing, and 
then analyzed by the Judges in connection with their final allocation 
distribution. See 2010-13 Determination at 3582; 4/3/2023 Tr. 2825 
(Trautman). In this proceeding, only one survey was conducted for use 
in possible litigation in connection with royalty distribution pursuant 
to section 111 of the Copyright Act, produced during discovery in 
accordance with applicable regulations,189 190 and then 
offered by a party during the hearing. In particular, JSC, as supported 
by fact and expert testimony, argues that a constant sum survey (in 
which survey respondents allocate a fixed sum across different 
categories, at least in this case, adding up to 100 percent) is well-
suited to revealing relative market values of distant signal 
programming to CSOs. Specifically, JSC argues that the Bortz 
Surveys,\191\ which it commissioned and offered for the years 2014 
through 2017, reliably reveal market value relevant to this 
proceeding.\192\ See, e.g., JSC PHB at 43-71; 4/3/2023 Tr. 2822-23 
(Trautman). CTV and SDC also make arguments that rely on the Bortz 
Surveys, as did some of their experts who testified during the hearing. 
See, e.g., CTV PHB at 1-3, 42-79; Settling Devotional Claimants' Post-
Hearing Brief at 64-85 (SDC PHB). Yet, CCG, Program Suppliers and PTV, 
supported by testimony of their experts, oppose reliance on the Bortz 
Surveys. See, e.g., Post-Hearing Brief of The Canadian Claimants Group 
at 50-77 (CCG PHB); PS PHB at 9-10, 57-77; PTV PHB at 38-71, 81-82.
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    \187\ See 2004-05 Distribution Order.
    \188\ See 2010-13 Determination at 3552, 3582.
    \189\ See, e.g., Order 27 Granting in Part and Denying in Part 
PTV Motion to Compel JSC to Produce Documents (Feb. 15, 2023); Order 
30 On Public Television's Order to Enforce Order 27 (Mar. 31, 2023); 
Order 31 Further to Order 30 on Public Television's Motion to 
Enforce Order 27 (Apr. 12, 2023).
    \190\ The Judges entered a Protective Order on February 17, 
2022, pursuant to a Joint Motion filed by all participants. Order 
No. 27 created a subset of further restricted information consisting 
of the identities or other personally identifiable information (PII) 
of Bortz Survey respondents for the years 2014-2017. See Order 27 at 
5 n.6, 57.
    \191\ JSC presented the Bortz Survey in documentary form in a 
report, entitled ``Cable Operator Valuation of Distant Signal Non-
Network Programming: 2014-17'' (Bortz Report). During the hearing, 
the Bortz Report was received into evidence as Trial Ex. 7101. 3/20/
2023 Tr. 305, 316.
    \192\ JSC offered the first Bortz Survey to the CRT in 1983. 4/
3/2023 Tr. 2824-25 (Trautman); Bortz Rep. app. A; 2010-13 
Determination at 3582.
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    In addition, CTV called as an expert witness, Prof. Robert A. 
Papper,\193\ who testified as to trends in the local television news 
industry, and particularly his opinion as to the impact of those trends 
on the relative value of CTV programming during the period 2014-2017. 
His opinion relied in large part on the results of an annual survey 
that he has directed for many years, which is called the Radio 
Television Digital News Association Annual Survey (RTDNA Survey),\194\ 
especially articles and studies (mainly authored or co-authored by 
Prof. Papper) that concern the results of the RTDNA Surveys for the 
period 2014-2017. RTDNA Survey information, and the articles and 
studies on which Prof. Papper relied, are appended to his written 
direct testimony. See, e.g., 4/11/23 Tr. 4361-63 (Papper); Written 
Direct

[[Page 54239]]

Testimony of Robert Papper, Trial Ex. 7201 (Papper WDT); Papper WRT.
---------------------------------------------------------------------------

    \193\ Prof. Papper was qualified as an expert in broadcast and 
digital journalism. 4/11/23 Tr. 4370 (Papper). He was retained by 
the National Association of Broadcasters on behalf of CTV (i.e., the 
CTV claimants in this proceeding). Papper WDT at 1.
    \194\ The RTDNA survey was conducted for at least two decades 
before Prof. Papper began to administer it in 1994. 4/11/23 Tr. 4367 
(Papper).
---------------------------------------------------------------------------

    An issue was raised as to whether or not large portions of Prof. 
Papper's testimony should be viewed as the introduction of a survey or 
surveys, governed by 37 CFR 351.10(e) and, if so, whether CTV has 
complied with the production requirements set forth therein. Indeed, 
before the hearing, Program Suppliers filed their Motion in Limine to 
Exclude Portions of the Testimony of Professor Robert A. Papper (MIL) 
(eCRB no. 27485). In denying the MIL, the Judges determined, inter 
alia, that the written direct and rebuttal testimonies, including the 
portions subject to the MIL, ``express detailed opinions based in large 
part on certain RTDNA Surveys, allowing Professor Papper to be examined 
on his opinions,'' but that ``would not necessarily mean that the 
surveys were offered or received into evidence.'' Order 29 at 8. 
Application of section 351.10(e) was not required at that time. Id. 
Program Suppliers made similar objections to portions of the Papper 
testimonies during the hearing. See 4/11/23 Tr. 4354-55, 4366 (Papper); 
4/12/23 Tr. 4445-52 (Papper). Subsequently, Program Suppliers filed 
their Motion to Strike Portions of the Written and Oral Testimony of 
Robert A. Papper (eCRB no. 28213). As discussed in Order 39 denying the 
motion to strike, the RTDNA Surveys were not conducted for the purpose 
of litigation or offered independently during the hearing as evidence. 
Rather, the RTDNA Surveys were relied on by Prof. Papper in forming and 
presenting his expert opinions, and the weight to be accorded data from 
the RTDNA Surveys shall be determined within the context of evaluating 
Prof. Papper's expert opinions.

B. The Bortz Surveys

1. Conduct of the Bortz Surveys for 2014 Through 2017
    During the hearing, JSC called James M. Trautman, Managing Director 
of Bortz Media & Sports Group, Inc. (aka Bortz Media), to sponsor the 
Bortz Surveys, and their report (Bortz Report) which formed part of Mr. 
Trautman's written direct testimony. Indeed, the Bortz Surveys, 
including their report, were prepared under Mr. Trautman's direct 
supervision at the request of Major League Baseball, the National 
Football League, National Basketball Association, Women's National 
Basketball Association, National Hockey League and the National 
Collegiate Athletic Association (i.e., JSC in this proceeding). Written 
Direct Testimony of James M. Trautman, Trial Ex. 7100, at 1 (Trautman 
WDT); 4/3/2023 Tr. 2816-20 (Trautman). For nearly forty years, Mr. 
Trautman has supervised market research addressing a wide range of 
issues, for a variety of clients, affecting the cable and satellite 
television industries, including issues related to the valuation of 
television programming. Mr. Trautman has had primary responsibility for 
management of previous CSO studies conducted by Bortz Media for JSC and 
has testified concerning these studies in several proceedings before 
the Judges of the CRB and their predecessors. In the 2010-13 cable 
royalty distribution proceeding, he was qualified as an expert; and in 
this proceeding, he was qualified as an expert in market research, 
including survey research, applied market analysis and valuation in the 
cable and broadcast television industries. 4/3/2023 Tr. 2821 
(Trautman).
    As explained by Mr. Trautman, the Bortz Survey is a telephone 
survey. He further testified that each Bortz Survey offered in this 
proceeding is a survey of local CSOs and was designed to address the 
relative value that distant signal programming has to cable operators, 
or would have in a free market. See 4/3/2023 Tr. 2821-22 (Trautman). As 
explained by Dr. Mathiowetz,\195\ the Bortz Survey may be termed an 
establishment survey because respondents answered questions of behalf 
of a business or other entity rather than themselves. 4/10/2023 Tr. 
3835 (Mathiowetz).
---------------------------------------------------------------------------

    \195\ Dr. Nancy Mathiowetz was called by JSC as an expert 
witness at the hearing, and was qualified as an expert in survey 
research methodology, questionnaire design and statistics. Dr. 
Mathiowetz has testified before on behalf of JSC. 4/10/2023 Tr. 
3828, 3835 (Mathiowetz); Mathiowetz CWDT; 2010-13 Determination at 
3587.
---------------------------------------------------------------------------

    After a Bortz Survey was first offered in a royalty proceeding in 
1983, changes have been made to the design of the survey, sometimes in 
consultation with experts outside Bortz Media or its predecessor 
company. Changes were made for the Bortz Surveys offered in this 
proceeding, as compared to those offered in prior royalty proceedings, 
including the most recent proceedings for distribution of 2010-2013 
royalties. See 4/3/2023 Tr. 2824 (Trautman); 4/4/2023 Tr. 3013 
(Trautman); 2010-13 Determination at 3582. For example, in 2015-2017, 
the number of cable systems eligible for inclusion in the Bortz survey 
had decreased, falling from 788 (in 2014) to 328-361 (for 2015-2017). 
Bortz Media responded by shifting from sampling eligible systems for 
2014 (as it had also done in earlier surveys) to attempting what it 
refers to as a census of all eligible systems for the surveys conducted 
for 2015, 2016 and 2017.\196\ Thus, for 2015-2017, Bortz Media states 
that all eligible systems had an opportunity to respond to the surveys. 
See Bortz Rep. at 21. Furthermore, in response to additional changes in 
the cable industry, Bortz Media modified its questionnaire in 2015-2017 
to account for WGNA's conversion to a cable network, which has already 
been discussed with respect to the regression evidence received in this 
proceeding.\197\
---------------------------------------------------------------------------

    \196\ Dr. Mathiowetz testified that she treated each of the 
Bortz Surveys for 2015 through 2017 as a sample rather than a 
census. She testified that while the Bortz Survey goal was to 
include each eligible CSO, there is a different expectation with 
respect to those Bortz Surveys and the data collection effort 
compared to, for example, that of the decennial census in the United 
States in which the goal is to measure absolutely every single 
person in the country. 4/10/2023 Tr. 3842-47 (Mathiowetz). Thus, 
when Dr. Mathiowetz made computations of standard errors for the 
Bortz Survey for 2015 through 2017, she treated each survey as a 
sample. 4/10/2023 Tr. 3844 (Mathiowetz).
    \197\ Specifically, Bortz Media used two survey instruments for 
the 2014 cable operator survey. There was one form for survey 
respondents whose cable systems carried distant signals in addition 
to, or other than, WGNA. Appendix B (entitled ``Survey 
Instruments'') to the Bortz Report contains the additional distant 
signals (ADS) questionnaire that was used with those survey 
respondents. There was a second form for respondents whose cable 
systems carried WGNA as their only distant signal (also included in 
the Bortz Report, app. B). When using the second form, respondents 
were provided with specific information about (and asked to value 
only) the compensable programming on WGNA. For the years 2015 
through 2017, only the ADS questionnaire was used because WGNA was 
no longer a distant signal. Bortz Rep. at 24-25. Similarly, changes 
were made to the Bortz weighting and projection approach for 2015-
2017 to account for the changes to the distant signal landscape in 
that time period. See id. at 21 (citing Bortz Rep., Section II).
---------------------------------------------------------------------------

    As in earlier surveys, for the 2014-2017 period at issue in this 
proceeding, Bortz Media surveyed so-called ``Form 3'' cable systems. 
Form 3 systems are those that had at least $527,600 in semiannual gross 
receipts from retransmitting broadcast signals to their 
subscribers.\198\ According to the Cable

[[Page 54240]]

Data Corporation (CDC), which compiles data from the statements of 
account (SOAs) that cable systems file with the Copyright Office, Form 
3 systems accounted for more than 95 percent of total royalty payments 
made by cable operators from 2014-2017. Furthermore, Form 3 systems, 
unlike the smaller Form 1 and 2 systems, are well-suited for Bortz 
surveys because they identify in their SOAs the distant signals that 
they retransmitted. Bortz Rep. at 20. Nevertheless, inasmuch as some 
Form 3 cable systems carry either no distant signals, or carry only 
distant signals representing a single programming category (i.e., only 
PTV signals or only Canadian signals), Bortz Media determined that it 
would not be possible to obtain a comparative value judgment from 
survey respondents regarding their distant signal programming. 
Therefore, as it has done in connection with surveys offered in 
previous proceedings, Bortz Media did not interview, or attempt to 
interview, those systems in connection with the 2014-2017 Bortz 
Surveys. Id.
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    \198\ As indicated by Dr. Mathiowetz in her written direct 
testimony, pursuant to section 111 of the Copyright Act, cable 
systems are classified into three tiers based on the level of gross 
receipts that they receive from their subscribers for the 
retransmission of over-the-air broadcast signals. Small-sized and 
medium-sized systems pay a flat royalty fee. With respect to large 
cable systems (that use ``Form 3'' when filing their SOAs at the 
United States Copyright Office), royalties are calculated as a 
percentage of their gross receipts based on the distant signals they 
retransmit. Yet, without regard to what (if any) distant signals a 
system retransmits, all Form 3 systems must pay at least a minimum 
royalty fee. See Mathiowetz CWDT at 6-7 (citing 2010-13 
Determination at 3553 and 17 U.S.C. 111(d)(1)(B)-(C)). See also 
United States Copyright Office, Statement of Account, SA3 (Long 
Form), https://www.copyright.gov/forms/sa3.pdf (current) (for use 
when a system's ``semiannual gross receipts for secondary 
transmissions (the figure you give in space K of the form) is 
$527,600 or more. . . .''); United States Copyright Office, Old 
Cable Statement of Account Forms, https://www.copyright.gov/licensing/saold.html.
---------------------------------------------------------------------------

    The level of copyright royalty payments played an additional role 
with respect to the 2014 Bortz Survey. As discussed above, for the 2014 
survey, Bortz Media attempted to contact what it terms ``a stratified 
random sampling of Form 3 cable systems,'' with the stratification 
based on copyright royalty payments. Bortz Rep. at 20. JSC's expert 
witness, Dr. Mathiowetz testified that as in the proceeding for 2010-
2013 royalties, her opinion is that ``the use of a stratified sample 
results in an efficient sample that assures the resulting sample 
mirrors the population of interest.'' Corrected Written Direct 
Testimony of Nancy Mathiowetz, Ph.D., Trial Ex. 7107, at 7 (Mathiowetz 
CWDT). In this case, Bortz Media obtained data from records compiled by 
CDC, indicating the royalty amounts paid by all Form 3 systems, based 
on SOAs filed by cable systems for the first accounting period of each 
survey year. Bortz Media then constructed a sampling plan so that 
proportionately more systems with large royalty payments were sampled 
relative to systems with small royalty payments. Specifically, the 
stratified sample included 361 Form 3 cable systems that collectively 
paid approximately 86 percent of the total Form 3 royalties. Bortz 
Media reasoned that cable systems that carried distant signals in 2014 
were overwhelmingly paying copyright royalties that were derived 
directly from the distant signals they actually chose to carry, and 
further, while systems paying the largest royalties were typically 
larger systems (as measured by subscribers served), they also reported 
carrying more distant signals on average. Thus, Bortz Media concluded 
that, in general, systems paying more royalties were making more use of 
the section 111 license. Bortz Rep. at 20-21.
    Once the CSOs for inclusion in the surveys were identified, Bortz 
Media used the Television & Cable Factbook (Factbook), as it has in the 
past, to identify contacts for each respective system, particularly 
telephone numbers. The Factbook usually lists approximately three to 
six managers or executives for each system. Bortz Media usually selects 
the senior-most executive from that cable system to list as the initial 
point of contact or the survey questionnaire. 4/3/2023 Tr. 2844-55 
(Trautman); Bortz Rep. at A-17 n.57.
    Bortz Media retained Sandra Grossman (then, of THA Research) to 
conduct telephone interviewing for the 2014-2017 cable operator 
surveys. Ms. Grossman specializes in conducting executive interviews, 
particularly in the cable industry. Indeed, she has provided market 
research to cable television industry clients for more than two 
decades, during which she and her company have been retained by Bortz 
Media or its predecessor for 17 cable operator surveys, starting with 
the 2001 survey and continuing through the 2017 survey received in this 
proceeding. Ms. Grossman personally conducted approximately 65 percent 
of the interviews for the 2014-2017 surveys. It is unclear whether Ms. 
Grossman relied solely on the information compiled by Bortz Media from 
the Factbook to contact potential respondents, or whether she also 
performed internet searches to obtain contact information. Three or 
four additional interviewers were supervised by Ms. Grossman, and each 
specialized in surveying professional and managerial personnel, with at 
least five years of such experience. Interviewers were instructed to 
call back each cable system as often as necessary to obtain a completed 
interview or refusal. For almost every completed interview, no more 
than three direct contacts with the eventual respondent were required. 
Tr. 2841-45, 3258 (Trautman); Bortz Rep. at A15-17.
    Interviewers were instructed that once they had made contact with a 
cable system, they should ask first for the system executive identified 
in advance as most likely to have responsibility for programming 
decisions, and to confirm that he individual was the person ``most 
responsible for programming carriage decisions made'' by the system. 
The interviewers were instructed that if the identified executive did 
not fit the description, the interviewer was to ask for the person who 
was most responsible for programming carriage decisions. Calls were 
placed to the cable system until the individual on the telephone 
indicated that he or she was the individual most responsible for 
programming carriage decisions. In all cases, the eventual survey 
respondents were required to confirm that they were most responsible 
for programming carriage decisions made by their systems. Bortz Rep. at 
A-17.
    Indeed, the ADS questionnaire which, as discussed above, was used 
for many respondents for 2014, and all respondents for 2015-2017, 
comprised four questions for the respondent.\199\ Question 1 asked the 
respondent, ``Are you the person most responsible for programming 
carriage decisions made by your system during [the year in question] or 
not?'' Bortz Rep. app. B. If the response was no, the questionnaire 
(e.g., for 2014) instructs the interviewer, ``ASK TO SPEAK WITH PERSON 
MOST RESPONSIBLE FOR THE SYSTEM'S PROGRAMMING CARRIAGE DECISIONS IN 
2014. REPEAT INTRODUCTION AND Q.1.'' Id.
---------------------------------------------------------------------------

    \199\ The WGNA questionnaire used for 2014 had differences in 
wording specific to carriage of WGNA. See Bortz Rep. at 83-86.
---------------------------------------------------------------------------

    After the survey respondents were qualified, the interviewers 
proceeded to the next questions. Questions 2 and 3 in the cable 
operator survey are designed by Bortz Media as preliminary questions 
intended to focus respondents on the particular distant signals carried 
by the system in the survey year, the types of programming on those 
signals, and certain factors (importance and cost) \200\ that 
contribute to the key allocation (which Bortz Media sometimes calls a 
``budget'' question) that will be required in the fourth and final 
survey question.

[[Page 54241]]

Bortz Rep. at 27, 30. In Question 2, the interviewer identified the 
particular distant signals (including call letters) for a specific 
respondent's cable system (Question 2a). Bortz Media obtained the 
distant signals for each system by reviewing each system's SOA at for 
the year in question that was filed at the Copyright Office.\201\ The 
interviewer then asked the respondent to rank up to seven\202\ non-
network programming categories on those distant signals in order of how 
important it was for the system to offer each category.\203\ Id. at 24-
27; 4/3/2023; Tr. 2861-64 (Trautman). Indeed, for Questions 2, 3 and 4, 
the number of programming categories provided to each respondent 
depended on whether the distant signals listed on the respondent's SOA 
included public television, Canadian, or live professional and college 
team sports programming, with the corresponding categories excluded 
when the respondent CSO did not carry the relevant programming on a 
distant basis. Bortz Rep. at 26 n.36.
---------------------------------------------------------------------------

    \200\ The Bortz Report notes that in the 2010-13 Determination, 
the Judges stated that the reference to expense in Question 3 
``muddled the concepts of cost and value'' and that ``[t]his may 
have injected some confusion into the respondent's estimation of 
relative value.'' Bortz Rep. at 27 n.38 (quoting 2010-13 
Determination at 3590); 4/3/2023 Tr. 2895 (Trautman); 4/5/2023 Tr. 
3466 (Trautman). Mr. Trautman, on behalf of Bortz Media stated in 
the report that he respectfully disagrees with this criticism, and 
did not find any evidence of confusion in the 2010-13 Bortz surveys, 
or in the 2014-2017 Bortz surveys. In any event, the 2010-13 
Determination was not available until October 2018, when the 2014-
2016 surveys had already been completed, and the 2017 questionnaires 
were in the field. Thus, there was no opportunity for Bortz Media to 
evaluate potential changes to this survey question. Id.
    \201\ For each of questions 2, 3 and 4, respondents that 
reported carrying more than eight distant signals were only asked 
about their eight most widely carried distant signals. This approach 
was also followed in the 2010-2013 surveys. Bortz Rep. at 25 n.35; 
2010-13 Determination at 3587 (``In the Bortz Survey, interviewers 
asked respondents about a maximum of eight distant signals even if 
their systems carried more.'').
    \202\ The seven categories, which could be tailored for each 
respondent, were: (1) Movies; (2) Live, Professional and College 
Team Sports; (3) Syndicated Shows, Series and Specials; (4) News and 
Other Station-Produced Programs; (5) PBS and All Other Programming 
Broadcast by Noncommercial Station(s) ____; (6) Devotional Programs; 
and (7) All Programming Broadcast by Canadian Station(s) ____. Bortz 
Rep. at 32 & app. B at 79. These categories were intended by Bortz 
Media to correspond with the program category definitions adopted by 
the Judges. Id. at 26, app. C (``Program Category Definitions'').
    \203\ For example, for 2014, Question 2b of the survey 
instrument reads: ``Now, I'd like to ask you how important it was 
for your system to offer certain categories of programming that are 
carried by these stations. When you consider this, please exclude 
from consideration any national network programming from ABC, CBS 
and NBC. I've grouped the non-network programming on these broadcast 
stations into seven categories. I will read these seven categories 
to you to give you a chance to think about their relative importance 
(READ EACH CATEGORY BELOW, STARTING WITH THE CATEGORY MARKED BY THE 
NUMBER ``1''). Considering only the non-network programming on these 
broadcast stations, please rank these seven categories in order of 
their importance to your system in 2014, with one being the most 
important category and seven being the least important category. 
What is your ranking of importance for the 2014 (READ FIRST 
CATEGORY, AS MARKED BY THE NUMBER ``1'') programming on the 
broadcast stations I listed. (REPEAT FOR ALL SEVEN CATEGORIES, IN 
ORDER LISTED BELOW. ENTER NUMERICAL RANK ON TABLE BELOW.)''
    Bortz Rep. app.B at 79.
---------------------------------------------------------------------------

    When asking Question 3, the interviewer asked the respondent to 
rank the same categories of non-network programming broadcast by the 
same stations in order of how expensive it would have been to acquire 
that programming if the system had been required to purchase it 
directly in the marketplace. Id. at 26-27, app. B (Ex. 7101 at 80).
    The final question, again for the ADS questionnaire only, was 
Question 4, the constant sum question. In this question, the 
interviewer asked the respondent to value the various types of non-
network programming on the distant signals that the respondent's system 
carried during the relevant year. This required the respondent to 
allocate a percentage of a finite dollar amount to each of the program 
categories on the distant signals that the system retransmitted. Id. at 
27-29. For example, Question 4a in the survey instrument that 
incorporated the year 2014 in the text was, as follows:

    4a. Now, I would like you to estimate the relative value to your 
cable system of each category of programming actually broadcast by 
the stations I mentioned during 2014, excluding any national network 
programming from ABC, CBS and NBC. Just as a reminder, we are only 
interested in U.S. commercial station(s)______, U.S. non-commercial 
station(s) ____, and Canadian station(s) ____.
    I'll read each of the seven programming categories we've been 
discussing again to give you a chance to think about them; please 
write the categories down as I am reading them. (READ PROGRAM 
CATEGORIES IN ORDER, STARTING WITH CATEGORY MARKED BY THE NUMBER 
``1''.)\204\ Assume your system spent a fixed dollar amount in 2014 
to acquire all the non-network programming actually broadcast during 
2014 by the stations I listed. What percentage, if any, of the fixed 
dollar amount would your system have spent for each category of 
programming? Please write down your estimates, and make sure they 
add to 100 percent. What percentage, if any, of the fixed dollar 
amount would your system have spent on (READ PROGRAM CATEGORY MARKED 
BY THE NUMBER ``1'')?\205\ And what percentage, if any, would your 
system have spent on (READ NEXT PROGRAM CATEGORY)? (COMPLETE LIST IN 
THIS MANNER.)
---------------------------------------------------------------------------

    \204\ To prevent ordering bias, for each questionnaire, the 
interviewer was provided with a preset, computer-generated random 
order in which to read the program types, in order to prevent 
ordering bias. Bortz Rep. at 29.
    \205\ For Question 4, the categories, among other things, 
incorporated the survey year, and other slight variations to the 
categories listed for Questions 2 and 3. The possible seven 
categories, to be identified by the interviewer, were: (1) Movies 
broadcast during (survey year) by the U.S. commercial stations I 
listed; (2) Live professional and college team sports broadcast 
during (survey year) by the U.S. commercial stations I listed; (3) 
Syndicated shows, series and specials distributed to more than one 
television station and broadcast during (survey year) by the U.S. 
commercial stations I listed; (4) News and public affairs programs 
produced by or for any of the U.S. commercial stations I listed, for 
broadcast during (survey year) only by that station; (5) PBS and all 
other programming broadcast during (survey year) by U.S. 
noncommercial station(s) ____; (6) Devotional and religious 
programming broadcast during (survey year) by the U.S. commercial 
stations I listed; and (7) All programming broadcast during (survey 
year) by Canadian station(s) ____. Bortz Rep. at 28, app. B (7101 at 
81) (2014 survey instrument). These categories were intended to 
correspond with the program category definitions adopted by the 
Judges. Id. at 28, app. C (``Program Category Definitions'').

---------------------------------------------------------------------------
Id., app. B (Ex. 7101 at 81).

    The survey instrument instructed the interviewer to prompt the 
respondent if the percentages did not add up to 100 percent. Id., app. 
B (Ex. 7101 at 81). As Question 4b, the interviewer read back the 
categories and estimates, and then asked whether each respondent wanted 
to make any changes. Question 4b concludes the survey; and the Question 
ends the interviewers thanking the respondents were for their time and 
cooperation. Id., app B (Ex. 7101 at 82).
    The interviews were conducted after the calendar year in 
question.\206\ Interviews were completed with between approximately 54 
and 58 percent of eligible cable systems.\207\ Upon completion of the 
survey, THA Research returned the completed questionnaires to Bortz 
Media for proofing and data entry. Bortz Rep. at A-16.
---------------------------------------------------------------------------

    \206\ For the 2014, the survey period was 8/11/15-4/7/16; for 
2015, the survey period was 8/11/16-4/23/17; for 2016, the survey 
period was 10/06/17-4/26/18; and for 2017, the survey period was 7/
01/18-6/26/19. Bortz Rep. at A-16.
    \207\ For 2014, the response rate was 53.8% (170 surveys 
completed); for 2015, the response rate was 54.3% (197 surveys 
completed); for 2016, the response rate was 57.7% (199 surveys 
completed); and for 2017, the response rate was 54.6% (179 surveys 
completed). Bortz Rep. at A-16.
---------------------------------------------------------------------------

2. Results Reported From the Bortz Surveys
    As in prior distribution proceedings, in order to address the 
issues relevant to this proceeding, the responses provided by the Bortz 
Surveys, particularly the constant sum rankings obtained through 
Question 4, must be expressed in terms of percentage allocations of the 
cable royalty funds to be distributed for the years surveyed, which in 
this case are 2014 through 2017. The procedures used by Bortz Media to 
perform obtain such results are in the Bortz Report. See, e.g., Bortz 
Rep. at A-18 through A-26.\208\
---------------------------------------------------------------------------

    \208\ Bortz weighted survey results for 2014 based on the 
royalties paid by responding systems in the first half of 2014, and 
applied those results to the universe of Form 3 system royalties 
(consistent with the weighting approach used in all prior Bortz 
surveys). For the 2015 through 2017 surveys, inasmuch as most 
systems carrying distant signals had become Minimum Fee Systems, the 
methodology was changed to weight the results based on the Base-
plus-3.75 fees attributable to the actual signal carriage of the 
Form 3 systems, and to apply the results using signal carriage-based 
fee calculations rather than actual royalties paid. Bortz Rep. at 
21-24, A-18.

---------------------------------------------------------------------------

[[Page 54242]]

    Table I-1. Bortz Survey Relative Value Allocation by Year, 2014-17 
from the Bortz Report shows the following compiled results:

                       Table I--1 Bortz Survey Relative Value Allocation by Year, 2014-17
----------------------------------------------------------------------------------------------------------------
                                                                       Year
                                 -------------------------------------------------------------------------------
                                   2014 (n=170)    2015 (n=197)    2016 (n=199)    2017 (n=179)   Average: 2014-
                                        (%)             (%)             (%)             (%)           17 (%)
----------------------------------------------------------------------------------------------------------------
Live Professional and College               40.4            28.5            28.5            31.5            32.2
 Team Sports....................
News and Public Affairs Programs            26.0            29.7            30.0            30.6            29.1
Syndicated Shows, Series and                10.4            12.7            14.8            14.9            13.2
 Specials.......................
Movies..........................            11.4            13.8            13.1             9.0            11.8
PBS and All Other Programming on             5.9             7.9             6.8             7.8             7.1
 Noncommercial Distant Signals..
Devotional and Religious                     5.6             6.5             6.0             5.4             5.9
 Programming....................
All Programming on Canadian                  0.3             1.0             0.8             0.6             0.7
 Signals........................
                                 -------------------------------------------------------------------------------
    Total.......................           100.0           100.0           100.0           100.0           100.0
----------------------------------------------------------------------------------------------------------------

Bortz Rep. at 2; see CTV PHB at 81 (summary of results for 2014 through 
2017, with acronyms of claimant groups substituted for program 
categories).

    Nevertheless, as discussed below, no party unequivocally proposes 
that the initial results, or allocations, of the 2014 through 2017 
Bortz Surveys, reflected in Table I-1 of the Bortz Report, be used 
directly to allocate shares of the royalty funds that are the subject 
of this proceeding.\209\
---------------------------------------------------------------------------

    \209\ See JSC WDS at 12-13 (``Claim of JSC''); but see JSC PHB 
at 82 (``the evidence demonstrates that the adjusted Bortz survey 
results are the most accurate and reliable basis for allocating the 
2014-17 cable royalty funds''), 84.
---------------------------------------------------------------------------

3. Issues Raised With Respect to the Bortz Surveys
a. The Exclusion of PTV-Only and Canadian-Only Systems
    As already detailed, Bortz Media chose not to survey Form 3 cable 
systems that carried no distant signal, or that carried only distant 
signals representing a single programming category. Thus, as it has for 
surveys used in connection with prior proceedings, Bortz Media excluded 
all PTV-only CSOs and Canadian-only CSOs from the 2014 through 2017 
surveys received in this proceeding. See Bortz Rep. at 20; 2010-13 
Determination at 3583; 2004-05 Distribution Order at 57067. Bortz 
Media's stated rationale for this decision is that if PTV-only and 
Canadian-only CSO were survey respondents, they would not be able to 
provide comparative value judgments regarding their distant signal 
programming. Id. While PTV-only and Canadian-only CSOs may be limited 
in their ability to respond to provide a response to the Bortz Survey 
value question as formulated, in prior proceedings, the Judges have 
found that, while one must not ``overstate the impact of this 
problem,'' the exclusion of such cable systems ``clearly biases the 
Bortz estimates downward for PTV and Canadian programming;'' and 
further, it has been observed that ``the Bortz survey may well be 
improved in this regard, either through the reformulation of the 
questions asked in the survey and/or by revisiting the underlying 
survey sample plan.'' Id. In any event, the Bortz Media surveys at 
issue in this proceeding exclude PTV-only and Canadian-only CSO, and 
even the parties that rely on the Bortz Surveys, cognizant of 
adjustments made in prior proceedings, offer certain adjustments to the 
initial results of the Bortz Surveys. See, e.g., JSC PHB at 83-84; SDC 
PHB at 82-85; CTV PHB at 79-84.
    The adjustments were offered largely with the so-called 
``McLaughlin Adjustment'' in mind, which has a long history in 
connection with the Bortz Survey. For example, in the 2004 and 2005 
proceeding, Linda McLaughlin, an economist, set forth calculations to 
the Bortz Survey results to make, what the Judges deemed to be, an 
``appropriate adjustment to the PTV share,'' although her efforts did 
not fully mitigate deficiencies in the Bortz results with respect to 
others, such Canadian claimants. 2004-05 Distribution Order at 57064, 
57070, 57073 (her ``efforts to correct for cable systems excluded from 
the survey because they only carry a distant Canadian signal do 
somewhat ameliorate the under-representation of Canadian signals in the 
overall survey results''). In the 2010-13 proceeding, Ms. McLaughlin 
and another witness, David Blackburn, set forth methodologies for 
augmented PTV and CCG shares, referred to as the ``McLaughlin/Blackburn 
adjustments,'' which assume, for example, that the PTV-only systems 
would assign a relative value to PTV of 100%.\210\
---------------------------------------------------------------------------

    \210\ In her testimony during the 2010-2013 proceeding, Ms. 
McLaughlin explained the adjustment, as follows: Q. In order to do 
your augmentation of the Bortz survey, what were your initial 
assumptions? A. I assumed that the systems that I was adding back in 
would have to answer the survey in the same way it was asked for the 
other people, and that is they were only allowed to respond to the 
category they are carrying and they are supposed to split up their 
value among the categories they are carrying. So they would have to 
say 100 percent for PTV, if that's all they carried. And if all they 
carried was Canadian signal, they'd have to say 100 percent for 
Canadian. And if they carried both, they'd have to say something 
between, you know, zero for one and 100 to the other or 100 for one 
and zero to the other. Q. How about with regard to response rate? 
Did you make any assumptions about that? A. Oh, when I added them 
in, I--I followed the same response rate. If you look at the--some 
of the highlighted numbers, so in the final eligible sample for the 
year that we're looking at, 2010, in all the strata together, there 
were 288 cable systems but only 163 of them completed the surveys. 
So the response rate, 163 over 288, or, you know, maybe that's, you 
know, 60 percent, say, 50, 60 percent. So I used that same response 
rate and I did it actually by strata and applied that to the omitted 
signal. So I didn't assume that all 16 were included. I only 
assumed, you know, approximately half of the 16 were included.
    Oral Testimony of L. McLaughlin (2010-2013), Trial Ex. 7017, at 
27-29.

---------------------------------------------------------------------------

[[Page 54243]]

2010-13 Determination at 3583-85, 3602. In that proceeding, three 
surveys were received, the Bortz Survey, the Horowitz Survey (which 
``did not exclude from its sample systems that distantly carried only 
PTV and/or Canadian signals'') and the Ringold Survey (which ``focused 
on Canadian signals'').\211\ Id. at 3582, 3591. Despite the 
availability of McLaughlin/Blackburn adjustments ``to augment'' the 
Bortz Survey results, the Judges placed more weight on the Horowitz 
results, for several reasons but ``particularly the acknowledged 
systematic bias against PTV and CCG programming,'' and thus ``the 
Judges accord relatively less weight to the `Augmented' Bortz Survey.' 
'' Id. at 3591. The weighting of the Bortz Survey evidence below that 
of the Horowitz survey did not, however, mean that the Bortz Survey 
evidence had no weight or played no role in the Judges final 
allocations. To the contrary, before setting forth the Judges' final 
Basic Fund allocation, the Judges defined ``ranges of reasonable 
allocations for each program category, and in doing so relied on 
``[t]he Bortz and Horowitz Surveys, together with the McLaughlin 
`Augmented Bortz' results and the Crawford and George regressions, 
taking into account the confidence intervals (when available) 
surrounding the point estimates . . . .'' Id. at 3610.
---------------------------------------------------------------------------

    \211\ Professor Ringold has previously testified, or otherwise 
given evidence, in proceedings before the CARP, and the CRB. See CCG 
PFF 601; 2010-13 Determination at 3585. In this proceeding, Prof. 
Ringold was called to testify by CCG, and was qualified as an expert 
in survey research methodology. 4/17/2023 Tr. 4950-51 (Ringold).
---------------------------------------------------------------------------

    In this proceeding, only the Bortz Surveys were offered (i.e., no 
survey such as Horowitz was offered by any party), and the surveys 
continue to exclude the PTV-only and Canadian-only distant signal cable 
systems. Although Bortz Media and Mr. Trautman are highly critical of 
the McLaughlin Adjustment, nevertheless, Bortz Media includes two 
approaches for adjusting its initial results, both of which bear some 
relationship to the McLaughlin Adjustment. Bortz Media's ``Adjustment 
One'' \212\ accepts (while not agreeing with) the McLaughlin assumption 
of attributing 100 percent of value to the PTV (or Canadian category) 
when that is the only category the system carries distantly, but does 
not do so for PTV-only systems in 2015 through 2017 that previously 
carried WGNA. As to the latter group of systems, Bortz Media instead 
attempts to predict the average valuation from all systems that carried 
only PTV and WGNA in 2014. The stated rationale is there is no reason 
to assume that a CSO changed its valuation of PTV content simply 
because of the WGNA conversion, and indeed, CSOs surveyed in 2015-2017 
did not increase their relative valuation of PTV with regard to systems 
that carried signals containing both PTV and other claimant categories. 
As for Bortz-eligible systems that were surveyed, Bortz Media weighted 
the results based on Base-plus-3.75 fees attributable to the distant 
signals actually carried by the PTV-only systems.\213\ See id. at 42-
43, app. D (``Potential Bortz Adjustments''). Bortz Media obtained the 
following, applying its Adjustment One:
---------------------------------------------------------------------------

    \212\ Bortz Media's Adjustment One is referenced in some of the 
parties' post-hearing filings as Adjustment 1. See, e.g., SDC PHB at 
85; CTV PFF 434.
    \213\ In Adjustment One, systems that carried both PTV and 
Canadian distant signals (but no U.S. commercial distant signals) 
are weighted in the same manner, but with the fees allocated equally 
among the PTV and Canadian categories. Bortz Rep. at 43 n.45.

