STATUTORY 

COPYRIGHT 

LICENSES

Stakeholders’ Views 

on a Phaseout of 

Licenses for 

Broadcast 

Programming

Report to Congressional Committees

May 2016

GAO-16-496

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-496, a report to 

congressional committees

May 2016

STATUTORY COPYRIGHT LICENSES

Stakeholders’ Views on a Phaseout of Licenses for 

Broadcast Programming

Why GAO Did This Study

Most U.S. households rely on cable or 

satellite operators to watch television 

broadcast programming. These 

operators are able to provide their 

subscribers with broadcast 

programming—including local news—

by retransmitting local broadcast

television stations’ over-the-air signals. 

Three statutory licenses permit 

operators to offer copyrighted 

broadcast programming in return for 

paying a government-set royalty fee. 

For 2014, these fees totaled about 

$320 million. Congress created

statutory licenses as a cost-effective 

way for operators to air broadcast 

programming without obtaining 

permission to do so from those that 

own the copyrights for this

programming. However, changes in 

the video marketplace have led some

industry stakeholders to question the

need for the licenses.

The Satellite Television Extension and 

Localism Reauthorization Act of 2014 

included a provision for GAO to review

possible effects of phasing out the 

statutory licenses. This report 

addresses (1) what is known about the 

feasibility of phasing out the statutory 

licenses and (2) views of selected 

stakeholders on the implications of 

such a phaseout. GAO analyzed 

FCC’s cable price data from 2010 to 

2014 and the U.S. Copyright Office’s

royalty data from 2014, the most 

recently available; reviewed relevant 

laws and reports; and interviewed 42

industry stakeholders, selected for their 

role in the video marketplace and 

expertise on the issue.

What GAO Found

A phaseout of the statutory licenses for broadcast programming may be feasible 

for most participants in the video marketplace, although there may be statutory

implications for the “carriage requirements” governing which local broadcast 

television stations are carried by cable and satellite operators. These licenses

allow cable and satellite operators to carry copyrighted content, such as 

television shows and movies, embedded in local broadcast stations’ signals to 

their subscribers’ television sets without negotiating with individual copyright 

owners. At the same time, these cable and satellite operators also engage in 

market-based negotiations to make some or all of this content available in other 

contexts, such as online. Of the 42 selected stakeholders GAO interviewed, 21

either use the statutory licenses or have their content provided through the 

statutory licenses. 20 of these 21 stakeholders—including content producers,

broadcast networks, and cable and satellite operators—also engage in marketbased negotiations to license broadcast content for video-on-demand or online 

viewing. Therefore, for stakeholders representing these business interests, a 

market-based approach to licensing secondary transmission rights may be 

feasible. However, some participants in the video marketplace—most notably, 

public television and small cable operators—may face logistical challenges and 

financial constraints in the event of a phaseout of the statutory licenses.

Phasing out the statutory licenses could have implications for the “must-carry”

and “carry-one, carry-all requirements,” which require cable and satellite 

operators, respectively, to carry the signals of local broadcast television stations 

upon request. As GAO has previously reported, the must-carry requirement could 

become impractical if Congress phased out the statutory license that applies to 

cable operators, as these operators could find themselves in the paradoxical 

position of being required to transmit the copyrighted content on a local 

broadcast television station’s signal for which they may not have the legal right to 

air. In addition, according to Federal Communications Commission (FCC) and 

the U.S. Copyright Office, the carry-one, carry-all requirement would no longer 

apply to satellite operators if the applicable statutory license were phased out 

because the requirement is premised on the use of the license.

The 42 selected stakeholders GAO interviewed varied in their support for a 

phaseout of the statutory licenses and many stakeholders were uncertain about 

the potential effects on the marketplace and consumers. For example:

• 15 supported a full or partial phaseout; 13 did not have a position; and 14 did 

not support a phaseout, because most believe the current system works, 

• About half were uncertain how a phaseout would affect the video 

marketplace. This uncertainty stems from uncertainty over how the carriage

requirements may change and the video marketplace would respond; 10

thought a phaseout would affect competition in the market, but differed on 

whether this would increase or decrease programming costs.

• 6 thought consumers’ access to programming would be negatively affected,

7 thought diversity of programs offered would decrease, and 13 thought

consumer prices would rise.

View GAO-16-496. For more information, 

contact Mark Goldstein at (202) 512-2834 or 

goldsteinm@gao.gov.
Page i GAO-16-496 Statutory Copyright Licenses

Letter 1

Background 5

As the Video Marketplace Changes, a Phaseout of the Licenses 

May Be Feasible for Most Market Participants, but Could Have 

Implications for Carriage Requirements 17

Stakeholders Vary in Their Support for a Potential Phaseout and 

Are Uncertain about its Potential Effects on the Video 

Marketplace and Consumers 28

Agency Comments 38

Appendix I Objectives, Scope, and Methodology 41

Appendix II GAO Contact and Staff Acknowledgments 46

Tables

Table 1: Partial Distribution of 2013 Cable and Satellite Royalty 

Funds by Claimant Group (Distributed on June 18, 2015) 8

Table 2: Industry Participants We Interviewed and Their Roles in 

the Video Marketplace 42

Figures

Figure 1: Overview of the Statutory Licenses for the 

Retransmission of Broadcast Programming by Cable and 

Satellite Operators 6

Figure 2: Distribution of Video Content by Commercial Entities to 

Viewers 12

Figure 3: Types of Rights Licensed for Video Content Distributed 

by Commercial Providers 22

Figure 4: Blackouts of Local Broadcast Television Stations’ 

Signals in the United States (2011 to 2015) 35

Contents
Page ii GAO-16-496 Statutory Copyright Licenses

Abbreviations

FCC Federal Communications Commission

OVD online video distributor

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-16-496 Statutory Copyright Licenses

441 G St. N.W.

Washington, DC 20548

May 4, 2016

Congressional Committees:

Local broadcast television stations1 provide their programming free overthe-air to the public. However, almost 84 percent2 of U.S. households’

receive local broadcast television stations through a paid subscription to a 

cable or satellite operator, such as Comcast, Verizon Fios, or DISH 

Network.3 When a local broadcast television station airs its programming 

over-the-air, this is referred to as the primary transmission of its 

programming. When a cable or satellite operator provides its subscribers 

with access to a local broadcast television station’s programming through 

its infrastructure, it is providing a secondary transmission of the station’s 

signal. Because programming contained on a local broadcast television 

station’s signal is typically protected by copyright,4 a license is required to 

secure the public performance rights for the secondary transmission of 

these works.5 Under existing law, three statutory licenses enable cable 

and satellite operators to retransmit copyrighted material without seeking 

 1 In this report, we use the term “local broadcast television stations” to refer to local 

television stations that are provided free over-the-air to the public, such as WJZ—a 

television station available to viewers in Baltimore, Maryland. Local broadcast television 

stations include commercial local broadcast television stations, which may be affiliated 

with a national broadcast network like ABC, and noncommercial educational broadcast 

television stations, such as those affiliated with the Public Broadcasting System. When 

referring to “local broadcast television stations,” we include both commercial and 

noncommercial educational stations. When referring to “commercial local broadcast 

television stations” or “noncommercial educational broadcast television stations” we are 

discussing a point that is relevant only to that particular group of stations.

2 In 2014, according to Bloomberg data, 83.9 percent of U.S. television households 

subscribed to a video service offered by cable, satellite, or telecommunication operators.

3 Consistent with the requirements in the Satellite Television Extension and Localism Act 

(STELAR) Reauthorization Act of 2014. – Pub. L. No. 113-200, 128 Stat. 2059, we 

include, in referring to cable and satellite operators, telecommunications companies such 

as AT&T and Verizon that distribute video services to subscribers for a fee and would be 

classified as multichannel video programming distributors as defined in 47 C.F.R. § 

76.64(d). See also Communications Act (of 1934, as amended, ch. 652, 48 Stat. 1064, § 

602 (codified at 47 U.S.C. § 522).

4 17 U.S.C. §102.

5 17 U.S.C. §106(4).

Letter
Page 2 GAO-16-496 Statutory Copyright Licenses

permission from copyright owners (such as Sony Pictures Entertainment 

or the National Football League) of this programming, allowing these 

operators to offer secondary transmissions of radio and television 

broadcast programming.6 To take advantage of the statutory licenses, 

cable and satellite operators must comply with the terms of the statutory 

licenses, including depositing with the U.S. Copyright Office a 

government-set royalty, which is later distributed to copyright owners.7

Using these licenses, cable and satellite operators transmit a variety of 

copyright-protected works, including network and syndicated 

programming,8 movies, sports programming, local news broadcasts, 

public television, religious material, and music of all types. For 2014, the 

U.S. Copyright Office collected about $320 million in copyright royalty 

fees from cable and satellite operators under the statutory licenses.9

The cable industry was still developing when, in 1976, Congress 

amended U.S. copyright law, and with the enactment of the Section 111 

statutory license, granted cable operators the ability to retransmit 

broadcast programs to their subscribers without obtaining the permission 

of the copyright owners of the programs being retransmitted.10 At the 

time, the statutory license was seen as a cost-effective way to reduce the 

transaction costs of licensing all the rights necessary to retransmit 

broadcast programs. Likewise, as the satellite television industry 

expanded, Congress established additional statutory licenses (Section 

119 in 1988 and Section 122 in 1999) to provide a cost-effective 

mechanism for satellite operators to retransmit out-of-local market 

(“distant-into-local”) and local market (“local-into-local”) broadcast station 

signals without obtaining the permission of the embedded programming’s 

 6 17 U.S.C. §§111, 119, and 122. These three statutory licenses are discussed in greater 

detail later in the report.

7 17 U.S.C. §§111(d), 119, and 122.

8 Syndicated programming is non-network programming or post-network programming (a 

rerun) that is licensed directly to individual broadcast stations in more than one market.

9 This figure covers the two accounting periods in 2014 for which the U.S. Copyright Office 

collects royalty fees from cable and satellite operators—January 1 to June 30 and July 1 

to December 31.

10 Pub. L. No.94-553, 90 Stat. 2550(1976).
Page 3 GAO-16-496 Statutory Copyright Licenses

copyright owners.11 However, changes in the video marketplace have led 

some industry stakeholders to question the premise that high transaction 

costs make a market-based approach to licensing these rights 

infeasible.12 Congress, in the Satellite Television Extension and Localism 

Reauthorization Act of 2014, included a provision for us to study and 

evaluate possible effects of phasing out statutory licensing of secondary 

transmission of television broadcast programming.13 This report 

addresses the following questions:

1. What is known about the potential feasibility of a phaseout of the 

statutory licenses?