                Potential Allocation of Royalties Among Claimant Groups, 2014-17 (Adjustment One)
----------------------------------------------------------------------------------------------------------------
                                                               Year                                   Average
                                 -------------------------------------------------------------------------------
                                     2014 (%)        2015 (%)        2016 (%)        2017 (%)       2014-17 (%)
----------------------------------------------------------------------------------------------------------------
JSC.............................            39.1            25.6            24.3            26.0            28.8
CTV.............................            25.2            26.6            25.6            25.3            25.7
PS..............................            21.0            23.7            23.7            19.8            22.1
PTV.............................             8.2            14.0            16.6            19.5            14.6
Devotional......................             5.5             5.8             5.1             4.5             5.2
Canadian........................             1.0             4.4             4.8             4.9             3.8
                                 -------------------------------------------------------------------------------
    Total.......................           100.0           100.0           100.0           100.0           100.0
----------------------------------------------------------------------------------------------------------------

Id. at 43 (Table IV-1).\214\
---------------------------------------------------------------------------

    \214\ The Adjustment One results for 2014 are nearly identical 
with Mr. Trautman's calculation of the 2014 Bortz results when 
subjected to the McLaughlin Adjustment. See JSC Production 
Materials, Trial Ex. 3049 (discussed in detail later in the main 
text).
---------------------------------------------------------------------------

    Bortz Media's ``Adjustment Two'' also attributes 100 percent of 
value to either the PTV or Canadian category when that is the only 
category the system carries distantly, even for systems that became 
PTV-only by default as result of the WGNA conversion. However, PTV-only 
systems that only carried distant PTV signals within those signals' 
originating DMAs are excluded. The stated rationale is that those 
systems have not demonstrated any preference for distant PTV 
programming based on their actual carriage patterns. Again, consistent 
with the treatment of Bortz-eligible systems that were surveyed, Bortz 
performed weighting based on the Base-plus-3.75 fees attributable to 
the distant signals actually carried by the PTV-only systems. See id. 
at 43, app. D (``Potential Bortz Adjustments''). Bortz Media obtained 
the following application, applying its Adjustment Two:

                Potential Allocation of Royalties Among Claimant Groups, 2014-17 (Adjustment Two)
----------------------------------------------------------------------------------------------------------------
                                                               Year                                   Average
                                 -------------------------------------------------------------------------------
                                     2014 (%)        2015 (%)        2016 (%)        2017 (%)       2014-17 (%)
----------------------------------------------------------------------------------------------------------------
JSC.............................            39.8            25.2            23.5            24.8            28.3
CTV.............................            25.7            26.2            24.8            24.1            25.2

[[Page 54244]]

 
PS..............................            21.4            23.3            23.0            18.9            21.6
PTV.............................             6.5            15.3            19.2            23.4            16.1
Devotional......................             5.6             5.7             4.9             4.3             5.1
Canadian........................             1.0             4.3             4.6             4.6             3.6
                                 -------------------------------------------------------------------------------
    Total.......................           100.0           100.0           100.0           100.0           100.0
----------------------------------------------------------------------------------------------------------------

Id. at 43-44 (Table IV-2).
    JSC endorses the adjustments calculated by Bortz Media, rather than 
the McLaughlin Adjustment.\215\ JSC does so first by raising a number 
of supposed faults in the McLaughlin Adjustment. It is argued that PTV-
only systems were almost all well below the minimum fee, and by 2016 
and 2017, an average of over 93% of PTV-only systems could have carried 
at least one additional PTV signal to all of their subscribers without 
having to pay more than the minimum fee, and the calculated Base + 3.75 
royalty fee attributable to the signals actually carried on PTV-only 
systems amounted to only 14 percent of the minimum fee royalties 
ultimately paid by these systems. Yet, JSC observes, the McLaughlin 
Adjustment would assume that these systems have an extreme preference 
for distant PTV programming based on their carriage decisions, even 
though there was almost never an incremental royalty payment associated 
with those carriage decisions. Furthermore, JSC argues, over 30 percent 
of the distant signals carried by PTV-only systems in 2014-17 were 
carried pursuant to the Must Carry rules or the related multicast 
agreement. The McLaughlin Adjustment nonetheless would assume that 
these systems valued their distant PTV signals more than any other 
categories of programming, even though the systems were required to 
carry the signals, and PTV was prohibited from charging for the 
content. JSC argues that inasmuch as the price of these signals would 
be $0 in the hypothetical market, it makes no sense to assign them 100% 
of the relative value. JSC PHB at 65-67.
---------------------------------------------------------------------------

    \215\ Mr. Trautman did calculate a McLaughlin Adjustment, which 
he does not recommend. The table he prepared in that regard is set 
forth infra.
---------------------------------------------------------------------------

    Additionally, JSC argues that while more than half of the PTV-only 
systems during 2016-17 had carried both WGNA and PTV prior to the WGNA 
conversion, back in 2014, systems that carried WGNA and one or more PTV 
distant signals valued PTV in Bortz surveys at just 8.8%. JSC argues 
that the McLaughlin Adjustment would assume a sudden and major shift in 
valuation. Id. at 67 (quoting 3/30/2023 Tr. 2621 (Majure)).\216\ 
Finally, with regard to the McLaughlin Adjustment, JSC argues that the 
majority of PTV-only systems only carried PTV signals within the 
signals' originating DMA. Yet, because only the PTV signal is deemed 
distant, the McLaughlin Adjustment would assume that these systems only 
care about the PTV content in that bundle of programming, thereby 
improperly inferring a set of preferences based on distinct regulatory 
treatment rather than the actual behavior of the cable systems. It is 
argued that there is no reason to assume that these systems value 
distant PTV programming more highly than any other category of content, 
much less at a 100% relative valuation. Id. at 67-68.
---------------------------------------------------------------------------

    \216\ Dr. Majure was qualified as an expert in economics and 
industrial organization, including their application to the cable 
industry. 3/30/2023 Tr. 2551 (Majure).
---------------------------------------------------------------------------

    In contrast, JSC argues, the alternatives calculated by Bortz 
Media, Adjustment One and Adjustment Two, is supported by evidence and 
economic theory, and yields similar valuations among the program 
categories. Id. at 68-69 (citing, inter alia, JSC PFF 414 (citing 
Majure)). Indeed, JSC expert witness, Dr. Majure, testified that the 
Bortz Adjustments ``avoid these gross misinterpretations that the 
McLaughlin adjustment would otherwise be adding into the calculations. 
I don't know that they completely resolve the fundamental issue of the 
McLaughlin adjustment, however. There's still no reason to think, for 
any particular PTV system, they have this very strongly different set 
of preferences, that the only thing they like is Public Television 
content.'' 3/30/23 Tr. 2624 (Majure).
    JSC's allocation request is based only on the Bortz survey, 
specifically Bortz Media's Adjustment One, whose results are reproduced 
above. JSC states that it prefers Adjustment One because it accounts 
for the fact that CSOs did not change their valuation of PTV simply 
because WGNA was no longer available as a distant signal. JSC PHB at 
83-84. JSC claims no share of the Syndex royalties. With respect to the 
3.75% royalty fund, JSC argues that the Judges should reallocate the 
shares attributable to PTV proportionally among the other parties, as 
PTV is not entitled to a share of the 3.75% royalty funds, as follows:

                        JSC's Proposed Reallocation of Shares of the 3.75% Royalty Funds
----------------------------------------------------------------------------------------------------------------
                                                                               Year
                                                 ---------------------------------------------------------------
                                                     2014 (%)        2015 (%)        2016 (%)        2017 (%)
----------------------------------------------------------------------------------------------------------------
JSC.............................................            42.6            29.8            29.1            32.3
CTV.............................................            27.5            30.9            30.7            31.4
PS..............................................            22.9            27.6            28.4            24.6
PTV.............................................             0.0             0.0             0.0             0.0
Devotional......................................             6.0             6.7             6.1             5.6
Canadian........................................             1.1             5.1             5.8             6.1
----------------------------------------------------------------------------------------------------------------


[[Page 54245]]

Id. at 83-84.
    Similarly, SDC supports reliance on the Bortz Surveys for 2014 
through 2017 in this proceeding, and supports the application of Bortz 
Media's Adjustment One. SDC PHB at 81. SDC argues that the McLaughlin 
Adjustment has always been economically unsound, and in this 
proceeding, there is new evidence that militates against an application 
of a McLaughlin Adjustment that assigns a 100% value to PTV and CCG-
only stations. Id. at 82.
    SDC argues that unlike past proceedings, the record here shows that 
a majority of PTV-only systems' distant carriage occurred exclusively 
within the DMAs in which the PTV signals originate, and were treated as 
distant only as a result of a regulatory reporting. Indeed, it is 
argued, PTV signals are the only category of distant content that CSOs 
can be required to report as ``distant'' under section 111 when such a 
signal is actually carried locally to subscribers within the signal's 
DMA, and all other similarly situated, but commercial, signals would be 
reported as local signals that are ineligible for section 111 
royalties; and accordingly, a CSO's choice to carry a PTV signal within 
its originating DMA cannot be compared to a CSO's choice to carry other 
signals and programming, and there is no economic basis to assume that 
a majority of the PTV-only CSOs had a relatively greater preference for 
PTV programming than other categories of programming, much less valued 
at a 100% relative valuation (as past adjustments have considered). Id. 
at 83 (citing, inter alia, Harvey WRT ]] 126-131;\217\ Bortz Rep. at 
17-18 (``throughout 2016-17 approximately 77% percent of the aggregate 
subscribers served by the PTV Only Systems did not receive any distant 
signals.''); Majure WDT ]] 150-51).
---------------------------------------------------------------------------

    \217\ Mr. R. Garrison Harvey was called to testify by JSC, and 
was qualified as an expert in statistics and applied mathematics. 3/
28/2023 Tr. 1772, 1777-78 (Harvey).
---------------------------------------------------------------------------

    Additionally, SDC argues that adjusting the Bortz survey results to 
account for PTV-only systems that were excluded from the Bortz sample 
would inappropriately assign a 100% value to PTV content on the 
significant number of systems that were compelled to carry PTV 
programming and reimbursed for such carriage pursuant to the Must Carry 
rule. See Id. at 83-84 (citing Bortz Rep. at 46; Majure WDT ]] 144; 
Harvey CWDT ] 119 (``[a]pproximately 36 percent of the time that a PTV 
Only system distantly retransmitted a primary PTV call sign, it was 
pursuant to the Must Carry rule''). It is argued that there is no 
reason to expect that PTV-only systems value PTV content that they were 
compelled to carry at all, let alone at 100%. See Majure WDT ]] 144-45. 
Thus, it is argued, there is also no economic basis to apply a 
McLaughlin Adjustment to the significant number PTV-only stations 
carried under the primary channel or multicast subchannel Must Carry 
rules. Id. at 84 (citing Tr. 2566 (Asker)).\218\
---------------------------------------------------------------------------

    \218\ Professor Asker was called to testify by JSC, and was 
qualified as an expert in economics, industrial organization, and 
econometrics. 3/30/2023 Tr. 2390-91 (Asker).
---------------------------------------------------------------------------

    Nevertheless, SDC argues, SDC's and JSC's valuation experts have 
acknowledged that some adjustment to the PTV and CCG shares is 
appropriate, and the only potential Bortz adjustments presented in this 
proceeding were set forth by JSC and in the Bortz Report. It is argued 
that as its evaluation expert John Sanders testified,\219\ Bortz 
Adjustment One in the Bortz Report is preferable to the historic 
McLaughlin Adjustment and to Bortz Adjustment Two because Adjustment 
One is substantially ``grounded in the survey data that was collected'' 
and yields reasonable relative value allocations for each of the 
participating claimant groups. Id. at 84 (citing, inter alia, Sanders 
WRT ]] 43-44).
---------------------------------------------------------------------------

    \219\ Mr. John Sanders was called to testify by SDC and was 
qualified as expert in the valuation of media assets, including 
television programs. 4/6/2013 Tr. 3694 (Sanders).
---------------------------------------------------------------------------

    SDC argues that the Judges should conclude that the Bortz survey is 
the methodology that best reveals relative market value in this 
proceeding, but that there is no economic basis for applying the 
conventional McLaughlin Adjustment in this proceeding. Rather, it is 
argued, the Judges should find that some modest adjustment for PTV and 
CCG may be appropriate, and the Judges should additionally find that 
the Bortz survey's point estimates should be adjusted under Bortz 
Adjustment One. SDC argues that thus the following relative value 
allocations are appropriate shares for the Devotional claimants with 
respect to the Basic Fund: 5.5% for 2014; 5.8% for 2015; 5.1% for 2016; 
4.5% for 2017; with 5.2% as the average. Id. at 85 (citing Bortz Rep. 
at 48, SDC PFF 246). SDC further argues that to arrive at the 
Devotional allocation for the 3.75% Fund, the Judges should, consistent 
with their decision in the 2010-13 proceeding, reallocate the PTV share 
of royalties proportionally among the categories that participate in 
that fund, and make the following allocation of the 3.75% Fund to the 
Devotional claimants: 6.0% for 2014; 6.7% for 2015; 6.1% for 2016; 5.6% 
for 2017; with 6.1% as the average. Id. at 85; SDC PFF 247 (citing 
2010-13 Determination at 3611).
    CTV argues that the fee-based regression estimates for 2014 that 
were made by Prof. Marx,\220\ and the Bortz survey results for 2014-
2017 provide the most appropriate starting point to determine the 
relative value of claimant shares in this proceeding. It is argued that 
the cumulative evidence of record in this proceeding shows that the 
fee-based regressions overestimate the value of PTV programming, while 
the Bortz survey underestimates the value of PTV and CCG programming. 
CTV proposes an adjustment to the Bortz initial results, but not the 
McLaughlin Adjustment, or Adjustment One or Adjustment Two calculated 
by Bortz Media. Rather, CTV proposes a share adjustment approach that 
relies on the estimates from the Marx model and the Bortz Surveys in an 
attempt to what it terms ``the primary challenge of both 
methodologies,'' which is how to obtain a reasonable and more reliable 
estimate of the value of PTV programming during the 2014-17 period. See 
CTV PHB at 79-80.
---------------------------------------------------------------------------

    \220\ Professor Marx was called by CTV and was qualified as an 
expert economist and econometrician with experience in statistical 
methods and measurements. 4/11/2023 Tr. 4109 (Marx).
---------------------------------------------------------------------------

    CTV argues that the Bortz Survey's underestimation of PTV and CCG 
programming due to the purposeful exclusion of PTV-only and CCG-only 
systems from the survey, affects results in each year, but not the 
year-to-year trends obtained from the survey. Thus, CTV proposes a 
share adjustment approach that combines the Marx non-duplicated minute 
estimates for 2014 with the Bortz results for 2014 to establish a 
starting point for allocating shares, and then applies the year-to-year 
net change in each category derived from the Bortz survey results for 
each year in 2015, 2016 and 2017. CTV argues, in its view, this 
provides a the only reliable basis to use regression estimates offered 
in this proceeding to assist in the determination of relative value of 
the shares. Id. at 81-82. To establish the starting point for shares in 
2014, CTV proposes taking the average of the Marx 2014 Bayesian 
regression and Bortz survey estimates in 2014 for PS, JSC, CTV and PTV, 
and the maximum amount under either method in 2014, inexplicably for 
SDC,\221\ and

[[Page 54246]]

also for CCG, as illustrated in the following table. Id. at 81-82.
---------------------------------------------------------------------------

    \221\ Cf. Commercial Television Claimants' Post-Hearing Reply 
Brief in Support of Proposed Royalty Allocations at 63-64 (CTV RPHB) 
(referring to the adjustments proposed by Bortz Media).

                                                    CTV's Proposed Starting Point for Shares in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Valuation Method & Steps                       PS (%)      JSC (%)      CTV (%)      PTV (%)      SDC (%)      CCG (%)     Total (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marx 2014--excluding duplicates..............................         19.7         43.9         15.6         16.4          0.5          3.9        100.0
Bortz 2014...................................................         21.8         40.4         26.0          5.9          5.6          0.3        100.0
Step 1: average of Bortz and Marx............................         20.8         42.1         20.8         11.2  ...........  ...........  ...........
Step 2: maximum of Bortz and Marx............................  ...........  ...........  ...........  ...........          5.6          3.9  ...........
Step 1 + 2...................................................         20.8         42.1         20.8         11.2          5.6          3.9        104.4
Normalizing 1 + 2 (to add up to 100%)........................         19.9         40.4         19.9         10.7          5.4          3.8        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Id. at 81-82. Applying the net change from the Bortz survey results in 
2015, 2016, and 2017 to the starting points established for 2014, 
provides the proposed shares reflected in the following table, which 
are presented along with the shares awarded in the 10-13 Final 
Determination for reference.

                                                                  CTV's Proposed Shares
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Year                   PS (%)      JSC (%)      CTV (%)      PTV (%)      SDC (%)      CCG (%)      Total (%)             Source
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010.............................         26.5         32.9         16.8         14.8          4.0          5.0         100.0  2010-13 Final
                                                                                                                                determination.
2011.............................         23.9         30.2         16.8         18.6          5.5          5.0         100.0  2010-13 Final
                                                                                                                                determination.
2012.............................         21.5         33.9         16.2         17.9          5.5          5.0         100.0  2010-13 Final
                                                                                                                                determination.
2013.............................         19.3         36.1         15.3         19.5          4.3          5.5         100.0  2010-13 Final
                                                                                                                                determination.
2014.............................         19.9         40.4         19.9         10.7          5.4          3.8         100.0  Combined 2014 Bortz and
                                                                                                                                Marx shares.
2015.............................         24.6         28.5         23.6         12.7          6.3          4.5         100.1  2014 proposed shares +
                                                                                                                                2015 Bortz net change.
2016.............................         26.0         28.5         23.9         11.6          5.8          4.3         100.0  2015 proposed shares +
                                                                                                                                2016 Bortz net change.
2017.............................         22.0         31.5         24.5         12.6          5.2          4.1          99.8  2016 proposed shares +
                                                                                                                                2017 Bortz net change.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Id. at 82. CTV argues that no individual valuation method or share 
adjustment approach is perfect, but its proposed share adjustment 
approach helps address several evidentiary trends established in this 
proceeding, including: (1) correcting the over-estimation of PTV 
programming value under the fee-based regressions and aligning PTV 
shares more closely with the overwhelming evidence in the record that 
CSOs would not be willing to pay much, if anything, for the right to 
retransmit distant PTV stations absent the compulsory license; (2) 
aligning the value of shares during the 4-year period in a manner that 
reflects the impact of streaming on the value of programming to CSOs, 
which supports an increase in CTV and JSC programming relative to 
Program Suppliers and PTV programming; (3) providing a consistent 
allocation of shares for PS, JSC, CTV, SDC and CCG since 2010 which 
more reasonably and realistically reflects how CSOs would assess 
relative value over time; and (4) provides a reliable and reasonable 
basis for adjusting shares during the 2015-2017 time period when the 
estimates from the fee-based regressions are meaningless and 
uninformative and should not be given any weight in determining shares 
in this case. Id. at 83.
    PTV argues that the Bortz Surveys for 2014 through 2017 should be 
rejected in their entirety due to numerous deficiencies in the way that 
that they were conducted, including their overwhelming bias against 
Public Television. Nevertheless, PTV acknowledges that the Judges and 
their predecessors have accepted the Bortz survey results but only 
after applying the conventional McLaughlin Adjustment to account for 
the bias against Public Television, and even then, only as a relative 
value floor for Public Television's allocation award. PTV PHB at 81-82 
(citing PTV PCL ] 41; PTV PFF ] 204 (citing Distribution of 1998 and 
1999 Cable Royalty Funds, Dkt. No. 2001-8 CARP CD 98-99, Determination 
at 24; Report of the Copyright Arbitration Royalty Panel, Dkt. No. 94-
3-CARP-CD-90-92, at 123-24; 1998 Cable Royalty Distribution Proceeding, 
Dkt. No. CRT-91-2-89CD, 57 FR 15286, 15299-300 (Apr. 27, 1992); 1983 
Cable Royalty Distribution Proceeding, Dkt. No. CRT-84-1 83CD, 51 FR 
12792, 12811 (Apr. 15, 1986); 2004-05 Distribution Order at 57070-71 
n.20; 2010-13 Determination at 3610; 4/4/2023 Tr. 3139-41 (Trautman)).
    PTV argues that at the hearing, Mr. Trautman conceded that he 
calculated a McLaughlin Adjustment for this proceeding two years before 
filing his written direct testimony, which showed Public Television's 
annual shares for 2014-17 as 8.4%, 43.6%, 48.4%, and 48.2%, 
respectively, with average shares of 37.1%. PTV argues that, although 
Mr. Trautman then embarked on a multi-year quest ``to conjure up'' 
additional adjustments that would reduce Public Television's shares, 
neither of Mr. Trautman's alternative proposed adjustments has any 
reliable basis. Indeed, it is argued, the Bortz Survey results, and Mr. 
Trautman's two proposed adjustments, give Public Television a lower 
share of royalties than the Judges awarded in 2013, despite significant 
changed circumstances such as the elimination of WGN as a distant 
signal and the substantial changes in the quantity and quality of 
compensable JSC and Public Television programming--all of which are 
realities that would warrant substantially increasing Public 
Television's relative share from 2013 levels. PTV PHB at 42 (citing, 
inter alia, 4/4/2023 Tr. 3142-43 (Trautman) (concerning table in Trial 
Ex. 3049)).

[[Page 54247]]

    PTV argues that if the Judges were to use the Bortz survey to guide 
allocations in this proceeding, which PTV believes would be 
inappropriate, given their unreliability, several adjustments, at a 
minimum, would be needed to correct for clear methodological biases and 
flaws. It is argued that the adjustments offered by JSC (Bortz Media's 
Adjustment One and Adjustment Two), which result in shares for Public 
Television that are less than Public Television's 2013 share, are not 
credible. PTV argues that only the conventional McLaughlin Adjustment 
adopted in prior proceedings yields shares that approximate relative 
valuations for Public Television in 2014-17. Id. at 82. Mr. Trautman 
testified during direct and cross-examination that he calculated the 
conventional McLaughlin Adjustment to the 2014 through 2017 Bortz 
surveys. A table prepared by him, and upon which PTV relies is, as 
follows:

            Weighted Bortz Survey Results by Year, 2014-17 (After Conventional McLaughlin Adjustment)
----------------------------------------------------------------------------------------------------------------
                                                               Year
                                 ---------------------------------------------------------------- Average: 2014-
                                   2014 (n=171)    2015 (n=199)    2016 (n=199)    2017 (n=179)       17 (%)
                                        (%)             (%)             (%)             (%)
----------------------------------------------------------------------------------------------------------------
PBS.............................             8.4            43.6            48.4            48.2            37.1
Sports..........................            39.0            12.7            12.2            14.8            19.7
News............................            25.2            19.2            15.3            17.2            19.2
Syndicated......................            10.0             9.3             9.8             9.8             9.7
Movies..........................            11.0             9.1             8.0             5.0             8.3
Devotional......................             5.4             4.4             5.0             3.9             4.7
Canadian........................             1.0             1.8             1.3             1.2             1.3
                                 -------------------------------------------------------------------------------
    Total.......................           100.0           100.0           100.0           100.0           100.0
----------------------------------------------------------------------------------------------------------------

PTV PHB at 82; PTV PFF 208; Trial Ex. 3049 (from calculations prepared 
by Mr. Trautman); 4/4/2023 Tr. 2881-82, 3142-43 (Trautman).
    PS argues that there are fundamental issues with the Bortz Survey 
that cannot be remedied by after-the-fact adjustments, such that 
putting ex-post fixes on the Bortz Survey is like putting a Band-Aid on 
a bad wound. Indeed, the requests for royalty allocation shares made by 
Program Suppliers are based on Dr. Tyler's regression model,\222\ and 
do not reference the Bortz Surveys. PS PHB at 80-82 (citing PS PFF ] 
502 (3/27/2023 Tr. 1490-91 \223\ (Boyle))); see PS PRFF ]] 59-62.
---------------------------------------------------------------------------

    \222\ Dr. Tyler was called by PS, and was qualified as an expert 
in the fields of economics, data analysis, and econometrics. 4/19/
2023 Tr. 5423, 5428 (Tyler).
    \223\ Professor Boyle was called by PTV and was qualified as an 
expert in the field of survey research and design. 3/27/2023 Tr. 
1400, 1410-11 (Boyle).
---------------------------------------------------------------------------

    CCG argues that it is time for the Judges to abandon reliance on 
the Bortz Survey, and does not propose any adjustment to the Bortz 
initial results. CCG PHB at 66-71, 77. In its reply briefing, CCG again 
argues that the Bortz results should not be used for any party, and 
further argues that Bortz results have never been used, and should 
never be used, for the CCG, with or without these adjustments. CCG 
argues that the proposed adjustments do not correct the Bortz Survey's 
fundamental failure to measure relative market value, and do not remedy 
their utter inapplicability to the CCG. Reply Post-Hearing Brief of The 
Canadian Claimants Group at 56 (CCG RPHB). Indeed, CCG specifically 
criticizes the adjustment to Bortz offered by CTV, which is based on 
Prof. Marx's regression analysis, arguing, ``CTV offered no evidence 
that would support that conclusion that even though the relative 
quantity of their programming declined by 60% their relative unit price 
went up by 370%. The CTV hybrid model represents the worst of both 
worlds, an incomplete regression model that relies on data from the 
wrong period combined with the faulty Bortz Survey results.'' CCG RPHB 
at 56-57.
    With respect to the issue of which, if any, adjustment should be 
made to the Bortz initial results for 2014-2017, it is remarkable that 
no party had its expert calculate the McLaughlin Adjustment for those 
results, at least not for presentation at the hearing. While no party 
argues that royalty fund allocations in this proceeding should be made 
strictly according to the Bortz initial results subject to the 
McLaughlin Adjustment, all parties knew that the Judges applied the 
McLaughlin Adjustment to the Bortz Survey initial results in the 2004 
and 2005 proceeding, as well as in the more recent 2010-13 proceeding. 
Moreover, several parties knew that they would raise the McLaughlin 
Adjustment at the hearing and in their posthearing filings. As 
summarized above, some parties specifically criticized the McLaughlin 
Adjustment and some, despite their criticisms or the criticisms of 
others, argued for application of the McLaughlin Adjustment in the 
alternative, or for a calculation that is based upon or otherwise 
relates to the McLaughlin Adjustment. To see the figures obtained when 
the McLaughlin Adjustment is applied to the Bortz Survey initial 
results at issue in this proceeding, the Judges are referred to a chart 
taken from a spreadsheet prepared by Mr. Trautman, originally for Bortz 
Media's internal use (Trial Ex. 3049, duplicated above). Fortunately, 
no party has challenged the figures contained therein as accurately 
reflecting application of the McLaughlin Adjustment to the Bortz Survey 
initial results; and as previously noted, the figures on the chart 
resemble those presented in connection with Bortz Media's Adjustment 
One to the extent that one would expect similar figures.
    The application of the McLaughlin Adjustment to the initial Bortz 
results for the years now at issue, 2014 through 2017, is relevant, and 
the adjusted results (or ``augmented'' results, as they were termed in 
the 2010-13 proceeding) should be given varied weight, depending on 
whether one is considering the adjusted results for 2014, or for 2015 
through 2017. With respect to 2014, the Bortz Survey for that year 
covers the year immediately following the last year at issue in the 
2010-13 proceeding. For the 2014 survey, Bortz Media used a similar 
sampling method, and asked similar questions. While other factors, such 
as the Horowitz survey results and regression evidence, weighed more 
heavily in the Judges' decision, the 2013 Bortz results with the 
McLaughlin

[[Page 54248]]

Adjustment were taken into consideration by the Judges, even when 
making their final allocations. See 2010-13 Determination at 3591, 
3610-11. Thus, the 2014 adjusted results may be used for comparison 
with earlier results, and would be expected to provide useful insight 
into relative marketplace value of distant broadcast signal programming 
retransmitted by cable systems during that year.
    Nevertheless, when weighing all the evidence presented in this 
proceeding, including regression evidence, a concern is presented by 
the fact that the McLaughlin Adjustment assigns value to PTV content on 
cable systems that were compelled to carry PTV programming and 
reimbursed for such carriage pursuant to the Must Carry rule; and 
further, the value it assigns to PTV, even in such circumstances, is 
100 percent. As discussed above, the evidence shows that more than 30 
percent of PTV-only systems were subject to the Must Carry rule. See, 
e.g., Majure WDT ]] 144; Harvey CWDT ] 119 (``[a]pproximately 36 
percent of the time that a PTV Only system distantly retransmitted a 
primary PTV call sign, it was pursuant to the Must Carry rule'')). That 
certain PTV signals are subject to the Must Carry rule is not a new 
circumstance, and neither is the fact that the McLaughlin Adjustment 
brings PTV-only systems into the Bortz results with an assigned value 
of 100% for PTV. Inasmuch as PTV-only systems are still not surveyed by 
Bortz Media, and there is no empirical evidence to show how PTV-only 
systems value PTV distant signals, there is no cause now to discard the 
McLaughlin Adjustment due to the Must Carry rule, especially for the 
2014 results which pertain to circumstances similar to 2013. The 
McLaughlin Adjustment has always been presented as a 100-percent or 
nothing approach, and the Judges can take that characteristic of the 
adjustment into consideration. To the extent that one would 
specifically exclude Must Carry signals, such as in a regression 
analysis, the fact that the McLaughlin Adjustment is applied to Must 
Carry signals diminishes the value of such adjusted Bortz results when 
making a comparison to such other evidence that devalues Must Carry 
signals.
    It has also been shown that PTV signals comprise the only category 
of content that CSOs can be required to report as ``distant'' under 
section 111 when such signals are actually carried to subscribers 
within the signals' DMA, and further that a majority of the PTV-only 
systems reported such distant signals during the years at issue. As 
discussed above, it has been argued that similarly situated commercial 
signals would be reported as local, and thus would be ineligible for 
section 111 royalties. Bortz Rep. at 17-18 (``throughout 2016-17 
approximately 77% percent of the aggregate subscribers served by the 
PTV Only Systems did not receive any distant signals.''); Majure WDT ]] 
150-51. Yet, the designation as ``distant'' is rooted in statutory 
definitions and requirements, and thus it is not established that such 
signals have no place in the hypothetical marketplace considered in 
this proceeding.
    Furthermore, with respect to distant signals carried within their 
DMAs, again certain parties argue that there is no basis to assume that 
a majority of the PTV-only CSOs had a relatively greater preference for 
PTV programming over other categories of programming, much less at 100% 
of relative value. Yet, it has always been the nature of the McLaughlin 
Adjustment to augment the Bortz results with PTV-only signals, and to 
impute a 100-percent valuation. Accordingly, the McLaughlin Adjustment 
is recognized as an adjustment that helps to remedy a bias in the Bortz 
methodology but may do so on an imprecise basis.
    For 2015 through 2017, the Bortz results, when subjected to the 
McLaughlin Adjustment, show a dramatic increase in the PTV results, 
i.e., an increase to 8.4% in 2014 to 43.6% in 2015, then to 48.4% in 
2016, and by 2017, the results are 48.2%. A significant change is also 
seen for JSC, whose result is 39% in 2014 but only 12.7% for 2015, 
declining to 12.2% in 2016, with the JSC result at declining to only 
14.8%. See Trial Ex. 3049. The unadjusted, initial Bortz results show 
increases for PTV, and decreases for JSC, but they are not nearly as 
precipitous between 2014 and 2015, and not nearly as steep overall. See 
Bortz Rep. at 2. Considering the relative value question that the Bortz 
Surveys set out to have answered, and the adjusted Bortz results, it is 
hard to see why within only about one year many CSOs went from 
ascribing relatively small value to PTV to considering it the most 
valuable. See 3/30/2023 Tr. 2621 (Majure) (``just coincidentally at the 
point where WGNA converted, the system suddenly went from having a 
small value for the Public Television content to that being the only 
thing they like.''). Thus, an issue is raised as to whether the Bortz 
Surveys, particularly after application of the McLaughlin Adjustment, 
are best suited for the years 2015 through 2017.
    With the loss of WGNA as a distant signal, many CSOs that had 
retransmitted only PTV and WGNA as distant signals became PTV-only 
systems, which meant that they were no longer eligible for 
participation in the Bortz Survey. They also became subject to the 
McLaughlin Adjustment; and according to the adjustment, the value 
assigned to PTV was, as always, 100 percent.\224\ It was also during 
this time that the universe of Bortz-eligible CSOs declined.\225\ That 
change in the number of eligible CSOs during 2015-2017 was so great 
that, as already discussed, Bortz Media went from the use of a sampling 
technique in 2014, which was similar to that employed for many 
preceding years, to a new and different technique in 2015 and 
thereafter, which Bortz Media and Mr. Trautman described as an attempt 
as a census.
---------------------------------------------------------------------------

    \224\ The number of PTV-only systems grew substantially in 2015-
2017. In the second accounting period of 2014, there were 44 PTV-
only systems, but that number increased to 173 in the second half of 
2017. This increase occurred in large part because systems that 
previously carried both PTV and WGNA became PTV-only systems when 
WGNA converted to a cable network at the end of 2014. Indeed, 
between 50 and 55 percent of the PTV-only systems in 2016-2017 had 
carried WGNA in 2014. Bortz Rep. at 10-11; Harvey CWDT tbl.32.
    \225\ This decline in Form 3 CSOs carrying distant signals was 
largely the result of systems that had previously carried only WGNA 
electing not to carry any distant signals. Out of the 275 systems 
that carried WGNA as their lone distant signal in 2014, only 15 
(5.5%) of these systems carried a non-WGNA distant signal from 2015-
2017. Bortz Rep. at 8.
---------------------------------------------------------------------------

    Although the bias caused by exclusion of PTV-only systems from the 
Bortz Survey became more profound in 2015-2017, as many systems that 
carried only PTV and WGNA as distant signals became PTV-only systems 
after the WGNA conversion, as illustrated above, there is little 
evidence to indicate that the application of the McLaughlin Adjustment 
rectifies the situation. Indeed, no party, not even PTV, argues that 
the Bortz Survey with the McLaughlin Adjustment is the best methodology 
of record for arriving at an allocation for 2015-2017.
    Adjustment One, proposed by Bortz Media and Mr. Trautman, and 
supported by JSC and SDC, is offered as a response to the situation in 
which CSOs once carrying only PTV and WGNA as distant signals suddenly 
became PTV-only systems. Adjustment One also addresses Canadian-only 
systems, although it is opposed by CCG; and it has not been shown that 
Adjustment One calculations would be useful on allocation CCG's share 
of the subject royalty funds.
    As described more fully above, Adjustment One uses the McLaughlin 
assumption of attributing 100 percent of value to the PTV (or Canadian 
category)

[[Page 54249]]

when that is the only category the system carries distantly, but does 
not do so for PTV-only systems in 2015 through 2017 that previously 
carried WGNA. As to those systems, Adjustment One attempts to predict 
the average valuation from all systems that carried only PTV and WGNA 
in 2014 because it is not assumed that a CSO changed its valuation of 
PTV content simply because of the WGNA conversion. Furthermore, systems 
that carried both PTV and Canadian distant signals (but no U.S. 
commercial distant signals) are weighted in the same manner, but with 
the fees allocated equally among the PTV and Canadian categories. See 
Bortz Rep. at 42-43.
    The results seen from the application of Adjustment One tend to 
confirm the fact that the conversion of WGNA had a profound effect on 
the way that the McLaughlin Adjustment affected the Bortz results for 
2015-2017. The application of Adjustment One prevents the steep swings 
seen in the McLaughlin-adjusted results. Yet, as pointed out by PTV, it 
does so at a cost. Adjustment One keeps the new PTV-only CSOs from 
bringing 100-percent PTV value into the calculation because they may 
have once valued another signal that no longer exists. It treats the 
class of new PTV-only CSOs differently from other PTV-only CSOs, even 
though they clearly have not replaced WGNA with other distant signals. 
Moreover, due to the fact that Adjustment One calculates shares for 
2015 through 2017 based on the average valuation from all systems that 
carried only PTV and WGNA in 2014, the application of Adjustment One, 
for the purpose of allocating royalties, would in effect attribute a 
portion of section 111 royalties according to the former existence of 
WGNA, even though WGNA no longer existed as a distant signal in 2015-
2017. Consequently, while Adjustment One is worth considering in the 
context of gauging the impact of the WGNA conversion on the Bortz 
results, it does not provide figures that can be used to calculate the 
allocation of shares of the subject royalty funds.\226\
---------------------------------------------------------------------------

    \226\ Additionally, Bortz Media's Adjustment Two addresses the 
question of whether PTV signals transmitted within their DMA should 
be treated differently. It also attempts to address the exclusion of 
Canadian-only systems. As already described in the main text, 
Adjustment Two accepts (while not agreeing with) the McLaughlin 
assumption of attributing 100 percent of value to either the PTV or 
Canadian category when that is the only category the system carries 
distantly, even for systems that became PTV-only by default as 
result of the WGNA conversion. However, PTV-only systems that only 
carried distant PTV signals within those signals' originating DMAs 
are excluded. Bortz Rep. at 43. Adjustment Two, therefore, does not 
accept the definition of a distant signal imposed by statute, and 
may also create a gap in compensation for copyrighted programming 
within a DMA. Furthermore, no party presents its requested 
allocation based on implementation of Adjustment Two, or made an 
adequate record concerning this potential adjustment.
---------------------------------------------------------------------------

    CTV's proposed adjustment is not a proposed adjustment to the 
survey evidence available in this proceeding, i.e., the Bortz Survey 
for 2014 through 2017. Rather CTV proposes that data connected to the 
survey for 2014 (without adjustment for the exclusion of PTV-only CSOs) 
be used to expand the application of regression evidence from its 
expert, Dr. Marx. As detailed above, CTV proposes a share allocation 
approach that combines the Marx non-duplicated minute estimates for 
2014 with the Bortz results for 2014 to establish a starting point for 
allocating shares, and then applies the year-to-year net change in each 
category derived from the Bortz survey results for each year in 2015, 
2016 and 2017. There is a dearth of expert testimony concerning CTV's 
proposal. CTV's proposal is supported by no other party. CTV's proposal 
hinges on acceptance of Dr. Marx's fee-based regression estimates for 
2014, which as discussed above has not been accorded the greatest 
weight.
    Accordingly, the McLaughlin Adjustment, provided one understands 
its aforementioned limitations, is most helpful among the proposed 
adjustments in understanding the Bortz results. The following table 
shows the McLaughlin Adjustment allocations when organized according to 
the claimant groups in this proceeding.

                                     McLaughlin-Adjusted Royalty Allocations
----------------------------------------------------------------------------------------------------------------
                   Basic Fund                        2014 (%)        2015 (%)        2016 (%)        2017 (%)
----------------------------------------------------------------------------------------------------------------
Canadian Claimants..............................             1.0             1.8             1.3             1.2
Commercial TV...................................            25.2            19.2            15.3            17.2
Devotional Programs.............................             5.4             4.4             5.0             3.9
Program Suppliers...............................            21.0            18.4            17.8            14.8
Public TV.......................................             8.4            43.6            48.4            48.2
JSC.............................................            39.0            12.7            12.2            14.8
----------------------------------------------------------------------------------------------------------------

b. The Constant Sum Methodology
    In the 2010-13 proceeding, some criticisms of Bortz and other 
survey evidence went to the way constant sum questions were worded or 
executed, but some criticisms went to use of the methodology per se. 
Dr. Mathiowetz provided an opinion in support of the particular 
methodology used in the Bortz Surveys received in that proceeding. See 
2010-13 Determination at 3587. Ultimately, the Judges found certain 
regression analyses to be more persuasive than the survey results. Yet, 
far from rejecting the survey results, the Judges concluded, after 
considering all of the evidence presented in that proceeding, ``the 
constant sum survey methodology, with adjustments, provides relevant 
information relating to the relative value for each of the six 
categories remaining at issue.'' Id. at 3591 (emphasis added).
    Many criticisms have been leveled against the Bortz Surveys now at 
issue. Yet, even among parties that do not support use of the Bortz 
Survey in this proceeding, for the most part there has been an 
acknowledgement that constant sum surveys, if properly designed and 
executed, might yield useful data, even if the Bortz Surveys presented 
in this proceeding fall short.\227\ In this proceeding, Dr. Mathiowetz 
testified that a constant sum methodology was used as early as the 
1980s in royalty allocation proceedings before the CRB predecessors. 
Her testimony in this proceeding is that a constant sum question offers 
a perfect solution to the relevant research question. Mathiowetz CWDT 
at 4-6; 4/10/2023 Tr. 3849-54 (Mathiowetz). The Judges must allocate 
100% of the royalty funds at issue across several different categories, 
and an increased allocation for one category will necessarily require a 
decrease elsewhere so as to allocate 100 percent. Consequently, survey 
evidence that

[[Page 54250]]

employs constant sum methodology, such as the Bortz Survey, could again 
provide relevant evidence.
---------------------------------------------------------------------------

    \227\ See, e.g., CCG PHB at 50-51; CCG RPFF at 40-41, 47-48.
---------------------------------------------------------------------------

    PTV has a one-paragraph subsection in its main brief devoted to an 
argument, which it claims is unrebutted, that the key constant sum 
question in the Bortz Surveys (Question 4) is incapable of producing 
valid and reliable results because it is not ``incentive compatible.'' 
It is argued that PTV's expert witness Dr. Boyle is one of the foremost 
experts on stated preference surveys, of which Bortz's constant-sum 
question is an example, and further that his written and oral testimony 
is that the literature has developed on stated preference surveys, and 
it is now settled that stated preference surveys must be ``incentive 
compatible.'' His opinion is that the Bortz Survey constant sum 
question fails multiple requirements for incentive compatibility. PTV 
PHB at 68 (citing PTV PFF ]] 355-57 (essentially tracking PTV's brief, 
or vice versa)); see Written Rebuttal Testimony of Kevin J. Boyle, 
Trial Ex. 7306, at 15, 32-36, 42-43 (Boyle WRT).
    A review of the parties' briefs and proposed findings of fact shows 
that, contrary to PTV's claim, PTV's incentive compatibility argument 
was not in any sense unrebutted.\228\ JSC addressed the issue of 
incentive compatibility at least as much as PTV did in its briefs.\229\ 
See JSC PHB 45-46; JSC RPFF 40; JSC PFF ]] 247, 248-51; JSC PRFF ] 67. 
Furthermore, during the hearing, PTV conducted a substantive direct 
examination concerning incentive compatibility; and then JSC conducted 
a vigorous cross-examination of Prof. Boyle on his opinion regarding 
incentive compatibility. Prof. Boyle also answered questions from the 
bench on this topic.\230\
---------------------------------------------------------------------------

    \228\ A review of the parties' filings shows that incentive 
compatibility was addressed primarily, if not entirely, only by PTV 
and JSC.
    \229\ PTV's reply brief and reply proposed findings provided 
more substance to its argument than PTV provided in its initial 
briefing. See PTV RPHB at 39-40, 44-45; PTV PRFF ]] 252-63.
    \230\ See 3/27/2023 Tr. 1419-21, 1453-54, 1492-512 (Boyle).
---------------------------------------------------------------------------

    There is some discussion in PTV's reply as to whether, in response 
to Prof. Boyle's opinion about incentive compatibility, JSC was wrong 
to set out to show that constant sum surveys are reasonable or widely 
used. See Public Television's Post-Hearing Reply Brief at 45 (PTV 
RPHB). Yet, Prof. Boyle's written testimony linked the reliability of 
constant sum methodology to incentive incompatibility, at least for 
purposes of PTV's case. Furthermore, the presentation of his incentive 
compatibility opinion appears as an alternative to evidence concerning 
the validity and reliability of constant sum questions. In particular, 
under the heading ``Validity and Reliability of Constant-Sum 
Questions,'' Prof. Boyle testified in writing, ``There is limited peer-
reviewed research on the validity and reliability of constant sum 
questions. In the absence of evidence on the credibility of constant-
sum questions for eliciting preferences to support decision making, I 
turn to the well-known concept in economics and political science of 
incentive compatibility (Groves and Ledyard, 1987; Ledyard, 1989) to 
consider the validity of the Bortz survey constant-sum question.'' 
Boyle WRT at 32-33 (footnote omitted, which shows Prof. Boyle's 
reliance on a Google Scholar search, with his search terms, to show 
limited peer-reviewed research). Far from leaving that statement 
unrebutted, at the hearing, JSC questioned Dr. Mathiowetz, and she 
responded, as follows:

    Q. * * * Professor Mathiowetz, did you see the assertion by Dr. 
Boyle that there is a ``absence of evidence on the credibility of 
constant sum questions for eliciting preferences to support 
decision-making''?
    A. I did see that by Dr. Boyle. And I disagree with that 
assertion. First of all, we still see constant sum being used and 
appearing in the peer-reviewed journal literature. Whether it is 
being used as an end in and of itself for a substantive topic or 
sometimes you see the constant sum question being used as a 
benchmark to compare other relative value methodologies.
    Second, in light of Dr. Boyle's comment, I thought it would be 
useful to go and look at recent marketing research text, because 
constant sum is often taught in MBA programs dealing with marketing 
research. And I found textbooks published as recently as 2017, I 
think was the most recent one, I found, that are still teaching 
constant sum methodology.

4/10/2023 Tr. 3852-53 (Mathiowetz). Accordingly, in view of that 
testimony, the use of constant sum evidence in prior proceedings, and 
other record evidence concerning constant sum methodology, the Judges 
do not adopt an opinion that there is an absence of evidence on the 
credibility of constant sum questions, or in the absence of such 
evidence one must turn to incentive compatibility (notwithstanding the 
importance that incentive compatibility may otherwise have).
    PTV's reply brief, and the proposed reply findings cited therein, 
provide a summary of Dr. Boyle's testimony on incentive compatibility 
to the effect ``that (1) a stated-preference question must be incentive 
compatible for it to produce valid and reliable results; (2) there are 
four requirements for a stated-preference question to be incentive 
compatible; and (3) Bortz's constant-sum question is fatally flawed 
because it fails multiple requirements for incentive compatibility.'' 
Yet, the requirements for a stated-preference question are not 
explained in detail. See PTV RPHB at 44 (citing PTV PHB at 68; PTV RPFF 
]] 254-63). Turning to Prof. Boyle's hearing testimony, he explained, 
as follows:

    A. So the constant sum, as I said before, is one example of 
stated preference surveys. And the literature for that has been 
developing for a long time.
    And as it has developed in a variety of different areas of 
economics, in terms of stated preference questions, it's developed 
standards that a question needs to be incentive-compatible. And that 
started, really, evolving in the early 1990s and codified, really, 
in the 2000s.
    But there are kind of four basic axioms of it; that it needs to 
be consequential, it needs to be truthful, it needs to be a binary 
choice, and payment needs to be coursed.
    And so if you fail one of them, then you're in problems for 
incentive compatibility. If you fail more than one, you're even more 
in trouble in terms of incentive compatibility. And, you know, I 
have--three of them are listed here on the slide, but probably the 
two most important ones are the truthful and binary because they 
apply directly to the way the constant sum question is framed.

3/27/2023 Tr. 1419-20 (Boyle); cf. Boyle WRT at 34 (quoting Carson and 
Groves, Incentive and Informational Properties of Preference Questions, 
37 Environmental and Resource Econ., 181-210 (2007), and a different 
formulation of the axioms).
    Prof. Boyle also testified as to why, in his opinion, the Bortz 
Survey, particularly Question 4, is not incentive compatible, as 
follows:

    Q. And why isn't the constant sum question incentive-compatible?
    A. It's not incentive-compatible because it's not a binary 
question and a single application. And so when I was talking about 
what we did with the Deepwater Horizon, that was a specific dollar 
amount for a specific valuation that you answered yes or no.
    There's no incentive for somebody to answer wrong on that. You 
have got to answer yes or no. And if you answer wrong, you get an 
undesirable outcome for yourself. With the Bortz Survey, when you 
have the different categories that you can allocate percentages to, 
there's a potential there for somebody to misallocate across 
categories when you have what's called an open-ended response that 
you can fill in.
    You know, in the Bortz Survey, there was an enumerator, so they 
were giving the information to the enumerator to fill in.
    But, you know, I think one of the examples I used in my report 
was that if someone had a devotional affinity, they could explicitly 
or

[[Page 54251]]

implicitly allocate more to devotional or less to others. If they 
are an atheist, it could be the opposite one.
    So there's an opportunity, by how you allocate the percentages, 
that you could either explicitly, implicitly, or accidentally 
misconstrue what the true value is that is estimated from the 
questions.

3/27/2023 Tr. 1420-21 (Boyle).
    PTV's argument concerning incentive compatibility is not 
persuasive. As pointed out by JSC, Prof. Boyle held up as a positive 
example an incentive compatible public resource survey in which 
respondents may in fact have had a financial interest in the outcome of 
the survey. JSC PFF ] 249; 3/27/2023 Tr. 1406-07, 1420 (Boyle) (``And 
if you answer wrong, you get an undesirable outcome for yourself''). 
Additionally, whether a Bortz survey respondent's personal beliefs, 
such as religious beliefs (or the absence thereof), might cause a 
respondent to ``misconstrue'' true value in the Bortz Surveys remains 
highly speculative.
    Moreover, with respect to the Bortz Surveys, Dr. Mathiowetz 
explained that Prof. Boyle's argument is wrong because ``[c]able system 
operators are paying [the] royalty fee regardless of how they 
allocate'' value to program categories in the surveys. See 4/10/2023 
Tr. 3854 (Mathiowetz). Indeed, it was not shown that Prof. Boyle had 
any knowledge of whether or how respondents' answers to Bortz Survey 
questions might actually affect respondents or their CSOs, and what 
respondents' perceptions might be on the subject. Further, JSC's 
suspicion that Prof. Boyle lacked knowledge in this area was confirmed 
on cross-examination, when Prof. Boyle could not provide clear answers 
to simple questions on this topic. He was, for example, specifically 
asked, ``whether you have an understanding as to whether cable system 
operators have a financial interest in the outcome of these 
proceedings,'' and he testified, ``I am not testifying as an expert on 
cable systems. I'm testifying as an expert on survey design. And that's 
how I am answering you.'' Furthermore, when forming his opinions, Prof. 
Boyle did not consult with anyone who had worked at a cable system. 3/
27/2023 Tr. 1502-05, 1513-15 (Boyle).
c. Value Measurement
    On behalf of Program Suppliers, Dr. Stec,\231\ testified that at 
best the Bortz Survey results represent an estimate of the cable system 
operators' relative willingness to pay for the different program 
categories they were asked to consider, but willingness to pay is not 
the same as a market price or market value.\232\ Furthermore, it is his 
opinion that the Bortz Survey does not account for the supply side of 
the transactions, which was noted as early as the CARP 1990-1992 cable 
royalty proceeding. He opined that although Mr. Trautman indicates that 
the survey respondents are familiar with the rates charged for 
programming, as CSOs they do not purchase the individual programming 
categories as identified in the survey and instead purchase entire 
broadcast signals that include multiple categories of programming. He 
opined that survey respondents are unfamiliar with the actual prices 
charged in the marketplace for the specific programming categories when 
they are retransmitted on distant signals. Written Rebuttal Testimony 
of Jeffrey Stec, Trial Ex. 7608, at 21-22 (Stec WRT); 4/19/2023 Tr. 
5655 (Stec); PS Brief at 67-71; PS PFF ]] 513-29.
---------------------------------------------------------------------------

    \231\ Dr. Stec was called to testify by PS, and was qualified as 
an expert witness in economics and survey research. 4/19/2023 Tr. 
5641 (Stec).
    \232\ Dr. Stec, citing to an article on willingness to pay at 
the point of purchase, opines ``research studies show that, when 
controlling for question formats, the hypothetical bias in consumer-
intent type measures, like willingness-to-pay, can be substantial 
with the hypothetical willingness to pay exceeding the real 
willingness to pay. Even in the absence of any other flaws, by not 
accounting for this hypothetical bias, the Bortz Survey likely 
measured willingness to pay, in the form of budget percentages, 
inaccurately.'' Stec WRT at 26 (footnote omitted); PS PHB at 70-71; 
PS PFF ]] 527, 529. The relevancy of this consumer-intent, point of 
purchase opinion to the Bortz Survey remains unclear, especially in 
view of a dearth of testimony on the subject.
---------------------------------------------------------------------------

    Measurement of sheer willingness to pay may not be identical with a 
determination of market value. Yet, as discussed throughout this 
determination, including with respect to regression evidence presented 
by another Program Supplier expert witness, Dr. Tyler, evidence 
concerning CSOs' willingness to pay is an important indicator when 
examining the hypothetical market examined by the Judges in this and 
prior proceedings.
    Furthermore, as pointed out by JSC, Dr. Stec expressed some of the 
same negative opinions about the Bortz Survey in the 2010-13 
proceedings, and although considered by the Judges, the opinions did 
not prevent the Bortz Survey results from being used by the Judges in 
making their allocations. See JSC PHB at 46; JSC PFF ] 253. Indeed, the 
Judges recognized that the CARP had determined that in the relevant 
hypothetical market, the supply of programming would be fixed and value 
would be determined only by the CSOs' demand as reflected in their 
willingness to pay. Additionally, in the 2010-13 proceeding, the Judges 
``agree[d] with the pronouncement in prior determinations that the 
royalties that would be paid in the hypothetical market would 
essentially be a function only of the CSOs' demand and the copyright 
owners' costs, and their supply curves (if any) would not be important 
determinants of the market-based royalty.'' See 2010-13 Determination 
at 3583, 3555 n.18 (citing, as an example, 1998-99 Librarian Order at 
3606, 3608).\233\ In any event, the wording of Question 4 of each Bortz 
Survey for a particular year does not seek a response about actual 
prices charged in the marketplace, referenced by Dr. Stec. Rather, it 
seeks a CSO response about percentages of a fixed dollar amount the 
system ``would have spent'' and specific categories of programming that 
the system carried as distant signals in the subject year.
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    \233\ As Dr. Majure testified, Question 4 is essentially a 
budget-setting exercise, and as such it is his opinion that 
importance and expected cost are relevant to the value of distant 
signal programming, as they are to forming a budget. 3/30/2023 Tr. 
2616 (Majure).
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    The parties have made further arguments to the effect that Bortz 
Survey, and its results, are unable to shed light on market value 
relevant to this proceeding. For example, Program Suppliers argue that 
the Bortz results are not credible because they are inconsistent with 
market changes, noting that with the conversion of WGNA to a cable 
system, the share of compensable minutes for JSC and CTV content 
significantly declined; and further, while in 2014, over 90% of the 
sports programming was JSC content, by 2015 that share dropped to 
approximately 65%, with the balance of 35% being Program Suppliers or 
CTV content, yet changes to programming shares observed in the 
marketplace are not reflected in the Bortz Survey results. It is 
argued, among other things, that despite the 94% decline in JSC 
content, the Bortz Survey suggests that JSC's volume fell by only 22% 
and remained the most valuable category in 2017. See PS PHB at 77. 
Similarly, CCG argues that according to the Bortz Survey results, JSC 
content retains a constant relative value, and is ranked the most 
expensive and most valuable according to Bortz Survey results, but that 
is unrealistic after 2014 when WGNA converted to a cable station. Such 
consistency, it is argued, does not comport with reality, inasmuch as 
WGNA carried 94.2% of compensable distant JSC programming minutes in 
2014, and with WGNA's conversion, compensable distant programming 
minutes of JSC content dropped precipitously. CCG argues that the year-
to-year consistency in average JSC relative values from Question 4 
despite

[[Page 54252]]

a loss of over more than 90% of retransmitted content after 2014 can 
only be explained through heuristics, question order bias, and the 
possible knowledge of the survey's purpose. See CCG PHB at 60.
    JSC argues that while CCG and Program Suppliers take the position 
that the Bortz Survey responses are not sensitive enough (by some 
unspecified degree) to the change in volume of subscriber-weighted 
minutes resulting from the WGNA conversion, the Bortz results show a 
strength of the Bortz survey that the Judges' predecessors have 
highlighted. JSC points out that in the 1998-1999 proceeding, following 
the conversion of WTBS from a superstation to a cable network, the 
Bortz survey results showed only a modest decrease in JSC's relative 
value allocation, despite a similar drop in volume as the one at issue 
in this proceeding. Indeed, JSC argues, it is wrong to expect that 
changes in value will track with changes in the volume of programming, 
as might be the case in other industries where value is driven by per-
unit sales. Further, it is argued, it is entirely reasonable that, as 
the Bortz Surveys show, CSOs continue to value highly the other JSC 
programming they carry after a superstation conversion, and perhaps 
value it even more. JSC points to the CARP's assessment that the 
``Bortz respondents take account of changes in volume, viewing, and all 
other material factors;'' and argues that as a result, the Bortz 
surveys, unlike other methodologies, would not lead the factfinders 
astray by confusing volume with value. Rather, it is argued, as the 
CARP found in its determination, affirmed by the Circuit Court, the 
surveys would ``best inform [the CARP] as to whether any changes in 
sheer programming volume, viewing minutes, subscriber instances, or any 
other volume metric, truly translate into changes in value.'' Joint 
Sports Claimants' Post-Hearing Reply Brief at 54-55 (JSC RPHB); JSC PFF 
at 167 ]] 17, 18 (quoting 1998-99 CARP Rep. at 30-31 and Program 
Suppliers v. Libr. of Cong., 409 F.3d 395, 401-02 (D.C. Cir. 2005)).
    JSC correctly argues that value, particularly as ascertained for 
the purpose of royalty allocation, is not merely reflective of 
compensable minutes or of the volume of programming. Furthermore, as 
recognized by the CARP, when determining the value of programming, 
CSOs, such as Bortz respondents, have the ability to take account of 
changes in volume, viewing, and all other material factors when 
assigning value. Therefore, to some extent, the Bortz results may show 
that the CSOs contacted for the Bortz Surveys, as argued by JSC, always 
valued JSC programming highly, and taking many factors into 
consideration may have continued to do so, or may have done so to an 
even greater extent, after the loss of WGNA as a distant signal. Thus, 
to retain usefulness in allocations proceedings, the Bortz Survey 
results need not track precisely the availability of WGNA. Furthermore, 
as JSC suggests, it is unclear exactly how closely the Bortz results 
would have to track such a market change for its detractors to be 
satisfied.
    Nevertheless, the magnitude of the changes caused by the conversion 
of WGNA is so great that one could expect some appreciable reflection 
of that event in the Bortz results, particularly if there had not been 
significant changes in the Bortz methodology as changes in the market 
occurred. Indeed, the Bortz results do show diminished percentages for 
JSC after 2014. Yet, as already detailed, it was at the time of the 
conversion that, citing various factors, Bortz Media made a radical 
change in its methodology such that it abandoned its prior sampling 
methodology in favor of an attempt to contact all CSOs it deemed 
eligible to participate in a Bortz Survey, while still excluding CSOs 
that carried only PTV or Canadian programming as distant signals. Bortz 
Media also calculated alternative adjustments to be used when 
interpreting the Bortz initial results after the WGNA conversion to 
replace the McLaughlin Adjustment used previously by the Judges. Thus, 
it is not simply a question of whether the Bortz Surveys were sensitive 
to changes that occurred from 2014 through 2017. There should be a 
realization that after 2014, one is looking at Bortz results that in 
certain respects are based on a different methodology, and that 
different adjustments have been proposed. Consequently, one must 
exercise caution when comparing results from 2014 (or before) with 
results for 2015-2017.
    As explained by Dr. Stec, for 2014, Bortz Media sought to interview 
a random sample of Bortz-eligible CSOs, but for 2015 through 2017 Bortz 
Media attempted something like a census while failing to interview 
anything near all eligible CSOs. In fact, about 46% of eligible CSOs 
did not participate in those surveys. Dr. Stec testified that 
participation or non-participation in the surveys was ``self-
selected,'' which maybe an accurate appellation; but in any case, the 
sampling that Bortz Media obtained was not a random sample. Thus, in 
Dr. Stec's opinion, one cannot ignore whatever differences might exist 
between respondents and non-respondents and, relying on the statistical 
properties of randomness, impute the results obtained from the 
respondents to the non-respondents, and thus for the entire target 
population. To do so, he opines, could introduce bias or inaccuracies 
into the results. See 4/19/2023 Tr. 5671-74 (Stec); CCG PFF ] 354.\234\
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    \234\ Even after the WGNA conversion in 2014, small numbers of 
cable systems continued to report carriage of the signal. The 
reasons for doing so may be varied on the part of the cable systems, 
but in any event remain unclear. See Trautman WRT at 2-3; Bortz Rep. 
at 7 n.6. As discussed, supra note 27, there may have been some 
residual WGNA carriage as WGNA transitioned from a broadcast channel 
to a cable station.
---------------------------------------------------------------------------

    Somewhat similarly, PTV argues there is no dispute that the massive 
number of Public Television and/or Canadian-Only Systems excluded from 
the 2014 through 2017 Bortz surveys would have responded differently 
than the CSOs Bortz actually surveyed, and further, Bortz's exclusion 
also creates a clear non-response bias in the years that Bortz 
attempted to conduct the surveys as a ``census.'' It is argued that 
Bortz defined its target population, in part, based on the amount of 
the section 111 royalties they represent, but by 2017, the scope of 
Bortz's exclusion of PTV- and/or Canadian-only systems exceeded the 
scope of CSOs that were actually surveyed as part of the attempted 
census, including in terms of the numbers of systems (37% of systems 
were excluded while 34% of systems were surveyed), the section 111 
royalties they paid (45% of royalties were paid by excluded systems 
while 28% of royalties were paid by surveyed systems), and the number 
of subscribers they represented (41% of subscribers were subscribed to 
excluded systems while 30% of subscribers were subscribed to surveyed 
systems). PTV PHB at 40 (citing PTV PFF ]] 199-200 (relying in part on 
Boyle WRT at 38-39)).
    JSC argues that the Bortz opponents fail to rebut Dr. Mathiowetz's 
finding that there was no evidence of non-response bias impacting the 
Bortz estimates in any year. It is argued that, as Dr. Mathiowetz 
explained, the ``risk and type of non-response bias'' is the same under 
either the sampling or the ``census'' approach, with no assumed 
statistical difference or indeterminacy in one compared to the other. 
JSC argues that there is an established method to test for non-response 
bias, which Dr. Mathiowetz applied, and found no bias. JSC RPHB at 48; 
JSC PFF 381. Indeed, during the hearing, Dr. Mathiowetz

[[Page 54253]]

provided a succinct explanation of her assessment, as follows:

    Q. * * * Just in the interest of time, if you could give us at a 
high level what you did to assess whether there was a problem of 
non-response bias here and what you concluded?
    A. So as we have already established, right, there are 
respondents and there are non-respondents. And you worry about non-
response bias to the extent that those who don't respond differ from 
those who do respond to the survey.
    In order to make that assessment, you have to take two steps. 
First of all, you have to take and look at characteristics or 
variables that you have for both respondents and non-respondents.
    So we have a lot of information about these cable systems. We 
know their total royalty payments. We know the region of the 
country. We know the distant signal equivalents. We know the 
programming mix being offered by those cable systems.
    So the first step is to say: Are there any of these 
characteristics related to non-response? And as Dr. Boyle asserts, 
there is--we see that there is a relationship between size of 
royalty and non-response.
    But you have to take the second step and you have to say: Now, 
among the respondents, is the characteristic that I saw related to 
non-response related to valuations? And when you look at that, total 
royalty payments is not related to average program valuations.
    So while we see a difference in non-response rates, there is no 
indication of non-response bias in any of the years of the Bortz 
Survey.

4/10/2023 Tr. 3906-08 (Mathiowetz). Dr. Mathiowetz's opinion expressed 
at the hearing is supported by her written testimony.\235\ See 
Mathiowetz CWDT at 18-19.
---------------------------------------------------------------------------

    \235\ In his written rebuttal to Dr. Mathiowetz's written direct 
testimony, Prof. Boyle questions Dr. Mathiowetz's use of Census 
regions when reviewing cable system responses, opining that her 
investigation might have been appropriate if one were doing a survey 
of the population but not for a survey to provide input to cable 
royalty revenue allocations. Boyle WRT at 43-44.
---------------------------------------------------------------------------

    Dr. Mathiowetz's analysis does not answer the theoretical question 
of whether or not the samples obtained through the Bortz's census-type 
approach in 2015 through 2017 can be treated the same way as random 
samples. Nevertheless, with respect to the target population of the 
Bortz Surveys, Dr. Mathiowetz's analysis provides actual evidence of 
the absence of non-response bias in the Bortz Surveys for 2014 through 
2017, which the Judges take into consideration when determining the 
extent to which the Bortz results indicate value.
    Yet, Dr. Mathiowetz's analysis does not speak to a different bias, 
which is the bias in the design of the Bortz Survey caused by the 
complete exclusion of PTV-only and Canadian-only CSOs. The hypothetical 
allocation by those CSO's under Question 4 would presumably have to 
have been 100% for the only distant signal that they carried. See 3/23/
2023 Simonson Tr. 1228;\236\ 4/4/2023 Tr. 3131-34 (Trautman). The 
changes in the Bortz results that occur when PTV-only or Canadian-only 
CSO are taken into account, especially after the conversion of WGNA, 
are significant and have already been discussed.
---------------------------------------------------------------------------

    \236\ Dr. Simonson was called by PTV, and qualified as an expert 
in an expert in the fields of survey methodology, marketing, and 
managerial decision-making. 3/23/2023 Tr. 1170-71 (Simonson).
---------------------------------------------------------------------------

d. The Identification and Qualification Process of Survey Respondents
    Questions have been raised concerning the identification and 
qualification of the respondents that Bortz Media contacted for 
participation in its surveys. An inaccuracy found among the criticisms 
of the Bortz surveys is that the executives identified as initial 
contacts for the interviewers (whose identities and phone numbers were 
obtained primarily through the Factbook) were the targets, or target 
populations of the surveys, or the targets for the interviewers.\237\ 
Yet, the target for the interviewers, and for the surveys, was always 
the person most responsible for programming carriage decisions. While 
the initial contacts may in fact serve as the survey respondents, in 
most cases, the interviewer was referred to a subsequent contact within 
the CSO. Notwithstanding some arguments to the contrary, the method of 
making an initial contact, and then pursuing a referral when needed, is 
not a new method for the 2014-2017 surveys. See 2010-2013 Trautman Oral 
Testimony, Trial Ex. 7043, at 103-05. Furthermore, despite suggestions 
to the contrary, Mr. Trautman's hearing testimony on this topic is 
consistent with the Bortz Report, and with the interviewer instructions 
of the survey instrument.\238\
---------------------------------------------------------------------------

    \237\ See, e.g., PS PHB at 63 (``Since Mr. Trautman only reached 
between 5.9% and 9.0% of his intended target population, there 
should have been a process for qualifying respondents who were not 
the intended targets.'').
    \238\ The survey instrument instructs interviewers, when 
introducing themselves, to ask to speak with the listed respondent, 
and if unavailable to confirm he/she is the person most responsible 
for programming carriage decisions for the system and to arrange for 
a call back; and if not, then to ask to speak with the person most 
responsible for programming carriage decisions for the system. In 
addition, Question 1 on the survey instrument is: ``Are you the 
person most responsible for programming carriage decisions made by 
your system during [year] or not?'' If the response is negative, the 
interviewer is instructed by the survey instrument to ask to speak 
with the person most responsible for the system's programming 
carriage decisions for the subject year, and then to repeat the 
introduction and Question 1. See Bortz Rep. app. B; 4/5/2023 Tr. 
3220-21 (Trautman).
---------------------------------------------------------------------------

    The Bortz Survey has also been criticized as failing to reach the 
person most responsible for programming carriage decisions because 
decision-making authority within the systems might be at the national 
or corporate level, or because the survey respondents worked in the 
marketing or video product departments. While one cannot say with 
certainty that in all cases the Bortz interviewers reached the right 
respondents, the evidence shows that during the time period in 
question, individuals with the knowledge of why specific distant 
signals were carried often worked at the local or regional level, and 
furthermore could work in departments with titles such as marketing or 
video rather than programming. See 4/3/2023 Tr. 2769-73 (Singer);\239\ 
4/10/2023 Tr. 4054-55, 4060-61 (Witmer);\240\ 3/28/2023 Tr. 1714-16 
(Costantini); \241\ 4/17/2023 Tr. 5066-67 (Ringold).
---------------------------------------------------------------------------

    \239\ Mr. Singer was called by JSC, and qualified as an expert 
in the operation of cable systems and cable networks, including the 
valuation of television programming in the cable industry. 4/3/2023 
Tr. 2738, 2745 (Singer).
    \240\ Ms. Witmer was called by JSC, and qualified as an expert 
in the operation of cable systems, including the valuation of cable 
and broadcast television programming. 4/10/2023 Tr. 4035 (Witmer).
    \241\ Ms. Costantini was called by PTV, and qualified as an 
expert in the cable television industry and valuation of television 
programming. 3/27/2023 Tr. 1583, 1588 (Costantini).
---------------------------------------------------------------------------

e. Whether There Was Interviewer Error, Interviewer Bias, or a Lack of 
Training
    Opponents of the Bortz Survey argue that they have found ``error'' 
by the interviewers in as many as 90% of the survey responses, although 
none seems to involve recording the survey responses. The alleged 
error, it is argued, occurred in recording information such as the 
recording of ``partial names'' or ``multiple positions'' for the same 
respondent. There are even criticisms based on respondents' LinkedIn 
profiles (which assumes, without record evidence, that LinkedIn 
accounts would be accurate, and up-to-date for the survey periods in 
question). See, e.g., PS PHB at 64-65; PTV PHB at 52-53; CCG PHB at 54; 
Tr. 1278-79 (Simonson). Yet, as explained by Mr. Trautman, respondents 
in these telephone surveys often hesitate to provide detailed 
information about themselves such as full names, or happen to provide 
abbreviated titles.\242\

[[Page 54254]]

4/4/2023 Tr. 2992, 3004-05 (Trautman). Furthermore, it is not uncommon 
for regional personnel to oversee activities at individual systems, 
depending on the size and individual system characteristics and 
responsibilities. Nor is it uncommon to find individuals who are 
responsible for more than one function within a company. See 3/27/2023 
Tr. 1622 (Costantini).
---------------------------------------------------------------------------

    \242\ There is an email in which Mr. Trautman asks his 
contractor running the interview process to make sure interviewers 
do not record titles short-hand form. While Mr. Trautman was doing 
the due diligence of quality control, there is no proof of actual 
error. See 4/10/2023 Tr. 3967-68 (Mathiowetz).
---------------------------------------------------------------------------

    Bortz opponents argue that Ms. Grossman's long experience working 
on the Bortz surveys, and the large number of interviews she conducted, 
could have resulted in bias in the surveys she performed. That 
criticism is somewhat speculative. Furthermore, Dr. Mathiowetz tested 
for that question, and found no such bias. Specifically, it was found 
that on average, responses to the surveys Ms. Grossman performed did 
not differ from those of obtained from other interviewers. 4/10/2023 
Tr. 3893-94 (Mathiowetz). On the other hand, despite the long history 
Bortz Media has with Ms. Grossman, there are criticisms about a 
supposed lack of training materials, although the record shows that it 
is standard to use the survey instrument, or the questionnaire, as the 
training material when there is a small team of interviewers as in the 
case of the Bortz Surveys.\243\ 4/10/2023 Tr. 3895-96 (Mathiowetz). 
Moreover, Bortz Media conferred with Ms. Grossman and her team with 
respect to the 2014-2017 interviews before starting each survey. 4/3/
2023 Tr. 2841 (Trautman); 4/4/2023 Tr. 3006 (Trautman). Subsequently, 
Bortz Media monitored approximately 20 percent of the interviews ``to 
ensure accurate interviewing techniques and to observe any issues 
related to the respondent's comprehension or ability to respond to the 
constant sum valuation question.'' Bortz Rep. at A-15.
---------------------------------------------------------------------------

    \243\ Bortz only used a separate, one-page training document for 
these surveys in the late 1980s to early 1990s, when it worked with 
a large contractor whose interviewers were not as clearly 
experienced in executive interviewing. 4/4/2023 Tr. 3168-69 
(Trautman).
---------------------------------------------------------------------------

f. Whether the Bortz Survey Questions Are Overly Complex or Caused 
Confusion or Recall Bias
    When examining the actual Bortz Survey constant sum question, 
industry experts explained that cable system executives are more than 
capable of understanding the categories of content separate and apart 
from particular linear channels, that they know these types of 
programming as part of their day-to-day job. The survey respondents 
also have experience running businesses and expenses. Thus, the 
constant sum question is the type of question one would ask them. See 
4/10/2023 Tr. 4052-55 (Witmer); 4/3/2023 Tr. 2769 (Singer).
    With respect to the terms used during the Bortz Survey interviews, 
there is argument and testimony that in some cases the terms used to 
describe the program categories are undefined or vague. See, e.g., PS 
PHB at 72. The terms used to describe the program categories are by 
necessity generalizations. Yet, there is no showing of widespread 
confusion among survey respondents. On the contrary, there is evidence 
that the categories are generally understood, in particular a term such 
as ``live professional and college team sports.'' See 2010-2013 Hartman 
Oral Testimony, Trial Ex. 7056, at 73-77; 3/28/2023 Tr. 1722-23 
(Costantini).
    With respect to the general complexity of the Bortz Survey, and 
especially Question 4, Dr. Mathiowetz, who has studied and conducted 
establishment surveys, testified that the Bortz constant sum question 
was similar in complexity to other establishment survey questions, and 
underscored that the executives contacted for the survey have a 
sophisticated level of knowledge about the concepts in the survey. 4/
10/2023 Tr. 3854-55 (Mathiowetz). Indeed, Dr. Ringold has conducted 
surveys of CSO employees, and has asked respondents a constant sum 
question that required respondents to allocate 100 points among seven 
different claimant categories. See 4/17/2023 Tr. 5014-16 (Ringold).
    Furthermore, one well-known indication of respondents who were 
overwhelmed or confused could be what is termed ``satisficing,'' in 
which a respondent may take a cognitive short cut to stay in the role 
of a respondent albeit at a minimum.\244\ See 4/10/2023 Tr. 3855-56 
(Mathiowetz). Yet, Dr. Mathiowetz found no pattern of respondent 
confusion or satisficing behavior in the Bortz survey data. There was, 
for example, a case cited by PTV of a Bortz respondent who gave the 
same rankings and value allocations for two different systems. Dr. 
Mathiowetz testified, however, ``[w]hat you want to see when you're 
looking for evidence that there are problems with the question is that 
you see that pattern [of satisficing] overall across most 
respondents,'' not just ``one or two.'' 4/10/2023 Tr. 4015-26 
(Mathiowetz).\245\
---------------------------------------------------------------------------

    \244\ With respect to satisficing, during the hearing, Dr. 
Mathiowetz quoted from the Encyclopedia of Survey Research Methods, 
as follows: ``Satisficing has been posited to at least partly 
explain several response effects, including acquiescence effects, 
non-response order effects, no opinion option effects, and non-
differentiation in answering batteries of rating scales.'' 4/10/2023 
Tr. 3856 (Mathiowetz).
    \245\ Even before the production of more detailed information, 
as originally produced, the redacted Bortz data contained anonymized 
respondent identifications showing every time the same individual 
responded on behalf of multiple systems in a given survey year. 4/
10/2023 Tr. 2922-24 (Mathiowetz). It appears, therefore, that early 
in this proceeding any party could have used such information to 
track potential satisficing.
---------------------------------------------------------------------------

    A question has been raised as to whether the timing of the Bortz 
surveys led to recall error or bias. Mr. Trautman testified that as a 
matter of best survey practices, in general it is better to perform the 
Bortz Survey closer to the end of the survey year, rather than farther 
from it. As discussed above, the Bortz Surveys did not begin until 
several months after the end of the preceding calendar year. 
Nonetheless, Mr. Trautman did not conclude that there was recall bias 
in this the surveys now at issue. 4/4/2023 Trautman Tr. 3012, 3029-34. 
Yet, as Dr. Simonson observed, ``the Bortz Survey mistakenly asked a 
few respondents about programming categories that they did not actually 
carry.'' \246\ 3/23/2023 Simonson Tr. 1223. In all such cases, the 
respondents should have realized that their systems had not carried 
distant signal programming in those categories, and allocated zero 
value to such programming. Yet, Dr. Simonson testified, for 2017, for 
example, over 11 percent of respondents allocated values of up to 50 
percent to categories they did not carry. Id. Dr. Mathiowetz was candid 
about the fact that there are some errors in the Bortz Survey. She 
testified, ``I think there are cases in any data collection effort 
where there is misinformation, respondent error, respondent recall. 
That's the nature of the beast when you go and interview humans. And 
the best you can do is understand how that can impact the data.'' It 
was her opinion, which appears reasonable, that incorrect answers in 
those cases, i.e., answers other than zero for a programming category 
that was not carried, could be the result of recall error. She 
explained that ``a respondent is under the impression that the 
interviewer is giving them--most respondents work under the impression 
that the information being conveyed by an interviewer is accurate. And 
so we may have cases of recall error as opposed to just not

[[Page 54255]]

understanding.'' 4/10/2023 Mathiowetz Tr. 4030-31.
---------------------------------------------------------------------------

    \246\ Such occurrences are indeed few in number, but not to be 
ignored. Specifically, for 2014 through 2017, 90 respondents 
overall, four in 2014, 33 in 2015, 24 in 2016, and 29 in 2017, 
provided relative value allocation to compensable programming that 
they did not carry. See PS PFF 541 (citing Stec WRT at 41).
---------------------------------------------------------------------------

    Despite a relationship between importance and cost, already 
discussed, there is a concern that because ``warm-up'' Question 3 asks 
about cost, it might have influenced responses to Question 4, which 
asks about value. See, e.g., 2010-13 Determination at 3590 (``This may 
have injected some confusion into the respondent's estimation of 
relative value.''); 3/27/2023 Boyle Tr. 1422 (``But if I was doing it, 
I probably would not have had Question 3 before Question 4, if it was 
something that was important. I would have had Question 3 after 
Question 4, after the primary source of information that I was looking 
to get.'').\247\
---------------------------------------------------------------------------

    \247\ Dr. Conrad was called by CCG, and qualified as an expert 
in survey methodology with specialization in questionnaire design 
and data collection. 4/13/2023 Tr. 4796-97, 4806 (Conrad). He 
expressed concern over Question 3, and its order in the survey. See 
Written Rebuttal Testimony of Frederick Conrad, Ph.D., Trial Ex. 
7405, at 4 (``The cost question (Q3) was intended as a warm-up but 
the information respondents used to answer it was almost certainly 
salient and particularly accessible in their working (short-term) 
memory when they answered the value question (Q4) immediately 
afterward, allowing the cost information to dominate the valuation 
process; if the order of these two questions had been reversed, 
i.e., if Q4 had been asked before Q3, cost information would less 
likely be the central consideration in the valuation process. This 
pattern, if observed, would be what survey researchers call a 
question order effect--considered a type of measurement error'') 
(emphasis added).
---------------------------------------------------------------------------

    In this proceeding, there is no strong evidence offered either way 
to show whether Question 3 unduly influenced responses to Question 4. 
The best evidence was, however, found in the opinion of Dr. Mathiowetz 
who testified, ``when you look at the relationship between importance 
and relative value, you see a stronger relationship in the [Bortz] data 
between importance and relative value than you do between expense and 
relative value.'' When asked whether Question 3 biases response to 
Question 4, she answered, that ``My analysis suggests that it is not 
biasing, that there is a very logical relationship, but it is one that 
also includes understanding how respondents answered the importance 
question.'' 4/10/2023 Tr. 3878 (Mathiowetz); see Mathiowetz CWDT at 11 
(``One means by which questionnaire designers can signal the 
distinction among related concepts is by employing different question 
forms, thereby presenting the respondent with a different task. In the 
case of the Bortz surveys, the warm-up questions require the respondent 
to rank order among the program categories, from 1 to k, whereas the 
key question of interest related to relative valuations is a constant 
sum task'').
g. Whether Pre-Testing and Post-Testing Verification Procedures Were 
Needed
    PTV and CCG criticize the Bortz survey for not performing 
``qualitative pre-testing'' or ``post-survey verifications.'' For 
example, CCG argues that pretesting is a best practice even for 
longitudinal surveys that are fielded with the same instrument over a 
long period of time, according to the American Association for Public 
Opinion Research (AAPOR),\248\ so that changes or adjustments can be 
made to the questions asked. CCG PHB at 51-52. PTV argues in favor of 
pre-testing, and also that Bortz failed to conduct any post-survey 
verification to confirm validity and reliability, such as test/retest 
reliability or recontacting respondents to confirm ``that they actually 
exist, the survey actually happened, or that the respondents were 
qualified, and to learn how the respondent understood and answered.'' 
PTV PHB at 58.
---------------------------------------------------------------------------

    \248\ The AAPOR is a leading organization on survey research 
standards, and its past presidents include JSC's expert witness Dr. 
Mathiowetz. In 2015, she was awarded the AAPOR Award for Exceptional 
Distinguished Achievement. See Mathiowetz CWDT at 1-2; 4/10/2023 Tr. 
3943-44 (Mathiowetz).
---------------------------------------------------------------------------

    JSC argues that it is inaccurate to suggest that pre-testing is the 
only way to assess whether the surveys produce valid and reliable 
results. JSC argues that there are many ways to test for, for example, 
internal consistency in responses, evidence of satisficing, and bias; 
and Dr. Mathiowetz tested for all of those things, even if other 
experts did not do so. JSC RPHB at 52.
    While neither JSC nor Dr. Mathiowetz disputes the value of pre-
testing in general, Dr. Mathiowetz testified that pretesting of the 
2014-2017 Bortz surveys was not necessary because the survey has been 
fielded for many years and has been established in prior proceedings as 
a valid approach to looking at relative market value. She explained 
that the need for pre-testing is different than if one were undertaking 
brand new questionnaire development. Furthermore, Dr. Mathiowetz 
testified that there is also a significant downside to pre-testing a 
survey such as the Bortz Survey because there is a small population, 
and Bortz Media goes back to them in the next year. Also, any cases 
used for pre-testing usually would not be used in the main study. Tr. 
3863-64, 3958-60 (Mathiowetz).
    With respect to post-survey verification, Dr. Mathiowetz explained 
that due to the small population, and recurring nature of the survey, 
``you don't want to burn bridges'' by recontacting CSOs that Bortz 
Media knows it will want to survey again, just to verify their prior 
identification of the respondent. Indeed, Dr. Mathiowetz had never seen 
such a verification process for an establishment survey in the 
literature, nor had she done it herself. 4/10/2023 Tr. 3897-98 
(Mathiowetz). Similarly, Mr. Trautman's reason for not contacting 
survey respondents after each survey is a concern about ``placing an 
additional burden on respondents or potential respondents,'' who are 
``busy executives,'' and the resulting ``risk of not being able to 
continue to interview respondents in the future.'' 4/4/2023 Tr. 3106-07 
(Trautman).
h. Whether Bortz Media Used Undisclosed Quotas, Financial Incentives, 
and Pressure To Produce ``Extraordinary'' Results That Biased the Data
    PTV argues in one paragraph of its brief that JSC has trumpeted 
high response rates achieved for the Bortz surveys, but never disclosed 
any response rate quotas it imposed, as revealed in compelled discovery 
showing that Bortz imposed substantial quotas on Ms. Grossman and her 
team, and pressured them to produce ``extraordinary'' results; \249\ 
and despite persistent and increasing difficulty, specifically 
pressured them to ``keep the response rate as high as possible because 
it has been a big selling point for the Bortz survey in these 
proceedings . . . based on past emphasis by the Judges.'' It is further 
argued that Mr. Trautman admitted, and documents confirmed, that Ms. 
Grossman and her team had a financial interest in meeting these quotas 
in order to keep the surveys going, and did ``everything possible to 
reach those numbers that [Mr. Trautman] needed,'' including placing 
many calls, pleading, calling neighboring systems, disregarding 
institutional policies against participating in surveys, and staying in 
the field for a longer time. See PTV PHB at 50 (citing PTV PFF ]] 266-
73).
---------------------------------------------------------------------------