2. What are selected stakeholders’ views on the implications of a 

phaseout of the statutory licenses?

To address these questions, we reviewed relevant statutes and 

regulations; reports on related subjects by the U.S. Copyright Office, 

Congressional Research Service, and GAO;14 and related documentation 

on how the statutory licenses work. We analyzed Federal 

Communications Commission’s (FCC) 2010 to 2014 cable price survey 

data, U.S. Copyright Office Statement of Account data on satellite 

subscribers’ use of distant signals for calendar year 2014, and computerprocessed data from Bloomberg Analytics on nationwide use of cable and 

satellite video services and trends in cable and satellite subscription rates 

between 2010 and 2014, the most recent available data. Our data 

analysis provided context on how the video marketplace operates, such 

as the number of local broadcast stations carried by cable operators, and 

 11 Local signals are the signals that local broadcast stations provide over-the-air to 

households within the local market of the subscriber (“local-into-local service”). The local 

market is defined by using the Nielsen Media Research designated market areas. Distant 

signals are broadcast signals imported by a cable or satellite operator from outside a 

subscriber’s local market area.

12 A market-based approach to licensing copyrights would consist of private negotiations 

between copyright owners and those that want to use their copyrighted content.

13 Pub. L. No. 113-200, § 107, 128 Stat. 2059.

14 These reports include: GAO, Statutory Copyright Licensing: Implications of a Phaseout 

on Access to Television Programming and Consumer Prices Are Unclear, GAO-12-75 

(Washington, D.C.: Nov. 23, 2011); GAO, Video Marketplace: Competition Is Evolving, 

and Government Reporting Should Be Reevaluated, GAO-13-576 (Washington, D.C.: 

June 25, 2013); and GAO, Broadcast Exclusivity Rules: Effects of Elimination Would 

Depend on Other Federal Actions and Industry Response, GAO-15-441 (Washington, 

D.C.: Apr. 11, 2015).
Page 4 GAO-16-496 Statutory Copyright Licenses

the potential impacts on consumers in the event of a phaseout. We 

assessed the reliability of the data used in this report by reviewing 

existing information about the data and the systems that produced them. 

For FCC and U.S. Copyright Office data, we also interviewed officials 

from FCC and the U.S. Copyright Office about measures taken to ensure 

the reliability of the data. We determined the data were sufficiently reliable 

for our purposes. We reviewed FCC, U.S. Copyright Office, 

Congressional Research Service, GAO, and industry reports on changes 

in the video marketplace to understand the factors influencing changes in 

the consumption and distribution of video content. Finally, we interviewed 

42 selected stakeholders—including experts, industry associations, and 

industry participants (broadcast networks and station owners, cable and 

satellite operators, online video distributors, and content 

producers/copyright owners)—to understand how the video marketplace 

has changed in the last 5 years, the potential feasibility of a phaseout of 

the statutory licenses, and potential implications of a phaseout for the 

requirements governing the carriage of local broadcast television stations 

(“carriage requirements”) and consumer access to programming and 

prices paid for cable and satellite services. We selected these 

stakeholders to include those with expertise on this topic as well as those 

representing a range of key roles in the video marketplace. We selected 

these individuals and organizations based on published literature, 

including U.S. Copyright Office filings and reports, our previous work, and 

stakeholders’ recognition and affiliation with a segment of the video 

marketplace, and recommendations from other stakeholders we 

interviewed. See appendix I for more details on our scope and 

methodology, including a list of industry stakeholders interviewed.

We conducted this performance audit from June 2015 to May 2016 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Page 5 GAO-16-496 Statutory Copyright Licenses

A statutory license, also called a compulsory license, permits the use of 

copyright-protected material15 without the express permission of the 

copyright owner under specific circumstances and provided the licensee 

meets certain requirements.16 Three statutory licenses pertaining to the 

retransmission of broadcast programming are codified in U.S. copyright 

law. These statutory licenses refer to cable operators, in the Section 111 

license, and satellite carriers, in the Sections 119 and 122 licenses. 

These licenses, as described in figure 1 below, allow cable or satellite 

operators to retransmit broadcast programming without obtaining 

permission from the copyright owners of that material.

 15 A copyright is the set of exclusive legal rights granted by law to the creator of an original 

work to protect the use of their work. This protection covers many artistic works, including 

books, movies, photographs, and music (See 17 U.S.C. §102). The Copyright Act confers 

a bundle of exclusive rights to the owner of a copyright (See 17 U.S.C. §106). Public 

performance rights usually allow a copyright owner to control when and how a copyrighted 

work is performed publicly, such as performance through transmission over television and 

radio. These rights may be further subdivided, transferred, and owned separately pursuant 

to 17 U.S.C. § 201(d)(2).

16 17 U.S.C. §§ 111, 119 and 122.

Background

Statutory Licenses
Page 6 GAO-16-496 Statutory Copyright Licenses

Figure 1: Overview of the Statutory Licenses for the Retransmission of Broadcast 

Programming by Cable and Satellite Operators

Note: Local signals are the signals that local broadcast stations provide over-the-air to households 

within the local market of the subscriber (“local-into-local service”). The local market is defined by 

using the Nielsen Media Research designated market areas. Distant signals are broadcast signals 

imported by a cable or satellite operator from outside a subscriber’s local area. Section 111(f)(6) 

defines “network station” as a “primary stream of a television broadcast station that is owned or 

operated by, or affiliated with, one or more of the television networks in the United States providing 

nationwide transmissions, and that transmits a substantial part of the programming supplied by such 

networks for a substantial part of the primary stream’s typical broadcast day.” Under this definition, 

programming provided by ABC, CBS, and NBC has been considered network programming.

a Certain exceptions would require royalty fee payments under Section 122(a)(4)-(5). 

Certain telecommunication companies, such as Verizon and AT&T—

which in the past provided telephone service but now offer video services 

as well—were determined by the U.S. Copyright Office to function as 
Page 7 GAO-16-496 Statutory Copyright Licenses

cable operators and allowed to use the statutory licenses.17 Given this 

report’s focus on the statutory licenses, we use the term “cable and 

satellite operators” to refer to all those entities that use the statutory 

licenses. This term includes telecommunications companies, such as 

Verizon and AT&T.

According to the U.S. Copyright Office, the statutory licenses supported 

the growth of the cable and satellite industries and facilitated the delivery 

of local broadcast television stations’ programming on these platforms.18

The section 111 license was enacted, in part, to reduce the transaction 

costs that a then nascent cable industry would have faced if cable 

operators were required to negotiate with every copyright owner whose 

work was embedded in a local broadcast television station’s signal. The 

section 119 and 122 licenses were extended to satellite operators to 

reduce transaction costs and provide the same general efficiencies 

offered to cable operators under the Section 111 license. Transaction 

costs are a concern because each television program may contain 

material from multiple copyright owners.19 Since a typical day of 

programming on a local broadcast television station would likely include 

20 or more programs, hundreds of copyright owners may have royalty 

claims on a single day’s worth of programming. 

Under the statutory licenses, the U.S. Copyright Office collects copyright 

royalty fees and invests them in government securities until fees are 

allocated and distributed to copyright owners. Under the Copyright Act, 

the Copyright Royalty Judges are responsible for determining the 

distribution of royalties and adjudicating royalty claim disputes.20 In June 

2015, the Copyright Royalty Judges granted a partial distribution of the 

 17 In contrast to the Copyright Act’s definition of “cable system” in §111(f)(3) and “satellite 

carrier” in §§119(d)(6) and 122(j)(4),the requirements, which must be met to use the 

statutory licenses, instead use the term “Multichannel Video Programming Distributors,”

which as defined in 47 U.S.C. § 522(13) includes “cable operator[s],” “direct broadcast 

satellite service[s],” and “television receive-only satellite program distributor[s]” which 

includes cable and satellite operators.

18 U.S. Copyright Office, Satellite Television Extension and Localism Act § 302 Report: A 

Report of the Register of Copyrights (Section 302 Report) (Washington, D.C., Aug. 29, 

2011).

19 In this context, transaction costs include the cost of identifying and negotiating 

agreements with copyright owners.

20 17 U.S.C. §111(d)(4).
Page 8 GAO-16-496 Statutory Copyright Licenses

2013 cable and satellite royalty funds to the claimant groups listed in table 

1.21

Table 1: Partial Distribution of 2013 Cable and Satellite Royalty Funds by Claimant Group (Distributed on June 18, 2015)

Claimant group Distribution amount 

Joint Sports Claimants (professional and college sports programming) $97,625,027

Program Suppliers (commercial entertainment programming) 46,050,918

Commercial Television ( local commercial television programming) 21,983,038

Public Television Claimants (national and local noncommercial television programming) 8,674,330

Music Claimants (musical works included in television programming) 5,135,051

Devotional Claimants (religious television programming) 4,643,089

Canadian Claimants (Canadian television programming) 2,469,564

National Public Radio (noncommercial radio programming) 243,678

Total $186,824,695

Source: U.S. Copyright Office. | GAO-16-496

Note: The amounts above represent a distribution of 60 percent of the 2013 Satellite Royalty Funds 

and a distribution of 59 percent of the 2013 Cable Royalty Funds. The distribution amounts are 

rounded to the nearest dollar.

Copyright owners have historically submitted copyright claims through the 

claimant groups shown in table 1. These groups then allocate their share 

of the distribution to their group members.

To use the statutory licenses, cable and satellite operators must comply 

with certain requirements on the carriage of local broadcast television 

stations. These carriage requirements are summarized below.

• Must-Carry and Carry-One, Carry-All: The must-carry and carry-one, 

carry-all requirements provide local broadcast television stations with 

the right to have their signals carried by cable and satellite operators 

serving their markets.22 The must-carry provision enables local 

broadcast television stations—commercial local broadcast television 

 21 The distribution of copyright royalties can be delayed if a proceeding before the 

Copyright Royalty Judges or other legal action becomes necessary. In the Matter of 

Distribution of the 1998 and 1999 Cable Royalty Fund, Sixth Order, Docket No. 2008-1 

CRB 98-99 (Copyright Royalty Judges, July 18, 2011).

22 47 U.S.C. § 338 (Satellite); 47 U.S.C. §§ 534 and 535 (Cable).

Intersection between 

Copyright Law and 

Communications Law
Page 9 GAO-16-496 Statutory Copyright Licenses

stations and qualified noncommercial educational broadcast television 

stations23—to require each cable operator in its local market to carry 

its signal, generally for no cost.24, 25 The carry-one, carry-all provision 

requires satellite operators that choose to offer one local broadcast 

television station in a local market, to carry all of the local broadcast 

television stations in that market, also for no cost.26 Satellite operators 

are only subject to the carry-one, carry-all provision if they use the 

Section 122 statutory license, which allows them to retransmit the 

signals of local broadcast television stations without obtaining 

permission from the copyright owners of the content on that signal.27

The choice to invoke must-carry and carry-one, carry-all is made 

every 3 years by commercial local broadcast television stations. 