    \249\ Dr. Simonson testified that he never heard the term 
``establishment survey'' before testifying, and had never heard of a 
business or organization survey obtaining a response rate of 50% 
without offering compensation (and did know of any compensation for 
respondents in connection with the Bortz Surveys). 3/23/2023 Tr. 
1248-51 (Simonson).
---------------------------------------------------------------------------

    JSC argues that Bortz Media appropriately sought to obtain high 
response rates, and to do so through its contractor, and at higher 
expense, spent more time in the field and made more

[[Page 54256]]

efforts to reach respondents than one might otherwise do. It is argued 
that no expert testified to the existence of ``quotas'' or resulting 
bias in the Bortz results. It is argued that to the contrary, Dr. 
Mathiowetz testified that there is ``absolutely not'' anything 
problematic about telling a survey organization to work hard to obtain 
good response rates, even if that requires interviewers to make more 
frequent calls or leads to cost overruns. Furthermore, it is argued, 
Mr. Trautman testified unequivocally that interviewers were never paid 
for completing an individual interview or completing a specific number 
of interviews. JSC RPHB at 4, 55.
    JSC argues that PTV is simply misreading the AAPOR disclosure 
standard, which it never submitted into evidence and never showed to 
any of the numerous testifying survey expert, including former AAPOR 
President, Dr. Mathiowetz. Furthermore, JSC argues that the AAPOR 
standards require disclosure of quotas used as part of the ``methods of 
sampling'' for the survey, sometimes referred to as ``quota sampling.'' 
Quota sampling is used to ``achieve a pre-specified distribution on 
some set of variables'' (such as gender or Census region) within a 
survey sample, and there is no suggestion that Bortz used quota 
sampling or anything like it, and thus nothing that Bortz improperly 
failed to disclose. See id. at 55-56.
    Indeed, there was a lack of development of any accusation that 
Bortz Media, or any party associated with the Bortz Surveys at issue 
used undisclosed sampling quotas, let alone to obtain extraordinary 
results. Furthermore, it has not been established that interviewers or 
anyone else associated with Bortz Media or its contractors received 
undisclosed financial incentives to obtain results,\250\ or the Bortz 
Media or anyone else associated with the Bortz Surveys engaged in 
``quota sampling,'' as it has been explained in the meager record on 
the topic.
---------------------------------------------------------------------------

    \250\ PTV's Proposed Finding of Fact 270 contains the statement: 
``Ms. Grossman and her team were financially incentivized to meet 
Mr. Trautman's quotas because their compensation was a product of 
keeping the study going, and the time and effort needed to do so. 
Ms. Grossman and her team required, inter alia, more money, 
resources, longer time in the field.'' PTV PFF at 96 (footnotes 
omitted) (emphasis added). An examination of the evidence cited in 
supporting footnotes (i.e., 4/4/2023 Tr. 3195-202 (Trautman)) 
confirms that the financial incentives involved were, as indicated 
in PTV's proposed finding, only in the nature of compensation for 
the time, effort and resources needed to keep the study going and to 
exceed expectations.
---------------------------------------------------------------------------

C. The Testimony of Professor Papper

    CTV argues that the testimony its expert witness Prof. Papper, 
referenced above, is based on empirical analysis and his decades-long 
expert assessment of trends in the local television news industry 
generally and their impact on the relative value of CTV programming 
during the 2014-2017 period. In particular, Prof. Papper opines that 
there has been a steady rise in the production and airing of local 
news.\251\ Thus, CTV argues that it is entitled to an increased share 
of royalties. See CTV PHB at 4-6. In its reply, CTV argues that despite 
criticisms of RTDNA surveys, Program Suppliers provide no evidence, 
empirical or otherwise, to rebut or refute what Prof. Papper 
consistently presents throughout his testimony, which is that that 
local television stations across the country, including those that were 
distantly retransmitted, were producing and airing increasingly more 
local news programming over the course of 2014-2017.\252\ Further, CTV 
argues that as Prof. Marx testified, CSOs' inability to offer as much 
CTV content in 2015-2017 was divorced from any actual choice made by 
the CSOs, and was due to the reduction of available CTV programming as 
a result of the WGNA conversion. CTV Reply at 52-53.
---------------------------------------------------------------------------

    \251\ CTV, based on the written testimony of Prof. Papper, 
argues that there has been a steady increase on the amount of news 
broadcasts by station, including an increase in the amount of local 
news from 5.3 hours in 2014 to 5.7 hours in 2017; and the amount of 
local news also went up on the weekend, from an average of 2 hours 
per Saturday in 2014 to 2.1 hours in 2017, while the amount of local 
news on Sunday rose from 1.9 hours in 2014 to 2.1 hours in 2017. 
Further, it is argued, the number of stations running local news 
rose from 1026 in 2014 to 1062 in 2017, and as television stations 
continued to increase their local news budgets during the four-year 
period, they added more local newscasts to their lineups in the 4 
p.m. to 7 p.m. time slots, and the 5 a.m. to 7 a.m. time slots. See 
CTV PHB at 5; CTV PFF ]] 10-11.
    \252\ CTV argues that in support of the value of their own 
content, Program Suppliers continue to rely on reports that are like 
those they find objectionable from Prof. Papper, and the articles 
Prof. Papper writes that in part rely on the RTDNA Survey. 
Specifically, CTV argues that Program Suppliers relies on the 
content of the Nielsen Year in Sports Media Report, U.S. 2017. It is 
argued that this Nielsen Report, which includes and relies on a 
variety of sports media data, studies and survey results, is no 
different from Prof. Papper's articles and opinions that are 
informed, in part, by results from the RTDNA Survey. CTV RPHB at 53 
n.267 (citing PS PHB at 13).
---------------------------------------------------------------------------

    Program Suppliers argue that the RTDNA Surveys should be given no 
weight for several reasons, including the fact that Prof. Papper failed 
to provide the information necessary to evaluate his target population, 
sample design, the data he collected (and did not collect) from the 
RTDNA Surveys, the quality of that data, or the accuracy of the data 
collection and recording of that data. Moreover, Program Suppliers 
argue that Mr. Papper's hearing testimony revealed that the reliability 
issues are more severe, pervasive, and disqualifying than originally 
thought. Indeed, it is argued, the RTDNA Surveys are not surveys at 
all, but are instead part of what CTV terms a ``fact-gathering 
exercise,'' presumably because Prof. Papper admitted that he is not a 
survey expert and lacks the expertise necessary to sponsor the RTDNA 
Surveys as evidence in this proceeding. CTV PHB 4. In addition, Program 
Suppliers argue that while CTV takes the position, based solely on Mr. 
Papper's RTDNA Survey, that there was an increase in the amount of CTV 
programming appearing on distant signals, this summary conclusion is 
directly contrary to the quantitative study conducted by the other CTV 
experts, Dr. Bennett \253\ and Dr. Marx, which shows the dramatic 
decline in CTV distant carriage over time. Program Suppliers' Post 
Hearing Reply Brief at 22 (PS RPHB).
---------------------------------------------------------------------------

    \253\ Dr. Bennett was called by CTV, and qualified as an expert 
in statistical methods and measurement. 4/12/2023 Tr. 4497, 4504-05 
(Bennett).
---------------------------------------------------------------------------

    The RTDNA Surveys were not offered or received as survey evidence, 
but rather as information, along with articles, that Prof. Papper 
relied upon in forming his expert opinions. As such, the RTDNA Surveys 
were not scrutinized as, for example, the Bortz Surveys were 
scrutinized in this proceeding. Based on the totality of Prof. Papper's 
opinions and the sources upon which he relies, including his 
involvement in the broadcast journalism industry, it is found that 
there was a trend toward increased production and airing of local news 
during the 2014-2017 time period, although the extent of that trend is 
difficult to gauge from Prof. Papper's testimony. Furthermore, that 
trend does not in and of itself translate to a greater allocation of 
section 111 royalties for CTV, and the opinions of Dr. Bennett, Dr. 
Marx and others who testified on the subject of CTV programming are 
addressed elsewhere.
    For the foregoing reasons, the Judges accord evidentiary weight to 
the Bortz Survey, with the McLaughlin Adjustment--relatively equivalent 
with the weight given to the regression analysis as discussed supra. A 
reconciliation of these two useful (albeit imperfect) approaches, 
augmented by the testimony of industry witnesses, is set forth below.

[[Page 54257]]

XVIII. Conclusion And Award

    Regression evidence was presented through Drs. Johnson, Tyler, 
George and Marx, with the Johnson, Tyler and George regression models 
generating proposed royalty fund shares for each of the claimant groups 
in each of the years 2014 through 2017. Furthermore, survey evidence 
was presented only in the form of the Bortz Survey, which was conducted 
for each of the years at issue, along with adjustments that could be 
made to the initial results to account for certain factors (most 
notably the exclusion of CSOs from the surveys because they carried 
only PTV or only Canadian programming as distant signals). In addition, 
the Judges received evidence from industry experts who testified from 
their unique perspectives about the regressions and annual surveys 
presented at the hearing, as well as the valuation of programming 
relative to several of the claimant groups.
    For the reasons detailed in this determination, the Judges have 
found that no form of evidence, be it a regression, the Bortz Survey or 
the testimony of industry experts, provided data that translates 
directly into the allocation of royalty fund shares needed for this 
determination.\254\ The results of all regression models in evidence 
have been considered, but the Judges find that the Tyler Model is the 
most appropriate regression model in this record, and have accorded it 
the most weight. The Bortz Surveys provide relevant illustrations of 
the values placed on distant signal programming during the relevant 
time period. For 2014-2017, the Bortz Surveys had limitations that 
other Judges and tribunals have long recognized. In some cases, a more 
comprehensive assessment of values can be made by applying adjustments 
proposed by various parties, especially the McLaughlin Adjustment, 
which has been used at least since the 2004 and 2005 proceeding. The 
Judges have also taken into consideration the fact that Bortz Survey 
methodology, like the regression models, faced challenges over the 
period following 2014, especially due to the conversion of WGNA.
---------------------------------------------------------------------------

    \254\ To the extent that any criticism of, or deficiency in, the 
record evidence was not discussed, it is because said criticism or 
deficiency does not change the outcome of this determination.
---------------------------------------------------------------------------

    In view of the totality of the evidence presented in this 
proceeding, the Judges find that a synthesis of regression and survey 
results is necessary to arrive at the required allocations. In 
particular, with respect to JSC, the Judges weighted heavily evidence 
from the Bortz Surveys. While the record shows that minute volume is 
not as applicable to sports programming (which is more dependent, for 
example, on games carried), JSC's allocation must be limited by the 
fact that significantly less sports was transmitted after the WGNA 
conversion. Yet, with respect to PTV, the regression evidence was 
accorded greater weight for 2014, and dispositive weight for 2015-2017. 
As already described, the regression evidence accounted for the 
reduction of shares due to the Must Carry signals, as well as increases 
due to the implicit willingness to pay as shown by cable systems that 
continued to carry PTV even when WGNA was no longer available as a 
distant signal. By contrast, the Bortz Surveys did not examine such 
circumstances, and there is no rationale for augmenting the survey 
results with the McLaughlin Adjustment for all the PTV-only systems 
that came into existence after 2014.
    For CTV, the Bortz Surveys weighed heavily in making the 
allocation, which is not inconsistent with evidence presented by 
industry experts Mr. Vaughn and Prof. Papper, as well as the industry 
analysis provided by Dr. Marx. Relatively speaking, the value of CTV 
should have increased since 2013, with the rise of streaming and over 
the top programming, more than one sees when simply looking at the 
regression results. Much of the CTV programming was not available on 
streaming, and would increase its relative value in what was 
technically distant signal programming because it was retransmitted to 
a contiguous area.
    With respect to the allocation for the Program Suppliers, the Bortz 
Survey evidence weighed more heavily than the regression evidence. 
Expert testimony showed that streaming services could substitute for 
retransmitted signals. This factor was not reflected in the regression 
evidence, but the Bortz Survey respondents, as cable industry 
executives, would have understood the factors affecting the value of 
Program Suppliers programming in much the same way as the testifying 
industry experts.
    There is ample evidence in the record that SDC provides niche 
programming whose value is not so much determined by minutes, and might 
not show up well in regressions. Yet, the niche value of SDC has been 
reflected well in the Bortz Surveys received in this proceeding, and 
previously, and is reflected in relatively consistent numbers. Inasmuch 
as the allocations for SDC, by any parties' estimation, resulted in low 
numbers, one sees share allocations with relatively steep jumps or 
declines between years, but when compared to the overall allocations to 
be made, the variations are not great in absolute terms.
    With respect to CCG, in general, the regressions examined the value 
of Canadian programming in detail, and were relied upon in making 
allocations. Yet, even the regression evidence was weighed carefully 
because although CCG had strength as a niche offering, it also 
overwhelmed some regressions, including the above-minimum-fee 
programming model. The Bortz Surveys were considered, but accorded no 
weight when arriving at the Basic Fund allocations because much 
Canadian programming is not taken into consideration, and the Bortz 
results were clearly off the mark.
    Accordingly, the allocations are, as follows:

                                     Table 2--Basic Fund Royalty Allocations
----------------------------------------------------------------------------------------------------------------
                   Basic Fund                          2014            2015            2016            2017
----------------------------------------------------------------------------------------------------------------
CCG.............................................            6.19           14.59           14.60           15.77
CTV.............................................           20.55           19.78           17.36           17.50
JSC.............................................           36.13           11.42           10.72           12.36
Program Suppliers...............................           21.21           28.29           25.53           23.29
PTV.............................................           11.07           19.18           24.78           25.25
SDC.............................................            4.85            6.74            7.01            5.83
----------------------------------------------------------------------------------------------------------------


[[Page 54258]]

    With respect to the 3.75% fund, it is recognized that PTV is a 
nonparticipant. To arrive at the allocations for the 3.75% fund set 
forth in Table 1, the Judges have reallocated the PTV shares 
proportionally among the claimant categories that participated in that 
fund.
    The Register of Copyrights may review the Judges' Final 
Determination for legal error in resolving a material issue of 
substantive copyright law. The Librarian shall cause the Judges' Final 
Determination, and any correction thereto by the Register, to be 
published in the Federal Register no later than the conclusion of the 
60-day review period.

    Dated: April 17, 2024

David R. Strickler,
Copyright Royalty Judge.

Steve Ruwe,
Copyright Royalty Judge.

David P. Shaw,
Chief Copyright Royalty Judge.

    The Register of Copyrights closed her review of this Determination 
on June 13, 2024, with no finding of legal error.

    Dated: June 13, 2024.

David P. Shaw,
Chief Copyright Royalty Judge.

    Approved by:

Carla B. Hayden,
Librarian of Congress.

ADDENDUM A

Before the Copyright Royalty Judges

The Library of Congress

In re Distribution of Cable Royalty Funds
Docket No. 16-CRB-0009 CD (2014-17)

Public

Order 46 Granting in Part and Denying in Part PTV's Motion for 
Rehearing and Denying JSC's Motion for Rehearing

I. Procedural Background and Legal Standard

a. Procedural Background

    On September 6, 2023, the Copyright Royalty Judges (``Judges'') 
issued their Initial Determination of Royalty Allocation (``Initial 
Determination'' or ``ID'') in the captioned proceeding (eCRB no. 
28762).
    On September 21, 2023, the Public Television Claimants (``PTV'') 
and the Joint Sports Claimants (``JSC'') filed motions for rehearing 
(eCRB nos. 30637 and 30638, respectively).
    On September 25, 2023, the Judges issued Order 43, permitting 
written responses to the motions for rehearing by October 5, 2023.
    On October 5, 2023, the Canadian Claimants Group (``CCG''), Program 
Suppliers (``PS'' or ``Program Suppliers'') and Settling Devotional 
Claimants (``SDC'') filed a Joint Response in Opposition to the Motions 
for Rehearing (eCRB no. 32670) (``Joint Response'').
    On October 5, 2023, JSC and the Commercial Television Claimants 
(``CTV'') filed responses in opposition to PTV's Motion for Rehearing 
(eCRB nos. 32671 and 40001, respectively).
    On October 5, 2023, PTV filed a Response in Opposition to JSC's 
Motion for Rehearing (eCRB no. 32673).
    On October 10, 2023, the Judges issued Order 44, granting movants 
leave to file replies by October 19, 2023.
    On October 19, 2023, JSC filed a reply in support of its motion for 
rehearing (eCRB no. 33842) and PTV filed a reply in support of its 
motion for rehearing (eCRB no. 33843).

b. Legal Standard

    Pursuant to the Copyright Act, the Judges may grant a motion for 
rehearing in exceptional cases. 17 U.S.C. 803(c)(2). Applying this 
statutory ``exceptional case'' requirement, the Judges' regulations 
state that the movant must show that an aspect of the determination is 
``erroneous.'' i.e., ``without evidentiary support in the record or 
contrary to legal requirements.'' 37 CFR 353.1-.2.
    In applying these statutory and regulatory standards, the Judges 
grant rehearing only ``when (1) there has been an intervening change in 
controlling law; (2) new evidence is available; or (3) there is a need 
to correct a clear error or prevent manifest injustice.'' See Order 
Granting in Part and Denying in Part Motions for Rehearing at 2 n.3, 
Determination of Royalty Rates and Terms for Making and Distributing 
Phonorecords (Phonorecords III), Docket No. 16-CRB-0003-PR (2018-2022) 
(Oct. 29, 2018) (citing Order Denying Motion for Reh'g at 1, 
Determination of Rates and Terms for Preexisting Subscription Services 
and Satellite Digital Audio Radio Services (SDARS I), Docket No. 2006-1 
CRB DSTRA (Jan. 8, 2008) (applying federal district court standard 
under Fed. R. Civ. P. 59(e))). See also Order Granting in Part and 
Denying in Part Sirius XM's Motion for Rehearing and Denying Music 
Choice's Motion for Rehearing at 1-2, Determination of Royalty Rates 
and Terms for Transmission of Sound Recordings by Satellite Radio and 
``Preexisting'' Subscription Services (SDARS III), Docket No. 16-CRB-
0001 SR/PSSR (2018-2022) (Apr. 18, 2018) (``SDARS III Order'') (same). 
Moreover, in the SDARS III Order, the Judges made clear what would not 
be sufficient to warrant rehearing: ``A rehearing motion does not 
provide a vehicle `to re-litigate old matters, or to raise arguments or 
present evidence that could have been raised prior to the entry of 
judgment.' '' \255\ Id. at 2 (quoting Exxon Shipping Co. v. Baker, 554 
U.S. 471, 485 n.5 (2008) (quoting C. Wright & A. Miller, Federal 
Practice and Procedure Sec.  2810.1 (2d ed. 1995))).\256\
---------------------------------------------------------------------------

    \255\ An attempt to re-litigate old matters, or to raise 
arguments or present evidence that could have been raised prior to 
the entry of judgment, is colloquially referred to as an improper 
attempt at ``a second bite at the apple.''
    \256\ In determining whether to grant motions for rehearing, the 
Judges have also previously relied on Fresh Kist Produce, LLC v. 
Choi Corp., 251 F. Supp. 2d 138, 140 (D.D.C. 2003), which involved a 
Rule 59(e) motion in a case relating to economic rights. See, e.g., 
SDARS III Order at 2, 7. In view of the facts in Fresh Kist, the 
district court held that ``[a]lthough the court disapproves of 
parties raising arguments that they could have advanced earlier, the 
court recognizes that the interests of justice and fairness support 
reviewing the plaintiff's motion.'' Fresh Kist, 251 F. Supp. 2d at 
141. Accordingly, the Judges recognize a tension between the 
proscription against using a rehearing motion to obtain a ``second 
bite at the apple'' and the need to prevent an unfairness that 
constitutes a ``manifest injustice,'' which can be addressed on a 
case-by-case basis.
---------------------------------------------------------------------------

II. JSC'S Motion For Rehearing

    Pursuant to 17 U.S.C. 803(c)(2) and 37 CFR 353.1, JSC requests 
rehearing, arguing that the Judges' allocations must conform to the 
record evidence and the law by: ``(1) correcting the Initial 
Determination's reliance on an outdated and unreliable version of the 
`McLaughlin adjustment' calculation; (2) adjusting JSC's 2014 share to 
align with the record evidence and the reasoning of the Initial 
Determination; and (3) eliminating reliance on a regression model for 
the 2015-17 time period that no witness endorsed and is at odds with 
the record evidence.'' JSC Motion at 1.

a. JSC's Motion Is Deficient Because It Does Not State a Standard Under 
Which It Can Seek Rehearing

    The JSC Motion fails to explicitly set forth a governing rehearing 
standard for the Judges to apply that would support the substantive 
arguments on which JSC seeks rehearing. As the Judges noted supra, a 
party may seek rehearing if (1) it demonstrates the existence of an 
``exceptional'' case under the applicable statutory section, which, (2) 
by regulation, means that a party must show that the aspects of the 
determination identified by the movant were ``erroneous,'' pursuant to 
(3) specific grounds, such as, e.g., ``clear error'' or ``manifest 
injustice.'' \257\ JSC

[[Page 54259]]

does not express and apply these specific standards, let alone maintain 
that its arguments meet these standards.
---------------------------------------------------------------------------

    \257\ As also noted supra, a ``negative'' requirement for a 
proper rehearing motion is that the motion cannot simply attempt to 
relitigate matters that were addressed at the hearing (the so-called 
``no second bite at the apple'' requirement) or to raise issues that 
the movant could have presented at the hearing but did not.
---------------------------------------------------------------------------

    The Judges should not have to guess at the standard on which a 
movant relies for seeking rehearing. Accordingly, the standardless 
nature of the JSC Motion renders it deficient on this basis alone.\258\
---------------------------------------------------------------------------

    \258\ JSC does cite 17 U.S.C. 803(c)(2) and 37 CFR 353.1, which 
provide parties with the right to seek rehearing, but those mere 
citations are not enough. The Motion must attempt to tie the 
movants' substantive arguments regarding the challenged aspects of 
the determination to specific rehearing standards.
    The Judges also note that JSC does attempt to tie its arguments 
to actual standards in its Reply. However, the Judges are highly 
reluctant to permit new arguments to be made for the first time in a 
Reply, because such delinquent assertions sandbag the adverse 
parties, who had already filed their permitted Responses and are 
unable to address the delinquent arguments in the Reply.
    In any event, the Judges' discussion infra rejecting JSC's 
arguments makes it clear that, even had JSC made a timely attempt to 
identify allegedly applicable specified standards for rehearing and 
attempted to connect its factual arguments to those standards, the 
JSC Motion would nonetheless be denied (in part). (In this regard, 
the Judges note that, in its Reply, JSC cites the Judges' order in 
the 2010-13 allocation proceeding which noted the rehearing standard 
in 37 CFR 353.2, requiring a movant to state why it believes the 
determination is ``without evidentiary support in the record or 
contrary to legal requirements.'' JSC Reply at 2. JSC makes no 
allegation of legal error and, as discussed infra, there is abundant 
evidentiary support for the factual findings with which JSC takes 
issue.)
---------------------------------------------------------------------------

    Further, the Judges note that JSC sets forth an incorrect standard 
for consideration of requests for rehearing, by repeating three times 
that the Judges' adjustments were ``arbitrary''. Motion at 8-10. 
However, that standard is an appellate standard, not a standard for 
rehearing. See, e.g., Hammond v. Reynolds Metals Co. Pension Plan for 
Hourly Emps., 2006 WL 8436765, at *2 (N.D. Ala. May 25, 2006) (holding 
that the ``arbitrary and capricious'' appellate standard of review is 
inapplicable to the court's ``stringent standard'' for consideration of 
a Rule 59(e) motion and ``the judicial interest in finality of 
decisions . . . .''); Perrin v. Hartford Life Ins. Co., 2008 WL 
11472191, at *2 (E.D. Ky. Mar. 24, 2008) (``the court finds that the 
defendant cannot attain arbitrary and capricious review of its 
decision. The court concludes that the defendant has failed to 
demonstrate appropriate grounds for relief under Rule 59(e)).\259\
---------------------------------------------------------------------------

    \259\ The paucity of cases in which a party even attempted to 
rely on the appellate issue of whether a decision was ``arbitrary 
and capricious'' is indicative of the inapplicability of that issue 
in the context of a Rule 59(e) type of motion. But see Arias v. 
DynCorp, 752 F.3d 1011, 1016 (D.C. Cir. 2014) (``We have squarely 
held that a party must preserve an issue for appeal even if the only 
opportunity was a post-judgment motion.''); see also Jones v. Horne, 
634 F.3d 588, 603 (D.C. Cir. 2011) (same). The Judges perceive JSC's 
``arbitrary and capricious'' arguments as potentially prophylactic 
measures intended to preserve this issue on appeal, rather than a 
proper basis for rehearing pursuant to statute, regulation, and the 
Judges' prior rulings regarding rehearing, which are expressly 
patterned on Fed. R. Civ. P. 59(e).
    Further, JSC relies on a case which does not involve a Rule 
59(e) motion, but rather addresses the standard by which the D.C. 
Circuit reviews a district court's entry of summary judgment. See N. 
Cent. Airlines, Inc. v. Cont'l Oil Co., 574 F.2d 582, 587 n.14 (D.C. 
Cir. 1978) (cited in Reply at 2). But in the same breath, JSC 
acknowledges the narrower Rule 59(e) standard. Reply at 2 (citing 
School for Arts in Learning Public Charter School v. Barrie, 810 F. 
Supp. 2d 52, 55 (D.D.C. 2011) for the narrow standard, as 
``routinely'' held by courts (and CRB Judges), that Rule 59(e) 
motions are not vehicles for (1) rearguing facts and theories upon 
which a court has already ruled or (2) for raising new issues that 
could have been raised previously, and that such motions are 
disfavored and granted only upon a showing of ``extraordinary 
circumstances''). Additionally, JSC relies on another case, Dyson v. 
Winfield, 129 F. Supp. 2d 22 (D.D.C. 2001), in which the district 
court found an error regarding a question of law, rendering that 
decision inapposite. But again, the broader defect is that JSC 
afforded Respondents no opportunity to address the JSC Reply's 
application of these prior decisions.
    Accordingly, the Judges understand JSC's Reply as setting forth 
the same standards that the courts in the D.C. Circuit routinely 
apply to Rule 59(e) motions and, as stated in the prior footnote, 
consider the JSC Motion on that basis.
---------------------------------------------------------------------------

    Despite the legal deficiency of JSC's ``arbitrariness'' argument as 
a basis for rehearing, in the interest of completeness, the Judges 
explain infra why JSC's substantive assertion that the adjustments were 
arbitrary is factually deficient.

b. Whether the Judges' Initial Determination Relies on an Incorrect 
Version of the McLaughlin Adjustment

    As JSC states in its pending motion, in the Initial Determination, 
the Judges relied in part on the Bortz Survey with the McLaughlin 
Adjustment, as the adjustment is found in Exhibit 3049. JSC Motion at 
1-2 (citing ID at 177-78, 181, 197-98). JSC argues, however, that 
Exhibit 3049 is an ``inaccurate version of the McLaughlin adjustment,'' 
and reliance upon Exhibit 3049 reflects two separate errors. Id. at 1.
    According to JSC, the first error is that Exhibit 3049 was an 
early, preliminary calculation of the ``conventional McLaughlin 
adjustment,'' as proposed in prior proceedings, that was subsequently 
updated in Exhibit 3105, and ``[t]hus, as between Exhibit 3049 and 
3105, Exhibit 3105 is the more accurate calculation of the McLaughlin 
adjustment.'' Id. at 1-2. The second error, according to JSC, is that 
``Exhibit 3049, as well as Exhibit 3105, rely on royalty-based 
weighting that is economically inappropriate after the conversion of 
WGNA and the enormous increase in minimum fee systems.'' Id. at 2. JSC 
argues that

    Bortz subsequently implemented a revised weighting system 
(referred to as ``base plus 3.75'') that takes account of the 
proliferation of minimum fee systems in 2015-17 by weighting based 
on what the CSO would have paid according to the system's distant 
signal usage absent the minimum fee. Use of royalty-based weighting 
for 2015-17 conflicts with the Judges' findings regarding minimum 
fee systems.

Id. JSC further argues, ``[i]f the Judges are relying on Bortz with the 
McLaughlin adjustment, they should use the version set forth in 
Exhibits 4001-4003, which applies base plus 3.75 weighting.'' Id. Each 
of these two alleged errors (i.e., (1) using Exhibit 3049 rather than 
Exhibit 3105, and (2) not using a ``base plus 3.75'' adjustment 
supposedly set for in Exhibits 4001-4003) are further detailed 
separately in JSC's motion, and are addressed separately, as follows.
i. Whether Exhibit 3049 Is Outdated, and Should Not Be Used To 
Determine Shares
1. Summary of the Parties' Arguments
a. The JSC Motion
    In addition to the JSC arguments recounted above, specifically with 
respect to the use of Exhibit 3049, JSC argues:

    Mr. Trautman prepared Exhibit 3049 in July 2020, roughly two 
years before he submitted testimony in this proceeding. See Tr. at 
3142:22-3143:8, 3145:2-3146:11 (Trautman); Ex. 7100 (Trautman 
Corrected WDT). As Mr. Trautman testified, it takes an extensive 
period of time--well beyond when the surveys are fielded--for Bortz 
to obtain and evaluate the voluminous programming data presented in 
this proceeding. See Tr. at 2886:21-2887:9 (Trautman). That 
programming data is used in the Bortz results to project allocations 
to non-respondents according to programming carriage patterns. See 
Ex. 7101 (Corrected Bortz Report), at 29 (``Bortz projected non-
respondent values based on signal carriage characteristics,'' 
including ``the carriage (or lack thereof) of JSC programming''). 
Thus, while the survey responses are not changed over time, the 
weighted results of the survey can be expected to become more 
accurate over time, as Bortz evaluates more comprehensive 
programming information.
    Mr. Trautman performed, and JSC produced, ``UPDATED'' 
calculations of the weighted Bortz Survey results and ``conventional 
McLaughlin adjustment'' dated ``1-21-21'' which are different in 
small but significant respects from the July 2020 calculations. 
These ``UPDATED'' calculations are in the record at Exhibit 3105 and 
a copy is attached as Exhibit 1 hereto. See Tr. at 3099:12-21 
(admitting Exhibit 3105).
    There is no reasoned basis or record support for relying on the 
outdated, incorrect version of the ``conventional McLaughlin 
adjustment'' calculation in Exhibit 3049 given that an updated 
version is in the record

[[Page 54260]]

at Exhibit 3105 and was cited to the Judges. Indeed, the proposed 
findings of fact of Public Television Claimants (``PTV'') cite to 
Exhibit 3105 (not Exhibit 3049) in presenting the ``Proposed 
Shares'' of PTV and JSC ``Determined by Various Analyses of Relative 
Marketplace Value in 2014-17.'' PTV Corrected PFF ] 12, Table 3 & ] 
43, Table 5. At a minimum, if the Judges are to rely on Mr. 
Trautman's calculation of the ``conventional McLaughlin 
adjustment,'' they should rely on the ``UPDATED'' calculation in 
Exhibit 3105.
    The existing record supports the use of Exhibit 3105 rather than 
Exhibit 3049. However, if the Judges believe that additional 
information on this issue would be helpful, JSC respectfully 
requests that rehearing be granted to present additional evidence. 
Throughout the course of this proceeding, ``[n]o party argue[d] that 
royalty fund allocations . . . should be made strictly according to 
the Bortz initial results subject to the McLaughlin adjustment,'' 
and ``no party had its expert calculate the McLaughlin adjustment . 
. . for presentation at the hearing.'' Initial Determination at 178. 
As a result--while JSC vigorously argued that the McLaughlin 
adjustment should not be used in the abstract, see, e.g., JSC Post-
Hearing Br. at 65-68--JSC has not had an opportunity to present 
evidence on which specific version of that calculation is most 
accurate and reliable.

JSC Motion at 2-4.
b. The CCG, PS, and SDC Joint Response
    In their joint response, CCG, the Program Suppliers, and SDC oppose 
JSC's motion with respect to the McLaughlin Adjustment, arguing that 
merely because Exhibit 3049 was an ``early'' calculation that Mr. 
Trautman subsequently ``updated'' with a recalculation ``does not by 
itself render the original version outdated or incorrect.'' Joint 
Response at 4-5. Furthermore, they argue,

    JSC has only itself to blame for failing to explain away the 
earlier results or to advocate more forcefully for reliance on the 
later results, particularly considering that Mr. Trautman was 
specifically asked about Exhibit 3049 and his preparation of `other 
documents regarding potential adjustments and weights that would 
alter those shares' on cross-examination.

Id. at 5 (citing 4/4/2023 Tr. 3142-3145 (Trautman)). Indeed, they argue 
that, contrary to JSC's assertion, nothing precluded JSC from 
``present[ing] evidence on which specific version of that calculation 
is most accurate and reliable.'' Id. at 5 (quoting JSC Motion at 3-4). 
They argue, ``[a]s the Initial Determination observes, `all parties 
knew that the Judges applied the McLaughlin [A]djustment to the Bortz 
Survey initial results in the 2004 and 2005 proceeding, as well as in 
the more recent 2010-2013 proceeding.' '' Id. (quoting ID at 178). 
According to CCG, the Program Suppliers, and SDC, ``JSC was on notice 
and cannot use rehearing as a vehicle to present arguments or evidence 
that it could have raised prior to issuance of the Initial 
Determination. Exxon Shipping Co., 554 U.S. at 485 n.5.'' Id.
c. The PTV Response
    PTV argues that JSC and the other parties devoted considerable time 
and pages during the hearing and in post-hearing briefing to the 
question of the appropriate weighting for the Bortz Survey responses, 
and the Judges, having evaluated those arguments, reached a conclusion 
based on the evidence and the arguments. PTV argues that JSC's motion 
for rehearing ``merely attempts to relitigate these issues, and now 
inappropriately advocates for yet another of its panoply of preferred 
weighting methodologies (another version of a `base plus 3.75' 
weighting scheme), among dozens of options that JSC's experts mined to 
identify shares that increased JSC's allocation.'' PTV Response at 3 
(citing Ex. 3039). PTV argues that JSC, apparently aware that its 
attempt to advance yet another weighting methodology does not meet the 
standard for rehearing,

argues alternatively (indeed, primarily) in favor of a more modest 
adjustment--that the Judges should use Exhibit 3105 rather than 
Exhibit 3049 as the most accurate calculation of the conventional 
McLaughlin-adjusted Bortz Survey results. While the differences 
between these two exhibits appear relatively small, the record lacks 
evidence supporting JSC's argument, and JSC had more than ample 
opportunity to introduce evidence during the hearing on this point 
but chose not to do so.

Id. Accordingly, PTV argues, rehearing is inappropriate under the well-
established requirements for a motion for rehearing. Id.
    Specifically with respect to Exhibit 3015, PTV argues that 
``[k]nowing that its broad arguments for re-weighting pursuant to a new 
methodology exceed what has typically been allowed on rehearing, JSC's 
more modest lead argument is that the Judges should rely on a 
purportedly `updated' calculation of the conventional McLaughlin 
[A]djustment. JSC's argument should be rejected because JSC failed to 
argue the point . . . .'' Id. at 3. It is further asserted that

    JSC failed to . . . introduce evidence supporting its argument 
prior to its motion for rehearing, despite ample opportunity to 
respond to Public Television's questioning at the hearing and 
arguments in its post-hearing briefing. JSC's request does not meet 
the rehearing standard because it seeks ``to raise arguments or 
present evidence that could have been raised prior to the entry of 
judgment.''

Id. at 3-4 (citing Order Denying Program Suppliers' Motion for 
Rehearing and Correcting 2012-13 Allocations for Certain Parties, 
Docket No. 14-CRB-0010-CD, at 1 (Dec. 13, 2018) (``2018 Rehearing 
Order'')). Indeed, PTV argues that during the hearing, Mr. Trautman was 
questioned extensively about Exhibit 3049, and Exhibit 3049 was the 
basis for Public Television's request, in the alternative, that the 
Judges use the McLaughlin-adjusted Bortz Survey results as the 
``royalty floor.'' See id. at 4 (citing PTV PFFCL ] 208 & n.327; PTV 
Post-Hearing Br. at 42-43 (citing PTV PFFCL ] 208 (depicting Ex. 
3049))). PTV argues, ``Despite these arguments, JSC chose not to 
introduce evidence regarding the relative accuracy of Exhibits 3105 and 
3049, and chose not to challenge the figures in Exhibit 3049 until its 
rehearing motion.'' See id. PTV observes,

[a]ccordingly, in the Initial Determination, the Judges noted that 
they were ``referred to a chart taken from a spreadsheet prepared by 
Mr. Trautman, originally for Bortz Media's internal use (Ex. 3049 . 
. .),'' and correctly observed that, ``[f]ortunately, no party has 
challenged the figures contained therein as accurately reflecting 
application of the McLaughlin adjustment to the Bortz Survey initial 
results.'' Initial Determination at 178.

Id. at 4.
    PTV argues that JSC belatedly asserts that Exhibit 3049 is an 
``outdated, incorrect version of the `conventional McLaughlin 
adjustment''' and that Exhibit 3105 is ``an updated version.'' Id. 
(quoting JSC Motion at 3). Yet, PTV argues, ``There is no support in 
the record for this assertion. Nor is there support (or even any 
citation) for JSC's assertion that `the weighted results of the survey 
can be expected to become more accurate over time.' '' Id. Rather, it 
is argued, ``there was substantial evidence that over time, Mr. 
Trautman attempted to develop a number of creative weighting schemes 
with the purpose of seeking to increase JSC's share, not to achieve 
more `accurate' results.'' Id. at 4-5.
    Finally, PTV argues that JSC is incorrect to argue that JSC lacked 
the opportunity to present evidence on which specific version of the 
conventional McLaughlin Adjustment is most accurate and reliable. Id. 
at 5. PTV argues that JSC ``had ample opportunity to present evidence 
and argument on this issue, including during the extensive examination 
of Mr. Trautman regarding Exhibit 3049, or in response to Public 
Television's post-hearing submissions.'' Id. It is argued that while 
JSC asserts that PTV cited to Exhibit

[[Page 54261]]

3105 (not Exhibit 3049), such citation ``was only in two illustrative 
comparison tables collecting various calculations by various witnesses, 
in order to show that all allocation methodologies showed an increase 
in Public Television's share, and a decline in JSC's shares.'' Id. 
(citing PTV PFFCL ]] 12, 13 & tbls. 3, 5; PTV Post-Hearing Br. at 41-
42). PTV argues that it ``proposed that Exhibit 3049 could be used in 
the alternative as a `royalty floor.' See PTV PFFCL ] 208 & n.327; PTV 
Post-Hearing Br. at 42-43. Public Television did not advocate for the 
adoption of Exhibit 3105 as a basis for share allocation.'' Id. 
(footnote omitted).\260\
---------------------------------------------------------------------------

    \260\ In the footnote, PTV argues, ``That said, the differences 
between Exhibit 3049 and Exhibit 3105 appear relatively small, 
although the record evidence does not explain the basis for those 
differences.'' PTV Response at 5 n.1.
---------------------------------------------------------------------------

d. The JSC Reply
    In its reply, JSC reiterates that one reason Exhibit 3049 is 
incorrect is because it is an early, preliminary calculation that was 
updated in Exhibit 3105. JSC Reply at 5-6 (citing JSC Motion at 1-4). 
JSC argues that ``[n]o party disputes that Exhibit 3105 is a more 
recent, `UPDATED' version of the calculation in Exhibit 3049'', or that 
``over time, Bortz incorporates more comprehensive programming 
information into its calculations.'' Id. at 5. JSC argues the 
``Responding Parties' speculative attempts to justify reliance on 
Exhibit 3049 instead of Exhibit 3105 are contrary to the record.'' Id. 
JSC argues that while the

Joint Respondents posit that a ``later'' calculation ``does not by 
itself render the original version outdated or incorrect'' . . . 
Exhibit 3105 is not simply a ``later'' calculation; the record 
supports the conclusion that Exhibit 3105 is more accurate because 
it incorporates more comprehensive programming data to project 
allocations to non-respondents.

    Id. (citing, inter alia, JSC Motion at 2-3). JSC further argues 
that while PTV speculates that Mr. Trautman may have applied some 
creative weighting scheme with the purpose of seeking to increase JSC's 
share in Exhibit 3105, there is no evidence of that. Id. (citing PTV 
Resp. at 4-5). Rather, JSC argues, ``Exhibit 3105 was created for 
Bortz's internal use, not to present a proposed share allocation in 
these proceedings.'' Id. (citing 4/3/2023 Tr. 2881-2882 (Trautman)).
2. Discussion
    As addressed in the Initial Determination, the parties knew going 
into the hearing that the McLaughlin Adjustment, having been applied to 
Bortz surveys in the 2004 and 2005 allocation proceeding, and in the 
2010-2013 allocation proceeding, would be relevant to the issues 
addressed during the allocation hearing for 2014-2017. See ID at 178. 
Indeed, during its opening argument, JSC expressed its disagreement 
with use of the McLaughlin Adjustment to allocate shares, particularly 
with respect to 2015 through 2017. See 3/20/23 Tr. 69. JSC also knew 
that it had produced calculations found in Exhibits 3049 and 3105,\261\ 
which showed that Mr. Trautman, JSC's witness from Bortz Media who 
sponsored the Bortz 2014-2017 surveys, had calculated the McLaughlin 
Adjustment for the 2014-2017 time period. See, e.g., JSC Motion at 2-3; 
ID at 161. During Mr. Trautman's direct examination at the hearing, JSC 
asked Mr. Trautman questions about the McLaughlin Adjustment, including 
questions concerning the fact that he had performed the McLaughlin 
Adjustment, as follows:
---------------------------------------------------------------------------

    \261\ Exhibits 3049 and 3105 were received into evidence with no 
objection and no argument. See 4/4/23 Tr. 3099.

    Q. * * * In the course of doing your work for 2014 to `17, did 
you ever run the McLaughlin adjustment?
    A. Early on, I did, yes.
    Q. Why did you do that?
    A. Well, I was aware that some form of the McLaughlin adjustment 
had been applied in past proceedings, including in 2010 to `13, and 
so I was interested to see what the outcome would be if that were 
applied for 2014 to 2017.
    Q. And if someone were to say: Well, the fact that Mr. Trautman 
ran the McLaughlin adjustment shows that it was his view that 
McLaughlin adjustment was appropriate, what would your response be?
    A. That that's not the case at all. I was simply performing a 
calculation in order to see what the outcome would be.

4/3/2023 Tr. 2881-2882 (Trautman). Thus, Mr. Trautman testified that 
``[e]arly on'' he performed ``a calculation.''
    Subsequently, during the cross-examination of Mr. Trautman, PTV 
raised the fact that he calculated the McLaughlin Adjustment, as 
follows:

    Q. * * * Mr. Trautman, you did attempt to calculate the 
McLaughlin adjustment for the 2014 to `17 Bortz Survey results 
before you filed your written direct testimony in this proceeding, 
correct?
    A. Yes. Early on in my review of 2014 to `17, I did prepare 
spreadsheets that calculated what the outcome of the McLaughlin 
adjustment would be or could be.
    Q. So let's take a look at Exhibit 3049, which was produced as 
JSC 00081249. Mr. Trautman, you recognize Exhibit 3049 as one of 
your documents, correct?
    A. Yes.
    Q. And I'll represent to you that the last modified date on this 
document, as it was produced to us, is July 27th, 2020, nearly two 
years before written direct testimony was due in this case. Is that 
consistent with your recollection?
    A. It is, yes.
    Q. And there are two tables in Exhibit 3049, correct?
    A. Correct.
    Q. And the bottom table is titled ``Weighted Bortz Survey 
Results By Year, 2014-`17 (After Conventional McLaughlin 
Adjustment).'' Correct?
    A. Correct.
    Q. And the bottom--and in this table, PBS is identified in the 
first column at the top--well, in the first row at the top of the 
table, row 25, correct?
    A. Correct.
    Q. And there are columns labeled, from left to right, 2014, 
2015, 2016, 2017, and average 2014 to `17, correct?
    A. Correct.
    Q. And in this table, you calculated PBS's share as 8.4 percent 
in 2014, 43.6 percent in 2015, 48.4 percent in 2016, and 48.2 
percent in 2017, with a 37.1 percent average from 2014 to 2017, 
correct?
    A. That's correct.
    Q. And then let's go down to the next row the Sports share. The 
Sports share is listed as 39 percent in 2014, 12.7 percent in 2015, 
12.2 percent in 2016 and 14.8 percent in 2017, with an average 2014-
to-`17 share of 19.7 percent; is that correct?
    A. Yes, it is.
    Q. Now, after Bortz prepared this document that we just looked 
at--and we can take that down. And let me, I guess, rephrase that. I 
mean, I don't know whether you used the term ``Bortz'' or you 
interchangeably. I'm happy--do you have a preference in that, Mr. 
Trautman?
    A. I really don't.
    Q. Okay. Well, after you prepared the document we just looked 
at, you prepared other documents regarding potential adjustments and 
weights that would alter those shares, correct?
    A. I recall that I did, yes. I don't recall a specific sequence 
or, you know, exactly which took place when in the sequence, but I 
did look at other ways of examining the issue.

4/4/2023 Tr. 3142-3145 (Trautman).
    As seen from the preceding transcript portion, the witness's 
attention, and the attention of the Judges, was directed exclusively to 
Exhibit 3049. On redirect, JSC did not conduct any examination to show 
that there was any error in Exhibit 3049 as a calculation of the 
McLaughlin Adjustment, or that it had been in any way updated or 
superseded, for example, by Exhibit 3015 or the calculations contained 
therein. In neither JSC's pending motion nor its reply is there any 
such citation to the hearing record.
    Given the hearing testimony concerning Exhibit 3049 and the 
McLaughlin Adjustment, it was not

[[Page 54262]]

surprising that PTV relied on pertinent portions of Exhibit 3049 in its 
Proposed Finding of Fact (PTV PFF ] 208), The Judges expressly relied 
on this proposed factual finding in the Initial Determination. See ID 
at 177 (citing PTV PFF ] 208); see also PTV Post-Hearing Br. at 82. In 
its pending motion and reply, JSC has cited to no initial or reply 
filing in which it pointed out any particular error in Exhibit 
3049.\262\
---------------------------------------------------------------------------

    \262\ In the Initial Determination, the Judges stated, ``To see 
the figures obtained when the McLaughlin adjustment is applied to 
the Bortz Survey initial results at issue in this proceeding, the 
Judges are referred to a chart taken from a spreadsheet prepared by 
Mr. Trautman, originally for Bortz Media's internal use (Ex. 3049, 
duplicated above). Fortunately, no party has challenged the figures 
contained therein as accurately reflecting application of the 
McLaughlin adjustment to the Bortz Survey initial results . . . .'' 
ID at 178.
---------------------------------------------------------------------------

    Not even in the pending motion and reply has JSC shown that any 
data point contained in Exhibit 3049 is erroneous. Although Exhibit 
3015 is labeled ``UPDATED'' and the data were calculated after the 
tables in Exhibit 3049, it cannot be presumed that Exhibit 3049 
contains error.
    The closest JSC has come to explaining why Exhibit 3105 should be 
considered ``updated'' appears only in its pending motion, in which JSC 
argues,

it takes an extensive period of time--well beyond when the surveys 
are fielded--for Bortz to obtain and evaluate the voluminous 
programming data presented in this proceeding. See Tr. at 2886:21-
2887:9 (Trautman). That programming data is used in the Bortz 
results to project allocations to non-respondents according to 
programming carriage patterns. See Ex. 7101 (Corrected Bortz Report) 
at 29 (``Bortz projected non-respondent values based on signal 
carriage characteristics,'' including ``the carriage (or lack 
thereof) of JSC programming''). Thus, while the survey responses are 
not changed over time, the weighted results of the survey can be 
expected to become more accurate over time, as Bortz evaluates more 
comprehensive programming information.

JSC Motion at 2-3.
    Consequently, only now after the hearing, JSC argues that Exhibit 
3105 can be considered ``updated'' because when the tables in Exhibit 
3105 were calculated, Bortz Media projected allocations for non-
respondents differently than it had at the time that the tables in 
Exhibit 3049 were calculated. JSC refers to such differences as ``small 
but significant.'' Id. at 3. Yet, inasmuch as JSC's citation to a 
documentary exhibit is general in nature and does not reference Exhibit 
3105 and the calculation contained herein, and further JSC did not 
examine Mr. Trautman about his McLaughlin Adjustment calculations at 
the hearing (even after the relevant cross-examination by PTV), there 
is no way to determine whether JSC's belated characterization of 
Exhibit 3105 is accurate, and that the data contained therein is 
accurate.
    In its pending motion, JSC argues, ``the proposed findings of fact 
of Public Television Claimants (`PTV') cite to Exhibit 3105 (not 
Exhibit 3049) in presenting the `Proposed Shares' of PTV and JSC 
`Determined by Various Analyses of Relative Marketplace Value in 2014-
17.' PTV Corrected PFF ] 12, Table 3 & ] 43, Table 5.'' JSC Motion at 
3; see JSC Reply at 8. That argument does not portray the full picture. 
PTV cited expressly to Exhibit 3105 in its Proposed Finding of Fact ] 
12, in a string cite showing support for a table it created to 
illustrate proposed share allocations resulting from seven proposed 
methodologies. See PTV PFF ] 12; see also PTV PFF ] 43 (table with 
citation to Ex. 3105). Yet, as already discussed, PTV cited, and 
reproduced a table from, Exhibit 3049 in its Proposed Finding of Fact. 
See PTV PFF ] 208. Furthermore, PTV cited to Exhibit 3049 (rather than 
Exhibit 3105) in a table found in the PTV initial post-hearing brief, 
and again cited to Exhibit 3049 (via PTV PFF ] 208) when making its 
substantive argument concerning a ``relative value floor'' for PTV. See 
PTV Post-Hearing Br. at 15, 42-43. None of the citations made by PTV in 
its post-hearing brief and proposed findings clarify or contextualize 
the content of Exhibit 3105, or, more importantly, diminish the weight 
the Judges were able to accord to Exhibit 3049.\263\
---------------------------------------------------------------------------

    \263\ The Judges also remain concerned by the fact that Mr. 
Trautman twice stated in his testimony in this proceeding that he 
initially generated a version of the original McLaughlin Adjustment 
``to see what the outcome would be.'' 4/3/2023 Tr. 2881-2882 
(Trautman). But an expert generating his prior preferred approach in 
order ``to see what the outcome would be'' (here, what the 
allocations would be) undermines his role as an objective expert, 
who should first identify the elements of his or her methodology and 
then disclose--for better or worse--the results of that action. 
Here, Mr. Trautman acknowledged that he ran his prior McLaughlin 
Adjustment ``to see what the outcome would be'' and then abandoned 
it in favor of making other adjustments (increasing the JSC share), 
which, as PTV stated, indicates that ``Mr. Trautman . . . embarked 
on a multi-year quest `to conjure up' additional adjustments.'' 
Initial Determination at 176. Indeed, Mr. Trautman's sequential 
modeling of the McLaughlin Adjustment resembles the revisionary work 
of other experts, which the Judges criticized as evidencing improper 
``searches'' for an allocation model that would increase the 
allocations of the parties by whom they were engaged. See Initial 
Determination at 39 & n.45 (``Also troubling was the fact that, over 
a prolonged period, successive testing by [the expert] was highly 
correlated with a steady rise in PTV's allocation shares'' . . . 
``[T]he Judges are concerned with whether the evidence suggests that 
experts may have engaged in any inappropriate or questionable acts 
in the course of attempting to maximize the return to the party on 
whose behalf they give testimony.'').
---------------------------------------------------------------------------

ii. Whether Use of the McLaughlin Adjustment Requires Base Plus 3.75 
Weighting Rather Than Royalty-Based Weighting
1. Summary of the Parties' Arguments
a. The JSC Motion
    In addition to the JSC arguments recounted above, specifically with 
respect to the use of base plus 3.75 weighting, JSC argues:

    There is a second, independent issue concerning the Judges' 
application of the McLaughlin adjustment. Both Exhibit 3049 (the 
outdated version) and Exhibit 3105 (the updated version) use 
royalty-based weighting. However, after creating these exhibits, Mr. 
Trautman determined that royalty-based weighting is not appropriate 
for 2015-17 due to the overwhelming number of minimum fees systems. 
Mr. Trautman subsequently ran the Bortz results with the McLaughlin 
adjustment using the revised base plus 3.75 weighting, as set forth 
at Exhibits 4001-4003. If the Judges are relying on the Bortz Survey 
with the McLaughlin adjustment, they should use this version that 
applies base plus 3.75 weighting rather than royalty-based 
weighting.
    As Mr. Trautman and Dr. Majure testified, use of royalty-based 
weighting improperly skews the survey calculations by giving 
inordinate weight to minimum fee systems that typically did not even 
use their full minimum fee budget. See JSC PFOF ] 302. The Judges 
similarly concluded that decisions by minimum fee systems during the 
2015-17 period are not probative of relative market value. See 
Initial Determination at 129 & n.155 (``[T]hese [minimum-fee-paying] 
CSO decisions do not provide the Judges with any useful information 
regarding the relative value of the retransmittal of the various 
programming categories . . . .'').
    The Initial Determination explains that in ``2015-2017, the 
overwhelming percentage of CSOs pay only the minimum fee, and the 
vast majority of section 111 royalties are generated by those 
minimum-fee-paying CSOs.'' Id. at 134. The Initial Determination 
likewise discusses how both the regression and survey methodologies 
changed (or should have changed) to account for the ``dramatic 
increase in the number of minimum-fee only'' systems in these years. 
See, e.g., id. at 21-22, 167 n.206. As relevant here, the Bortz 
Survey methodology ``changed to weight the results based on the 
Base-plus-3.75 fees attributable to the actual signal carriage of 
the Form 3 systems, and to apply the results using signal carriage-
based fee calculations rather than actual royalties paid.'' Id. at 
167 n.206. This change in the weighting was necessary to avoid `` 
`introduc[ing] a distortion, by giving excessive weight to systems 
with large Minimum Fee payments even when they have chosen to carry 
very little distant signal programming.' '' JSC Post-Hearing Br. at 
56

[[Page 54263]]

(quoting testimony of Dr. Majure). No party disputed the propriety 
of Bortz's new weighting approach, nor is it questioned in the 
Initial Determination.
    Bortz developed its revised base plus 3.75 weighting approach 
over time, after recognizing that there were many more CSOs paying 
the minimum fee in 2015-17. See Tr. at 3149:11-3151:11 (Trautman). 
The first calculation in the record using an early version of the 
revised weighting approach (initially only applied to PTV-only 
systems) was performed in June 2021. See Ex. 3048; Tr. at 3147:19-
3149:5 (Trautman). The ``conventional McLaughlin adjustment'' 
calculations in Exhibits 3105 and 3049 predate that change, see 
supra at pp. 2-3, instead applying the historical, royalty-based 
weighting that undisputedly distorts the results, making them 
unreliable for 2015-17.
    The record contains more recent calculations of the McLaughlin 
adjustment for the years 2015-17 applying the corrected, base plus 
3.75 weighting. These calculations are part of the Bortz Survey data 
that JSC produced in connection with Mr. Trautman's written direct 
testimony. See Ex. 4001, ``2015 Data File'' at Rows 588-590, Columns 
W-AD (showing ``Adjusted Royalties'' after ``PTV/Canadian 
Adjustment'' for 2015); Ex. 4002, ``2016 Data File'' at Rows 573-
575, Columns W-AD (same for 2016); Ex. 4003, ``2017 Data File'' at 
Rows 571-573, Columns W-AD (same for 2017); see also Tr. at 4792:7-
4793:20 (Carbert) (identifying and admitting Exhibits 4000-4003). 
These calculations are the most accurate and reliable version of the 
McLaughlin adjustment in the record, on which the Judges should rely 
to the extent they give weight to the adjustment. A table setting 
forth the relevant results from Exhibits 4001-4003 is attached as 
Exhibit 2 hereto.
    If the Judges conclude that identifying the correctly weighted 
McLaughlin adjustment calculation requires further information, JSC 
respectfully requests that the Judges grant rehearing to present 
additional evidence on the issue. In the post-hearing briefing, JSC 
raised the problem of royalty-based weighting in the ``conventional 
McLaughlin adjustment'' calculation in response to PTV's citation to 
Exhibits 3049 and 3105. See JSC Post-Hearing Reply Br. at 62 
(``[B]lindly applying the McLaughlin adjustment as it was proposed 
in prior proceedings, PTV argues that it should be attributed . . . 
100% of all of those royalties, massively inflating its share . . . 
. PTV overlooks that almost all PTV Only CSOs were paying the 
Minimum Fee in 2015-17, so their substantial royalty payments have 
nothing to do with their distant signal usage.''). However, because 
PTV first embraced this calculation in its post-trial briefing, 
without having previously offered any witness who endorsed it, JSC 
did not have an opportunity to directly address the reliability of 
the calculation through its own witnesses.

JSC Motion at 4-6 (footnote omitted).264
---------------------------------------------------------------------------

    \264\ JSC argues, ``With proper weighting, the Bortz Survey 
results with the McLaughlin adjustment estimate shares for PTV that 
are within 4 percentage points of the Judges' final award to PTV in 
each year 2015-17.'' JSC Motion at 6 n.1.
---------------------------------------------------------------------------

b. The CCG, PS, and SDC Joint Response
    As discussed above, CCG, Program Suppliers, and SDC argue that 
``coming up with a different calculation or weighting system later does 
not by itself render the original version outdated or incorrect.'' 
Joint Response at 4-5. Furthermore, they argue, JSC was on notice that 
the McLaughlin Adjustment was relevant to the hearing, ``and cannot use 
rehearing as a vehicle to present arguments or evidence that it could 
have raised prior to issuance of the Initial Determination.'' Id.
c. The PTV Response
    PTV argues:

    In a transparent overreach that is plainly improper on a motion 
for rehearing, JSC now argues for yet another alternative weighting 
methodology for the Bortz Survey that purportedly uses a ``base plus 
3.75'' weighting scheme. JSC never presented this calculation on its 
own as a potential allocation methodology during the proceeding. The 
two Bortz adjustments that JSC actually did choose to advocate in 
the hearing were fully vetted in written testimony, at the hearing, 
and in post-hearing submissions, and the Judges ultimately rejected 
them. JSC had every opportunity to also present this calculation of 
the McLaughlin adjustment with ``base plus 3.75'' weighting, and 
chose not to do so. JSC's request accordingly must be denied. See 
2018 Rehearing Order at 7.

PTV Resp. at 5-6.
    PTV argues that while JSC acknowledges that Mr. Trautman originally 
focused on the conventional McLaughlin-adjusted Bortz Survey results, 
he

argues that he later preferred alternative weighting methods, 
including various versions of a ``base plus 3.75 weighting'' for 
which JSC now belatedly advocates. JSC Motion for Reh'g at 4. In 
fact, Mr. Trautman testified that, after initially calculating the 
conventional McLaughlin adjustment, he spent years testing multiple 
adjustments and weights, including those that specifically singled 
out Public Television, to reduce Public Television's shares from 
those that result from the conventional McLaughlin Adjustment.

Id. at 6 (citing PTV PFF ] 209; Tr. 3142-3154 (Trautman); Exs. 3048, 
3049) (footnote omitted).\265\ PTV argues that, ``[c]ontrary to JSC's 
suggestion, there is no reason to believe that Mr. Trautman's weighting 
innovations became more reliable over time, as they appear to have been 
focused instead on achieving his results-oriented purpose of reducing 
Public Television's shares as generated by the conventional McLaughlin 
adjustment.'' Id. (citing PTV PFF ]] 208-13).
---------------------------------------------------------------------------

    \265\ In the omitted footnote, PTV's response directs the reader 
to representative portions of the hearing transcript. See PTV 
Response at 6 n.2 (``Tr. 3150:15-20 (Q. `[T]he analysis there would 
have applied the McLaughlin adjustment but then would have weighted 
systems that carried only Public Television distant signals 
differently from all the other systems? Is that Right?' A. `My 
recollection is that's correct.'); Tr. 3153:4-14 (Q. `So you then 
considered other adjustments that could be combined with the new 
weighting approach, correct?' A. `Broadly, I think that's correct.' 
Q. `Those included assigning various values of less than 100 percent 
to Public Television for systems that carried only Public Television 
distant signals, right?' A. `Well, certainly my two adjustments do 
employ that approach based on the particular characteristics of some 
of the PTV-only systems.')'').
---------------------------------------------------------------------------

    Moreover, PTV argues,

[t]he ``base plus 3.75'' weighting is inconsistent with the 
weighting principles that undergirded the McLaughlin-adjusted Bortz 
Survey in prior proceedings. The Bortz Surveys ask respondents to 
value only the signals that their CSOs actually distantly carried, 
and instruct that the sum of the values must equal 100%. As a 
result, the conventional McLaughlin Adjustment reflects the only 
possible response when a CSO distantly carried only Public 
Television signals: 100% to Public Television.

Id. at 6-7. Further, specifically with regard to the weighting of the 
McLaughlin-adjusted Bortz Survey results, it is argued,

    Mr. Trautman testified unequivocally in the 2010-13 proceeding 
that weighting by total royalties was the correct approach--even as 
to PTV-only systems, which by definition were almost always 
``minimum-fee systems.'' When asked, ``But in your view . . . , the 
McLaughlin-Blackburn augmentation of the Bortz survey assures that 
an appropriate weight is applied to the PTV-only systems; 
correct[?],'' Mr. Trautman said, ``Yes, it considers the systems in 
the context of royalties, the total royalties that they pay.''

Id. at 7 (citing Ex. 7043 at 551 (2010-13 Trautman Oral Testimony)). 
Accordingly, PTV observes,

the Initial Determination rejected JSC's proposed adjustment that 
would have assigned less than 100% of the value to Public 
Television. Initial Determination at 180; see also id. at 178-79 
(``Inasmuch as PTV-only systems are still not surveyed by Bortz 
Media, and there is no empirical evidence to show how PTV-only 
systems value PTV distant signals, there is no cause now to discard 
the McLaughlin adjustment . . . . The McLaughlin adjustment has 
always been presented as a 100-percent or nothing approach, and the 
Judges can take that characteristic into consideration.'').

Id. at 7.
d. The JSC Reply
    In its reply, JSC argues against using Exhibit 3049 or Exhibit 3105 
``because they use incorrect, royalty-based weighting.'' JSC Reply at 
6. JSC further argues that its ``witnesses explained at the hearing 
that royalty-based weighting

[[Page 54264]]

would improperly skew the survey calculations in the 2015-17 period due 
to the overwhelming number of minimum fee systems.'' Id. (citing JSC 
Motion at 4). JSC also seeks to analogize to the Judges' analysis of 
the regression evidence, arguing that,

in the context of the regression analyses, the Judges similarly 
recognized that the increase in minimum fee systems during the 2015-
17 period required methodological changes. Initial Determination at 
21-22. Accordingly, Bortz revised its methodology to use base plus 
3.75 weighting. JSC Mot. at 4. Calculations of the McLaughlin 
adjustment for the years 2015-17 applying the corrected, base plus 
3.75 weighting are in the record at Exhibits 4001-4003. Id. at 5-6.

Id.
    JSC argues,

    None of the Responding Parties opposed Bortz's change to base 
plus 3.75 weighting during the proceeding (indeed, SDC and PTV 
affirmatively bolstered it), and none of them can explain why the 
reliance on royalty-based weighting in Exhibit 3049 is anything but 
clear error. The Joint Respondents do not address the issue at all.

Id. (footnote omitted).
    JSC argues that PTV,

lacking any evidence from the 2014-17 proceeding, attempts to rely 
on testimony from the 2010-13 proceeding supporting royalty-based 
weighting. See PTV Resp. at 6-7. But the difference between this 
proceeding and the last one is critical: royalty-based weighting 
became a problem in 2015-17 when, as the Judges found, there was a 
`dramatic increase in the number of minimum-fee only' systems. 
Initial Determination at 21. Testimony that royalty-based weighting 
was appropriate in 2010-13 does not support its use in the changed 
landscape of 2015-17.

Id. at 6-7.
    In addition, JSC argues in its reply that it was diligent, and

promptly objected to PTV's belated embrace of the McLaughlin 
adjustment with royalty-based weighting when it first arose in post-
hearing briefing. See JSC Post-Hearing Reply Br. at 62. Nothing in 
the rehearing standard, or common sense, justifies requiring a party 
to spend its limited hearing time and briefing space clarifying the 
most accurate version of each un-endorsed calculation that comes up, 
particularly where, as here, the alternative calculations presented 
for even a single base regression numbered in the hundreds.

Id. at 7.
    JSC argues, with respect to the cross-examination of Mr. Trautman, 
that ``pointing a witness to his own alternative calculation is a 
common form of criticizing a methodology, not an affirmative 
endorsement of the alternative,'' and with respect to PTV's citations, 
JSC argues, inter alia, ``JSC had no reason to argue for the use of 
Exhibit 3105 over Exhibit 3049 because PTV's average share does not 
meaningfully differ between the two exhibits (only the shares of the 
other parties do).'' Id. at 7-8.
    JSC argues,

    The implausible degree of foresight that the Joint Respondents 
and PTV would demand of any party seeking rehearing is well beyond 
anything necessary to deter parties from ``re-litigat[ing] old 
matters'' or raising new arguments out of time. PTV Response at 2 & 
Joint Response at 2. Rather, denying rehearing on this record would 
incentivize parties to disguise their intent to rely on a specific 
calculation as long as possible, so as to immunize that calculation 
from the full adversarial vetting process.

Id. at 8-9.
2. Discussion
    As an initial matter, the proposed adjustment contained in JSC's 
Motion Exhibit 2 (derived from Exs. 4001-4003) would, as indicated in 
the pending motion, apply only to the Bortz survey results for 2015 
through 2017. Thus, the adoption of JSC's Motion Exhibit 2 would leave 
unanswered any questions pertaining to the McLaughlin Adjustment for 
2014. In any event, the underlying problem that gives rise to the 
McLaughlin Adjustment, and all other adjustments advanced by the 
parties, is in the way that the Bortz surveys exclude certain PTV and 
Canadian signals. While the problem should not be overstated, the Bortz 
surveys contain downward biases with respect to relevant PTV and 
Canadian programming. See ID at 168. The McLaughlin Adjustment has been 
recognized as an adjustment, or augmentation, that helps to remedy bias 
in the Bortz methodology but may do so on an imprecise basis. Id. at 
168, 179. There is no indication that any adjustment exists that 
compensates completely for weakness in the design of the Bortz surveys.
    With respect to JSC's newly advanced adjustment, there is no 
indication in JSC's pending motion and reply that the adjustment 
derived from Exhibits 4001-4003 was the subject of hearing testimony. 
Indeed, the available details surrounding the calculations made 
therein, and condensed in JSC's Motion Exhibit 2, remain scant. JSC 
argues, ``because PTV first embraced this [McLaughlin] calculation in 
its post-trial briefing, without having previously offered any witness 
who endorsed it, JSC did not have an opportunity to directly address 
the reliability of the calculation through its own witnesses.'' JSC 
Motion at 6. Yet, this argument is unavailing for several reasons. As 
discussed above, all parties knew that the McLaughlin Adjustment would 
be at issue in the hearing. JSC even addressed the McLaughlin 
Adjustment in its opening argument, and later during the direct 
examination of its witness Mr. Trautman. As JSC expected, PTV cross-
examined Mr. Trautman on the McLaughlin Adjustment, yet without 
corresponding redirect by JSC.
    Moreover, JSC did not need to wait, nor did it wait, to find out 
what PTV would say in its post-hearing filings in order to set forth 
JSC arguments and evidence concerning adjustments to the Bortz survey 
results, including its own proposed adjustments. Indeed, during the 
hearing, JSC presented evidence with respect to its proposed 
``Adjustment One'' and ``Adjustment Two,'' which were discussed at 
length in the Initial Determination.\266\ See, e.g., ID at 170-180. One 
feature of the adjustments proposed by JSC was that Bortz Media 
weighted the results based on base-plus-3.75 fees attributable to the 
distant signals actually carried by the PTV-only systems. See id. at 
170, 171. Aside from the substantive deficiencies in this alternative 
adjustment, it is not appropriate for JSC to use the rehearing process 
to advance this argument, when it could have (and should have) been 
articulated during the hearing.
---------------------------------------------------------------------------

    \266\ In view of the hearing that JSC has already received, PTV 
argues that ``the Judges should deny JSC's motion for rehearing, to 
the extent that the prospective rehearing would rehash which 
weighting methodology should be applied to the Bortz Surveys . . . 
.'' PTV Response at 10.
---------------------------------------------------------------------------

    In addition, JSC's motion fails to adequately address the fact that 
in the Initial Determination, the Judges already recognized strengths 
and weaknesses of the Bortz surveys, particularly after application of 
the conventional McLaughlin Adjustment. See, e.g., id. at 178 (``The 
application of the McLaughlin adjustment to the initial Bortz results 
for the years now at issue, 2014 through 2017, is relevant, and the 
adjusted results . . . should be given varied weight, depending on 
whether one is considering the adjusted results for 2014, or for 2015 
through 2017.''); id. at 179 (``To the extent that one would 
specifically exclude Must Carry signals, such as in a regression 
analysis, the fact that the McLaughlin adjustment is applied to Must 
Carry signals diminishes the value of such adjusted Bortz results when 
making a comparison to such other evidence that devalues Must Carry 
signals.''); id. at 180 (``no party, not even PTV, argues that the 
Bortz Survey with the McLaughlin adjustment is the best methodology of 
record for arriving at an allocation for 2015-2017''). Having reviewed 
all adjustments proposed by the parties during the hearing, the

[[Page 54265]]

Judges determined, ``the McLaughlin adjustment, provided one 
understands its aforementioned limitations, is most helpful among the 
proposed adjustments in understanding the Bortz results.'' Id. at 181. 
Consequently, in allocating shares, the Judges made judicious use of 
the Bortz surveys (with the McLaughlin Adjustment), in some instances 
according the Bortz survey evidence no weight at all. Id. at 197-98.
iii. Conclusion Concerning the McLaughlin Adjustment and the Request 
for Rehearing \267\
---------------------------------------------------------------------------

    \267\ JSC's argument, noted supra, seeking to justify rehearing 
by analogy to the Judges' analysis of the impact of the Minimum Fee 
CSOs on the regression methodology, is discussed separately, infra.
---------------------------------------------------------------------------

    For the reasons detailed above, the Judges find that it has not 
been shown that an exceptional case exists, and that an aspect of the 
Initial Determination is erroneous due to its reliance on Exhibit 3049 
and data contained therein. The movant for rehearing, JSC, has not 
demonstrated that aspects of the determination relating to the 
McLaughlin Adjustment and Exhibit 3049 are without evidentiary support 
in the record or are contrary to legal requirements. In that regard, it 
has not been shown that there is a need to correct a clear error or to 
prevent manifest injustice with respect to the Initial Determination's 
cautious use of the Bortz surveys with the McLaughlin Adjustment. 
Rather, a review of the parties' filings and relevant portions of the 
hearing record shows that evidence concerning Exhibit 3049 went 
unrebutted during the hearing, and there is no reason to disturb the 
hearing record or the findings of the Initial Determination in favor of 
another exhibit or exhibits (and other calculations contained therein) 
as to which there is less evidentiary support, whether that be Exhibit 
3015 or JSC's newly advanced adjustment as summarized in JSC's Motion 
Exhibit 2. Furthermore, other approaches to adjustment or augmentation 
of the Bortz Survey results were presented by JSC during the hearing. 
It has not been shown that it is necessary or appropriate to rehear any 
portion of the case with respect to yet another proposed adjustment. As 
the Judges noted supra, the rehearing process cannot be utilized to 
obtain a ``second bite at the apple,'' i.e., to re-litigate old matters 
or to raise arguments or present evidence that could have been raised 
prior to the entry of judgment.
    Consequently, JSC's motion for rehearing with respect to reliance 
on the McLaughlin Adjustment is denied.
c. Whether JSC's Share for 2014 Is Inconsistent With the Record 
Evidence and the Reasoning of the Initial Determination
i. Introduction
    As explained above, it is clear that in the Initial Determination 
the Judges appropriately and sufficiently considered--and rejected--
JSC's proffered alternative adjustments to the Bortz Survey. JSC's 
request for rehearing as to this issue is properly dismissed, as 
indicated supra, as an attempt to relitigate the issue, i.e., a 
violation of the ``second bite at the-apple'' proscription.
    However, JSC also argues something else--that rehearing is required 
because, according to JSC, the Judges erred in the Initial 
Determination by applying the Minimum Fee issue differently to the 
survey methodology than they did to the regression methodology.\268\
---------------------------------------------------------------------------

    \268\ This specific argument cannot be rejected under the 
``second bite at the apple'' proscription because JSC's claim of 
inconsistency is based on a comparison of two aspects of the Initial 
Determination. However, as explained infra, this argument fails to 
support JSC's request for rehearing for other reasons.
---------------------------------------------------------------------------

ii. The Parties' Positions
1. The JSC Motion
    To put JSC's ``inconsistency'' argument in context, it is helpful 
to begin by taking note of the basic argument in JSC's Motion regarding 
the alleged effect of Minimum Fee royalty payments on the Bortz Survey 
results. In this regard, JSC maintains the following:

    [R]oyalty-based weighting is not appropriate for 2015-17 due to 
the overwhelming number of minimum fees systems. . . . [U]se of 
royalty-based weighting improperly skews the survey calculations by 
giving inordinate weight to minimum fee systems that typically did 
not even use their full minimum fee budget. . . . As relevant here, 
the Bortz Survey methodology changed to weight the results based on 
the Base-plus-3.75 fees attributable to the actual \269\ signal 
carriage of the Form 3 systems, and to apply the results using 
signal carriage-based fee calculations rather than actual royalties 
paid.
---------------------------------------------------------------------------

    \269\ JSC's use of the word ``actual'' here is misleading, in 
the manner previously described by the Judges. See Initial 
Determination at 69 n.79 (``The word ``actual'' in this context is 
rather Orwellian. For the 2015-2017 period, a substantial majority 
of the CSOs in which the subscriber groups are situated ``actually'' 
paid the minimum fee. A Base Fee was ``actually'' calculated, as 
required by the regulations, but not ``actually'' paid, because the 
Minimum Fee bound. . . . [M]isleading semantic use of the adjective 
``actual'' does not assist the Judges in deciding whether any or all 
of the Base Fee calculations have objective evidentiary weight. . . 
.'').

---------------------------------------------------------------------------
. . .

    This change in the weighting was necessary to avoid `` 
`introduc[ing] a distortion, by giving excessive weight to systems 
with large Minimum Fee payments. . . .' ''

JSC Motion at 4-5 (citations omitted).
    But, as noted supra, the JSC Motion also maintains something more 
than an error occurred in the Judges' adopting of this weighting. JSC 
asserts as well that the Judges acted inconsistently, because their ``[ 
]use of royalty-based weighting for 2015-17 conflicts with the Judges' 
findings regarding minimum fee systems.'' JSC Motion at 2.\270\
---------------------------------------------------------------------------

    \270\ The Judges discuss infra at footnote 28 JSC's problematic 
use of the word ``weighting'' to characterize its application of the 
Bortz Survey allocations. For clarity, the Judges defer that 
discussion until after they have explained the error in JSC's 
argument that the Judges should have treated the Bortz Survey 
results and the regression analyses in the same manner vis-[agrave]-
vis the Minimum Fee royalties.
---------------------------------------------------------------------------

2. The PTV Response \271\
---------------------------------------------------------------------------

    \271\ The Joint Respondents did not address this issue and, as 
noted supra, CTV did not file a response to the JSC Motion.
---------------------------------------------------------------------------

    Relating to this issue, PTV responded that it is JSC that is 
inconsistent as to this issue:

    [T]he ``base plus 3.75'' weighting is inconsistent with the 
weighting principles that undergirded the McLaughlin-adjusted Bortz 
Survey in prior proceedings. . . . Specifically . . . Mr. Trautman 
testified unequivocally in the 2010-13 proceeding that weighting by 
total royalties was the correct approach--even as to PTV-only 
systems, which by definition were almost always ``minimum-fee 
systems.'' When asked, ``But in your view . . ., the McLaughlin-
Blackburn augmentation of the Bortz survey assures that an 
appropriate weight is applied to the PTV-only systems; correct[?],'' 
Mr. Trautman said, ``Yes, it considers the systems in the context of 
royalties, the total royalties that they pay.'' Ex. 7043 at 551:9-15 
(2010-13 Trautman Oral Testimony).

PTV Response at 6-7.
3. The JSC Reply \272\
---------------------------------------------------------------------------

    \272\ As noted supra, JSC described the Judges' finding as to 
this (and all other) rehearing issues as ``clear error'' for the 
first time in the JSC Reply.
---------------------------------------------------------------------------

    In Reply, JSC explained why the PTV Response fails to rebut JSC's 
argument as to this issue. Specifically with regard to the issue of 
inconsistency vis-[agrave]-vis the treatment of the Minimum Fee in the 
regression analyses, JSC argued:

    1. The evidentiary weight the Judges gave to Minimum Fee royalty 
payments in the Bortz Survey model was inconsistent with the lesser 
evidentiary weight the Judges gave to Minimum Fee royalty payments 
in the regression models.
    2. The Judges found that--with regard to the regression models--
Minimum Fee royalty payments, standing alone, for the most part did 
not provide useful information regarding the ``relative value'' of 
the retransmitted

[[Page 54266]]

programming, therefore requiring ``methodological changes'' to the 
regression approach.
    3. Bortz revised its methodology used in prior allocation 
proceedings, substituting instead its new ``base plus 3.75 
weighting,'' to account for Minimum Fee royalty payments as applied 
to the Bortz Survey model.
    4. The adverse parties fail to rebut the argument that the 
Judges wrongly employed a royalty-based weighting approach which 
gives undue weight to Minimum Fee royalty payments during the 2015-
17 period. Specifically, all the responding parties except PTV 
ignored the issue. And, as for PTV, it cites no evidence from the 
present proceeding, and instead relies on testimony from the 2010-13 
proceeding supporting royalty-based weighting--ignoring the JSC's 
assertion that royalty-based weighting only became a problem in 
2015-17, with the significant increase in the number of Minimum Fee-
only CSOs.