Qualified noncommercial educational broadcast television stations 

request carriage by cable and satellite operators through the mustcarry and carry-one, carry-all requirements.

• Retransmission Consent: Instead of opting for must-carry or carryone, carry-all, commercial local broadcast television stations may opt 

to negotiate “retransmission consent.” Retransmission consent gives 

commercial local broadcast television stations a property right over 

their broadcast signal, which, prior to the 1992 Cable Act did not 

 23 Among other things, a noncommercial educational broadcast television station must 

serve the same must carry market as the cable system on which it seeks carriage, deliver 

a good quality signal, and not air duplicative programming. See 47 U.S.C. § 535. Under 

specially enumerated criteria, qualified low-power broadcast television stations may also 

be eligible for mandatory carriage by cable operators. See 47 U.S.C. § 534.

24 Each cable operator’s obligation to carry all stations within its designated market area is 

dependent upon its total capacity; however, the capacity of most modern cable systems 

has rendered these distinctions largely meaningless.

25 Except for costs associated with delivering a good quality signal for transmission and 

increased costs relating to distant signal copyright indemnification. See 47 C.F.R. §76.60.

26 Generally, a satellite carrier carrying a station under the carry-one, carry-all requirement 

may not accept or request any fee for carriage. See 47 C.F.R. § 76.66(I).

27 47 U.S.C. § 338.
Page 10 GAO-16-496 Statutory Copyright Licenses

exist.28 This property right is distinct from the right to perform 

copyright-protected material embedded in the broadcast signal. 

Retransmission consent applies only to commercial local broadcast 

television stations and allows them to grant permission to cable and 

satellite operators to retransmit their signals, usually in return for a 

negotiated payment.29 By opting for retransmission consent, 

commercial local broadcast television stations give up the guarantee 

of carriage in exchange for the right to negotiate compensation for 

carriage of their signal. SNL Kagan, a media research firm, estimates

these fees at $6.3 billion in 2015 and projects that they may reach 

$10.3 billion by 2021.

• Broadcast Exclusivity Rules:30 The broadcast exclusivity rules—the 

syndicated exclusivity rule and the network non-duplication rule—are 

an administrative mechanism for local broadcast television stations to 

enforce their exclusive rights obtained through contracts with 

broadcast networks and syndicators. The syndicated exclusivity rule 

protects a local broadcast television station’s right to be the exclusive 

provider of syndicated programming31 in its market. Similarly, the 

network non-duplication rule protects a local broadcast television 

station’s right to be the exclusive provider of network programming in 

its market.32 The exclusivity rules—when invoked by local broadcast 

television stations—require cable and satellite33 operators to block, in 

 28 Prior to the 1992 Cable Act, cable operators could retransmit local broadcast television 

stations’ signals without the approval of the broadcast station and without compensating 

them. In 1992, Congress determined that cable operators obtained great benefit from the 

broadcast signals that they were able to carry without broadcast stations’ consent, which 

resulted in an effective subsidy to cable operators. See Cable Television Consumer 

Protection and Competition Act, Pub. L. No. 102-385, §2(a), 106 Stat. 1460(1992)(Cable 

Act).

29 Noncommercial educational broadcast television stations typically cannot request a fee 

from cable and satellite operators for the retransmission of their signal.

30 FCC issued a further Notice of Proposed Rulemaking to consider eliminating or 

modifying the broadcast exclusivity rules. This notice is still under consideration. In the 

Matter of Amendment of the Commission’s Rules Related to Retransmission Consent 29 

FCC Rcd 3351; March 31, 2014, Released, March 31, 2014, Adopted. 

31 Syndicated programming is non-network programming or post-network programming (a 

rerun) that is licensed directly to individual broadcast stations in more than one market.

32 47 C.F.R. §§ 76.92 and 76.122.

33 For satellite operators, the broadcast exclusivity rules only apply to nationally distributed 

superstations, not distant network station signals. See 47 U.S.C. § 339(b)(1)(A), 339(d)(2).
Page 11 GAO-16-496 Statutory Copyright Licenses

some manner, duplicative content carried by a local broadcast 

television station in another market (a distant signal) imported into a 

station’s local market. For example, these rules allow WJZ, the CBSaffiliated local broadcast station in Baltimore, to prohibit cable 

operators from showing duplicative network content on a CBSaffiliated station from another market (e.g., WUSA, the CBS-affiliated 

local broadcast station in Washington, D.C.) in the event WUSA was 

imported into Baltimore. Similarly, the rules would allow WJZ to 

prohibit cable operators from showing any duplicated syndicated 

content from any other market’s station that is imported into Baltimore.

Video programming, or video content, is the television programs watched 

by viewers including primetime shows, news, and movies.34 The flow of 

this content from development to distribution involves many entities, 

including those that create the video content, those that aggregate the 

content into a schedule, and those that distribute the content to viewers 

(see fig. 2).

 34 Video content and video programming are terms used to describe the television series, 

movies, and other programs that viewers watch on their televisions, tablets, smartphones, 

and other Internet-connected devices. Broadcast programming or content is a subset of 

video content, specifically video content initially shown on a local broadcast television 

station. 

Video Content: from 

Production to Viewer
Page 12 GAO-16-496 Statutory Copyright Licenses

Figure 2: Distribution of Video Content by Commercial Entities to Viewers

a Cable and satellite operators also provide their viewers access to online content through 

authenticated services in addition to or as part of their subscription service.

b Online video distribution requires a broadband internet connection that is often provided by but not 

limited to cable and satellite operators..

A single entity in the video marketplace may produce content, aggregate 

it, and distribute the content. For example, CBS is primarily known as a 

broadcast network; however, CBS also produces its own video content, 

through CBS Television Studios. It owns several CBS-affiliated local 

broadcast television stations. CBS also functions as an online video 

distributor, such as through its offering of a subscription online streaming 

service, CBS All Access—which offers live streams of local CBS-affiliated 

broadcast television stations as well as video content on an on-demand 

basis.

Before video content can be watched by viewers, financial and 

contractual arrangements between those that produce, aggregate, and 

distribute video content must be made—through market-based 
Page 13 GAO-16-496 Statutory Copyright Licenses

negotiations or under certain circumstances, through the statutory 

licenses. Market-based negotiations involve private negotiations between 

copyright owners or licensees and those that want to use their 

copyrighted content. These negotiations can include a variety of 

contracted terms covering such items as when the content will be aired, 

how the content will be promoted, and the price that will be paid for the 

right to license that content. The price ultimately agreed to for the public 

performance rights of video content in market-based negotiations 

depends on a variety of factors, including, the expected ratings and 

associated advertising revenues for the content.

Content producers, such as Paramount Studios and the National Football 

League, create the video content viewers ultimately will watch. Content 

producers may license their public performance rights35 over a variety of 

distribution platforms that include:

• Online distribution—video content is streamed online to any Internetconnected device. Requires the licensing of online rights.

• Primary transmission—the over-the-air broadcast of content by a local 

broadcast television station. Requires the licensing of primary rights 

and only applies to content shown by local broadcast television 

stations.

• Through-to-viewer distribution—the content on a cable network is 

distributed by a cable or satellite operator to their subscribers’

television sets. Requires the licensing of through-to-viewer rights.

• Video-on-demand distribution—cable and satellite operators offer 

individual programs to their subscribers for free or for a nominal fee to 

watch at a time of the viewer’s choosing. Requires the licensing of 

video-on-demand rights.

Content producers do not explicitly license secondary transmission36

rights for broadcast content that is retransmitted by cable and satellite 

operators to viewers’ television sets. As discussed above, the statutory 

licenses allow these operators to carry copyrighted programming without 

licensing those rights from the individual copyright owners of that content. 

 35 This is the right to perform the copyright-protected work in public. 17 U.S.C. § 106(4).

36 A “secondary transmission” is the further transmitting of a primary transmission 

simultaneously with the primary transmission, or non-simultaneously with the primary 

transmission if by a cable system not located in whole or in part within the boundary of the 

48 contiguous States, Hawaii, or Puerto Rico [...] 17 U.S.C. § 111(f)(2).

Content Producers
Page 14 GAO-16-496 Statutory Copyright Licenses

As reported by the U.S. Copyright Office, most types of public 

performance rights are licensed by private parties through market-based 

negotiations.37

Content producers are paid for the public performance rights of their 

content in several ways. They receive licensing fees from broadcast 

networks and other “content aggregators” or “content distributors” like 

online video distributors that license the right to use their content on 

online platforms. Content producers can also receive licensing fees for 

selling syndicated programming to local broadcast television stations. 

Additionally, content producers may receive royalty fees paid by cable 

and satellite operators to the U.S. Copyright Office through the statutory 

licenses.

Content aggregators—typically broadcast networks, local broadcast 

television stations, and cable networks, as described in more detail 

below—are those that purchase the rights to a variety of copyrighted 

content which they arrange into a schedule for viewers. Content 

aggregators license the public performance rights for content by paying a 

fee to the producers of the content.

• Broadcast networks range from major commercial networks, such as 

ABC, CBS, FOX, and NBC, to other commercial networks, such as 

ION Television and Univision. Broadcast networks purchase the rights 

for programs, arrange programs into a schedule, and then through 

network-affiliate agreements convey these rights to their affiliates. 

Broadcast networks receive payments through affiliate fees, as 

discussed below, and advertising revenues.

• Commercial local broadcast television stations, network-affiliated and 

independent stations (e.g., WJLA—an ABC affiliate in Washington, 

DC, and KUBE—an independent station in Houston, TX) may own the 

rights to transmit local content (e.g., local news) or license from 

content producers the rights to transmit syndicated content (e.g., 

Seinfeld reruns) in their local markets. They receive revenue from 

selling advertising spots and from cable and satellite operators via 

retransmission consent fees, if elected. Network-affiliated local 

broadcast television stations pay affiliate fees to broadcast networks 

in exchange for the right to air broadcast network content.

 37 Section 302 Report.

Content Aggregators
Page 15 GAO-16-496 Statutory Copyright Licenses

• Cable networks (e.g., ESPN and HBO), similar to broadcast networks, 

can obtain video content for their networks from content producers 

through market-based negotiations. However, instead of licensing 

their network content to an affiliate, cable networks license their signal 

to a cable or satellite operator for transmission. They receive money 

through license fees, advertising revenues, and in some cases, 

subscription fees directly from viewers.

Content distributors are those entities that distribute video content to 

households. Local broadcast television stations, cable and satellite 

operators, and online video distributors all distribute video content.

• Commercial local broadcast television stations—like KDFW, the FOX 

affiliate in Dallas, TX—transmit their signals over-the-air for free and 

are accessible by most households via antenna.38 Stations are not 

paid by viewers for the broadcast of their signals over-the-air. As 

discussed above, however, commercial local broadcast television 

stations can receive retransmission consent fees from cable and 

satellite operators for the secondary transmission of their signals as 

well as advertising revenue.

• Cable and satellite operators, such as Time Warner Cable and DISH 

Network, distribute video content, including the signals of local 

broadcast television stations and cable networks, to viewers for a 

subscription fee. Cable and satellite operators obtain the right to 

retransmit local broadcast television station’s signals either through a 

local station’s assertion of must-carry or carry-one, carry-all or through 

retransmission consent negotiations. As discussed above, cable and 

satellite operators that rely on the statutory licenses do not have to 

obtain the rights to retransmit the content embedded in a local 

broadcast television station’s signal. An estimated average of 14 local 

broadcast television stations are carried in cable operators’ channel 

lineups with an estimated average of around 10 local broadcast 

 38 Over-the-air content is distributed by local broadcast stations via terrestrial transmitters. 

According to FCC, in 2014, 11.4 million U.S. households relied exclusively on over-the-air 

transmission for their television viewing.

Content Distributors
Page 16 GAO-16-496 Statutory Copyright Licenses

television stations carried under the must-carry requirement.39,40

Cable and satellite operators receive revenue through subscription 

fees. They also receive revenue for advertising spots.

• Online video distributors (OVDs) provide video content to consumers 

through several business models, including on a subscription (e.g., 

Netflix) or an advertising-supported basis (e.g., Go90) through internet 

connections that can be provided by cable and satellite operators.41

The video content includes programs available on-demand and, in 

some cases, as a live stream of a local broadcast television station or 

cable network with the same schedule of shows and aired at the same 

time as is offered over-the-air or through a cable or satellite operator. 

They receive payments through subscription fees or advertising 

revenue—depending on their business model.

Consumers have several options through which to access video content. 

Consumers may watch local broadcast television stations on their 

television set using an antenna or they may watch local broadcast 

television stations and cable networks on their television set through a 

cable or satellite service subscription. Using an internet connection, 

consumers can watch video content on, for example, tablets, 

smartphones, and other mobile devices, through an existing subscription 

with a cable or satellite operator or using an OVD service.

 39 Based on our analysis of FCC’s 2014 Cable Service Price Survey (From 333) data. 

Averages are subscriber weighted means of the survey responses. Cable operators were 

asked the number of local broadcast television stations carried in their channel lineup for a 

particular community. The survey asked that respondents count each local station only 

once—for example if a local broadcast television channel has an analog channel and a 

separate HD digital channel these should be counted as one station. Also, local broadcast 

multicast channels were not to be counted.

40 Within this report, all numerical estimates based on FCC’s Cable Service Price Survey 

data have margins of error at the 95 percent confidence level of plus or minus 3.2 percent 

or less of the value of those numerical estimates.

41 FCC has defined an OVD as any entity that offers video content by means of the 

Internet or another Internet Protocol-based transmission path provided by a person or 

entity other than the OVD. See, Annual Assessment of the Status of Competition in the 

Market for the Delivery of Video Programming, 30 FCC Rcd 3253, Released April, 2, 

2015, Adopted March 31, 2015 Sixteenth Report, (2015). In our report, we use the term 

OVD, as defined, to describe any entity that offers video content over the internet. 
Page 17 GAO-16-496 Statutory Copyright Licenses

The video marketplace also includes noncommercial educational 

broadcast television stations, such as public television stations.42 Similar 

to commercial local broadcast television stations, these stations are 

available to viewers over-the-air and through secondary transmission by 

cable and satellite operators. As discussed earlier, unlike commercial

local broadcast television stations, these stations typically cannot request 

a fee from cable and satellite operators for the retransmission of their 

signal; instead they request carriage by cable and satellite providers 

through the must-carry or carry-one, carry-all requirements. In addition, 

noncommercial educational stations are prohibited from accepting on-air 

advertisements.

How viewers access and consume video content is changing.

• Over-the-air: According to FCC, the percentage of television 

households relying on over-the-air reception to watch local broadcast 

television stations has remained relatively steady. While the number 

of households that use over-the-air service increased from 11.2 

million households in 2013 to 11.4 million households in 2014, 

 42 GAO. Telecommunications: Issues Related to the Structure and Funding of Public 

Television. GAO-07-150. (Washington, D.C.: Jan. 19, 2007).

Noncommercial Educational 

Broadcast Television Stations

As the Video 

Marketplace 

Changes, a Phaseout 

of the Licenses May 

Be Feasible for Most 

Market Participants, 

but Could Have 

Implications for 

Carriage 

Requirements

In the Video Marketplace, 

Video Content is 

Increasingly Distributed 

and Accessed OnDemand and Online
Page 18 GAO-16-496 Statutory Copyright Licenses

reliance on over-the-air service by all U.S. television households 

remained the same at 9.8 percent.43

• Cable and satellite video services:44 The percentage of U.S. television 

households that receive video content through cable and satellite 

services has declined even as the number of subscribers to these 

services has increased. Our analysis of industry data indicates that 

from 2010 to 2014, the total number of U.S. video service subscribers 

to cable, satellite, and telecommunication companies increased from 

99.2 million to 99.6 million. Over that same period of time, cable 

operators lost subscribers, satellite operators maintained about the 

same number of subscribers, and telecommunication companies 

increased their number of subscribers. However, the percentage of 

U.S. television households that use cable and satellite subscriptions 

to receive video services declined from 85.4 percent to 83.9 percent 

over the 5 year period.45

• Online video services: As of 2013, more than 53 million U.S. 

households watched video content online with at least one Internetconnected device.46 Thirty-nine of the 42 industry stakeholders we 

interviewed identified the growth of OVDs and increasing usage of 

online video services as a trend in the video marketplace over the last 

5 years. SNL Kagan estimates that 4.9 percent of occupied U.S. 

households watched television programs or movies through OVDs 

without receiving cable and satellite service in 2013, compared to 3.9 

percent in 2012.47

 43 Viewers may also be using a combination of over-the-air services and online video 

services such as Netflix, Amazon Prime, etc.

44 The data included in this section on the percentage of U.S. television households that 

use video services and subscriber numbers for cable, satellite, and telecommunication 

companies are based on our analysis of Bloomberg data.

45 According to Bloomberg data, the number of U.S. television households increased from 

116.1 million in 2010 to 118.8 million in 2014.

46 Annual Assessment of the Status of Competition in the Market for the Delivery of Video 

Programming, Sixteenth Report, 30 FCC Rcd 3253, ¶ 10, Released April 2, 2015, 

Adopted, March 31, 2015.

47 Annual Assessment of the Status of Competition in the Market for the Delivery of Video 

Programming, Sixteenth Report, 30 FCC Rcd 3253, ¶ 302, Released April 2, 2015, 

Adopted, March 31, 2015.
Page 19 GAO-16-496 Statutory Copyright Licenses

Our analysis of FCC reports, industry reports, and stakeholder opinions 

identified several factors influencing the changes in the video marketplace 

and the consumption of video content, including:

• Programming costs: The rising cost of video content impacts how 

much each entity—from content aggregators (e.g., CBS and ABC) to 

content distributors (e.g., Time Warner Cable and Netflix) to viewers—

involved in the flow of video content must pay to obtain the rights to 

distribute or view video content. SNL Kagan data show that cable and 

satellite operators’ programming expenses are increasing at a greater 

rate than their revenues. For example, cable and satellite operators’

programming expenses as a percent of video service revenue 

increased from 34.6 percent in 2006 to 44.6 percent in 2013. Twentyone out of the 42 stakeholders we interviewed identified rising 

programming costs as a trend in the video marketplace over the last 5 

years.

• Affordability and flexibility: Industry reports we reviewed suggest that 

the emergence of low-cost alternatives to cable and satellite video 

services could accelerate viewers’ use of online services.48 Factors 

influencing this trend include pressures on disposable income for low 

income cohorts of all ages, the desire to only pay for the content 

consumers want to watch, and viewers’ preference to watch content 

when they want, where they want, and on the device of their 

choosing. According to FCC and consistent with our analysis, the 

average monthly per-subscriber cost for an expanded basic service 

cable subscription increased from $54.44 in 2010 to $66.61 in 2014.49

This suggests that emerging options may provide consumers with 

greater flexibility to choose a service that more closely meets their 

desired price and content preferences.

 48 MoffettNathanson Research, The Poverty Problem, Six Years On, U.S. Telecom and 

U.S. Cable & Satellite Broadcasting (Mar. 12, 2015); PWC, Videoquake 3.0: The Evolution 

of TV’s Revolution, Consumer Intelligence Series (December 2015);and Pew Research 

Center, Home Broadband 2015 (Dec. 21, 2015).

49 For more on FCC’s analysis of cable industry data, see Report on Cable Industry Prices

(MM Docket No. 92-266), 29 FCC Rcd 14895, Released December 15, 2014, December 

15, 2014, Adopted. For more details on our analysis of this data, see appendix I.
Page 20 GAO-16-496 Statutory Copyright Licenses

• Generational viewing habits: According to several industry reports, 

younger consumers are more likely to be “cord-nevers” or “cordcutters” than those in other age groups.50 Subscriptions to cable and 

satellite services are lowest among households headed by younger 

adult consumers (e.g., 18 to 29 years old).51 However, it is unclear 

whether younger consumers who currently do not subscribe to cable 

and satellite video services will eventually do so.

52

As reported by FCC, cable and satellite operators have developed a 

variety of competitive strategies to adapt to the changing marketplace.53

In response to the video marketplace changes mentioned above—

changes in distribution platforms and viewing habits—cable and satellite 

operators, broadcast networks, and cable networks are increasingly 

offering video content online, including:

• TV Everywhere: Video services that allow subscribers to cable and 

satellite video services to access both linear54 and video-on-demand 

content on a variety of in-home and mobile Internet-connected 

devices. While not yet widespread, according to industry reports the 

availability and use of TV Everywhere appears to be growing.55 For 

example, Comcast’s Xfinity TV Go allows viewers to access video 

 50 MoffettNathanson Research, The Poverty Problem, Six Years On, U.S. Telecom and 

U.S. Cable & Satellite Broadcasting (Mar. 12, 2015); PWC, Videoquake 3.0: The Evolution 

of TV’s Revolution, Consumer Intelligence Series (December 2015); and Pew Research 

Center, Home Broadband 2015 (Dec. 21, 2015).