JSC Reply at 1-2, 6-7.
iii. The Judges' Analysis
JSC Wrongly Maintains That the Judges Erred by Inconsistently Applying 
the Bortz Survey Results to the Royalties Actually Paid Inclusive of 
Minimum Fee Payments, While Declining To Similarly Rely on Minimum Fee 
Payments When Considering the Regression Results
    The Judges categorically reject JSC's argument that they acted 
inconsistently, and thus committed ``clear error,'' by giving less 
evidentiary weight to Minimum Fee royalty payments in the regression 
models compared to the weight they gave to Minimum Fee royalties in the 
Bortz Survey model. Indeed, as explained infra, by comparing JSC's 
rehearing argument with the hearing testimony of its economic experts' 
and its post-hearing filings, it is clear that it is the JSC analysis 
(incorrectly advanced in support of its motion for rehearing) that is 
inconsistent.\273\
---------------------------------------------------------------------------

    \273\ To be clear, the Judges' analysis and findings as to this 
issue do not rely on PTV's argument, noted supra, that the testimony 
of the Bortz Survey witness, Mr. Trautman, in the prior 2010-13 
proceeding, precluded or diminished JSC's ability to assert its 
``inconsistency'' argument.
---------------------------------------------------------------------------

    Specifically, JSC argues on rehearing that the Judges clearly erred 
because their ``use of royalty-based weighting improperly skews the 
survey calculations by giving inordinate weight to minimum fee 
systems'' which, JSC maintains, is inconsistent with the Judges' 
conclusion that in the regression models ``decisions by minimum fee 
systems during the 2015-17 period are not probative of relative market 
value.'' JSC Motion at 4 (citing Initial Determination at 129 n.155, 
134). Moreover, in this regard JSC claims that ``[t]he Initial 
Determination likewise discusses how both the regression and survey 
methodologies changed (or should have changed) to account for the 
`dramatic increase in the number of minimum-fee only' systems in these 
years.'' JSC Motion at 4-5 (emphasis added) (citing Initial 
Determination at 21-22, 167 n.206).
    Before proceeding to discuss the substance of this argument, the 
Judges take note that JSC has misleadingly utilized the Initial 
Determination in the quote above from the JSC Motion. In the Initial 
Determination, the Judges explained how they apply the Minimum Fee 
problem only in the context of a regression model. See Initial 
Determination at 21-22, 129 n.155, 134. By contrast, when referring to 
the Bortz Survey, the Judges simply recited how Bortz, not the Judges, 
sought to insinuate the Minimum Fee issue into the survey approach. See 
Initial Determination at 167 n.206. In this regard, the Judges note 
that the emphasized parenthetical quote from the JSC Motion in the 
paragraph immediately above wrongly intimates that the Initial 
Determination expressly discusses how ``both the regression and survey 
methodologies . . . should have changed'' to address the Minimum Fee 
issue. JSC Motion at 4-5 (emphasis added). The Judges in fact made no 
such finding in the Initial Determination regarding how the Bortz 
Survey methodology should have changed.
    Accordingly, the overt inconsistency that JSC suggests is set forth 
in the Initial Determination simply does not exist (and as explained 
infra, for good reason). With the foregoing misconstrual of the Initial 
Determination corrected, the Judges proceed infra to explain the 
substantive error and inconsistency in JSC's argument that the Judges' 
erred in their consideration of the effect of the Minimum Fee on the 
regression approach compared to its non- effect on the Bortz Survey 
approach.
    To make clear the fundamental error in JSC's argument, it is 
instructive to begin with certain first principles. The statutory 
scheme supplants marketplace pricing of distantly retransmitted local 
programming by CSOs. Thus, the parties proffer economic models that 
they claim to be sufficient to represent relative marketplace 
value.\274\ Here, and as in prior proceedings, the Judges were 
presented with two starkly different types of models--the regression 
model and the survey model.\275\ In the difference between how these 
two models approach the concept of relative marketplace lies the 
explanation why the Minimum Fee issue is a concern in the regression 
context, but not in the survey context.\276\
---------------------------------------------------------------------------

    \274\ The models may be supported by the testimony of industry 
witnesses and industry documents. Parties who eschew formal modeling 
may elect to rely solely on industry-based evidence and testimony 
(as did CTV through the ``directional analysis'' undertaken by its 
expert witness, Dr. Leslie Marx, for the 2015-17 period. See Marx 
ACWDT ] 83).
    \275\ The existence of competing models in economic litigation 
is hardly uncommon. As the Judges have previously explained: 
``Benchmarks, Shapley and Nash models, surveys and experiments are 
all models, in that a model is a representation of something beyond 
itself being used as a representative of that something, and in 
prompting questions of resemblance between the model . . . and their 
target systems.'' Initial Ruling after Remand at 87 n.125, in Final 
Determination after Remand at App. A, Phonorecords III (June 22, 
2023).
    \276\ As the Judges noted in the Initial Determination, the D.C. 
Circuit has approvingly noted that there is no reason to require 
that assumptions or findings applicable to one type of economic 
model addressing an issue necessarily apply to a different type of 
economic model attempting to address the same issue. See Initial 
Determination at 48 (citing NRBNLMC v. CRB, 77 F.4th 949, 971 (D.C. 
Cir. 2023) (affirming the Judges' finding in their Web V 
Determination declining to apply the ``opportunity cost'' value in 
one economic model (a Shapley Value model) to an economic model (a 
benchmarking model) with different assumptions)). Of course, the 
assumptions in each economic model must be internally consistent. 
See J. Schlefer, The Assumptions Economists Make at 29 (2012) (an 
economic model ``provides a check on thinking: it restricts us to at 
least consistent economic worlds . . . .'') (emphasis added).
---------------------------------------------------------------------------

    Broadly stated, the regression approach seeks to identify value 
from the expressions of the willingness-to-pay of CSOs, by analyzing 
their actual decisions (i.e., their ``revealed preferences'') as to 
which local stations, and thus which program categories on those 
stations, they decide to retransmit. See, e.g., Initial Determination 
at 78 (``the regressions identify market-based behavior among CSOs, in 
the form of revealed preferences for different program categories, and 
such behavior is relevant evidence useful for estimating relative 
marketplace value.''). The ``value'' element of this willingness-to-pay 
(the CSO's ``revealed preference'') is the royalty-based value of a 
minute of retransmittal of programming within the program categories. 
However, the presence (indeed, the prevalence) of Minimum Fee-only CSOs 
complicates this form of value analysis because such CSOs did not incur 
any royalty cost associated with their specific choices. Accordingly, 
the Judges needed to take into account this Minimum Fee factor in order 
to reasonably apply the regression approach. ID at 21 (``The Judges 
find that the dramatic increase in the number of minimum fee-only CSOs 
. . . renders regression analyses that include those

[[Page 54267]]

CSOs less reliable and thus can be accorded only very limited economic 
evidentiary weight.'').
    By contrast, a constant-sum survey, such as the Bortz Survey, does 
not seek to estimate relative value by examining actual decision-
making, in a regression or otherwise. Rather, the Bortz Survey seeks to 
estimate relative value by examining hypothetical decision-making by 
presumably informed CSO employees, who are asked to allocate a fixed 
but unspecified monetary budget by percentages across identified 
program categories, totaling 100%. See JSC PFF ] 296 (and record 
citations therein). But at no point in the survey are the respondents 
asked to consider whether the relative values are affected by the CSO's 
payment of the Minimum Fee for any programming.\277\ Rather, the Bortz 
Survey is an attitudinal survey, asking respondents to state the 
relative values they would hypothetically assign to some program 
categories (but not to PTV-only and CCG-only categories as discussed 
elsewhere in this order and in the Initial Determination), whereas the 
regressions seek to reveal relative value based on how much CSOs in 
fact paid in royalties to retransmit programs within all the program 
categories.
---------------------------------------------------------------------------

    \277\ Also, there is no record evidence that survey respondents 
took into account--or even knew--whether their CSO employer had paid 
the Minimum Fee or the Base Fee for such programming.
---------------------------------------------------------------------------

    Indeed, the JSC's own expert economic witnesses dismissed the very 
idea that any royalty-based valuation could be probative, 
characterizing all statutory royalty amounts as ``uninformative'' and 
as mere ``artifacts'' of the statutory system. Dr. Asker, on behalf of 
JSC, testified in this regard:

    [F]ollowing the WGNA conversion, the experts' price proxies, 
which are based on base rate (plus 3.75%) royalty fees and therefore 
ignore the minimum fee, were uninformative measures of the 
incremental cost cable system operators paid for distant signal 
content. . . . As a result, these price proxies became biased. . . .

. . .

    [V]ariation introduced solely due to this feature of the base 
rate (plus 3.75%) royalty fee calculation is an artifact of the 
computation of the fee. . . .''

Asker WRT ]] 58, 98 (emphasis added).
    In like manner, another JSC economic expert witness, Dr. Majure, 
testified that all the regression models merely reflect ``the statutory 
relationship [between DSEs, revenues, and royalties owed] parrot[ing] 
back the relative values of distant signals set by Congress.'' Majure 
WRT ] 8.\278\
---------------------------------------------------------------------------

    \278\ Dr. Majure offered the same opinion with regard to the 
3.75% Fund as he did regarding the Basic Fund, testifying that ``the 
3.75 royalty fee . . . after 2014 . . . explains only the 
Congressionally-mandated framework . . . .'' Majure WRT ] 80.
---------------------------------------------------------------------------

    Importantly for the issue at hand, Dr. Majure explicitly opined 
that the Bortz Survey did not have share this defect:

    By contrast with the regression models . . ., the Bortz [S]urvey 
method does not have the same problem of a disconnect between the 
data and the conceptual model that is necessary to interpret the 
data within a regression. . . . [T]he survey does not rely on the 
notion that a minute of each type of content has a specific 
incremental value. The Bortz survey only requires that respondents 
have some experience with different types of content available on 
distant signals, so that they will have formed preferences for these 
types of content. . . . The Bortz survey thus connects directly to 
actual market value.

Majure WRT ]] 59, 61 (emphasis added).
    The economic import of this point was emphasized in further 
testimony by Dr. Majure, explaining this distinction between the 
regression model and the survey model:

    [T]he scarcity of valid observations for the regression method 
due to the increase, post-WGNA conversion, in CSOs carrying fewer 
signals than they could without exceeding the minimum royalty fee . 
. . results in a significant gap between a CSO's distant carriage 
decisions and how much that system paid in royalties. This creates 
an issue peculiar to the regression method [which] depends on 
statistical inferences that are more powerful and reliable when 
applied to more independent observations that are derived from the 
same underlying model of economic choices. Unlike the regression, 
which depends critically on the relationship between these measures 
to identify the relative values of content, the survey does not . . 
. because the survey does not rely on the incremental cost of the 
content to identify value. Whether a survey respondent carried 
enough distant signals to be above or below the minimum royalty, 
their response can address equally well how that CSO would apportion 
a fixed sum between the content types that it did carry.
    A survey can reveal CSO preferences reliably because the survey 
does not rely upon inference but instead directly poses the relative 
value question to the buyers in the hypothetical market.
* * *

    In summary, the survey method has the advantage of not suffering 
from any of the problems that make the regression method unreliable 
in the wake of WGNA's conversion.

Majure WDT ]] 129-130, 133 (emphases added).
    This expert testimony distinguishing the regression and survey 
approaches was foundational to JSC's economic theory of the case. See 
JSC PFF ] 236 (quoting Majure WDT ] 130 to distinguish the survey model 
from the regression model because the former model ``reveal[s] CSO 
preferences reliably because the survey does not rely upon inference 
but instead directly poses the relative value question to the buyers in 
the hypothetical market.''); JSC Post-Hearing Brief at 3 (``Unlike the 
Bortz Survey, the fee-based regressions are entirely incapable of 
estimating relative value in the post-WGNA world predominated by 
minimum fee systems.'') (emphasis added).
    Likewise, in its Post-Hearing Reply Brief (responding to Program 
Suppliers argument), JSC expounded upon this fundamental difference 
between the regression approach and the survey approach to the Minimum 
Fee issue:

    Program Suppliers mistakenly conflate the manner in which the 
Bortz Surveys and the fee-based regressions treat Minimum Fee CSOs, 
arguing that ``like the regressions offered in this case, the Bortz 
Survey considers the stated preferences of survey respondents whose 
systems pay only the Minimum Fee--in this way, the Bortz Survey 
considers Minimum Fee systems the same way as the regressions do.'' 
Program Suppliers misunderstand a fundamental difference between the 
Bortz Surveys and the regressions.
    The fee-based regressions attempt to estimate relative 
marketplace value by associating minutes of programming with 
calculated royalty fees. For Minimum Fee CSOs, this presents an 
insurmountable issue, because Minimum Fee CSOs do not pay their 
calculated royalty fees but instead face an incremental royalty cost 
of $0 for the distant signals they choose to retransmit. In 
contrast, the Bortz Surveys do not rely upon a nominal royalty fee 
calculation to draw inferences about CSO preferences. Instead, the 
Bortz Surveys avoid the problem . . . by directly asking 
knowledgeable CSO executives to assign relative values to the 
distant signal programming they carry.

JSC Post-Hearing Reply Brief at 26 (footnotes omitted) (emphases 
added).
    And yet, having repeatedly claimed that the Bortz Survey avoided 
the alleged analytical vice of associating the statutory nature of the 
royalties with relative marketplace value, JSC nonetheless now seeks to 
convert that vice into virtue, by seeking to justify its use of a 
different survey-weighting approach because of the problem of the 
Minimum Fee. Not only is that argument self-contradictory, as explained 
supra, it is also lacking in substantive merit regarding the analysis 
of economic models, as discussed infra.\279\ In more general economic 
terms, the regression approach and the survey approach each considers 
relative

[[Page 54268]]

marketplace value from different modeling perspectives. The Bortz 
Survey approach does not seek to define value a priori--rather it 
surveys industry employees who, in response to Question 4 of the Bortz 
Survey, assign their relative value to the several program categories 
identified by the Bortz interviewer. That is, the respondent may, for 
example, be focused on demand-side concepts regarding subscriber growth 
or retention, or supply-side issues such as the hypothetical cost of 
acquiring the signals necessary to obtain the retransmitted 
programming, or both. But the reasons why survey respondents assign 
particular values are neither sought nor known by Bortz. In particular, 
the Bortz Survey respondents are not asked to address any potential 
impact on value arising from the statutory nature of the royalties 
actually paid, whether via the Minimum Fee, the Base Fee, the 3.75% 
fee, or otherwise.
---------------------------------------------------------------------------

    \279\ PTV also argues that JSC's experts ``mined'' this and 
other ``weighting scheme[s]'' to ``increase[] JSC's allocation.'' 
PTV Response at 3. In rejecting this rehearing argument, the Judges 
need not and do not inquire into the motives of JSC's experts.
---------------------------------------------------------------------------

    Thus, for the Judges to make any adjustments to the Bortz Survey 
results based on how the respondents may or may not have incorporated 
concepts relating to the statutory royalty framework would be 
untenable, because the underlying economic reasons lurking in the minds 
of the respondents are not in the record.
    Moreover, the thought processes of the survey respondents are 
irrelevant to what constitutes the probative value according to JSC and 
the Bortz Survey. That is, it is the status of the survey respondents 
as knowledgeable industry participants that makes the Bortz Survey 
responses probative and allows the Judges to give it an appropriate 
evidentiary weight. In this regard, the survey approach shares a 
characteristic of the benchmarking approach used by the Judges in their 
ratemaking cases, in which the underlying economic considerations of 
market participants are deemed to have been ``baked-in'' to the 
decisions of licensors and licensees, and their subjective reasons for 
establishing value are not relevant. See Web IV Determination, 86 FR 
26316, 26326 (May 2, 2016) (``The Judges hold in this determination, as 
they have held consistently in the past, that the use of benchmarks 
``bakes-in'' the contracting parties' expectations . . . .''), aff'd 
SoundExchange, Inc. v. Copyright Royalty Bd., 904 F.3d 41 (2018). So 
understood, any connection between the Bortz Survey results and the 
statutory fees is both unknowable and irrelevant.
    By contrast, as noted supra, the regression approach is based on an 
a priori assumption as to what constitutes value in this proceeding, 
positing that a CSO's relative valuation of the various program 
categories can be derived from their actual decision-making, i.e., 
their revealed preferences, based upon the royalties associated with a 
minute of programming in each category. Thus, for the regression 
approach, the Judges found (rejecting the arguments of the regression 
proponents) that the existence of the Minimum Fee royalties was a 
matter to be addressed, because the evidentiary strength of this a 
priori assumption is compromised by the presence of the royalties paid 
by Minimum Fee-only CSOs, which are not associated with the cost of any 
programming (absent particular circumstances necessitating adjustments 
(such as discussed in the Initial Determination regarding PTV and CCG 
programming)).
iv. Conclusion
    Simply put, whereas the value proposition in the regression model 
lies in the actual retransmission decisions by CSOs, the value 
proposition in the Bortz Survey approach lies in the responses to the 
survey instrument. Properly understood, the evidentiary weight of the 
Bortz Survey approach, compared to the regression modeling, lies in the 
fact that the survey model circumvents what JSC and its expert 
witnesses characterize as the economic irrelevancy of the Minimum Fee 
and other elements of the statutory royalty formula set forth in 17 
U.S.C. 111. That is, rather than rely on what they claim to be economic 
``artifacts,'' JSC and Bortz rely instead on the survey responses of 
CSO representatives as a practical way to value and allocate royalties 
that are paid according to statutory fiat rather than by revealed 
preference. However, by attempting to inject concerns regarding the 
Minimum Fee that apply to regression analyses--through its misconceived 
plea for consistency--JSC actually reveals its inconsistent 
understanding of its own survey model,\280\ converting it into a tool 
that, so to speak, is neither fish nor fowl. The Judges appropriately 
declined to make this analytical error.
---------------------------------------------------------------------------

    \280\ As noted supra, an economic model's assumptions need to be 
internally consistent. See Schlefer, supra.
---------------------------------------------------------------------------

    For the foregoing reasons, the Judges find that there is no 
inconsistency between the Judges' decision to address the Minimum Fee 
issue in connection with the regression model, but not with regard to 
the Bortz Survey model. Indeed, as explained supra, the inconsistency 
revealed by JSC's rehearing argument lies in JSC's own willingness to 
abandon its experts' testimonies regarding the fundamental economic 
modeling differences between the regression and survey approaches, and 
to pollute the survey approach with irrelevant aspects of the statutory 
fee.\281\
---------------------------------------------------------------------------

    \281\ One might question why the Judges criticize JSC for making 
an inconsistent argument, when the Judges used Dr. Tyler's above-
Minimum Fee data but found two instances in which it was necessary 
and appropriate to utilize his full set of calculated Base Fee 
royalty data. But the Judges did not engage in an inconsistent 
analysis. Rather, there were unique fact-based reasons, as described 
in this Order and in the Initial Determination, which made the 
above-Minimum Fee data an incomplete measure of regression-based 
value, to an extent, for PTV and CCG. The needed adjustments that 
followed did not demonstrate inconsistency, but rather a careful 
parsing of the record evidence. By contrast, JSC's position is 
inconsistent at the conceptual level--it first argues (as explained 
supra) that the statutory royalty fee structure does not provide 
evidence of value and that the survey method is the appropriate 
valuation tool--only to then alter course and adjust the royalty 
shares by relying on that very statutory fee structure it discredits 
as a value metric.
    Alternately stated, it would be contrary to the evidence for the 
Judges to ignore the divergent marketplace impact of the WGNA 
conversion on Minimum Fee royalty payments. In this regard, the 
Judges are mindful of the aphorism that a ``foolish consistency is 
the hobgoblin of little minds.'' See generally R.W. Emerson, Self-
Reliance and Other Essays 24 (Dover unabridged ed. 1993) (emphasis 
added).
    Further, even if JSC's approach somehow could be construed, like 
the Judges' approach, as not internally inconsistent, it was hardly 
error, let alone ``clear error,'' for the Judges to exercise their 
fact-finding duty and their discretion by adopting the approach they 
found reflects the record evidence and the relative marketplace 
value standard--and reject one (JSC's approach) they found to be 
logically questionable and insufficiently probative of marketplace 
value. (That is, even if the general ``logic'' of JSC's argument 
were correct, the Judges were under no duty to adopt it.)
---------------------------------------------------------------------------

    Accordingly, the Judges' decisions in these regards do not 
constitute error--let alone ``clear error,'' or otherwise serve as a 
basis for granting rehearing.\282\
---------------------------------------------------------------------------

    \282\ As stated in footnote 16, supra, the Judges' foregoing 
analysis indicates why JSC's use of the word ``weighting'' can be 
misleading in the context of its shift away from its former 
weighting method. One common meaning of ``weighting'' is an 
``allowance or adjustment made in order to . . . compensate for a 
distorting factor.'' https://en.bab.la/dictionary/english/weighting. 
(For example, weighting is often used to correct for perceived 
inaccuracies in ``unweighted'' values--as when an election survey 
has failed to poll a representative sample of voters from a 
political party or other sub-set of the population of voters.) Here, 
JSC/Bortz are not changing the weighting of the survey results to 
correct for a factor that, in their own experts' opinions, is not 
only non-distorting, but wholly irrelevant (as discussed in detail, 
supra). That is, JSC and its expert economic witnesses acknowledge 
that the Bortz Survey methodology, unlike the regression modeling, 
is not distorted by the nature of the statutory formula for royalty 
fees.

---------------------------------------------------------------------------

[[Page 54269]]

d. Whether the Judges Adopted a Version of the Tyler Model That No 
Witness Endorsed for the 2015-2017 Time Period, and Whether It Is at 
Odds With the Record Evidence
i. The Parties' Filings
1. The JSC Motion
    In its Motion for Rehearing regarding the Judges' adoption of the 
Tyler Model and the adjustments thereto, JSC argues the following 
points:

    1. The Initial Determination adopts a version of the Tyler Model 
that no witness endorsed for the 2015-17 time period. JSC Motion at 
8-9.
    2. The other experts opined that the Tyler Model merely 
``parroted'' the statutory formula. JSC Motion at 9.
    3. The Initial Determination makes ``arbitrary'' adjustments to 
the Judges' adopted Tyler Model contrary to record evidence. JSC 
Motion at 9-10.
    4. The Initial Determination allocates shares to PTV and CCG 
that are beyond ``reasonable limits'' because for PTV they are 
greater than the unadjusted levels, and, for CCG, they are greater 
than levels from prior years. JSC Motion at 10.
    5. The Initial Determination fails to credit allegedly 
unrebutted testimony of industry fact witnesses inconsistent with 
the allocations made by the Judges to PTV and CCG. JSC Motion at 10.

2. The Adverse Parties' Responses \283\
---------------------------------------------------------------------------

    \283\ CTV did not file a response to the JSC Motion for 
Rehearing or otherwise oppose it in any other filing.
---------------------------------------------------------------------------

a. The Joint Response
    In their Joint Response, CCG, Program Suppliers, and SDC respond as 
follows:

    1. JSC does not satisfy any standard for rehearing because it is 
merely raising points as to which it did not meet its burden of 
persuasion. Joint Response at 3-4.
    2. JSC's attempt to litigate issues already considered or which 
it failed to consider constitutes an improper attempt to obtain the 
so-called ``second bite at the apple'' that the Judges' reject as a 
proper basis for rehearing. Joint Response at 4.
    3. The Judges adoption of and adjustment to a version of the 
Tyler Model based on record evidence is consistent with the D.C. 
Circuit's prior ruling that the Judges are ``not strictly limited to 
choosing from among proposals set forth by the parties,'' but, like 
agencies in general, ``have authority to modify proposals set forth 
by the parties, or to suggest models of their own.'' Joint Response 
at 4 n.2; see also id. at 6.
    4. JSC fails to note that the higher shares for PTV and CCG were 
consistent with the regression evidence on which the Judges relied, 
and, by contrast, JSC asks the Judges instead to rely fully on the 
Bortz Survey evidence, an argument which the Judges expressly 
considered and rejected. Joint Response at 6.
The PTV Response
    In its Response, PTV argues as follows:

    1. JSC correctly asserts that the record contains no evidence to 
support the Judges' reliance on the Tyler above-Minimum Fee Model.
    2. The record contains ``minimal'' yet ``disputed'' evidence--
i.e., the ``conventional McLaughlin-adjusted Survey'' and the Tyler 
Model inclusive of Minimum Fee-paying CSOs--to support a higher PTV 
share than determined by the Judges.
    3. JSC incorrectly maintains that there is no record evidence to 
support what JSC characterizes as the ``large shares'' awarded to 
PTV in the Initial Determination for the 2015-17 period.

PTV Response at 1-2, 9-10.
    JSC's Reply contains the following points:

    1. JSC identifies the ``clear error'' standard as its specific 
standard for seeking rehearing. JSC Reply at 2.
    2. JSC's arguments in its Motion regarding alleged 
methodological errors cannot be construed as a mere ``rehashing'' of 
arguments previously considered at the hearing and in the Initial 
Determination (a/k/a seeking a ``second bite at the apple'') because 
the above-Minimum Fee version of the Tyler Model was not 
``endorsed'' by any witness. JSC Reply at 2, 9.
    3. JSC minimizes the importance of its own motion argument that 
cited industry executive testimony supporting their request for 
rehearing. Rather, JSC states in their Reply that this is not the 
``heart'' of their argument, but rather only reveals that the 
differences between the regression results and the cited industry 
witness testimonies ``are so at odds'' as to indicate problems with 
the regression evidence on which the Judges relied. JSC Reply at 9.
ii. The Judges' Analysis and Conclusion
1. The Judges' Adoption of a Version of the Tyler Model in the Record 
Does Not Warrant Rehearing
a. The Judges Did Not Err by Adopting the Above-Minimum Fee Tyler 
Model, Let Alone Commit ``Clear Error''
    JSC maintains that the Judges wrongly adopted the above-Minimum Fee 
analysis undertaken by Program Supplier's expert economic witness, Dr. 
Tyler. As recounted in detail below, the Judges explained in the 
Initial Determination why regression modeling for 2015-17 that relied 
only on above-Minimum Fee CSOs was more useful and why, by contrast, 
modeling that relied on the Base Fees calculated by the subscriber 
groups of CSOs who actually paid only the Minimum Fee was of limited 
usefulness (as when used to adjust for economic value from the 
regressions uncaptured by the above-Minimum Fee modeling). See Initial 
Determination at 21 (``The Judges find that the dramatic increase in 
the number of minimum fee-only CSOs . . . renders regression analyses 
that include those CSOs less reliable and thus can be accorded only 
very limited economic evidentiary weight [and] the Judges accord 
significantly more evidentiary weight to regression modeling that 
focuses only on the CSOs that actually revealed their preferences by 
willingly paying above the minimum fee, i.e., at the base fee 
level.''); id. at 142-144 (noting particular regression adjustments 
\284\ to economic value necessitated by the evidence).
---------------------------------------------------------------------------

    \284\ These are the three adjustments (Adjustments A through C) 
in the Initial Determination.
---------------------------------------------------------------------------

    The Judges further recognized that, despite the evidentiary 
usefulness of the royalties paid by the above-Minimum Fee cohort in 
this proceeding, that group generated a smaller portion of the CSO 
market than in the prior (2010-13) allocation proceeding. Accordingly, 
the Judges did not accord this regression approach primary weight vis-
[agrave]-vis the results of the Bortz Survey, as they had in that prior 
proceeding. See Initial Determination at 147 (``[T]he Judges are not 
giving any primacy to the regression evidence in this proceeding, given 
how the changes in the retransmission sector after the WGNA conversion 
have affected the available data.''); id. at 197 (``[T]he Judges accord 
evidentiary weight to the Bortz Survey, with the McLaughlin 
Adjustment--relatively equivalent with the weight given to the 
regression analysis . . . . [T]he Judges find that a synthesis of 
regression and survey results is necessary to arrive at the required 
allocations.'').
    Turning to a more granular review, the record is replete with 
evidence, argument, and judicial colloquy regarding the use of above-
Minimum Fee evidence as a building block for the ascertainment of 
relative value. See Initial Determination at 12-13. There, the Judges 
relied on the testimony of Dr. Tyler, who expressly found ``merit'' in 
a ``version of the model that includes only CSOs paying above the 
minimum fee [which] presents with the ``highest degree of confidence'' 
the CSO tradeoffs between different stations and categories of 
minutes.'' Id. at 12-13 (quoting Tyler ACWDT ] 155) (emphasis added). 
As a general matter, when the Judges have decided to rely, as here, on 
the specific opinion testimony of an expert whom they have credited and 
who himself has the ``highest degree of confidence'' in that specific 
opinion, under no standard could the Judges' ruling in that regard be 
subject to rehearing.

[[Page 54270]]

    Moreover, further support exists in the record for the Judges' 
adoption of this above-Minimum Fee modeling. See id. at 15 (``for these 
CSOs which CTV accurately describes as `above-capacity' . . . paying 
above the minimum fee, the base fee royalties reported by their 
subscriber groups are their actual royalty payments, revealing the 
CSO's perceived value of the distantly retransmitted stations and their 
constituent programs.'' (citing Bennett WRT ] 15 (a CTV economic 
expert)); CTV PFF ] 158 (For above capacity CSOs, ``the reported 
[Subscriber Group] royalties reflected the amount of royalties actually 
paid . . . [by CSOs] [that] decided to incur an increased marginal 
royalty cost[,] . . . revealing the CSO's perceived value of the 
distantly retransmitted stations.'').
    Additionally, the Judges were persuaded by the following supportive 
argument of the SDC (no fan of the regression approach, to say the 
least) regarding the Tyler Model as applied to above-Minimum Fee-paying 
CSOs:

    Dr. Tyler, whose rate-based methodology is the most explicitly 
based on a ``minimum willingness to pay'' theory . . . offers a 
sensitivity test [the above-Minimum Fee modeling] of this issue. 
Tyler [ACWDT] ] 156. . . . Dr. Tyler's sensitivity test might 
provide some rough guidance as to the potential direction and 
magnitude of bias introduced by the presence of minimum fees. SDC 
PFF ] 156. See also 4/19/23 Tr. 5473 (SDC's counsel's statement to 
Dr. Tyler on cross-examination) (``I do want to point out to your 
credit that your first sensitivity test tries to address this 
issue.''). This argument is generally consistent with Dr. Tyler's 
response to SDC counsel on this point, agreeing that it was 
important to be ``cognizant'' of this minimum fee issue and that it 
be ``considered and addressed'' because there is ``reasonable 
disagreement about how to handle the issue.'' Id. at 5473-74. . . . 
[T]he Judges find . . . . the variant of the Tyler Model in Figure 
6.3 of the Tyler ACWDT offers the Judges' ``rough guidance'' in the 
allocation of shares.

Initial Determination at 21-22 (quoting SDC and its counsel) (emphasis 
added).
    Additionally, the Judges carefully considered this issue at the 
hearing, questioning witnesses from the bench. See 4/13/23 Tr. 4719 
(Bennett) (CTV economic expert responding to Judge Strickler that ``the 
idea that you're relating carriage with the cost or willingness to pay 
for that carriage, I think, is an entirely reasonable modeling approach 
where the data exists to link the carriage to . . . those payments. And 
that is certainly true where you have above-minimum-fee-paying systems 
for which the incremental cost is apparent . . .'') (emphasis added); 
4/18/23 Tr. 5125 (George) (CCG expert Dr. Lisa George responding to 
Judge Ruwe that ``the royalty payments are not exact measures of 
incremental cost. They are more so when we're above minimum fees.'') 
(emphasis added); see also 4/19 Tr. 5503 (Tyler) (agreeing on cross-
examination that ``CSOs paying above the minimum fee [is]where you have 
economic decision-making because the costs that they're paying for each 
of those distant signals are actual binding costs . . . .'').
    The Judges further noted at length multiple perspectives in which 
an above-Minimum Fee cohort of CSOs can be viewed:

    This cohort of CSOs can properly be viewed as essentially the 
only CSOs who provide revealed preference information as to the 
variation in relative values among the program categories (in 
contrast with CSOs who did not retransmit any distant local stations 
or those with ``excess capacity''), which in that sense is a cohort 
unto itself, rather than a sub-sample. On the other hand, this 
cohort can also reasonably be viewed as but a small sample of all 
the CSOs, which reduces the evidentiary weight of their preferences. 
Both perspectives on the revealed preferences of these above-minimum 
fee paying CSOs are properly considered in weighting the various 
strands of useful evidence in order to allocate royalty shares in 
this proceeding.
. . .
    [I]t is misleading, to say the least, to categorize the base-
fee-paying CSOs as merely a small cohort of the larger population of 
CSOs, when they are differentiated by the key marker for section 111 
purposes: whether they assign a relative value to the retransmittals 
and thus relative values to the retransmitted programs. The Judges 
find it more accurate and appropriate to consider the base-fee-
paying CSOs essentially as a separate cohort of CSOs whose decision-
making is pertinent to a regression analysis in this statutory 
context.
. . .
    Colloquially, the issue may be characterized as whether the 
Judges should let the perfect be the enemy of the good. Here, the 
``perfect'' fact pattern would be where all or most of the data is 
generated by CSOs paying above the Minimum Fee. That is not the 
factual context here. But there is ``good'' evidence from the CSOs 
who did retransmit enough programming to trigger the base fees of 
their subscriber groups, and that the Judges do not ignore that 
data.
    Accordingly, the Judges will give due weight to the minority of 
CSOs that, in the 2015-2017 period, paid above the minimum fee and 
thus revealed their preferences by paying an additional royalty in 
order to retransmit one or more additional stations.

Initial Determination at 100, 130-131 (emphasis added).
    The Judges made it clear that they found important economic 
evidence in the above-Minimum Fee version of the Tyler Model:

    [F]or those CSOs transmitting above 1.0 DSE, they have economic 
decisions to make regarding the mix of programming they will 
transmit via their signal decisions. Given the economics and reality 
of this retransmission market, as described above, only then will 
the relative value of program categories be of material economic 
importance. It is at this stage that the Tyler Model generates 
information as to relative value, through the Tyler model's 
coefficients.

Initial Determination at 136.
    Relying on this abundant record, the Judges held as follows:

    [T]he Judges rely on the Tyler Model, as Dr. Tyler applied his 
model to the CSOs paying above the minimum fee. . . . [A]bove-
minimum fee paying CSOs['] channel selections/programming 
preferences are . . . probative and useful, even if less so than in 
the 2010-2013 Determination because of the reduction in the number 
of such CSOs and in the percentage of royalties they represent.''

Initial Determination at 21, 66.
    But, as indicated supra, the Judges did not ignore the fact that 
the above-Minimum Fee CSO cohort was substantially smaller than 
identified in the 2010-13 Determination. Specifically, the Judges 
stated:

    [H]ere the Judges are considering the regression evidence and 
the Bortz Survey evidence as essentially equally weighted and useful 
(but not flawless) evidence . . . . [T]he reconciliation will be 
different than in the 2010-13 proceeding, because the Judges are not 
giving any primacy to the regression evidence in this proceeding, 
given how the changes in the retransmission sector after the WGNA 
conversion have affected the available data.

Initial Determination at 147.
    To be sure, in its Motion, JSC disagrees with the Judges' adoption 
of the above-Minimum Fee modeling undertaken by Dr. Tyler. But JSC made 
its disagreements known at the hearing stage of this proceeding, and 
supported those disagreements with expert testimony. See Initial 
Determination at 19-20.
    In particular, one criticism, as described by the Judges, was 
levied by one of JSC's expert economic witnesses, Dr. Asker, who 
maintained that it was improper to ``use . . . the base fee as a price 
proxy even for CSOs paying above the minimum fee.'' Id. at 19.\285\ The 
Judges declined to adopt Dr. Asker's analysis because: (1) it amounted 
to

[[Page 54271]]

mere ``blackboard economics,'' \286\ in that there was ``no evidence'' 
that any CSO actually engages in the ``tunnel-vision sort of 
hyperrationality'' described by Dr. Asker; and (2) it was at odds with 
the testimony of a cable industry expert witness, Sue Ann Hamilton, who 
stated, in testimony credited by the Judges, that ``CSOs do not devote 
much attention to issues regarding distant retransmittals.'' Id. at 22 
& n.29.
---------------------------------------------------------------------------

    \285\ More specifically, Dr. Asker opined that a rational CSO 
would calculate the actual ``price'' of an above-Minimum Fee 
retransmission of a local station as the difference between: ``(1) 
the total fees that would bind, which may have been the minimum fee, 
without retransmitting that local station, and (2) the total base 
fees that would bind (the minimum fee having been exceeded) if that 
local station was distantly retransmitted.'' Initial Determination 
at 20.
    \286\ See id. at 22 n.29 for the Judges' application of the 
economic criticism of unrealistic ``blackboard economics.''
---------------------------------------------------------------------------

    As a second criticism regarding this issue, JSC also relied--at the 
hearing stage of the proceeding--on what its statistical expert, Mr. 
Harvey opined was the lack of ``statistical significance'' in Dr. 
Tyler's above-Minimum Fee modeling. See JSC RPFF ]] 29-30; Harvey WRT 
]] 45-46 & tbl.10 \287\ (More specifically, JSC and Mr. Harvey 
maintained that Dr. Tyler's above-Minimum Fee modeling ``failed to 
obtain statistically significant results for JSC minutes in 2015, 2016 
and 2017 . . . .''); see also JSC Post-Hearing Brief at 27; Harvey WRT 
]] 45-46.
---------------------------------------------------------------------------

    \287\ JSC premises its argument on the fact that far fewer CSOs 
paid royalties at above-Minimum Fee levels in the years 2015-17 than 
in the pre-WGNA conversion period of 2010-2014 (which straddles this 
and the prior allocation proceeding). See Initial Determination at 
18-20. As explained in the Initial Determination, and recounted 
elsewhere in this Order, the Judges did not dispute this point, and 
therefore accorded Dr. Tyler's above-Minimum Fee results less 
evidentiary weight than when more CSOs paid above-Minimum Fee 
royalties, but they declined to adopt JSC's argument that the Judges 
therefore should give zero weight to the evidence of CSO decision-
making by CSOs that did pay above-Minimum Fee royalties. Id. at 131 
(``there is `good' evidence from the CSOs who did retransmit enough 
programming to trigger the base fees of their subscriber groups, and 
the Judges do not ignore that data.
    Accordingly, the Judges will give due weight to the minority of 
CSOs that, in the 2015-2017 period, paid above the Minimum Fee and 
thus revealed their preferences by paying an additional royalty in 
order to retransmit one or more additional stations.'').
---------------------------------------------------------------------------

    In the Initial Determination, the Judges explained in detail why 
they disagreed, finding that the above-Minimum Fee Tyler Model was 
statistically sufficient to carry the level of evidentiary weight the 
Judges accorded to that model. See Initial Determination at 144-148. 
Accordingly, although JSC may disagree with the Judges' reasoning as to 
this issue (even though JSC does not in fact address the Judges' 
reasoning in their Motion seeking rehearing), their disagreement does 
not remotely suggest that rehearing is warranted as to this issue.
    In their present Motion seeking rehearing, JSC makes a further 
criticism of the Judges' reliance on the above-Minimum Fee Tyler Model. 
Specifically, JSC relies on Dr. Tyler's recommendation at the hearing 
that the Judges rely on his preferred model in which he applies all the 
Base Fees calculated by the Subscriber Groups within CSOs, including 
those for whom the Minimum Fee would bind. But JSC's present post-
hearing reliance on Dr. Tyler's preference is seriously misleading.
    Although Dr. Tyler preferred one of his models over another, his 
preference does not dictate which of his analyses the Judges may 
credit. Here, the Judges declined to defer to his preference because 
regression models that included the royalty payments of CSOs paying 
only the Minimum Fee were less useful in reflecting economic decision-
making (an argument advanced by JSC and other parties). Instead, the 
Judges relied heavily on the Tyler Model based on only above-Minimum 
Fee paying CSOs, for the reasons explained supra, as supported by 
abundant aspects of the record evidence. Initial Determination at 21 
(``The Judges find that the dramatic increase in the number of minimum 
fee-only CSOs (i.e., those with no distant retransmittals and those 
with some distant retransmittals but with `excess capacity') renders 
regression analyses that include those CSOs less reliable and thus can 
be accorded only very limited economic evidentiary weight. Moreover, 
the Judges accord significantly more evidentiary weight to regression 
modeling that focuses only on the CSOs that actually revealed their 
preferences by willingly paying above the minimum fee, i.e., at the 
base fee level.'').
    JSC also overplays its hand. Dr. Tyler did not maintain that his 
above-Minimum Fee modeling lacked probative value. Quite the contrary, 
he testified (as noted supra) that his above-Minimum Fee modeling 
showed, with the ``highest degree of confidence,'' actual economic 
tradeoffs made by CSOs, even though he preferred his model inclusive of 
the Minimum Fee-paying CSOs. Initial Determination at 13 (quoting Tyler 
ACWDT ] 155).
    Moreover, as a general matter, there is no doubt that the Judges 
may give greater weight to evidence that the proffering witnesses 
recommend should have less weight. Indeed, such an expert's 
disagreement in this regard ultimately is of little value, as it 
intrudes upon the Judges' exercise of their core judicial function to 
weigh evidence, and, for present purposes, cannot support a claim for 
rehearing under any of the available standards.
    In a related criticism, JSC maintains that the Judges wrongly 
adopted the above-Minimum Fee Tyler Model because other experts 
supported their own models and approaches over the adoption of any 
version of Dr. Tyler's modeling. Motion at 9.\288\ But again, because 
one of the Judges' core duties is to weigh competing testimony, 
including expert testimony, their decision to adopt an opinion 
proffered by one expert which clashes with opinions of others, is 
certainly not ipso facto erroneous.
---------------------------------------------------------------------------

    \288\ Imagine that--the other experts preferred their own models 
over another expert's opinion: Quelle surprise.
---------------------------------------------------------------------------

    More broadly, the Judges are not locked into the recommendations of 
the parties and the experts. This statutory process is not like ``final 
offer'' arbitration. As noted by the Joint Respondents, the D.C. 
Circuit has held that the Judges are ``not strictly limited to choosing 
from among proposals set forth by the parties,'' but, like agencies in 
general, ``have authority to modify proposals set forth by the parties, 
or to suggest models of their own.'' Joint Response at 4 n.2; see also 
id. at 6; see also Johnson v. Copyright Royalty Bd., 969 F.3d 363, 381-
82 (D.C. Cir. 2020) (citing SoundExchange, Inc. v. Copyright Royalty 
Bd., 904 F.3d 41, 50-51, 57 (D.C. Cir. 2018); Association of American 
Publishers, Inc. v. Governors of USPS, 485 F.2d 768, 773 (D.C. Cir. 
1973)).
b. JSC Is Improperly Seeking a ``Second Bite at the Apple'' by Asking 
To Submit Additional Evidence Regarding Dr. Tyler's Above-Minimum Fee 
Model
    As discussed supra, JSC submitted testimony from two expert 
witnesses, Dr. Asker, an economist, and Mr. Harvey, a statistician, in 
unsuccessful attempts to undermine Dr. Tyler's above-Minimum Fee 
modeling. Thus, this issue has already been considered and, as Joint 
Respondents assert, JSC cannot obtain rehearing to introduce further 
evidence that JSC ``could have submitted at the hearing, but did not,'' 
and as to which JSC ``did not meet their burden of persuasion.'' Joint 
Response at 3-4.
    Alternately stated, the JSC Motion fails to satisfy the 
``negative'' standard for rehearing noted earlier in this order--a 
demonstration that the movant is not seeking the ``second bite at the 
apple'' that the Judges have ruled is insufficient to support a request 
for rehearing.