51 Pew Research Center, Home Broadband 2015 (Dec. 21, 2015).

52 MoffettNathanson Research, The Poverty Problem, Six Years On, U.S. Telecom and 

U.S. Cable & Satellite Broadcasting (Mar. 12, 2015).

53 Annual Assessment of the Status of Competition in the Market for the Delivery of Video 

Programming, Sixteenth Report, 30 FCC Rcd 3253, ¶ 85 and 240, Released April 2, 2015, 

Adopted, March 31, 2015.

54 Programming that is offered at a certain time and on a certain channel (e.g., The Big 

Bang Theory on a CBS affiliate station at 8pm ET on a Thursday) is also called linear 

programming. 

55 In Annual Assessment of the Status of Competition in the Market for the Delivery of 

Video Programming, Sixteenth Report, 30 FCC Rcd 3253, ¶ 86, Released April 2, 2015, 

Adopted, March 31, 2015.; FCC cites data from SNL Kagan showing that use of TV 

Everywhere in 2013 was estimated at 2.5 million viewers. In Adobe Digital Index’s Digital 

Video Benchmark Report Q2 2015, the active monthly share of cable and satellite (PayTV) viewers using TV Everywhere increased from 10.7 percent in the 2nd quarter of 2014 

to 12.7 percent in the 2nd quarter of 2015.

Changes in Consumer Viewing 

Habits

• Cord-Cutters: Consumers who 

cancel a cable or satellite video 

service subscription. CordCutters may access local 

broadcast television stations 

over-the-air with an antenna or 

use an Internet-based service.

• Cord-Nevers: Consumers who 

never subscribed to a cable or 

satellite video service.

Source: GAO. | GAO-16-496
Page 21 GAO-16-496 Statutory Copyright Licenses

content online, live and on-demand, through their existing cable 

subscription.

• Online linear programming: Some cable and satellite operators are 

also offering subscription-based online video services that allow 

subscribers to stream television channels over the Internet in realtime. For example, DISH’s SlingTV is a subscription service that 

allows viewers to access certain television channels live or watch 

video-on-demand content via the Internet.

• Broadcast and cable network online video services: Broadcast 

networks are increasingly offering their content online, with video-ondemand offerings and streaming of their affiliated local broadcast 

television stations, through network websites and applications that are 

accessible via Internet-connected devices (i.e., computers, tablets, 

and smartphones). For example, the CBS network offers CBS All 

Access, an online video service that provides access to live linear 

streams of local CBS affiliate broadcast programming over the 

Internet and video-on-demand content to consumers for a monthly 

subscription fee. Cable networks also offer similar online services. For 

example, HBO offers a standalone subscription service, HBO Now, 

which allows viewers to watch episodes of shows in real time as well 

as on-demand.

Our analysis of recent changes in the video marketplace, as discussed 

above, indicates that the types of rights licensed have increased as online 

and video-on-demand distribution platforms have multiplied. Much of this 

video content—including content aired by local broadcast television 

stations—is licensed through private market-based negotiations. Figure 3, 

below, diagrams the parties and types of rights that can be licensed for 

different distribution platforms (e.g., over-the-air, video-on-demand, and 

online) for commercial video content.

Market-Based 

Negotiations for the 

Licensing of Online, OnDemand and Other Video 

Content Rights Illustrate a 

Phaseout May be Feasible 

for Most Industry 

Participants
Page 22 GAO-16-496 Statutory Copyright Licenses

Figure 3: Types of Rights Licensed for Video Content Distributed by Commercial Providers
Page 23 GAO-16-496 Statutory Copyright Licenses

As shown in figure 3, it may be feasible to license the rights for the 

secondary transmission of broadcast content in a manner similar to the 

market-based negotiations used for other distribution platforms. The only 

rights in the video marketplace not licensed through market-based 

negotiations are the secondary transmission rights for broadcast content, 

as shown in the first panel of figure 3. All other rights depicted in figure 3 

are licensed through market-based negotiations. The growth in online and 

video-on-demand content provides evidence that suggests the video 

marketplace can develop a market-based approach to license secondary 

transmission rights for broadcast content in the absence of the statutory 

licenses. Of the 42 stakeholders we interviewed, 21 play a role in 

licensing rights for the over-the-air (primary) transmission of broadcast 

content or secondary transmission of broadcast signals (e.g., negotiations 

with content producers for primary transmission rights, network-affiliate 

agreements, and retransmission consent negotiations). Twenty of these 

21 stakeholders told us they also participate in the licensing of online and 

video-on-demand rights for broadcast content. This suggests that the 

same parties56 (e.g., broadcast networks, local broadcast television 

stations, and cable and satellite operators) that currently rely on the 

statutory licenses to facilitate the retransmission of broadcast content by 

cable and satellite operators already use market-based negotiations to 

license other public performance rights for broadcast content. In addition, 

11 out of the 14 of these stakeholders that participate in negotiations for 

primary transmission rights thought it was feasible to license secondary 

transmission rights when primary transmission rights are licensed.

The emergence of live linear online video services that allow viewers to 

stream, via Internet-connected devices, the live signal of their local 

broadcast television station, also illustrates the potential feasibility of 

licensing all public performance rights related to broadcast content using 

market-based negotiations. For example, CBS offers a direct-toconsumer online video service, CBS All-Access. In another example, 

Sony’s PlayStation Vue allows viewers to stream live television channels, 

including local broadcast television station affiliates of ABC, CBS, FOX, 

and NBC in select cities. Online video distributors (e.g., Sony Playstation 

Vue or CBS All Access) must license the online rights for all the content 

 56 While cable and satellite operators are the users of the statutory licenses, their use of 

the licenses means that broadcast networks and local broadcast television stations do not 

need to ensure they have the rights to license their content to cable and satellite 

operators. 
Page 24 GAO-16-496 Statutory Copyright Licenses

on the local broadcast television station’s signal—including the broadcast 

network’s content (e.g., primetime dramas and comedies) and the local 

broadcast television station’s content (e.g., local news programs). The 

method by which these online rights are licensed varies by broadcast 

network and by online video distributor; however, the content they must 

license—without the benefit of the statutory licenses—is similar to the 

content covered by the statutory licenses. Therefore, it seems feasible 

that just as broadcast content is licensed for online viewing using marketbased negotiations; it can also be licensed for viewing through cable and 

satellite operators using market-based negotiation and without the 

statutory licenses.

Moreover, over the past 25 years, FCC and the U.S. Copyright Office 

have reported that the transaction costs that statutory licenses were 

created to address may have become more manageable and that 

licensing secondary transmission rights in the absence of the statutory 

licenses could be feasible.57 Specifically, in its 1989 statutory licensing 

study, FCC reported that in the absence of the section 111 license, 

television stations would be able to acquire cable retransmission rights to 

“packages” of the programming they broadcast.58 Cable operators could 

then negotiate with a single entity—the broadcast station—for carriage 

rights to each package (e.g., sublicensing).59 Thus, cable and satellite 

operators would not have to license the rights to transmit each program 

with each copyright owner, minimizing the number of negotiations and 

subsequently the transaction costs. FCC reported that the existence of 

cable networks provided “convincing” evidence that the transaction costs 

associated with full copyright liability are manageable and concluded that 

the “networking mechanism” appeared well-suited to the acquisition of 

cable retransmission rights for broadcast signals as well.60 Moreover, the 

 57 Section 302 Report; U.S. Copyright Office, Satellite Home Viewer Extension and 

Reauthorization Act § 109 Report (Section 109 Report) (Washington, D.C.: June 30, 

2008); and FCC, Compulsory Copyright License for Cable Retransmission, 4 FCC Rcd 

6562, 6712. Released, Aug. 3, 1989, Adopted October 27, 1988.

58 FCC, Compulsory Copyright License for Cable Retransmission, 4 FCC Rcd 6562, 6712.

¶ 12, Released, Aug. 3, 1989, Adopted October 27, 1988.

59 The market alternatives to the statutory licenses—direct licensing, sublicensing, and 

collective licensing—are described below. 

60 FCC, Compulsory Copyright License for Cable Retransmission, 4 FCC Rcd 6562, 6712.

¶ 12, Released, Aug. 3, 1989, Adopted October 27, 1988.
Page 25 GAO-16-496 Statutory Copyright Licenses

U.S. Copyright Office reported in 2008 and 2011 that sublicensing is a 

reasonable alternative to statutory licenses.61 Cable and satellite 

operators could negotiate for the secondary retransmission rights for 

broadcast content at the same time and potentially with the same entities 

they negotiate retransmission consent for the entire broadcast signal.

Although feasible for most, some video marketplace participants may face 

negative effects and may have difficulty licensing secondary transmission 

rights to ensure distribution of their video content in the event of a 

phaseout. Specifically:

• Small Cable Operators: Based on our analysis of stakeholder 

interviews and the U.S. Copyright Office’s 2011 report, cable 

operators with small customer bases may face financial and logistical 

challenges in the event of a phaseout of the Section 111 license. As 

the U.S. Copyright Office has reported, small cable operators are 

particularly vulnerable to increases in the costs of doing business. 

Similarly, some stakeholders told us they believe that small cable 

operators do not have the financial and legal resources to adapt to a 

change in the statutory licenses. These stakeholders were concerned 

that any increase in transaction costs (due to additional negotiations) 

or an increase in the actual cost of content may make it difficult for 

small cable operators to stay in business.

• Public Television: Public television, in particular, may be negatively 

affected by a phaseout of the statutory licenses. Public television 

stations and program suppliers, such as the Public Broadcasting 

Service (PBS), tend to license a smaller bundle of rights62 at a 

relatively low cost. In addition, producers of public television content 

rely on the distribution of statutory license copyright royalty fees to 

supplement the payments received from public television. According 

to public television stakeholders,63 given the terms by which content is 

currently licensed for public television, neither direct licensing or 

 61 Section 302 Report and Section 109 Report.

62 According to public television stakeholders, they typically license the primary 

transmission rights. In some cases, online rights may also be licensed, but these are 

typically restricted to a short online viewing window.

63 This group included representatives from an industry association for public television 

stations, a public television program supplier and a public television station. See appendix 

I for further information
Page 26 GAO-16-496 Statutory Copyright Licenses

sublicenses64—marketplace alternatives to the statutory licenses—

would work. These licensing mechanisms would likely result in cable 

and satellite operators or public television stations and program 

suppliers facing significant transaction costs to obtain the necessary 

secondary transmission rights. As we, along with the U.S. Copyright 

Office reported in 2011,65 there are also concerns that some local 

public television stations may not have the financial resources to deal 

with the transaction costs associated with obtaining these rights for all 

of their content.

A phaseout of the statutory licenses could have implications for the mustcarry and carry-one, carry-all requirements, as currently implemented.

• Must-carry: As we have previously reported, if Congress phases out 

the Section 111 statutory license, cable operators may have difficulty 

complying with the must-carry requirement.66 Eliminating this statutory 

license would remove the current mechanism used by cable operators 

to license broadcast programming and, unless the must-carry 

provision was at least revised, would leave cable operators in a 

seemingly paradoxical situation. Cable operators would be required to 

transmit without modification local broadcast station signals containing 

copyrighted content for which they might not be able to license the 

needed public performance rights, or only be able to do so at a 

potentially significant burden and cost.67

• Carry-one, carry-all: If Congress phases out the Section 122 statutory 

license, according to FCC and the U.S. Copyright Office, the carry-

 64 Direct licensing and sublicensing are discussed in greater detail below. 

65 GAO-12-75 and Section 302 Report.

66 GAO-12-75.

67 The potential for copyright owners to act as holdouts in negotiations with cable 

operators over the secondary transmission rights for the broadcast programming 

embedded in the signals of stations that elect must carry is largely driven by the legal 

requirement that broadcast signals must be retransmitted without modification. The holdout problem is a well-recognized phenomenon in economic literature, which is usually 

discussed in the context of real estate development.

A Phaseout of the 

Statutory Licenses Could 

Impact Some Carriage 

Requirements
Page 27 GAO-16-496 Statutory Copyright Licenses

one, carry-all provision would no longer apply to satellite operators.68

According to the U.S. Copyright Office, a repeal of the Section 122 

license would render carry-one, carry-all effectively “null and void,”69

which could have a detrimental effect on television stations that do not 

or cannot elect retransmission consent due to a poor bargaining 

position. Local broadcast television stations that currently gain 

carriage by satellite operators through the carry-one, carry-all 

provision, may no longer be carried in the event of a phaseout of the 

Section 122 license. In this scenario, cable operators would have a 

mandatory obligation to carry any local broadcast television station 

that requested carriage, while satellite operators would face no such 

obligation.

As we have reported in the past, a phaseout of the statutory licenses 

would not necessarily require modification to the other carriage 

requirements, specifically retransmission consent and the broadcast 

exclusivity rules, as discussed below.70

• Retransmission consent: Commercial local broadcast television 

stations can pursue this option, discussed earlier, when they do not 

invoke must-carry or carry-one, carry-all. A phaseout of the statutory 

licenses would not necessarily change how cable and satellite 

operators negotiate for the rights to transmit commercial local 

broadcast stations’ signals.71 However, without the statutory licenses, 

cable and satellite operators would be required to obtain the rights to 

retransmit the content72 embedded on a broadcast station’s signal—

 68 Carry-one, carry-all is required by the Communications Act, § 338(a) (47 U.S.C. § 

338(a)), which provides, “Each satellite carrier providing, under section 122 of Title 17, 

secondary transmissions to subscribers located within the local market of a television 

broadcast station of a primary transmission made by that station shall carry upon request 

the signals of all television broadcast stations located within that local market...”

69 Section 302 Report, p. 60.

70 GAO-12-75.

71 GAO-12-75.

72 According to FCC, cable operators must carry in its entirety the signal of any station 

that is eligible to elect must-carry even if that station elects carriage via retransmission 

consent. The same requirement applies to satellite operators. Therefore, cable and 

satellite operators would need to obtain the secondary transmission rights to all of the 

content on a commercial local broadcast stations’ signal in the event of a phaseout of the 

statutory licenses.
Page 28 GAO-16-496 Statutory Copyright Licenses

the potential mechanisms for obtaining these rights (direct licensing, 

sublicensing, and collective licensing) are discussed further below.

• Broadcast exclusivity rules: These include the network non-duplication 

and syndicated exclusivity rules that, as mentioned earlier, were 

designed to protect local broadcast stations from competition with 

local broadcast stations imported by cable or satellite carriers from 

outside the local market being served. A phaseout of the statutory 

licenses would not, on its face, require a change to the exclusivity 

rules.73 We previously reported that eliminating the exclusivity rules 

may have varying effects, but these would depend on other federal 

actions and industry response.74

Stakeholder support for a phaseout of the statutory licenses varied. Of the 

42 selected stakeholders we interviewed, all of whom provided a 

response to our questions asking their position on a phaseout, 15 

supported either a full or partial phaseout of the statutory licenses, and in 

some cases cited contingent factors:

• Six of the 42 stakeholders supported a full phaseout of all three 

statutory licenses.75 Reasons given for supporting a full phaseout 

 73 GAO-12-75.

74 GAO-15-441.

75 This group of stakeholders consisted of a commercial broadcast network, three content 

producers, an industry association, and an industry expert.

Stakeholders Vary in 

Their Support for a 

Potential Phaseout 

and Are Uncertain 

about its Potential 

Effects on the Video 

Marketplace and 

Consumers

Stakeholder Positions on a 

Phaseout of the Statutory 

Licenses Vary
Page 29 GAO-16-496 Statutory Copyright Licenses

included that direct negotiations and sublicensing to license the rights 

to distribute broadcast content on online and on-demand platforms 

are already taking place in the video marketplace. In addition, cable 

networks aggregate all rights needed for cable and satellite operators 

to transmit their content to viewers. According to some of these 

stakeholders, they see no reason the same system could not be 

employed to address the retransmission of broadcast content by cable 

and satellite operators.

• Five of the 42 stakeholders said their support of a full phaseout was 

contingent on other factors, such as the phaseout or reform of some 

or all of the carriage requirements.76 Four of these would support a 

phaseout of the licenses but only if all carriage requirements were 

eliminated. One stakeholder overall supported a phaseout of the 

statutory licenses, but thought the licenses could be retained to help 

smaller copyright holders. One reason given for wanting either the 

elimination or amendment of the carriage requirements at the same 

time as a phaseout was concern that if the requirements remain in 

effect they could undermine any benefits of a system without the 

statutory licenses. For example, if a sublicensing system was the 

primary replacement for the current statutory licenses and cable and 

satellite operators paid for the right to license the underlying 

broadcast content rights in addition to current fees for retransmission 

consent; there were concerns that programming costs would increase 

significantly.

• Four of the 42 stakeholders said they supported a partial phaseout of 

the statutory licenses, and all four specified that the licenses related to 

distant signal transmission—section 119 and the relevant portions of 

section 111—as those that should be phased out.77 These 

stakeholders said the statutory licenses were functioning as intended, 

however, they thought the distant signal portions of the licenses had a 

negative impact on the marketplace.

 76 This group of stakeholders consisted of two commercial broadcast networks, two cable 

and satellite providers and a public interest group.

77 This group of stakeholders consisted of three commercial local broadcast television 

station owners and an industry association.
Page 30 GAO-16-496 Statutory Copyright Licenses

In contrast, 14 of the 42 selected stakeholders said they did not support a 

phaseout.78 Five of the 14 specified that they did not support a phaseout 

of the statutory licenses for stations that elect must-carry or carry-one, 

carry-all, but did not take a position on what should happen to the 

statutory licenses for commercial local broadcast television stations that 

participate in retransmission consent negotiations. This position is in part 

due to the issues discussed above, such as financial concerns if 

noncommercial participants had to license a larger bundle of rights 

through market-based negotiations. Half of these stakeholders (7 of 14 

stakeholders) said that the current system is operating as intended. 

These stakeholders were concerned that changes to the system might 

unfairly benefit one industry segment over another as well as possibly 

have unintended consequences that could damage the video 

marketplace. For example, stakeholders had concerns that sublicensing 

or direct licensing could add transaction costs and reduce efficiencies 

gained though the statutory license system, and hurt the video 

marketplace.

Thirteen of the 42 selected stakeholders told us they had no position on a 

possible phaseout.79 One of these stakeholders told us he or she did not 

have a position on a phaseout because this stakeholder has other higher 

priority regulatory and legislative concerns requiring their attention. 

Additionally, the five stakeholders representing OVDs are not a part of the 

statutory licensing system so this issue was not relevant to their role in 

the video marketplace.

 78 This group of stakeholders consisted of three industry associations, four cable or 

satellite companies and one content producer. Additionally, four public television 

stakeholders and one commercial broadcast station owner also opposed a phaseout of 

the licenses, but limited their position to stations that elect must-carry or carry-one, carryall status.

79 This group of stakeholders consisted of five OVDs, three industry associations and five 

industry experts.
Page 31 GAO-16-496 Statutory Copyright Licenses

Selected stakeholder views on how a phaseout might affect the video 

marketplace were varied and appeared to be influenced by uncertainty 

related to the carriage requirements,80 marketplace alternatives, and 

competition. Given this uncertainty, generally only about half or fewer of 

the 42 selected stakeholders interviewed had a position on these issues.

Carriage Requirements: Of the 42 selected stakeholders we interviewed, 

on any given requirement, only about half (a range of 19-22 

stakeholders)81 had a position on what should happen with the carriage 

requirements if the statutory licenses were phased out. Those without a 

position who offered a reason, cited not wanting to speculate on the 

issue, in some cases due to uncertainty about what, if any, federal actions 

would be taken and what the impacts of those actions on the video 

marketplace may be.82 As discussed above, if the statutory licenses are 

fully or partially phased out, it may be necessary to adjust the must-carry 

requirement. For example, several stakeholders representing cable 

operators told us that the must-carry requirement would put cable 

operators in a difficult position if the statutory licenses were phased out. 

Specifically, must-carry would require carriage of a station, but cable 

operators would have no guarantee that the rights for the content on a 

station’s signal were licensed for secondary transmission. Similarly, public 

television stakeholders told us that without the statutory licenses, the 

party responsible for obtaining the secondary transmission rights—either 

public television stations or program suppliers—would face difficulties due 

to high transaction costs. Some selected stakeholders also raised 

concerns about how, if the licenses were phased out, retransmission 

consent negotiations for the commercial local broadcast television station 

signal would co-exist with market-based negotiations to license the rights 

for the broadcast station’s content.

 80 The carriage requirements include must-carry and carry-one, carry-all, retransmission 

consent, and the broadcast exclusivity rules.

81 Of the selected stakeholders we interviewed, 22 had a position on changes to the mustcarry and carry-one, carry-all requirements, 20 had a position on changes to 

retransmission consent, and 19 had a position on changes to the broadcast exclusivity 

rules.

82 Additionally some stakeholders, such as OVDs and industry experts, declined to take a 

position because they do not participate in the statutory license system and are not

affected by these requirements. 