[[Page 54272]]

2. The Judges' Adjustments to the Version of the Tyler Model They 
Adopted Do Not Support JSC's Motion for Rehearing
a. Introduction
    JSC also argues that rehearing is warranted because the Judges made 
two ``adjustments'' via the Initial Determination that were 
improper.\289\ JSC's argument is deficient for several reasons. At a 
high level, JSC simply ignores the Judges' explanations in the Initial 
Determination for why the above-Minimum Fee version of the Tyler 
Model--albeit a highly useful lens for broadly identifying relative 
value--generated certain results that required the Judges to make 
relative value adjustments for CCG and PTV programming. It is quite 
simple, but also simply wrong, for JSC to argue that the Judges erred 
in their reasoning, by omitting any reference to the Judges' actual 
reasoning.
---------------------------------------------------------------------------

    \289\ JSC's ``adjustment'' argument comes in two varieties. 
First, JSC objects to ``Adjustment C'' in the Initial Determination 
which increased PTV shares. Second, JSC objects to the adjustment of 
the shares allocated by the Initial Determination to CCG and PTV for 
2015-17, in comparison to their share percentages in the prior years 
of 2010-13 (in the prior allocation proceeding) and 2014 (in this 
proceeding.) JSC does not object to ``Adjustment A'' in this 
proceeding that lowered CCG's allocation share, or to ``Adjustment 
B'' in this proceeding that lowered PTV's share. Alternately stated, 
JSC claims error by the Judges in the adjustments that reduced their 
royalty allocation, but assert no error in adjustments that 
increased JSC's royalty allocation. (JSC's argument pertaining to 
Adjustment B does identify a computational error in the Initial 
Determination that the Judges acknowledge and correct infra.)
---------------------------------------------------------------------------

    To highlight the importance of these omissions, the Judges 
recapitulate the reasoning in the Initial Determination which JSC 
ignores.
b. The CCG Share Adjustment (Adjustment A) \290\
---------------------------------------------------------------------------

    \290\ Although JSC does not seek rehearing on Adjustment A 
regarding CCG, that adjustment is relevant to this discussion 
because it is part and parcel of the Judges' derivation of the CCG 
share that JSC claims to be too high relative to prior years. The 
deficiency in JSC's argument in that regard is best understood by 
including in the text following this footnote a summary of the 
reasoning for Adjustment A.
---------------------------------------------------------------------------

    First, with regard to the CCG share (Adjustment A) the Judges 
reasoned as follows in the Initial Determination:

    1. The above-Minimum Fee Tyler Model generates ``an anomalous 
increase'' in the share allocated to the CCG claimants.
    2. This anomaly arose because ``CCG programming is unique among 
the program categories in this proceeding [in that] it is limited in 
geographic scope to CSOs located within a 150-mile belt below the 
U.S./Canadian border'' (known as the ``Canada Zone'').
    3. Thus, the above-Minimum Fee Tyler Model ``reflect[s] the 
unique value of Canadian programming in the Canada Zone, including 
the uniquely valuable . . . French language programming, a niche 
sub-category.''
    4. Accordingly, in addition to the demand for the usual 
complement of distantly retransmitted programming that exists 
throughout the wider United States, in the Canada Zone there exists 
this additional demand. Such greater demand means that CSOs would 
choose to pay more than the Minimum Fee by adding CCG stations, and 
thus Canadian claimant programming, to their channel lineup.
    5. Therefore, CSOs in the Canada Zone would very likely be 
overrepresented in the above-Minimum Fee Tyler Model.
    6. This phenomenon creates a problem because the Judges are 
allocating a royalty pool for which, over the period 2015-2017, more 
than 90% of the funding came from Minimum Fee-only CSOs. 
Accordingly, although the data from the above-Minimum Fee Tyler 
Model provides useful economic evidence of CSOs' revealed 
preferences for other claimant categories, with regard to CCG 
content and value, this data is distortionary.
    7. Confirming this anomaly, CCG itself did not propose receiving 
the high allocations suggested by the above-Minimum Fee Tyler Model 
(23.2% in 2015; 31.1% in 2016; and 34.6% in 2017). Rather, CCG 
proposed that it receive 14.8% for 2015, 13.7% for 2016, and 13.6% 
for 2017.\291\
---------------------------------------------------------------------------

    \291\ It is also noteworthy that CCG has not sought rehearing to 
challenge this significant downward adjustment in its 2015-17 share 
of the royalty pool nor to criticize the wider application of the 
above-Minimum Fee Tyler Model.
---------------------------------------------------------------------------

    8. Accordingly, in their 2015-2017 allocations, the Judges 
utilize the lower CCG shares reported by Dr. Tyler for all CSOs, 
rather than only the above-Minimum Fee Tyler Model.

Initial Determination at 142-143.
    As noted supra, JSC studiously ignores this substantial downward 
adjustment of CCG's 2015-17 share, which benefited JSC and the other 
claimants by raising their share allocations, ceteris paribus. Rather, 
as noted supra, JSC focuses on a comparison of the CCG shares for 2015-
17 with the CCG shares for 2010 through 2014 and claims error 
sufficient to warrant rehearing based on the increase in CCG shares in 
this proceeding. Simply put, JSC does not object to the Judges' 
adoption of adjustments to its above-Minimum Fee approach, but rather 
only to those adjustments that reduce its inter-year allocations. That 
argument, now in proper context, is addressed in the subsection below.
1. JSC Misapprehends the Process for Ascertaining Relative Value in 
Allocation Proceedings
    JSC argues that the sheer increase in the size of the Judges' 
allocation for PTV and CCG are ``arbitrary.'' Motion at 8. More 
particularly, JSC calculates that ``after the Judges made multiple 
adjustments to the results, PTV's share in the adjusted regression 
increased by 51% in 2015, by 69% in 2016, and by 105% in 2017. JSC 
Motion at 9. With regard to CCG, JSC makes an inter-period argument, 
asserting that CCG's shares more than doubled in the 2015-17 period 
compared to the pre-WGNA conversion years of 2010-13 (in the prior 
allocation proceeding) and 2014 (in the present proceeding). JSC Motion 
at 10. As explained infra, JSC's argument in these regards 
fundamentally misapprehends the statutory process by which relative 
values and shares are determined.\292\
---------------------------------------------------------------------------

    \292\ In addition to the specific points discussed infra 
regarding the CCG and PTV adjustments, it is important to remain 
mindful that the Judges are ascertaining relative values, not 
absolute values. That is, the WGNA conversion significantly 
scrambled CSOs' retransmission decisions, which the record reflects 
changed the relative value of program categories. This does not 
necessarily indicate that, in an absolute sense, any one program 
category became more or less valuable.
---------------------------------------------------------------------------

    Addressing first the CCG inter-period share increase, the Judges 
note that they do not begin with some pre-determined allocation of 
shares and then make certain that they can ``back into'' that ``pre-
determination'' by conjuring up a comporting analysis. That would not 
only, to put it colloquially, ``place the cart-before-the horse,'' but 
would also be antithetical to the Judges' fact-finding duty. In this 
regard, as the Judges proceed through their analysis, as here, by 
applying the probative facts--they do not decide ex ante that their 
factual findings cannot exceed (or fall below) some arbitrary level 
(whether an interim pre-adjusted level or a level from a prior 
proceeding). Indeed, that too would be an improper exercise by the 
Judges of their duty to weigh the facts. Alternately stated, when the 
Judges weight the evidence, they are agnostic as to the share 
percentages that would ultimately result.
    Nonetheless, as noted supra, JSC complains that CCG's shares are 
higher than the shares CCG received in the 2010-13 Final Allocation 
Determination and in 2014 in the present proceeding. But JSC cites no 
authority to suggest that allocations should equal or approximate 
allocations in prior years or from prior proceedings. Indeed, there is 
no authority in that regard because in each allocation proceeding the 
Judges consider the allocation issues de novo, based on the record 
developed in that proceeding. To be sure, a party can argue that the 
underlying facts in the latter proceeding mirror those of the prior 
proceeding, suggesting it would be correct for the Judges not to 
deviate from the allocations in the prior

[[Page 54273]]

proceeding. And because factual patterns may remain relatively stable 
across years within a given proceeding, a party may argue that the 
annual years at issue should all reflect similar allocations.
    Of course, the converse is true as well: If the facts reveal 
substantial differences between the years in different proceedings, or 
across years within a proceeding, the allocations made by the Judges 
should reflect those facts. Indeed, the Judges have described their 
consideration of this issue as a ``Changed Circumstances'' analysis.
    In the present case, the Judges addressed this very issue in 
section XVI of the Initial Determination:

XVI. Changed Circumstances

    The Judges may vary from prior decisions when there are (1) 
changed circumstances from a prior proceeding; or (2) evidence on 
the record before the Judges that requires prior conclusions to be 
modified regardless of whether there are changed circumstances.
    In the 2014-2017 period, several widely agreed upon changed 
circumstances have taken place including 1) WGNA's conversion to a 
cable network, the reclassification of PTV signals from exempt to 
non-exempt, and 3) the rise in streaming on alternative platforms. . 
. . Based on the agreed upon record and Judges' findings here and 
throughout the determination, the Judges find that significant 
changed circumstances occurred across the relevant period.

Initial Determination at 159-160 (citing the testimonial consensus 
regarding these changed circumstances.).
    Thus, not only was it permissible for the Judges to deviate from 
allocation shares in prior years and/or proceedings, the facts of the 
case required the Judges to adjust the share allocations. Quite 
clearly, therefore, the Judges did not make any findings that--under 
any standard--would support rehearing based on changes in the Judges' 
share adjustments.
    Second, with regard to the upward adjustment for PTV's relative 
value (Adjustment C), the Judges reasoned as follows in the Initial 
Determination:

    1. PTV argued that, when WGNA was a local station retransmitted 
by CSOs pursuant to section 111, a significant number of PTV's 
stations were retransmitted by CSOs together with WGNA.
    2. Thus, prior to the WGNA conversion, a CSO's decision to 
retransmit PTV and WGNA jointly generated a Base Fee royalty and 
revealed that CSO's revealed preference and willingness-to-pay.
    3. PTV further noted that post the WGNA conversion, many of 
these CSOs continued to retransmit the same PTV station, but this 
did not trigger the Base Fee because the Minimum Fee applied (with 
WGNA gone).
    4. PTV maintained that the pre-WGNA conversion carriage is 
probative of the fact that the PTV carriage post-WGNA conversion 
demonstrates economic value.

    The Judges agreed with this analysis, increasing PTV's 2015-17 
share of royalties as calculated in Adjustment C.\293\
---------------------------------------------------------------------------

    \293\ As explained in the section of this order denying PTV's 
request for rehearing, to adjust for this increase in PTV's relative 
value, the Judges found probative the analysis and testimony by a 
JSC expert statistical witness, Mr. Harvey. His analysis and 
testimony indicated that 44% of the PTV stations that were 
identified as being retransmitted by Minimum Fee-paying CSOs after 
the WGNA conversion had also been transmitted pre-conversion jointly 
with WGNA and thus generated Base Fee (above-Minimum Fee) royalties. 
The Judges adopted this testimony via Adjustment C, increasing PTV's 
share of the royalties.
---------------------------------------------------------------------------

    But JSC objects to this Adjustment C on the same general basis that 
it objects to the CCG increase--it is simply too large an increase. As 
to this issue, JSC compares the Judges' interim work-in-progress (i.e., 
pre-adjustment) PTV shares with the Judges' final post-adjustment 
analysis. But its argument hinges on the same mistaken assumption made 
by JSC regarding the CCG share increase across the relevant years--that 
the Judges are somehow precluded from increasing a party's shares by 
too great a percentage, regardless of where the Judges' factual 
findings lead.
3. JSC's Proposal That the Judges Disregard the Regression Evidence on 
Which They Relied--and Instead ``Fully Rely'' on JSC's Industry 
Witnesses by Adopting the Bortz Survey--Is a Blatantly Impermissible 
Request for a ``Second Bite at the Apple''
    Further, JSC's proposed alternative to the Judges' approach 
underscores the paucity of its argument. JSC argues that the Judges 
should ``fully rely'' on their version of the Bortz Survey approach, 
which the Judges rejected in the Initial Determination. JSC Motion at 
8.
    But this argument, like other JSC arguments discussed supra, 
constitutes a request for the proverbial ``second bite at the apple'' 
that is an insufficient basis for granting rehearing. The Judges agree 
with the Joint Respondents that because ``JSC forcefully advocated for 
reliance on the Bortz Survey before, during and after the 5-week 
hearing,'' this argument is ```nothing more than a recapitulation of 
arguments that the Judges fully considered in fashioning their [Initial 
Determination] and therefore do[es] not present the type of exceptional 
case that would warrant a rehearing or reconsideration.''' Joint 
Response at 6. See also PTV Response at 2. More particularly as 
explained below, in the Initial Determination, the Judges credited 
industry witness testimony from JSC witnesses by significantly 
increasing the JSC shares above the small shares arising from the 
above-Minimum Fee Tyler Model (and all other regression modeling).
    To place JSC's present argument--and the Judges' rejection of 
same--in appropriate context, it is necessary to begin with the Judges' 
factual finding that, in the 2015-17 period, ``[t]he WGNA conversion . 
. . drastically reduced the number of JSC subscriber-minutes distantly 
retransmitted.'' Initial Determination at 122 n.147. There was no 
dispute as to this fact. See generally JSC PFF ] 101 (stating, without 
denying, that ``[a]ccording to multiple non-JSC witnesses [citing Dr. 
Tyler and multiple other expert and fact witnesses], the absolute and 
relative volume of JSC programming declined significantly following the 
WGNA conversion when measured in subscriber-weighted minutes.''); id. 
at ] 111 (citing JSC's own expert witness, Dr. Majure, who did not deny 
the drastic reduction in the number of JSC subscriber-minutes, but 
instead argued ``that it would be wrong to infer a drop in JSC value 
from a drop in subscriber-weighted minutes . . . .''). In like manner, 
JSC relied on the testimony of three industry witnesses who, while not 
denying the drastic reduction in JSC subscriber-weighted minutes, 
testified that, from a CSO's perspective, ``the value and volume of 
different categories of programming are not correlated.'' JSC PFF ] 
112. See also Program Suppliers RPFF ] 26 (``JSC's witnesses did not 
dispute that JSC's relative subscriber-weighted volume share declined 
by 91 to 92 percent between 2014 and 2015, and [] JSC's relative volume 
share fell from approximately 7% in 2014 to 0.6% in 2015, and by 2017, 
it had fallen to 0.4%, representing a 94% decline.'').
    This background is pertinent to JSC's present argument because the 
Judges (1) in fact did credit the testimony by JSC industry witnesses 
that subscriber-weighted minutes alone were insufficient to determine 
relative value for JSC programming; and (2) therefore substantially 
increased the relative value of JSC shares above the levels generated 
by the above-Minimum Fee Tyler Model and other regression modeling. 
However, the Judges declined to ignore the significant impact on 
relative value of the substantial reduction in the volume of 
subscriber-weighted JSC minutes distantly retransmitted. See Initial 
Determination at 122 n.147.
    The following portions of the Initial Determination make this point 
in detail:


[[Page 54274]]


    Based on the entirety of the record, the Judges are not 
persuaded by industry expert testimony that the value and volume of 
programming are not correlated. The industry expert evidence is set 
against the more well-established sound economic reasoning 
underlying the regression analyses in this proceeding.
. . .
    That is not to say that regressions correlating program category 
minutes and a measure of royalties is necessarily the only way to 
determine value. . . . [A]s confirmed by some of the industry 
testimony, the Judges recognize that . . . JSC programming, bundled 
together with programming from other claimant categories, can have a 
value (in terms of retaining or adding subscribers) . . . that is 
not well-correlated with overall program minutes.
. . .
    The Judges find [JSC witnesses] to be particularly credible . . 
. regarding the unique value of JSC content . . . . Based on the 
entirety of the record, the Judges are persuaded that evidence of 
the unique value of . . . JSC content . . . serves as a limitation 
on the applicability of certain proposed regression analyses and 
their proposed allocation results. These [findings] do not negate 
valid application of regression analyses as a basis for allocation. 
However, these factors are taken into account within the Judges' 
weighting of the allocation methodologies, including application of 
the Bortz survey . . . .

Initial Determination at 151-152 (emphasis added).
    Consequently, the Judges set the 2015-17 post-WGNA conversion 
allocation shares for JSC substantially above the shares proposed by 
the above-Minimum Fee Tyler Model, as can be seen in the comparison of 
the two tables below:

             Shares Awarded to JSC in Initial Determination
------------------------------------------------------------------------
          2015                     2016                    2017
------------------------------------------------------------------------
          11.44%                   10.76%                  11.91%
------------------------------------------------------------------------

Initial Determination at 2 tbl.1.\294\
---------------------------------------------------------------------------

    \294\ These final totals are changed marginally via the 
correction of a mathematical error in the Initial Determination, as 
discussed infra.

        Shares Allocated to JSC by Above-Minimum Fee Tyler Model
------------------------------------------------------------------------
          2015                     2016                    2017
------------------------------------------------------------------------
            2.1%                     1.3%                    0.5%
------------------------------------------------------------------------

Initial Determination at 13.
    As a comparison of these two tables shows, by departing from the 
above-Minimum Fee Tyler Model, and giving due weight to the Bortz 
Survey, as suggested by JSC's industry witnesses, the Judges increased 
JSC's shares by 445% for 2015, 728% for 2016, and by 2,282% for 2017. 
To be sure, these higher shares are still well below what the Bortz 
Survey proposed, and what JSC sought, both at the hearing and again via 
rehearing. But, as noted above, the JSC share of subscriber-weighted 
minutes declined by over 90% during this period, which is reflected in 
the effect of the regression analysis in the above-Minimum Fee Tyler 
Model, and which the Judges found highly relevant.
    Thus, JSC's claim of purported error regarding this issue is not 
premised on any failure by the Judges to ignore its expert witnesses or 
the Bortz Survey. Rather, JSC's complaint is that the Judges did not 
give zero weight to the regression model and 100% weight to the Bortz 
Survey (based on the survey itself and the industry witnesses JSC 
proffered). Of course, as noted supra, a party's disagreement as to the 
Judges' weighing of record evidence, including expert testimony, does 
not satisfy any grounds for granting a motion for rehearing.\295\
---------------------------------------------------------------------------

    \295\ Implicit in JSC's argument is that JSC should not suffer 
such a loss in royalty revenues compared to past years. But no 
implied assumptions regarding a JSC loss in royalty revenues arising 
from these lower shares is warranted by the record. Rather, the 
record indicates that ``JSC sports content has been migrating from 
broadcast stations to other platforms, including cable networks like 
TNT, TBS, and ESPN, regional sports networks, and pay-TV 
platforms.'' See Program Suppliers PFF ] 237 (citing witness 
testimony, including the testimony of JSC expert Allan Singer). 
Further, the record reflects that such migration ``has increased 
significantly for the past several years, resulting in corresponding 
decreases of distantly retransmitted JSC programming volume'' 
[indicating that] [t]he significantly low 2014 through 2017 JSC 
programming volumes are consistent with a continuing migratory 
pattern. Id. ]] 239-40.
    Thus, as the Judges explained in their Initial Determination, 
there is no reason to assume that the reduction in JSC shares caused 
JSC to lose revenue realized from the transmission of JSC content 
formerly on WGNA. That is, there is no record evidence to support an 
assumption that JSC had irrationally sought out less profitable 
distribution outlets than distantly retransmitted local stations 
after the conversion of WGNA to cable station status. See Initial 
Determination at 135 n.161 (``[T]he JSC is simply a representative 
of the major professional sports leagues and the NCAA, and the 
record does not reflect that they suffered any economic loss because 
of the reduction of subscriber minutes distantly retransmitted.'')
---------------------------------------------------------------------------

4. JSC's Argument--That Rehearing Is Necessary Because the Tyler 
Modeling Simply ``Parrots'' the Statutory Formula--Cannot Be Grounds 
for Rehearing Because This Argument Was Made at the Hearing, and 
Because JSC Fails to Note in Its Motion the Judges' Detailed 
Explanation for Rejecting that Argument
    JSC argues that the Tyler modeling (in its several varieties) 
should have been rejected because it simply ``parrots'' the statutory 
formula. JSC Motion at 9. Ironically, this basis for rehearing must be 
denied because it ``parrots'' the argument made by JSC and other 
parties at the hearing. See Initial Determination at 74 (``Dr. Majure 
maintains that the Tyler Model . . . essentially estimates only `the 
equation given by the statutory formula . . . .' ''); id. at 75 (noting 
that CCG's expert economic witness, Dr. Lisa George, likewise 
criticized the Tyler modeling because it ``effectively replicates the 
regulatory formula . . . .'' and noting that PTV's expert, Dr. John 
Johnson, likewise maintained that the Tyler modeling ``essentially 
replicates the statutory formula . . . .'').
    However, the Judges comprehensively analyzed and then rejected this 
argument, in all its iterations. See id. Section XIB at 131-136. 
Nonetheless, JSC simply ignores the Judges' detailed explanation why 
this ``statutory formula''/``fee generation'' criticism lacks merit.
    In sum, JSC once again asks for that improper ``second bite at the 
apple'' by seeking to reargue an issue. Moreover, JSC does not even 
claim that the Judges' extended discussion and findings as to this 
issue were incorrect. Accordingly, this JSC point is insufficient to 
justify rehearing.
5. Conclusion
    Accordingly, JSC's Motion for Rehearing as to these issues is 
denied.\296\
---------------------------------------------------------------------------

    \296\ The Judges also do not credit PTV's invitation for the 
Judges to ``amend[] the Initial Determination to award [PTV] shares 
for the 2015-2017 royalty years based on or adjusted upward from 
either the conventional McLaughlin-adjusted Bortz Surveys or Dr. 
Tyler's primary regression model . . . .'' PTV Response at 10. PTV's 
representation that it would be amenable to this alternative is 
little more than the statement by a party that it supports an 
approach that increases its allocation. Obviously, such argument 
based on naked self-interest does not support a rehearing or 
amendment of the Initial Determination.
---------------------------------------------------------------------------

III. PTV'S Motion for Rehearing

a. Whether ``Adjustment B'' in the Judges' Initial Determination Is 
Premised on Clear Error That Must Be Corrected

    The PTV Motion seeks rehearing with regard to the Judges' 
application of ``Adjustment B'' in the Initial Determination, which is 
a downward adjustment of the PTV shares derived from the Tyler Model 
for above-Minimum Fee CSOs. This adjustment was made by the Judges to 
reflect the presence of must-carry PTV signals, whose value had not 
been adequately demonstrated to be included as part of the relative 
marketplace value generated by regression approaches. However,

[[Page 54275]]

PTV maintains that the adjustment is incompatible with the record 
evidence and amounts to an erroneous double-counting of the Judges' 
intended adjustment. PTV Motion at 1.
    PTV alleges that it is clearly erroneous for the Judges to derive 
its shares from the Tyler above-Minimum Fee Model for the 2015-17 
period and also apply a downward adjustment based on Bennett Figure 52. 
PTV notes that the Tyler above-Minimum Fee Model excludes CSOs that 
paid the Minimum Fee, whereas Dr. Bennett (Figure 52) carried out the 
analysis applied by the Judges only based on CSOs that paid the Minimum 
Fee. PTV Motion at 3.
    In their Joint Response, CCG, Program Suppliers, and SDC clarify 
that the Judges explained Adjustment B as weighting Dr. Bennett's 
Figure 52 analysis in order to avoid the double counting that is 
alleged in PTV's motion. Joint Response at 7, citing ID at 143 (note to 
Adjustment B Table). The Joint Response adds that the applied 
adjustment is likely a conservative one, understating the bias from 
must-carry PTV signals, because must-carry signals were also 
retransmitted by above-Minimum Fee cable systems. Joint Response at 7, 
citing ID at 45.
    Similarly, JSC's response to PTV's proposed elimination of 
Adjustment B notes the Judges' recognition of the need to lower the 
Tyler Model's estimates for PTV to correct the issue of fee-based 
regressions falsely associating must-carry signals with additional 
royalties. JSC Response at 2. JSC challenges PTV's view that excluding 
Minimum Fee systems from the Tyler Model somehow accounts for must-
carry carriage within the Tyler regression. JSC argues that the Judges 
were correct to conclude that all must-carry signals are being falsely 
interpreted by the regressions. Furthermore, JSC observes that reliance 
on the Tyler above-Minimum Fee Model without adopting Adjustment B, 
would incorporate the false inferences from must-carry signals, because 
the regression would ``see'' systems carrying those stations and making 
royalty payments, but would not ``see'' indemnification payments made 
by the PTV stations back to the CSO. Id.
    CTV asserts that PTV's motion regarding Adjustment B reflects a 
fundamental misunderstanding of the evidence. CTV notes that the Tyler 
Model does not exclude any PTV stations that were retransmitted 
pursuant to must-carry requirements. CTV Response at 3, citing Ex. 7207 
(Bennett WRT) at 63-64 and 4/12/23 Tr. 4608 (Bennett); Ex. 7600 (Tyler 
ACWDT) at 37, 64. And, for that reason, Dr. Bennett developed a must-
carry sensitivity analysis to measure the impact of must-carry signals 
on share allocations, which is reflected in Figure 52. Id. CTV also 
notes that the Judges' weighting methodology effectively decreases the 
downward adjustment to PTV's share determination based on the ratio of 
the PTV shares reflected in Dr. Tyler's baseline regression model, 
Figure 3.2 (including all CSO royalties), and the PTV shares reflected 
in Dr. Tyler's Figure 6.3 (including only above-Minimum Fee-paying CSO 
royalties), as explained by the Judges note accompanying Adjustment 
Table B on page 143 of the Initial Determination. Id.
    PTV's Reply reiterates its initial arguments regarding Adjustment B 
and argues that any weighting contained within the adjustment is also 
unsupported. PTV asserts that in order for the applied weighting to be 
appropriate, the proportion of Public Television value derived from 
must-carry signals estimated by Dr. Bennett must have been the same 
within the above-Minimum Fee CSOs as within the Minimum Fee-paying 
CSOs. PTV Reply at 1-2.
    PTV asserts that Dr. Bennett's analysis only examined the value of 
must-carry signals carried by Minimum-Fee-paying CSOs. PTV maintains 
that the values estimated by Dr. Bennett are not proportionally 
distributed among Minimum Fee and above Minimum Fee CSOs. PTV argues 
that that such estimates do not reflect carriage among above-Minimum 
Fee CSOs, and that there is no basis for using the numbers calculated 
by Dr. Bennett to attempt to estimate that value. Id. at 3.
    PTV asserts that the CSOs paying more than the Minimum Fee could 
have chosen to decline to carry any distant PTV signals. PTV argues 
that, under the relevant must-carry regulations, for the above-Minimum 
Fee CSOs, distant retransmission of a must-carry signal necessarily 
incurs an incremental royalty cost. PTV notes that under those 
regulations above-Minimum Fee CSOs thus have the right to demand 
indemnification from the originating station for that incremental 
royalty burden. If a station refuses indemnification, then the CSO is 
not obligated to carry the signal under the must-carry rules. 
Therefore, PTV argues, a CSO's decision to carry the signal without 
indemnification necessarily demonstrates value of the programs on that 
signal. PTV adds that the record indicates that no indemnification 
payments were made. Id. at 4.
i. The Judges' Analysis and Conclusion Regarding PTV's Adjustment B 
Rehearing Motion Arguments
    The Initial Determination clearly explains the finding that must-
carry signals are problematic when fee-based regressions are used to 
establish relative value, and thus require an adjustment. More 
particularly, this need for adjustment exists for Dr. Tyler's 
allocation share calculations pertaining only to the CSOs who paid more 
than the Minimum Fee. The Tyler Model does not exclude any PTV stations 
that were retransmitted pursuant to must-carry requirements. PTV 
proposes to ignore the effect of must-carry signals on the Tyler Model. 
PTV takes the position that the must-carry issue is addressed because 
the adopted Tyler Model excluded Minimum Fee systems. But excluding 
Minimum Fee systems from the Tyler Model does not account for PTV must-
carry signals that are carried by above-Minimum Fee CSOs. Therefore, 
the Judges' determination on this proceeding record makes clear that 
the absence of an adjustment, rather than the adjustment itself, would 
more likely impose a clear error and manifest injustice.
    PTV asserts that the Judges cannot apply an adjustment based on Dr. 
Bennett's analysis because Dr. Bennett examined only the value of must-
carry signals carried by Minimum Fee paying CSOs. This argument does 
not undermine the need for an adjustment. It simply attacks the applied 
Adjustment B as supposedly having inadequate precision or basis in the 
record. There is a reason that the record evidence does not provide for 
greater precision, and that is the noted evidentiary failure of PTV 
regarding which stations were subject to the must-carry provisions and 
which were not. See ID at 47. However, the application of Adjustment B 
is reasonable, and is clearly based on evidence in the record and the 
Judges' assessment of the entirety of the record.\297\
---------------------------------------------------------------------------

    \297\ Dr. Bennett's adjustments are based upon Mr. Harvey's 
identification of stations likely carried pursuant to the must-carry 
provision. See Bennett WRT at 57. Furthermore, as the Judges 
observed, ``Mr. Harvey engaged in a reasonable attempt to estimate 
this number, which PTV could have set forth in its submissions, but 
did not.'' ID at 47.
---------------------------------------------------------------------------

    Further, Adjustment B, which is properly weighted, does not amount 
to an erroneous double-counting of the intended adjustment. While 
employing the best evidence available to determine a necessary 
adjustment, the Judges weighted the Bennett analysis, for 2015-2017, 
prior to applying it to the Tyler regression allocations. This is a 
reasonable approach, with sufficient

[[Page 54276]]

evidentiary support, consistent with the relevant legal requirements.
    As explained in the Initial Determination:

    The Must Carry adjustment in Bennett WRT fig. 52 was based on 
the PTV shares of all CSO royalties, whereas the Judges are applying 
this adjustment to the shares of CSO royalties attributable to 
shares generated by CSOs paying above the minimum fee (subject to 
the prior adjustment for CCG, discussed supra). So, for [2014], the 
percentage point adjustment to the PTV share is the percentage point 
adjustment in Bennett WRT Fig 52. For 2015-2017, the percentage 
point adjustment to the PTV share is calculated for each year by: 
(1) finding the percentage of PTV shares reflected by the PTV shares 
from Tyler/WRT fig. 6.3 / PTV's shares from Tyler WRT fig. 3.2; (2) 
multiplying that percentage by the percentage point adjustment in 
Bennett WRT fig 52; and (3) subtracting that product from the PTV 
share from the table above.

ID at 143 (note to Adjustment B Table).
    The weighting described above, for 2015-2017, serves to discount 
the Bennett downward adjustment by ratios derived from PTV allocations 
of above-Minimum Fee CSOs divided by the PTV allocations of all CSOs. 
As the Joint Response notes, these ratios and the resulting downward 
adjustments are conservative in that they may tend to understate the 
bias introduced by Dr. Tyler's inclusion of must-carry PTV signals, 
precisely because they do not exclude must-carry signals retransmitted 
by above-Minimum Fee systems. At the same time, the approach remains 
based in record evidence and is a reflection of reasonable and 
conservative judgments derived from the entirety of the record. The 
Judges appropriately employed the thusly discounted Bennett adjustments 
(derived for Minimum Fee-paying systems) when applied to the Tyler 
model allocations for above-Minimum Fee CSOs.
    For the reasons explained herein, and based on the entirety of the 
record, PTV has not shown that an exceptional case exists, or that the 
Initial Determination is erroneous in relation to Adjustment B. 
Further, PTV has not demonstrated that aspects of the determination 
relating to Adjustment B are without evidentiary support in the record 
or are contrary to legal requirements. In that latter regard, PTV has 
not shown that, with respect to the Initial Determination's application 
of Adjustment B, there exists either clear error or manifest injustice 
that would support granting of PTV's request for rehearing.\298\
---------------------------------------------------------------------------

    \298\ PTV's Reply raises concerns regarding indemnification, in 
relation to value of must-carry signals. The Judges point to section 
VII.A.5. of the Initial Determination ``The Judges' Analysis & 
Conclusions regarding the `Must-Carry' Issue'' and the Judges' 
undisturbed and valid analysis and conclusions as to why must-carry 
signals lack objective and measurable value. See Initial 
Determination at 47-49.
---------------------------------------------------------------------------

b. Whether ``Adjustment C'' in the Judges' Initial Determination 
Reflects a Clear Error That Must Be Corrected

    The PTV Motion also seeks rehearing with regard to the Judges' 
application of what the Judges identified as ``Adjustment C'' in the 
Initial Determination. By this Adjustment, the Judges substantially 
increased the value of certain PTV stations, and thus PTV's share of 
royalties. However, PTV maintains now that the Judges should have used 
``Adjustment C'' to increase its share even more. PTV Motion at 1-2.
    By way of background, the Judges found in the Initial Determination 
that ``the dramatic increase in the number of minimum fee-only CSOs 
(i.e., those with no distant retransmittals and those with some distant 
retransmittals but with `excess capacity') renders regression analyses 
that include those CSOs less reliable and thus can be accorded only 
very limited economic evidentiary weight.'' Initial Determination at 
21. In so holding, the Judges rejected PTV's argument (proffered 
through the testimony of its economic expert, Dr. John Johnson) that 
the Judges should find predominant ``economic significance in the 
choices of a CSO `to retransmit a distant signal to particular 
subscriber groups' despite the fact that the CSO pays the minimum fee . 
. . .'' Initial Determination at 13 (emphasis added) (explicitly 
rejecting the argument in PTV PFF ] 58 that ``[t]he decision of a CSO 
paying the minimum fee to retransmit a distant signal to particular 
subscriber groups shows the CSO's preference for distantly 
retransmitted programming without the effect of the statutory royalty, 
which is an economic context that more closely resembles the 
hypothetical marketplace.'' (citing, inter alios, at n.83 therein, Dr. 
Johnson's hearing testimony)).\299\
---------------------------------------------------------------------------

    \299\ The Judges also declined to rely on Dr. Johnson's analysis 
(including his broad Minimum Fee and above-Minimum Fee arguments) 
and PTV's case, because of certain decisions regarding 
methodological approaches and decisions which the Judges found 
troubling, as discussed infra.
---------------------------------------------------------------------------

    In contrast with the Judges' misgivings as to Dr. Johnson's 
regression testimony, they agreed with his argument that, ceteris 
paribus, the record contained sufficient evidence to increase PTV's 
allocation. In this regard, the Judges found that--although certain PTV 
stations were only retransmitted by Minimum Fee-paying CSOs--these CSOs 
had previously retransmitted PTV stations when such retransmissions had 
been combined with retransmissions of WGNA, the most retransmitted 
local station, thereby triggering a CSO royalty obligation above the 
Minimum Fee. As Dr. Johnson testified, there was evidence that CSOs' 
immediately prior retransmissions of PTV stations that triggered an 
incremental royalty cost revealed an incremental value in those 
retransmissions and that it was reasonable to conclude that the PTV 
stations continued to have incremental value when they were uncoupled 
from WGNA (and thus generated only the Minimum Fee). PTV made this 
specific argument in its post-hearing PFF and post-hearing brief. See 
PTV PFF ] 60 (and record citations therein); PTV Post-Hearing Brief at 
27-28. The Judges were persuaded that this WGNA-related evidence 
reflected ``ongoing marketplace value,'' notwithstanding the general 
principle that Minimum Fee royalty payments did not otherwise disclose 
actual economic decision making or reveal the preferences of CSOs. 
Initial Determination at 143-144.
    To calculate PTV's upward adjustment based on this point, the 
Judges identified evidence and testimony proffered by a JSC statistical 
expert, Mr. R. Garrison Harvey. Mr. Harvey testified as follows: 
``[T]he number of PTV Only systems increased after the WGNA conversion 
from 44 at the end of 2014 to 173 by the end of 2017. PTV Only Systems 
that had carried WGNA and PTV in 2014 account for three-fifths of that 
increase.'' Harvey WDT ] 106.
    The Judges found that that Mr. Harvey demonstrated that 44% of the 
PTV stations that were identified as retransmitted by Minimum Fee-
paying CSOs after the WGNA conversion had been transmitted pre-
conversion and generated Base Fee royalties. That is sufficient 
evidence of ongoing marketplace value. Moreover, Mr. Harvey supported 
this testimony with reference to specific data, citing to his 
underlying workpapers, which were not called into question or 
contradicted at the hearing. Harvey WDT ] 106 n.86. Accordingly, the 
Judges used that factual finding to increase by 44% the PTV share 
modification, as set forth in the table for Adjustment C. Initial 
Determination at 144.
    This adjustment substantially increased PTV's allocation of the 
royalties. Compare Adjustment B Table with Adjustment C Table, Initial 
Determination at 143-144. The PTV Motion does not challenge the 
accuracy

[[Page 54277]]

or the credibility of this evidence or Mr. Harvey's testimony in this 
regard.
    But PTV maintains that other testimony indicates that this 
increased adjustment was insufficient. In this regard, PTV avers that 
the Judges erred by limiting their adjustment to evidence concerning 
the specific combination of Public Television signals with WGNA. That 
is, PTV claims that testimony it had proffered showed that PTV's upward 
adjustment should have been 55% rather than 44%. PTV Motion at 5.
    In support of this argument, PTV points to a single one-paragraph 
statement in Dr. Johnson's Written Rebuttal Testimony, wherein he 
claimed, without identifying any underlying workpapers or other 
evidence:

    There were 1,115 CSO-Public Television distant signal 
combinations in the 2015-2017 period where the CSO paid a minimum 
fee during those years. For 609 (or 55 percent) of these 
combinations, the same CSO also carried the same Public Television 
distant signal, at a different point in time, when it paid section 
111 royalties greater than the minimum fee. In those instances, the 
CSOs elected to pay incremental royalties for these signals (because 
they generated more than one DSE). Put differently, the CSOs' 
carriage decisions indicate that these Public Television signals did 
have value.

PTV Motion at 6 (quoting Ex. 7303 ] 79 (Johnson WRT)) (emphasis 
added).\300\
---------------------------------------------------------------------------

    \300\ In their Motion, PTV also cites to Johnson WRT ]] 76-78 as 
attribution for this quote. PTV Motion at 6. However, no portion of 
the quote is contained in those paragraphs, and none of those 
paragraphs support this rehearing argument. Moreover, paragraph 78 
sets forth as an example a PTV station that had been retransmitted 
by an Arizona CSO together with WGNA and continued to be 
retransmitted after WGNA was no longer a broadcast station that 
could be distantly retransmitted. This example supports the Judges' 
increase in PTV's share for the reason set forth in Adjustment C in 
the Initial Determination, and in no way supports PTV's rehearing 
argument for a more lucrative adjustment.
---------------------------------------------------------------------------

    PTV also maintains that Mr. Harvey's testimony, quoted above, 
refers to the number of CSOs (systems) that continued to retransmit PTV 
stations after WGNA was unavailable, rather than the number of PTV 
stations retransmitted after the WGNA conversion. PTV Motion at 5 n.4.
    On these bases, PTV invokes two aspects of the standard for 
rehearing. Specifically, PTV contends that ``the Judges' `Adjustment C' 
reflects a clear error that must be corrected to prevent manifest 
injustice.'' PTV Motion at 5 (emphasis added).
    In their Joint Response, CCG, Program Suppliers, and SDC assert 
that PTV's argument regarding this rehearing issue, like the others, 
fails to satisfy the requisites for granting a rehearing, particularly 
the assertions of ``clear error'' and ``manifest injustice'' levied by 
PTV with regard to ``Adjustment C.'' Joint Response at 1-3. More 
particularly, these parties assert that:

    1. The WGNA conversion was a ``supply-side phenomenon'' 
inapplicable to PTV + non-WGNA commercial station combinations.
    2. Record evidence suggests that CSOs retransmitting PTV 
stations may have been indemnified by the latter for any royalties 
paid above the Minimum Fee.
    3. PTV acknowledges that it presented these very facts and 
arguments at the hearing (citing PTV Motion at 6), and PTV's failure 
to persuade the Judges to apply these facts and adopt this argument 
at the hearing preclude PTV from using the rehearing process to get 
a ``second bite at the apple.'' (citing 2010-2013 Rehearing Order at 
2.).