Selected Stakeholders 

Were Uncertain about 

Potential Impacts of a 

Phaseout on the Video 

Marketplace
Page 32 GAO-16-496 Statutory Copyright Licenses

Marketplace Alternatives: Similarly, of the 30 selected stakeholders 

asked,83 about half (16 out of 30) had no position on which marketplace 

alternative could replace the current statutory licensing system. Among 

these stakeholders, some cited uncertainty about if or when a phaseout 

would occur, as well as not wanting to comment because they do not 

support a phaseout. The U.S. Copyright Office outlined in 201184 three 

possible marketplace alternatives—sublicensing, direct licensing, or 

collective licensing85—that could replace the current system of statutory 

licenses. Additionally, the office outlined86 three approaches—statutory 

sunset, distant signal first, and station-by-station87—for conducting a 

phaseout. The marketplace alternative used to license the secondary 

transmission rights for broadcast content after a phaseout would affect 

video marketplace negotiations and associated transaction costs. Of the 

30 selected stakeholders we asked, about half had a position on a 

preferred marketplace alternative or how a phaseout of statutory licenses 

should be conducted. Some stakeholders (5) noted that sublicensing, 

collective licensing, and direct licensing already occur in the current video 

marketplace to license video content on cable channels and on most 

distribution platforms (e.g., over-the-air transmission, online, and on-

 83 Twelve of the selected stakeholders were not asked questions about how a phaseout of 

the statutory licenses may impact competition in the video marketplace because these 

questions were not relevant to their roles in the video marketplace. This group included 

industry associations and public television stakeholders. 

84 Section 302 Report. 

85 In a sublicensing system television broadcast stations could license the rights for the 

secondary transmission of content in their programming lineup and sublicense those rights 

to cable and satellite operators concurrent with retransmission consent or other 

negotiations. In a direct licensing system, cable and satellite operators could negotiate 

directly with the numerous copyright owners for the right to perform the work publicly 

through the secondary transmission of stations’ programming. In a collective licensing 

system, negotiations about compensation for the secondary transmission of copyright 

protected programming could be conducted between organizations representing the 

copyright owners on one side and the users of the content, such as cable and satellite 

operators on the other.

86 Section 302 Report.

87 A statutory sunset approach would involve Congress setting a date to simultaneously 

phaseout all three statutory licenses. The distant signal first approach would involve 

Congress incrementally phasing out statutory licensing over a period of time with distant 

signal licenses being phased out first. A station-by-station approach would sunset use of 

statutory licenses on a station-by-station basis as each station achieved the ability to 

license the public performance rights for all of its programs.
Page 33 GAO-16-496 Statutory Copyright Licenses

demand). As discussed above, with market-based negotiations88 already 

occurring, a phaseout of the licenses may be feasible. However, the 

approach used to conduct a phaseout and the timeliness of 

implementation, could also impact the marketplace. Of the stakeholders 

with a position, 9 out of 10 said a statutory sunset option may be the best 

option as it would allow the video marketplace participants time to 

renegotiate any existing contracts for broadcast programming and signal 

carriage contracts. For example, one broadcast network noted that 

contracts related to broadcasting of live events, such as professional 

sports, often cover a multi-year period, and a statutory sunset might help 

avoid a disruption in carriage.

Competition: Of the 30 selected stakeholders asked, about half (16) had a 

position on the potential effects of a phaseout on competition in the video 

marketplace. Of those, only one thought there would be no impact on 

competition. Five of these stakeholders found it difficult to comment on 

how competition would change. This was in part due to not knowing how, 

if at all carriage requirements might change and the marketplace 

alternatives that might take the place of the statutory licenses. Of the 10 

that indicated a possible effect on competition, 5 stakeholders cited a 

potential increase in competition in the marketplace as a possible result of 

phasing out the statutory licenses. According to one selected stakeholder, 

an increase in competition could mean a decrease in programming costs, 

as new market entrants might spur the creation of more original content. 

However another stakeholder said that an increase in competition as 

more participants enter the marketplace could result in higher 

programming costs. Essentially, more entities would be competing over 

the same content.

 88 Collective licensing is currently used to administer copyright licensing of musical works. 

Organizations represent composers, songwriters, lyricists, and music publishers in 

negotiations with users such as television and radio broadcasters, and cable systems 

among others.
Page 34 GAO-16-496 Statutory Copyright Licenses

Given the uncertainty about the implications of a phaseout on the carriage 

requirements and the video marketplace discussed above, most 

stakeholders did not have a position regarding the effect of a phaseout on 

consumer access to programming and prices paid for cable and satellite 

television. Of the 42 selected stakeholders we interviewed,89 about half or 

less provided responses on a range of possible impacts on consumers’

access and prices.

As we have previously reported, a phaseout of the statutory licenses has 

the potential to result in disruptions of local broadcast television stations’

signals being aired by cable and satellite providers. However, the overall 

impact on the nature of content available and consumer access is 

unclear.90 Consumers might see their access to local broadcast television 

stations disrupted due to disagreements over the price and terms to 

retransmit broadcast station’s content, and it is unclear what impact a 

phaseout might have on the nature and availability of this content.

Blackouts: Programming disruptions, often termed blackouts, occur when 

a cable or satellite operator and a local broadcast television station owner 

are unable to reach agreement on the carriage of the station’s signal, 

usually during retransmission consent negotiations. This disagreement 

results in a broadcast station’s signal not being retransmitted to viewers 

via the cable or satellite operator, disrupting their access to the content on 

a local broadcast television station’s signal. Blackouts have increased in 

recent years, as shown in figure 4.

 89 Six of the selected stakeholders were not asked this question as it was deemed not 

relevant. This group included one industry expert and the five selected OVDs.

90 GAO-12-75.

Stakeholders Were 

Uncertain about the 

Potential Effects of a 

Phaseout of the Statutory 

Licenses on Consumers

Consumer Access
Page 35 GAO-16-496 Statutory Copyright Licenses

Figure 4: Blackouts of Local Broadcast Television Stations’ Signals in the United 

States (2011 to 2015)

Of the 37 selected stakeholders asked,91 17 provided responses to our 

questions about blackouts. These stakeholders were unsure if blackouts 

in a post-phaseout marketplace would change because of uncertainty 

around the status of the carriage requirements or other marketplace 

changes. Six out of 17 stakeholders thought blackouts would definitely 

increase in the event of a phaseout of the statutory licenses. These 

stakeholders said this would occur because of the potential for additional 

negotiations, both in number and the number of parties involved, which 

could create more opportunity for holdouts and lack of agreement. The 

remaining 11 stakeholders were split between either no change (6) or 

those (5) who thought the impacts on blackouts would vary depending on 

the marketplace alternative selected and the video marketplace response 

to it, and therefore was difficult to predict. None of the selected 

 91 The five OVD stakeholders were not asked these questions because they were not 

relevant to their roles in the video marketplace.
Page 36 GAO-16-496 Statutory Copyright Licenses

stakeholders thought blackouts would decrease if the statutory licenses 

were phased out.

Programming Diversity: Of the 42 selected stakeholders interviewed, 17 

commented on how the diversity of programming, such as the nature and 

availability of content, might be affected if the statutory licenses were 

phased out. One of these stakeholders thought there could be an 

increase in the diversity of programming, as the phaseout of the licenses 

could spur the development of new content into the marketplace. Three 

selected stakeholders thought there would be no change to the 

availability and diversity of programming. Another five stakeholders were 

unsure of what impact might occur because there were unknown factors

related to a phaseout that could affect either the availability or diversity of 

programming. For example, depending on the marketplace alternative 

selected to replace the statutory licenses, or if any changes were made to 

the relevant carriage requirements discussed above, diversity of 

programming could be affected or stay the same.

Seven of the 17 responding stakeholders thought the availability and 

diversity of content would decrease. Of those that provided additional 

explanation on their position (6), concerns about less diverse content 

being available stemmed, in part, from uncertainty over how potential 

changes to carriage requirements may affect niche programming. For 

example, if a system has greater transaction costs, availability of 

programming could decrease. Representatives from one selected 

industry stakeholder organization said that smaller content producers with 

less popular programming would have limited leverage in a direct 

licensing system, in part due to increased transaction costs. Additionally, 

as discussed above, if in addition to the statutory licenses being phased 

out, the must-carry requirements were also eliminated, public television 

and other stations that currently elect must carry could have difficulty 

licensing the secondary transmission rights and thus might have to alter 

or diminish their programming.

In our interviews with satellite operators, some cable operators, and 

public television stakeholders, these stakeholders also raised concerns 

that consumers might face decreased access to programs in the event of 

a phaseout of the distant signal licenses (portions of Section 111 license 
Page 37 GAO-16-496 Statutory Copyright Licenses

and the Section 119 license),92 although it is not clear the extent of the 

effect on consumers due to changes in the marketplace.

• Satellite operators and one cable operator raised the concern that 

without the distant signal licenses, no marketplace alternative for 

distant signals would develop. One satellite provider we spoke with 

said that without the distant signal licenses, no marketplace 

alternative to provide distant signals may emerge as commercial 

broadcast networks do not have any financial incentive to allow their 

affiliates’ signals to be transmitted outside of the intended local 

market. These stakeholders noted how in some local television 

markets, known as “short markets”, there is no local broadcast affiliate 

station for at least one of the major broadcast networks. Without 

distant signal importation, these markets may not have access to one 

or more local broadcast television stations affiliated with a major 

network. However, according to U.S. Copyright Office data, the most 

widely viewed distant signal by satellite service subscribers in the 

United States is that of WGN, a superstation.93 The effects of a partial 

phaseout of the statutory licenses on the viewers of distant signals 

may be mitigated by the recent conversion of WGN into a cable 

network. In Statement of Account filings with the U.S. Copyright 

Office, the two satellite service providers no longer reported carrying 

WGN as a superstation during the latter part of the 2015 accounting 

period and subsequently saw a decrease in the number of their 

subscribers receiving distant signals.

• Public television stakeholders raised the concern that a phaseout of 

the distant signal licenses may actually lead to some local markets not 

being served by a public television station. These stakeholders noted 

that in the event a local public television station can no longer provide 

service in a community, it may be necessary to import a public 

television station from another market as a distant signal. However, 

without the distant signal licenses, these public television 

stakeholders said it would be very difficult to license the needed public 

 92 As of October 2013, the Satellite Broadcasting and Communications Association 

estimated that more than 1.5 million satellite subscribers would lose access to at least one 

channel if the Section 119 license was phased out.