Joint Response at 4, 7-8.
    In its Reply to the Joint Response, PTV argues:

    1. The Joint Response wrongly concludes, without explanation, 
that the issues relating to, inter alia, Adjustment C, ``could have 
been `address[ed] . . . during the hearing' '', despite the fact 
that ``it was impossible to anticipate that the Judges would apply 
[inter alia] their Adjustment[ ] C to Dr. Tyler's sensitivity 
limited to Above Minimum Fee CSOs.'' Thus, PTV maintains, the 
rehearing process constituted the first occasion for it to litigate 
this issue, and the rehearing motion thus is not an impermissible 
attempt to ``re-litigate'' a matter considered at the hearing. PTV 
Reply at 1-2.
    2. The Joint Response wrongly maintains that the Judges acted 
``well within their discretion by limiting Adjustment C to ``PTV + 
WGNA'' combinations, because the Judges did not account for their 
differentiation of ``PTV + non-WGNA combinations that also generated 
a base fee royalty . . . .'' PTV Reply at 10-11 (quoting 17 U.S.C. 
803(c)(3) (``A determination of the Copyright Royalty Judges shall 
be supported by the written record and shall set forth the findings 
of fact relied on by the Copyright Royalty Judges.''). PTV Reply at 
10.

    In its separate response, JSC argues that PTV's request for 
rehearing regarding ``Adjustment C'' should be denied because:

    1. Any initial royalty obligation for the CSO above the Minimum 
Fee is subject to offset via indemnification; \301\
---------------------------------------------------------------------------

    \301\ This argument echoes the argument made in the Joint 
Response, as noted supra.
---------------------------------------------------------------------------

    2. Adjustment C ``fails to account for the must-carry issue,'' 
an issue which uncouples continuing carriage of PTV signals after 
2014 from any finding of ``CSO's revealed willingness to pay for 
those signals;''
    3. More broadly, Adjustment C wrongly relies on data from 
Minimum Fee-only CSOs; and
    4. Adjustment C treats similarly situated parties differently 
because some Minimum Fee-only CSOs in 2017 also carried commercial 
signals that ``generated base fee royalties'' in 2014.

JSC Response at 4-7.
    In its Reply to the JSC Response, PTV argues:

    1. JSC's criticism of Adjustment C as arbitrary is wrong, 
because this adjustment is ``necessary to mitigate the unreasonably 
low estimates of [PTV's] shares'' as set forth in the Tyler Model's 
analysis of only ``Above Minimum Fee CSOs.'' PTV Reply at 6.
    2. JSC's criticism of Adjustment C for supposedly treating 
different parties differently is an incorrect criticism because the 
Judges explained that the ``Above Minimum Fee-Only'' version of the 
Tyler Model disproportionately ignored circumstantial evidence 
demonstrating post-2014 PTV value through the continuation of PTV 
retransmittals in that period after the retransmittal of a 
combination of ``WGNA + PTV'' signals became moot (with the WGNA 
conversion to a cable system). By contrast, no other program 
category suffered from a similar loss of share value because of the 
WGNA conversion. PTV Reply at 9-10.

    In its separate response to the PTV Motion, CTV maintains that 
there is no basis to find that the Judges' adoption of Adjustment C was 
incorrect or incomplete--let alone ``clearly erroneous'' or that it 
caused PTV ``manifest injustice''. CTV Response at 5-6. In support, CTV 
argues the following points:

    1. PTV wrongly asserts that the Judges committed clear error in 
the way they applied Adjustment C to the share allocations, because 
the Judges articulated in the Initial Determination a proper 
rationale for applying Adjustment C; and
    2. The Judges were within their authority to adopt Mr. Harvey's 
record testimony and evidence, rather than Dr. Johnson's record 
testimony, to calculate Adjustment C, particularly because 
Adjustment C focused on PTV's specific argument ``regarding 
demonstrated willingness to pay'' by CSOs for a PTV signal after the 
WGNA conversion.

CTV Response at 2, 5-6.
    In Reply to the CTV Response, PTV maintains:

    1. Instead of offering a substantive argument, CTV incorrectly 
argues that, as a matter of law, the Judges may adopt whichever 
percentage (Mr. Harvey's or Dr. Johnson's) they deem ``most 
appropriate''; and
    2. The Judges do not have such discretion; rather, their 
findings ``may not be arbitrary[,] must be supported by substantial 
evidence'' and shall be the product of a ``reasoned decision.''

PTV Reply at 10.

[[Page 54278]]

i. The Judges' Analysis and Conclusion Regarding PTV's Adjustment C 
Rehearing Motion Arguments
1. Application of the Rehearing Bases on Which PTV Relies for 
Adjustment C: ``Manifest Injustice'' and ``Clear Error''
a. PTV Has Not Satisfied the ``Manifest Injustice'' Standard
    As an initial matter, the Judges find that--for several reasons--
PTV's basis for a requested rehearing regarding the Adjustment C issue 
fails to satisfy the ``manifest injustice'' standard. First, the Judges 
agree with the Joint Respondents that the concept of ``manifest 
injustice'' is ``exceptionally narrow,'' requiring a showing of not 
only ``clear and certain prejudice'' to the movant, but also a harm to 
the movant that is ``fundamentally unfair.'' Joint Response at 3 
(citing Leidos, Inc. v. Hellenic Republic, 881 F.3d 213, 217 (D.C. Cir. 
2018); Mohammadi v. Islamic Republic of Iran, 947 F.Supp.2d 48, 78 
(D.D.C. 2013). Here, PTV maintains that even though the Judges 
recognized that their primary regression model (the Tyler Model for 
above-Minimum Fee CSOs) failed to adequately reflect a revealed 
preference for PTV signals--and accordingly increased PTV's share 
substantially--other evidence indicated that the PTV share should have 
been increased even more. The Judges detect neither ``fundamental 
unfairness'' nor ``prejudice'' (let alone ``clear and certain 
prejudice'') arising from the fact that PTV's increase was not as great 
under the evidence relied upon by the Judges (44%, pursuant to Mr. 
Harvey's calculations) as it would have been had the Judges instead 
relied on PTV's witness, Dr. Johnson.
    In applying the above D.C. Circuit test for ``manifest injustice,'' 
a district court noted that ``a dollar-and-cents comparison'' serves to 
``undercut[ ] the significance of the ``manifest injustice standard.'' 
Fraenkel v. Islamic Republic of Iran, 326 FRD. 341, 345 (D.D.C. 2018), 
rev'd on other grounds 892 F.3d 348 (D.C. Cir.). (abuse of discretion 
in applying a statute).\302\ The Judges agree, especially where, as 
here, the movant is complaining of ``manifest injustice'' because a 
substantial upward adjustment in its favor should have been even 
greater.\303\
---------------------------------------------------------------------------

    \302\ The D.C. Circuit reversed because the district court 
misconstrued a statute by finding that relatives of a person with 
American citizenship murdered by terrorists should be lower if the 
murder victim had dual Israeli citizenship and was targeted for 
death because of his latter citizenship. Fraenkel, 892 F.3d 348 
(D.C. Cir. 2018). That holding is clearly not analogous to the 
present issue of ``manifest injustice.''
    \303\ PTV's reliance on the Judges' order on rehearing in SDARS 
III is misplaced. There, the Judges found that ``it would be 
manifestly unjust to maintain a royalty rate . . . not based on the 
. . . calculation that prevailed at the time the record was 
closed,'' and the alternative methodology could change the royalty 
obligation by $150 million. SDARS III Order at 7-8. The Judges' 
reference to the potential royalty dollars at issue, standing alone, 
was not the dispositive basis for finding potential manifest 
injustice; rather manifest injustice would be the consequence of the 
use of a calculation methodology not prevailing according to the 
extant record. The reference to the $150 million disparity 
underscored the importance of the manifest injustice of using an 
improper methodology. By contrast, in the present case, the 
differing methodologies for calculating PTV's upward adjustment (Mr. 
Harvey's or Dr. Johnson's) both are in the record, and they are 
discussed infra.
---------------------------------------------------------------------------

    With regard to a specific point made by JSC, the Judges reject 
JSC's argument for eliminating Adjustment C en toto on the basis that 
this adjustment is itself erroneous because it purportedly treats 
similarly situated parties differently. JSC Response at 6-7. Although 
the Judges address this argument, and the opposition thereto, in the 
section of this order denying JSC's Motion seeking to eliminate 
Adjustment C en toto, the Judges here take specific note of an 
important concession by JSC in its Response. Although JSC claims that 
categories of programming other than PTV might have benefitted from the 
same pre- and post-WGNA conversion analysis of CSO retransmissions, JSC 
concedes, in a footnote, that, no witness, including its witness, Mr. 
Harvey, ``analyze[d] whether these CSOs were carrying the same non-WGNA 
signals in 2017 as they were in 2014.'' JSC Response at 7 n.2. So, not 
only did no party other than PTV make the argument that this analysis 
might favor its particular programming, the evidence cited does not 
permit an allocation among other program categories based on this 
argument.
b. PTV Has Not Satisfied the ``Clear Error'' Standard
    Pursuant to the Judges' rules, the statutory ``exceptional case'' 
requirement for rehearing--based on an allegedly ``erroneous'' factual 
aspect of a determination--is satisfied only if that factual finding is 
``without evidentiary support in the record.'' 17 U.S.C. 803(c)(2); 37 
CFR 353.1-.2; see also Order Denying Motion for Rehearing at 1, In re 
Distribution of 2000-03 Cable Royalty Funds, Docket No. 2008-02 CRB CD 
2000-2003 (Phase II), (Aug. 7, 2013). Further, pursuant to D.C. Circuit 
precedent, when the movant's asserted factual predicate for the 
assertion of ``clear error'' relies on the uncredited testimony of its 
expert, a Rule 59(e) motion \304\ must be denied if the expert's 
testimony does not provide sufficient ``factual . . . reasons for [the 
expert's] conclusion.'' Martin v. Omni Hotels Mgmt. Corp., 321 FRD. 35, 
40 (D.D.C. 2017) (citing New York State Ophthalmological Soc. v. Bowen, 
854 F.2d 1379, 1391 (D.C. Cir. 1988)), aff'd, 409 F. A'ppx 362 (D.C. 
Cir. 2011).
---------------------------------------------------------------------------

    \304\ As noted supra, the Judges pattern their rehearing 
analysis pursuant to the standards applicable to motions under Fed. 
R. Civ. P. 59(e).
---------------------------------------------------------------------------

    Moreover, a request for rehearing based on a judge's reliance on a 
``specific factual determination[ ]'' does not satisfy the ``clear 
error'' test if (1) the evidence which the motion challenges is 
``sufficiently reliable to credit'' or (2) if the evidence on which the 
movant relies is inconsistent with ``the entire evidence,'' and thus 
the court is ``left with the definite and firm conviction that a 
mistake has been committed.'' Obaydullah v. Obama, 688 F.3d 784, 792 
(D.C. Cir. 2012) (emphasis added).
    Applying these standards, PTV's motion for rehearing with regard to 
Adjustment C must be denied. First, the Judges' Adjustment C is based 
on evidence in the record, i.e., the testimony of JSC's statistical 
expert witness, Mr. Harvey, and the documentation on which he relied. 
Moreover, this testimony and evidence was not challenged, either at the 
hearing or on rehearing. On this basis alone PTV's motion for rehearing 
fails to demonstrate any error, let alone clear error.
    Second, PTV relies upon the testimony of its own economic expert, 
Dr. Johnson, which PTV maintains is superior to the testimony of Mr. 
Harvey on this issue. However, this argument fails the second ``clear 
error'' standard cited above, because Dr. Johnson's testimony, on which 
PTV relies to seek, via rehearing, a 55% Adjustment C increase in its 
royalty share (instead of the 44% Adjustment C increase provided by the 
Judges) does not provide sufficient factual reasons for his conclusion. 
Specifically, Dr. Johnson's opinion regarding the 55% increase sought 
by PTV is not supported by any record evidence cited by PTV. See PTV 
Rehearing Motion at 6; Johnson WRT ] 79.\305\
---------------------------------------------------------------------------

    \305\ Although PTV also cites to Johnson WRT ]] 76-78, which are 
irrelevant as to the Adjustment C rehearing issue, the Judges note 
that those paragraphs likewise do not cite to or provide any 
documentary support for Dr. Johnson's opinion. (By contrast, Mr. 
Harvey's testimony, on which the Judges relied, was supported by 
documentary evidence, in the form of Mr. Harvey's cited workpapers. 
Harvey WDT ] 106 n.86. Moreover, Mr. Harvey's testimony was not 
subject to challenges that the Judges found sufficient to call into 
question his testimony, unlike the case with Dr. Johnson's 
testimony, as discussed in the text immediately following this 
footnote.)

---------------------------------------------------------------------------

[[Page 54279]]

    Additionally, PTV does not maintain that Mr. Harvey's analysis that 
led to the Judges' 44% upward adjustment in favor of PTV was erroneous; 
rather PTV argues that it is Dr. Johnson's opinion which would favor a 
55% adjustment which ``best comports'' with the Initial Determination. 
PTV Motion at 10. However, the Judges' exercise of their discretion in 
deciding which of two (or more) alternative factual approaches to 
follow cannot constitute ``clear error'' (or any error at all) when the 
party seeking rehearing itself simply maintains merely that its 
preference is better. Moreover, for the reasons articulated below, the 
Judges had good cause to rely on Mr. Harvey's testimony over that of 
Dr. Johnson.
2. PTV's Claims of ``Manifest Injustice'' and ``Clear Error'' Also Fail 
Because PTV Is Seeking To Relitigate an Issue Raised and Determined in 
the Initial Determination
    As the Judges have noted previously, a motion seeking rehearing 
based on, inter alia, assertions of ``manifest injustice'' or ``clear 
error,'' shall be rejected if the movant has ``merely restate[d] . . . 
evidence that was presented during the proceeding.'' Order Denying 
Motions for Rehearing at 2, In re Digital Performance Right in Sound 
Recordings and Ephemeral Recordings, Docket No. 2005-1 CRB DTRA 
(Webcasting II) (Apr. 16, 2007). It is in such context that the movant 
seeks rehearing--over an issue that was raised and determined in the 
Initial Determination. This principle has been aptly described by the 
Judges, and other tribunals, as an improper attempt to seek ``a second 
bite at the apple'':

    [When] the Judges consider whether there exists . . . a need to 
correct a clear error or prevent manifest injustice[ ] . . . the 
Judges must subject the rehearing arguments to a strict standard, in 
order ``to dissuade repetitive arguments on issues that have already 
been fully considered . . . .'' Order Denying Motions for Reh'g, 
Docket No. 2005-1 CRB DTRA, at 1-2 (Apr. 16, 2007). Under this 
strict standard, a rehearing motion does not provide a litigant with 
a ``second bite at the apple,'' allowing it ``to re-litigate old 
matters, or to raise arguments or present evidence that could have 
been raised prior to the entry of judgment.'' Exxon Shipping Co. v. 
Baker, 554 U.S. 471, 485 n.5 (2008) (quoting C. Wright & A. Miller, 
Federal Practice and Procedure Sec.  2810.1 (2d ed. 1995)).

Order Denying Program Suppliers' Motion for Rehearing . . . at 1, 
Distribution of Cable Royalty Funds, Consolidated Proceeding Docket No. 
14-CRB-0010-CD (2010-13) (Dec. 13, 2018).
    Here, PTV is seeking the metaphorical ``second bite at the apple.'' 
In this regard, it has not escaped the Judges' notice that PTV does not 
meaningfully attempt to counter the ``second bite'' problem--but rather 
simply avoids it. Perhaps that is because the Judges explicitly did 
take note in the Initial Determination that Dr. Johnson had made this 
precise claim. See Initial Determination at 13-14 (citing and quoting 
Johnson WRT ] 79). Clearly, PTV's rehearing argument regarding 
Adjustment C is--to say the least--complicated by the fact that the 
Judges were fully aware of Dr. Johnson's relevant testimony--yet did 
not adopt that testimony in the Initial Determination.\306\
---------------------------------------------------------------------------

    \306\ The Judges recalled Dr. Johnson's testimony in this 
regard, even though it was not set forth expressly in PTV's Proposed 
Findings of Fact or Conclusions of Law (or PTV's replies to other 
parties' post-hearing submissions). In fact, in both of its post-
hearing filings regarding proposed factual findings, PTV only 
expressly referenced this issue in connection with CSOs 
retransmitting PTV + WGNA, and failed to argue for the wider 
application it now seeks via rehearing. See PTV PFF ]] 60, 126; PTV 
RPFF 136 & n.188. That failure on PTV's part alone would have 
sufficed for the Judges to have disregarded PTV's argument. See 37 
CFR 351.14 (``A party waives any objection to a provision in the 
determination unless the provision conflicts with a proposed finding 
of fact or conclusion of law filed by the party.''). Although PTV 
claims that ``it was impossible to anticipate that the Judges would 
apply their Adjustment[ ] . . . C to Dr. Tyler's sensitivity limited 
to Above Minimum Fee CSOs,'' PTV Reply at 1, a crucial theme of Dr. 
Johnson's testimony was that the Minimum Fee data should have been 
used en toto to establish value. Thus, it was incumbent upon PTV to 
make this point by including it explicitly in its post-hearing 
submission.
    But nonetheless the Judges, sua sponte, recalled, referenced, 
and quoted testimony as to this issue, rather than deem PTV's upward 
adjustment argument to have been waived. However, the Judges did 
decline to credit Dr. Johnson's testimony (as discussed in the 
following text), adopting instead the substantial 44% upward 
adjustment indicated by the testimony of JSC's statistical expert, 
Mr. Harvey. PTV's argument strikes the Judges as a fine example of 
chutzpah, or as Joint Respondents' put it, ``looking a gift horse in 
the mouth,'' by characterizing only a 44% upward adjustment as 
``manifest injustice'' and ``clear error.'' See Joint Response at 7.
    In this vein, PTV also takes issue (when assuming arguendo the 
correctness of Mr. Harvey's analysis) with the Judges setting of 
PTV's Adjustment C share percentage increase by 44%, rather than 
setting the adjustment at 44.5%. PTV Motion at 5 n.4. The Judges 
disagree with PTV's argument as to this issue. An agency has the 
discretion to truncate a value expressed in decimal form. See North 
Carolina v. E.P.A., 531 F.3d 896, 915-916 (D.C. Cir. 2008 (``[W]e 
cannot say that EPA's decision to truncate rather than round . . . 
was arbitrary. . . . Without a rule mandating any particular method, 
EPA is free to round or truncate the numbers it is comparing . . . 
as long as its choice is reasonable.''). Here, there was no 
regulation guiding the Judges. Moreover, given the uncertainties 
generated by PTV's failures, as discussed elsewhere in this order, 
to proffer sufficiently credible evidence and to meet its 
evidentiary burdens regarding which PTV signals among the CSO 
systems were must-carry, multicast or subject to royalty 
indemnification--truncating the percentage to 44% continues to 
strike the Judges as a reasonable decision, and certainly not one 
that generated ``manifest injustice'' or ``clear error,'' as those 
standards are described in this order. (It should be noted that PTV 
has not argued on rehearing that the Judges should have rounded the 
percentage increase to 45%, rather than truncate the increase to 
44%, nor did PTV argue that the Judges are bound by a mathematical 
convention to do so.)
---------------------------------------------------------------------------

    As made clear in the Initial Determination, the Judges had 
substantial problems with regard to Dr. Johnson's testimony and 
analyses, which should have made obvious their unwillingness to credit 
his testimony on which PTV relies for its objection that the Judges' 
44% Adjustment C in favor of PTV is too low. To make this point 
explicit, the Judges recount their difficulties in connection with Dr. 
Johnson's hearing testimony, as expressed in the Initial Determination.
    First, the Judges were troubled by Dr. Johnson's reliance on the 
modeling of a witness in a prior proceeding because the testimony and 
modeling of that witness had been called into serious question. Initial 
Determination at 36.\307\ Second, and relatedly, the Judges were 
stunned when Dr. Johnson claimed at the hearing that he had ``never 
received'' the satellite case documents calling into question the 
modeling and testimony on which Dr. Johnson had relied, which SDC's 
counsel had produced (as voluntary discovery) to PTV's counsel (and to 
all counsel).\308\ Third, and also relatedly, PTV's counsel never 
volunteered whether it had in fact transmitted that important discovery 
to Dr. Johnson, or whether PTV's counsel had (intentionally or 
otherwise) not transmitted that material. Initial Determination at 36 
n.39. Thus, the Judges were unable to determine whether the failure to 
consider and address this important evidence was the fault of Dr. 
Johnson, PTV's counsel, or

[[Page 54280]]

both. For these three related reasons, the Judges gave ``diminished 
weight'' to Dr. Johnson's testimony. Id. at 38.
---------------------------------------------------------------------------

    \307\ To recount, these materials revealed ``compelling'' 
evidence of ``potential specification searching and [of] 
dissembling'' by the expert econometric witness on whose testimony 
the Judges had relied in the 2010-13 cable allocation proceeding 
(before serious questions were raised in the companion satellite 
proceeding). Initial Determination at 33. That prior testimony and 
modeling served as a starting point for Dr. Johnson's econometric 
work in the present proceeding. Id. at 27. The Judges thus found in 
this proceeding that, inter alios, Dr. Johnson--in order to support 
his testimony--was ``obligated,'' yet failed, ``to adequately 
address the impact of Dr. Crawford's workpapers, as well as the 
assertion that they demonstrated he lied in his testimony in the 
prior proceeding.''); Id. at 36.
    \308\ Id. (``[S]tartlingly, Dr. Johnson testified that he never 
received the satellite case documents that SDC's counsel produced to 
PTV's counsel . . . or the [relevant] testimony . . . [from] the 
satellite proceeding that was designated as evidence [in the present 
proceeding . . . .'']).
---------------------------------------------------------------------------

    Fourth, as explained in the Initial Determination, the Judges were 
also ``troubled'' that PTV appeared to have created two different 
``teams'' within Dr. Johnson's firm, Edgeworth Economics 
(``Edgeworth''), in order to allow Edgeworth to use a so-called 
``consulting team'' which excluded Dr. Johnson, in order for PTV to 
provide him with deniability about specification searching and to 
withhold discovery of such dubious activity.\309\ More particularly, 
the Judges explained that, ``when the `consulting team' is created 
within[ ] the same firm of economists who are also preparing testimony 
and actually testifying, there is the risk that work by the 
`consulting' team will be utilized as a screening device for work that 
should have been undertaken by the `testifying' team . . . [and] the 
use of a `consulting' team can allow a party to also cloak from 
discovery expert work by claiming the protection of the work-product 
rule.'' Id. In this regard, the Judges took particular note that
---------------------------------------------------------------------------

    \309\ A bona fide ```consulting team' of experts can be utilized 
by a party's law firm, to allow for work product confidentiality in 
connection with the law firm's evaluation of the facts.'' Initial 
Determination at 38.

an email that was withheld from Dr. Johnson as ``consulting'' team 
material contained a link to CDC distant signals with the caveat: 
``these data files are being shared for consulting purposes only and 
should not be shared with John''). It is difficult to fathom why raw 
data regarding distant signals would be withheld from the testifying 
---------------------------------------------------------------------------
expert.

Initial Determination at 39 n.43.
    Additional detailed facts only further undermined the credibility 
of PTV and Dr. Johnson:

    Moreover, the soundness of the ``wall'' between the 
``consulting'' team and the ``testifying'' team was questionable, 
given that the ``consulting'' team was led by Drs. Michael Kheyfets 
and David Colino, but they also were the senior members of the 
``testifying'' team that reported to Dr. Johnson, along with dual 
team members Dr. Stephanie Cheng and Esther Yan. . . . . . 
Additionally, when PTV first produced documents to SDC, it did not 
also provide a privilege log describing the Edgeworth documents 
otherwise withheld because of an assertion of a privilege relating 
to a consulting team. (After SDC'[s] motion to compel, PTV provided 
a privilege log, but, after [ordered to produce the documents,] PTV 
produced virtually all of the previously withheld material.)

Initial Determination at 39. The Judges thus determined that not only 
was there evidence that PTV attempted to avoid discovery of its alleged 
specification searching, but that this attempted concealment ``serves 
to diminish the Judges' reliance on the Johnson Model . . . .'' Id.
    Fifth, when evaluating the substance of the work undertaken by Dr. 
Johnson, the Judges were further concerned by the absence of ``any 
sufficient basis in the record to explain [the] correlation between 
sequential regression runs and the growth of PTV's allocation share,'' 
and PTV's failure to present a ``sufficient basis to rebut SDC's charge 
that data changes should not consistently be correlated with the growth 
of PTV's share allocation, as opposed to a randomized effect on share 
percentages.'' Id. Thus, the Judges agreed with SDC's economic expert, 
Dr. Daniel Rubinfeld, finding that Dr. Johnson's work demonstrated ``an 
appearance . . . of practices that ran counter to sound empirical 
research practice . . . .'' Initial Determination at 39-40. For these 
reasons alone, the Judges decided to ``give reduced weight'' to the 
work undertaken by Dr. Johnson on behalf of PTV. Initial Determination 
at 40.
    Sixth, the Judges were frustrated by PTV's failure to produce 
important evidence with regard to another issue. Although PTV claimed 
royalties for multicast programming and must-carry stations, PTV failed 
to produce sufficient proof in that regard.\310\ As the Initial 
Determination explains:
---------------------------------------------------------------------------

    \310\ ``Must Carry'' stations were those PTV stations which CSOs 
were legally obligated to transmit, potentially belying any 
assertion that the value of such stations was demonstrated by their 
carriage. See Initial Determination at 47-49; see also id. at 40, 
42-43.

    [T]here was evidence available to be produced by PTV, namely the 
PBS-NCTA agreement as well as the number of entities it represents 
that would provide significant marketplace evidence . . . . But . . 
. PTV did not produce either this agreement or the number of 
entities bound by it as evidence, although its own expert witness 
testified as to some of the agreement's contents.
    Thus, the Judges were deprived of full knowledge of the terms of 
the agreement, the parties' fulsome testimony as to the meaning of 
its provisions and the number of entities signing on to the 
agreement. Moreover, PTV opposed the admission of that agreement 
into evidence. . . . Accordingly, the Judges . . . find that PTV 
bore, but failed to discharge, the burdens of production and 
persuasion with regard to the details of the agreement and the 
extent of its coverage.

Initial Determination at 53.
    Regarding the ``Must Carry'' issue, PTV's failure to carry its 
burdens of production and persuasion are especially instructive, 
because they are juxtaposed against the testimony of Mr. Harvey, as in 
the rehearing issue pertaining to Adjustment C. Mr. Harvey identified 
15.5% of PTV distant signals as having been retransmitted in compliance 
with these must-carry rules. Initial Determination at 40. But, as the 
Judges noted, ``PTV takes issue with the entirety of Mr. Harvey's 
approach to designating `must-carry' stations.'' Id. The Judges 
rejected PTV's argument, chastising PTV for failing to satisfy its 
burden of proof to provide affirmative evidence and for instead 
attempting to cast doubt on Mr. Harvey's otherwise credible testimony 
and analysis. As the Initial Determination states:

    The Judges agree with JSC and CTV, based on the case law cited 
by JSC, that PTV, whose clients include the public television 
stations that are in fact subject to must-carry requirements, bore 
the twin burdens of proof--the burden of producing evidence and the 
burden of persuasion--regarding which stations were subject to the 
must-carry provisions and which were not. Further, because PTV is 
seeking a determination including must-carry station data in the 
regression, those burdens are apportioned to PTV as a matter of 
statute. See 5 U.S.C. 556(d).
    But rather than produce such evidence or prove its significance, 
PTV elected to attack Mr. Harvey's attempt to estimate the number of 
must-carry stations. Those attacks are insufficient. . . . Mr. 
Harvey engaged in a reasonable attempt to estimate this number, 
which PTV could have set forth in its submissions, but did not.

Initial Determination at 47 (emphases in original).\311\
---------------------------------------------------------------------------

    \311\ PTV also questions the use of Mr. Harvey's analysis 
because it identifies the number of ``systems'' (i.e., CSOs) that 
continued to retransmit a PTV signal after the WGNA conversion, 
rather than the total number of PTV stations retransmitted by these 
CSOs. PTV Motion at 5 n.4. The Judges do not agree with this 
criticism. Recall the problems (discussed supra) related to PTV's 
failure to meet its evidentiary burdens related to ``must carry'' 
and multicast signals, as well as to indemnified transmissions. The 
Judges find it prudent to rely on Mr. Harvey's ``system'' 
calculation, which is equivalent to establishing one PTV signal per 
CSO as retaining in the 2015-2017 post-WGNA era its pre-2014 value, 
as evidenced by its above-Minimum Fee carriage in that year. 
Utilizing PTV's per station approach would require the Judges to 
assume that the retransmission of all PTV stations in 2015-2017 were 
generating royalties, regardless of whether they were ``must carry'' 
or multicast signals, or whether they were subject to 
indemnification of any royalties due. As noted supra, the Judges 
declined to adopt PTV's arguments regarding the number or percent of 
``must carry'' stations (for which no net royalty obligation 
exists), because of PTV's failure to meet its evidentiary burdens in 
those regards (a point unaddressed in the PTV Motion). As the D.C. 
Circuit has noted, the daunting factual nature of the statutory task 
of allocating royalties necessitates a measure of ``rough justice,'' 
which the Judges find to be well-administered as to this issue by 
making allocation decisions dependent in part on whether a party had 
met its evidentiary burden. See Initial Determination at 9 (and 
citations therein).
---------------------------------------------------------------------------

    Seventh, and finally, as noted at the outset of this discussion of 
PTV's rehearing request vis-[agrave]-vis Adjustment C, Dr. Johnson's 
rebuttal testimony on

[[Page 54281]]

which PTV relies does not include a reference to documentation on which 
he relied to support that testimony. The Judges are hesitant (to say 
the least) to grant rehearing based upon an expert's testimony when the 
party relying on that testimony fails to cite to any underlying 
documentation of factual analysis or support for that opinion. 
Moreover, when the Judges consider the absence of such documentation in 
the cumulative context of the assorted problems with PTV's failures to 
meet its evidentiary burdens and Dr. Johnson's lack of knowledge of 
critical facts and evidence (as cataloged supra), their reluctance to 
grant the ``exceptional'' section 803 relief of rehearing is 
reinforced.
    The foregoing analysis makes it clear that the Judges had--and 
continue to have--serious questions regarding the credibility, 
reliability, and sufficiency of the evidence and testimony put forth by 
PTV and Dr. Johnson. Each of the Judges' findings and conclusions in 
these multiple areas is sufficient grounds for the Judges' election to 
rely on the testimony and evidence provided by JSC's expert 
statistician, Mr. Harvey, rather than PTV's Dr. Johnson, regarding the 
basis for, and size of, Adjustment C. Moreover, when the foregoing 
seven points calling into question the testimony of Dr. Johnson and 
PTV's position are considered as a whole, the Judges' decision to rely 
on Mr. Harvey's testimony instead of that of Dr. Johnson, most 
certainly did not constitute an error, let alone clear error that could 
serve as a basis for rehearing.
    For these reasons, the Judges agree with the Joint Respondents that 
the Judges acted within their discretion in making Adjustment C as set 
forth in the Initial Determination.\312\ \313\
---------------------------------------------------------------------------

    \312\ PTV appears to implicitly argue that the ``second bite at 
the apple'' argument is not applicable because it did not know that 
the Judges would apply Dr. Johnson's opinion in favor of applying 
the Minimum Fee royalty data as an adjustment (Adjustment C). PTV 
Motion at 1 (arguing it was ``impossible to anticipate that the 
Judges would apply their Adjustment[ ] C to Dr. Tyler's sensitivity 
limited to Above Minimum Fee CSOs.''). This argument is meritless. 
PTV argued emphatically for the Judges to utilize Minimum Fee 
royalty data to establish program values and allocation shares in 
this proceeding. The Judges did use Minimum Fee evidence in making 
Adjustment C in PTV's favor--just not the Minimum Fee evidence that 
PTV prefers, nor as extensively as PTV had sought. As noted supra, 
the D.C. Circuit has held, the Judges are ``not . . . strictly 
limited to choosing from among the proposals set forth by the 
parties'' and, like all agencies, ``have the authority to modify 
proposals set forth by the parties, or to suggest models of their 
own.'' Johnson v. Copyright Royalty Bd., 969 F.3d 363, 381-82 (D.C. 
Cir. 2020). See also SoundExchange, Inc. v. Copyright Royalty Bd., 
904 F.3d 41, 50-51, 57 (D.C. Cir. 2018) (upholding the Judges' 
decision to modify a party's proposed rates in light of the Judges' 
application of the relevant statute); Ass'n of American Publishers, 
Inc. v. Governors of USPS, 485 F.2d 768, 773 (D.C. Cir. 1973) (when 
a rate-setting agency partially disregards two experts in connection 
with ``suggested adjustments . . . [the] rate-making body may 
fashion its own adjustments within reasonable limits.'').
    \313\ The Joint Respondents' argument that the PTV Motion as it 
relates to Adjustment C should be denied because the analysis of 
WGNA + PTV transmissions is a ``supply-side'' scenario and thus 
differentiated from PTV pairing with other signals is moot in light 
of this order.
---------------------------------------------------------------------------

IV. Correction of Typographical and Arithmetic Errors

    The PTV Motion noted errors in the Adjustment B Table for 2014, 
observing that ``typographical errors result in total 2014 shares that 
do not equal 100%.'' PTV Motion at 4 n.2. PTV argued that, in order to 
correct the 2014 shares, ``Program Suppliers' share should be changed 
from 28.8% to 26.8%, JSC's share should be changed from 37.5% to 
37.48%, and CTV's share should be changed from 11.39% to 11.38%.'' 
Id.\314\
---------------------------------------------------------------------------

    \314\ When computing the allocation shares in the adjustment 
tables, the Judges necessarily rounded figures. When such rounding 
was applied it was done consistently across parties and years. Due 
to rounding, the sum of allocation shares may not equal exactly 100% 
for a given year.
---------------------------------------------------------------------------

    The Judges have reviewed the Adjustment B calculations questioned 
by PTV and agree that they are erroneous as a consequence of a 
typographical error. PTV's proposed correct shares adjust for this 
error. The Judges grant the motion for rehearing regarding the 
identified typographical errors, finding that there is a need to 
correct a clear error or prevent manifest injustice. Having found the 
Motions for rehearing and related filings a sufficient rehearing record 
from the participants, the Judges correct the typographical errors for 
2014.
    Further, the Judges correct mathematical errors, not only in 2014 
but in all years, that affected the shares reported in the Adjustment B 
Table. PTV, JSC, and CTV note that PTV's share of 19.09% reported in 
the Adjustment B table for 2017 is in error.\315\ PTV Motion at 4 n.3; 
JSC Motion at 9 n.4; CTV Response to PTV Motion at 6. The Judges grant 
the motion for rehearing regarding these arithmetic errors, finding 
that there is a need to correct a clear error or prevent manifest 
injustice. Having found the Motions for rehearing and related filings a 
sufficient rehearing record from the participants, the Judges correct 
the arithmetic errors.\316\
---------------------------------------------------------------------------

    \315\ PTV and CTV describe the error as an arithmetic error.
    \316\ The first arithmetic error corrected was in the 
calculation of the proportional increase to other claimants' shares 
relating to the reduction in the PTV share due to the presence of 
``must-carry'' stations. The second arithmetic error corrected was 
in the calculation of the PTV share for 2017 to account for this 
``must-carry'' issue.
---------------------------------------------------------------------------

    All of these corrections are applied in Adjustment B Table below: 
\317\
---------------------------------------------------------------------------

    \317\ To the extent that corrections set forth in this Order 
might be construed to reach beyond those identified in the Motions 
for rehearing or the rehearing authority in 17 U.S.C. 803(c)(2), the 
Judges also make such corrections under their authority to correct 
technical or clerical errors in 17 U.S.C. 803(c)(4). For this 
reason, the Judges set forth the analysis herein also as a written 
addendum to the Initial Determination, which is distributed to the 
participants of the proceeding via this Order and will be published 
as part of the Final Determination, pursuant to 17 U.S.C. 803(c)(4).

                                                                   Adjustment B Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Program
                          Year                             suppliers (%)      JSC (%)         CTV (%)         PTV (%)         SDC (%)         CCG (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014....................................................           26.80           37.48           11.38           13.36            4.33            6.55
2015....................................................           47.67            2.44           13.14           11.78           11.28           13.70
2016....................................................           40.75            1.69           17.32           15.32           10.81           14.12
2017....................................................           44.07            0.67           13.23           15.96           10.41           15.66
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Must Carry adjustment in Bennett WRT fig. 52 was based on the PTV shares of all CSO royalties, whereas the Judges are applying this adjustment to
  the shares of CSO royalties attributable to shares generated by CSOs paying above the Minimum Fee (subject to the prior adjustment for CCG, discussed
  supra). So, for 2014, the percentage point adjustment to the PTV share is the percentage point adjustment in Bennett WRT Fig 52. For 2015-2017, the
  percentage point adjustment to the PTV share is calculated for each year by: (1) finding the percentage of PTV shares reflected by the PTV shares from
  Tyler/WRT fig. 6.3 / PTV's shares from Tyler WRT fig. 3.2; (2) multiplying that percentage by the percentage point adjustment in Bennett WRT fig 52;
  and (3) subtracting that product from the PTV share from the table above.

[[Page 54282]]

 
The shares of the other claimants are adjusted upward by: (1) calculating the percentage each category represents of all the categories' shares except
  PTV; (2) multiplying each percentage by the Bennett Must Carry adjustment (reduced as set forth above); and (3) adding that product to the shares of
  each claimant category.

    The Judges recalculate the Adjustment C Table to reflect the 
corrections to the Adjustment B Table:

                                                                   Adjustment C Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Program
                          Year                             suppliers (%)      JSC (%)         CTV (%)         PTV (%)         SDC (%)         CCG (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015....................................................           44.87            2.30           12.37           16.96           10.62           12.90
2016....................................................           37.51            1.56           15.94           22.06            9.95           13.00
2017....................................................           40.39            0.61           12.12           22.98            9.54           14.35
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Judges recalculated the shares of the other five claimant categories by: (1) calculating the percentage each category represents of all the
  categories' shares except PTV; (2) multiplying each percentage by the increase in the PTV share generated by adjusting to reflect WTP of CSOs that
  maintained PTV carriage after WGNA conversion; and (3) subtracting that product from the shares of each claimant category.

    As discussed in the Initial Determination, the Judges allocated 
shares of the Basic Fund to each party based on their review and 
weighting of the record evidence. ID at 197-198. The corrected Basic 
Fund and 3.75% Fund allocations incorporate the corrections discussed 
above.
    For each year, the aggregate sum of the share allocations did not 
sum to 100% for the Basic Fund. In 2014, the allocations summed to 
marginally greater than 100 percent and, in 2015-2017, marginally less 
than 100 percent. The Judges therefore adjusted the allocated shares 
proportionally to achieve an aggregate allocation of 100%; in 2014 
shares this process required a modest downward adjustment and, in 2015-
2017, this process required a modest upward adjustment in shares. The 
resulting corrected Basic Fund and 3.75% Fund \318\ allocations are as 
follows:
---------------------------------------------------------------------------

    \318\ For years 2015 and 2017, the calculated allocation shares 
did not equal 100%. In the case of 2015, the total calculated shares 
were just below 100%. To achieve the full 100%, the Judges reviewed 
the results and provided an increase to the claimant whose share was 
the closest to being rounded up at the second decimal place. In 
2017, the total calculated shares were just above 100% and the 
Judges did not round up the claimant whose share was the closest to 
not being rounded up at the second decimal place to achieve a 100% 
allocation.

                                         Basic Fund Royalty Allocations
----------------------------------------------------------------------------------------------------------------
                                                     2014 (%)        2015 (%)        2016 (%)        2017 (%)
----------------------------------------------------------------------------------------------------------------
CCG.............................................            6.19           14.59           14.60           15.77
CTV.............................................           20.55           19.78           17.36           17.50
JSC.............................................           36.13           11.42           10.72           12.36
Program Suppliers...............................           21.21           28.29           25.53           23.29
PTV.............................................           11.07           19.18           24.78           25.25
SDC.............................................            4.85            6.74            7.01            5.83
----------------------------------------------------------------------------------------------------------------


                                         3.75% Fund Royalty Allocations
----------------------------------------------------------------------------------------------------------------
                                                     2014 (%)        2015 (%)        2016 (%)        2017 (%)
----------------------------------------------------------------------------------------------------------------
CCG.............................................            6.96           18.05           19.41           21.10
CTV.............................................           23.11           24.48           23.08           23.41
JSC.............................................           40.63           14.13           14.25           16.53
Program Suppliers...............................           23.85           35.00           33.94           31.16
SDC.............................................            5.45            8.34            9.32            7.80
----------------------------------------------------------------------------------------------------------------

V. Ruling and Order

    For the foregoing reasons, PTV's motion for rehearing is granted in 
part and denied in part and JSC's motion for rehearing is denied.
    The affected parties shall file a joint proposed redacted public 
version of this Order for public viewing within ten days.
    So ordered.

    Dated: March 21, 2024.
David P. Shaw,
Chief Copyright Royalty Judge.
[FR Doc. 2024-13597 Filed 6-27-24; 8:45 am]
BILLING CODE 1410-72-P