93 A superstation is a station not affiliated with a major network but carried by distant 

operators. Superstations are now referred to in copyright law as non-network stations. 17 

U.S.C. §§ 119(d)(9) and 122(j)(4). 
Page 38 GAO-16-496 Statutory Copyright Licenses

performance rights for all the content embedded in the signal of a 

distant public television station.

Of the 37 selected stakeholders asked,94 29 responded to our questions 

about the impacts of a phaseout on consumer prices. Among these 

stakeholders, there was a general recognition that uncertainty about how 

the video marketplace would react to a phaseout of the statutory licenses 

and about what, if any, changes would be made in the regulatory 

environment made it difficult to speculate on the effects on consumer 

prices. Thirteen of the 29 who commented on this issue thought 

consumer prices would increase, in part due to anticipated increases in 

transactions costs under a new licensing system. In general, an increase 

in costs to providers of a service may lead to higher consumer prices for 

the service. If, in the event of a phaseout, the marketplace alternative 

selected to replace the current statutory license structure entails greater 

transaction costs, then it is possible that some or all of those costs would 

be passed onto the consumer. Similarly, if there were no change to 

stakeholder transaction costs, then there should be no change to 

consumer prices. This outcome is consistent with our prior work, the 

effect of a phaseout on consumer prices for cable and satellite television 

is unclear.95 Even so, another 15 selected stakeholders were unsure of 

the effects or thought there would be no change in consumer prices. Only 

one cable and satellite provider thought changes to the system would 

create a downward pricing pressure to lower consumer prices.

We provided a draft of this report to the FCC and the U.S. Copyright 

Office for review and comment. FCC provided technical comments, which

we incorporated as appropriate. The U.S. Copyright Office stated that it 

agreed with our finding that a phaseout of the statutory licenses may be 

feasible for most market participants.

We are sending copies of this report to the appropriate congressional 

committees, the Chairman of the FCC, and the Register of Copyrights. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov.

 94 The five OVD stakeholders were not asked this question because it was not relevant to 

their roles in the video marketplace.

95 GAO-12-75.

Consumer Prices

Agency Comments
Page 39 GAO-16-496 Statutory Copyright Licenses

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix II.

Mark Goldstein

Director,

Physical Infrastructure
Page 40 GAO-16-496 Statutory Copyright Licenses

List of Committees

The Honorable John Thune

Chairman

The Honorable Bill Nelson

Ranking Member

Committee on Commerce, Science, and Transportation

United States Senate

The Honorable Charles E. Grassley

Chairman

The Honorable Patrick J. Leahy

Ranking Member

Committee on the Judiciary

United States Senate

The Honorable Fred Upton

Chairman

The Honorable Frank Pallone

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Bob Goodlatte

Chairman

The Honorable John Conyers, Jr.

Ranking Member

Committee on the Judiciary

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-16-496 Statutory Copyright Licenses

The Satellite Television Extension and Localism Act Reauthorization Act 

of 2014 included a provision for us to study and evaluate the possible 

effects of phasing out statutory licensing of the secondary transmission of 

television broadcast programming. This report examines (1) what is 

known about the potential feasibility of a phaseout of the statutory 

licenses and (2) what are selected stakeholder views on the implications 

of a phaseout of the statutory licenses.

To address both objectives, we reviewed relevant statutes and 

regulations of sections 111, 119, and 122 of the United States Code, U.S. 

Copyright Office, GAO, Congressional Research Service, and Federal 

Communications Commission (FCC) reports to among other things, 

determine how the licenses work, identify alternatives to statutory 

licenses, as well as how the marketplace might function if the statutory 

licenses were phased out. We conducted semi-structured interviews with 

or obtained written comments from 42 stakeholders—including experts, 

industry associations, and industry participants (broadcast networks, 

broadcast station owners, cable and satellite operators, online video 

distributors, and content producers/copyright owners). We selected these 

individuals and organizations based on published literature, including U.S. 

Copyright Office filings and reports, our previous work, and stakeholders’

recognition and affiliation with a segment of the video marketplace, and 

recommendations from other stakeholders. We conducted a content 

analysis based on these interviews to determine how the video 

marketplace has changed in the last 5 years, the potential feasibility of a 

phaseout of the statutory licenses based on the types of rights licensed in 

the video marketplace and negotiations stakeholders participate in, and 

the potential implications of a phaseout of carriage requirements, for the 

video marketplace, and for consumers’ access to programming and the 

prices consumers pay for cable and satellite services. We spoke with six 

experts, including analysts with Pivotal Research, Huber Research, 

MoffettNathanson, and BTIG. We also spoke with Preston Padden, a 

telecommunications expert, and Gregory Crawford, former Chief 

Economist at FCC. We also spoke with eight industry associations and 

one public interest group:

Industry Associations

• American Cable Association (ACA)

• Association of Public Television Stations (APTS)

• Digital Media Association (DiMA)

• Independent Film and Television Alliance (IFTA)

• Motion Picture Association of America (MPAA)

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-16-496 Statutory Copyright Licenses

• National Association of Broadcasters (NAB)

• National Cable and Telecommunications Association (NCTA)

• NTCA – The Rural Broadband Association

Public Interest Group

• Public Knowledge

We also interviewed 27 entities that participate in the video 

marketplace—either producing content (or holding the copyrights to 

content), aggregating content, or distributing content. Table 2 contains 

those industry participants we interviewed along with their role(s) in the 

marketplace.

Table 2: Industry Participants We Interviewed and Their Roles in the Video Marketplace

Role in Video Marketplace

Stakeholder

Content 

producer/ 

Copyright 

owner

Content aggregator Content distributors

Broadcast 

network

Cable 

network

Broadcast 

station 

owner

Noncommercial 

educational

Cable 

operatora Satellite 

operator

Online 

video 

distributor

21st Century Fox     

Amazon.com  

American Society of 

Composers, Authors, and 

Publishers (ASCAP) 



AT&T and its subsidiary, 

DirecTV

  

Broadcast Music, Inc 

(BMI)



CassComm 

CBS Corporation     

Charter Communications 

Corporation for Public 

Broadcasting (CPB)



DISH Network  

Disney-ABC Television 

Group

    

Gray Television  

Hulu  

Major League Baseball 

(MLB)

  

Microsoft c
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-16-496 Statutory Copyright Licenses

Role in Video Marketplace

Stakeholder

Content 

producer/ 

Copyright 

owner

Content aggregator Content distributors

Broadcast 

network

Cable 

network

Broadcast 

station 

owner

Noncommercial 

educational

Cable 

operatora Satellite 

operator

Online 

video 

distributor

National Cable Television 

Cooperative, Inc. (NCTC)

b

National Football League 

(NFL)

 

Netflix  

News Press & Gazette  

Public Broadcasting 

System (PBS)

  

Sinclair Broadcast Group  

Time Warner Cable 

TiVo, Inc. c

Tribune Media Group    

Trinity Broadcasting 

Network (TBN)

   d 

Verizon  

WGBH Educational 

Foundation

 

Source: GAO Analysis based on Interviews with the organizations listed above. | GAO-16-496

a This category includes telecommunication companies, in this case, Verizon and AT&T.

b NCTC serves as a cooperative and negotiates with certain cable networks and broadcast stations 

owned and operated by broadcast networks on behalf of their membership of cable operators.

c This category includes businesses that provide software and in in some cases hardware that allows 

consumers to access online video services.

d According to a TBN representative, it is a non-profit corporation that owns both commercial 

broadcast stations and noncommercial educational broadcast stations.

To understand how the video marketplace is changing and the factors 

influencing changes in the consumption and distribution of video content, 

we reviewed FCC, U.S. Copyright Office, Congressional Research 

Service, GAO, and industry reports. In addition, to understand the 

potential feasibility of a phaseout of the statutory licenses, we analyzed 

FCC’s Cable Service Price survey data from 2010 through 2014, and 

computer-processed data from Bloomberg Analytics on nationwide use of 

cable and satellite video services and trends in cable and satellite 

subscription rates from 2010 through 2014, the most recent available 

data. Our data analysis provided context on how the video marketplace 

operates, such as the number of local broadcast television stations 

carried by cable operators, and how changes in the video marketplace 
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-16-496 Statutory Copyright Licenses

make a phaseout of the statutory licenses appear feasible. FCC’s cable 

price survey was based on a stratified random sample design with 

selection probabilities proportional to the size of the community and a 

response rate of around 97 percent.1 Following FCC’s survey 

methodology, we analyzed FCC’s 2010 through 2014 cable price survey 

data using complex survey software accounting for the sample design 

and weights to produce generalizable estimates to the population of 

communities, on a per-subscriber basis. Because FCC’s cable price 

survey followed a probability procedure based on random selections, the 

selected sample is only one of a large number of samples that might have 

drawn. Since each sample could have provided different estimates, we 

express our confidence in the precision of the particular sample’s results 

as a 95 percent confidence interval (e.g., plus or minus 5 percent). This is 

the interval that would contain the actual population value for 95 percent 

of the samples we could have drawn. Within this report, all numerical 

estimates based on FCC data have margins of error of plus or minus 3.2 

percent or less of the value of those numerical estimates.

To determine how a phaseout of the statutory licenses could impact 

consumer access to cable and satellite television service and television 

programming, we used U.S. Copyright Office calendar year 2014 

Statement of Account data to understand the number of satellite 

subscribers receiving distant signals. Statement of Account filings 

covering 2014 were the most recent full year of data available. To 

understand how consumer access might be affected by a phase out, 

GAO reviewed a summary of SNL Kagan LC data, provided by FCC, on 

local broadcast television station signal blackouts from 2011 through 

2015.

We assessed the reliability of the data used in this report by reviewing 

existing information about the data and the systems that produced them 

and interviewing officials from FCC and the U.S. Copyright Office about 

measures taken to ensure the reliability of the data. We determined the 

data were sufficiently reliable for our purposes.

We conducted this performance audit from June 2015 to May 2016 in 

accordance with generally accepted government auditing standards. 

 1 For further details, see FCC, Report on Cable Industry Prices, (MM Docket No. 92-266), 

29 FCC Rcd 14895 Released Dec. 15, 2014, p.28 – 32.
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-16-496 Statutory Copyright Licenses

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 46 GAO-16-496 Statutory Copyright Licenses

Mark Goldstein, (202) 512-2834 or goldsteinm@gao.gov

In addition to the individual named above, Derrick Collins (Assistant 

Director), Amy Abramowitz, Sarah Arnett, Michael Clements, Juan 

Garcia, Samuel Hinojosa, David Hooper, Sara Ann Moessbauer, Malika 

Rice, Amy Rosewarne, Jerome Sandau, Sonya Vartivarian, and Betsey 

Ward-Jenks made key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100159)
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