Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices 13423 

1Although this proceeding consolidates royalty 

years 1998 and 1999, all claims to 1998 royalties 

have been resolved, and the funds have been 

distributed. IPG’s appeal of the order approving 

distribution of 1998 royalties was dismissed for lack 

of jurisdiction. Ind. Producers Group v. Librarian of 

Congress, 759 F.3d 100 (D.C. Cir. 2014). 

2The 1999 cable royalty deposits equaled 

approximately $118.8 million at the outset. The 

Judges authorized partial distributions that the 

Copyright Licensing Office made on October 31, 

2001, March 27, 2003, April 19, 2007, June 7, 2007, 

and February 28, 2013. Authorized distributions 

equaled in the aggregate approximately $126.9 

million, including accrued interest, leaving a 

balance available for distribution of $827,842. 

3See infra note 18, and accompanying text. The 

Devotional Claimants category has been defined by 

agreements of the Phase I participants as 

‘‘Syndicated programs of a primarily religious 

theme, not limited to those produced by or for 

religious institutions.’’ 

4The Settling Devotional Claimants are: The 

Christian Broadcasting Network, Inc., Coral Ridge 

Ministries Media, Inc., Crystal Cathedral Ministries, 

Inc., In Touch Ministries, Inc., and Oral Roberts 

Evangelistic Association, Inc. The SDC previously 

reached a confidential settlement with devotional 

program claimants represented by the National 

Association of Broadcasters, Liberty Broadcasting 

Network, Inc., and Family Worship Center Church, 

Continued 

No other changes have been made in 

either the membership or planned 

activity of the group research project. 

Membership in this group research 

project remains open, and Pistoia 

Alliance, Inc. intends to file additional 

written notifications disclosing all 

changes in membership. 

On May 28, 2009, Pistoia Alliance, 

Inc. filed its original notification 

pursuant to Section 6(a) of the Act. The 

Department of Justice published a notice 

in the Federal Register pursuant to 

Section 6(b) of the Act on July 15, 2009 

(74 FR 34364). 

The last notification was filed with 

the Department on November 20, 2014. 

A notice was published in the Federal 

Register pursuant to Section 6(b) of the 

Act on December 31, 2014 (79 FR 

78908). 

Patricia A. Brink, 

Director of Civil Enforcement,Antitrust 

Division. 

[FR Doc. 2015–05853 Filed 3–12–15; 8:45 am] 

BILLING CODE 4410–11–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

Notice Pursuant to the National 

Cooperative Research and Production 

Act of 1993; National Armaments 

Consortium 

Notice is hereby given that, on 

February 13, 2015, pursuant to Section 

6(a) of the National Cooperative 

Research and Production Act of 1993, 

15 U.S.C. 4301 et seq. (‘‘the Act’’), 

National Armaments Consortium 

(‘‘NAC’’) has filed written notifications 

simultaneously with the Attorney 

General and the Federal Trade 

Commission disclosing changes in its 

membership. The notifications were 

filed for the purpose of extending the 

Act’s provisions limiting the recovery of 

antitrust plaintiffs to actual damages 

under specified circumstances. 

Specifically, AEgis Technologies Group, 

Inc., Huntsville, AL; Aerojet Ordnance 

Tennessee, Jonesborough, TN; AGM 

Container Controls, Inc., Tucson, AZ; 

Anyar, Inc., Fort Walton Beach, FL; 

BANC3, Inc., Princeton, NJ; Chesapeake 

Testing Services, Inc., Belcamp, MD; 

DRS Sustainment Systems, Inc., Saint 

Louis, MO; Ellwood National Forge 

Company, Irvine, IN; Fastcom Supply 

Corporation, Franklin, NJ; Group W, 

Fairfax, VA; Hydrosoft International, 

Livermore, CA; Kord Technologies, Inc., 

Huntsville, AL; Michigan Research 

Institute, Ann Arbor, MI; Prime 

Photonics, LC, Blacksburg, VA; Sabre 

Global Services, Wharton, NJ; SCHOTT 

North America, Southbridge, VA; Scot 

Forge Company, Spring Grove, IL; 

Teamvantage Molding LLC, Forest Lake, 

MN; Technical Professional Services, 

Inc., Wayland, MI; TELEGRID 

Technologies, Inc., Livingston, NJ; 

TimkenSteel Corporation, Canton, OH; 

and Universal Propulsion Company, 

Inc., Fairfield, CA, have been added as 

parties to this venture. 

The following members have 

withdrawn as parties to this venture: 

Bulova Technologies Group, Inc., 

Tampa, FL; Colt Defense, Hartford, CT; 

Decatur Mold Tool & Engineering, Inc., 

North Vernon, IN; DRS ICAS, LLC, 

Buffalo, NY; Ervine Industries, Inc., Ann 

Arbor, MI; Fibertek, Inc., Herndon, VA; 

Matrix Systems, Inc., Ashland, VA; 

Metal Storm, Herndon, VA; Microcosm, 

Inc., Hawthorne, CA; NI Industries, Inc., 

Riverbank, CA; Olin Corporation— 

Winchester Division, East Alton, IL; Otis 

Products, Inc., Lyons Falls, NY; Parsons 

Government Services, Pasadena, CA; 

Polaris Sensor Technologies, Inc., 

Huntsville, AL; Quantum Technology 

Consultants, Inc., Franklin Park, NJ; 

Solidica, Inc., Ann Arbor, MI; The 

Timken Company, Canton, OH; and 

UTRON, Manassas, VA. 

No other changes have been made in 

either the membership or planned 

activity of the group research project. 

Membership in this group research 

project remains open, and NAC intends 

to file additional written notifications 

disclosing all changes in membership. 

On May 2, 2000, NAC filed its original 

notification pursuant to Section 6(a) of 

the Act. The Department of Justice 

published a notice in the Federal 

Register pursuant to Section 6(b) of the 

Act on June 30, 2000 (65 FR 40693). 

The last notification was filed with 

the Department on August 18, 2014. A 

notice was published in the Federal 

Register pursuant to Section 6(b) of the 

Act on September 17, 2014 (79 FR 

55830). 

Patricia A. Brink, 

Director of Civil Enforcement, Antitrust 

Division. 

[FR Doc. 2015–05835 Filed 3–12–15; 8:45 am] 

BILLING CODE 4410–11–P 

LIBRARY OF CONGRESS 

Copyright Royalty Board 

[Docket No. 2008–1 CRB CD 98–99 (Phase 

II)] 

Distribution of 1998 and 1999 Cable 

Royalty Funds 

AGENCY: Copyright Royalty Board, 

Library of Congress. 

ACTION: Final distribution 

determination. 

SUMMARY: The Copyright Royalty Judges 

announce the final Phase II distribution 

of cable royalty funds for the year 1999. 

The judges issued their initial 

determination in December 2014 and 

received no motions for rehearing. 

DATES: Effective date: March 13, 2015. 

ADDRESSES: The final distribution order 

is also published on the agency’s Web 

site at www.loc.gov/crb and on the 

Federal eRulemaking Portal at 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Richard Strasser, Senior Attorney, or 

Kim Whittle, Attorney Advisor, (202) 

707–7658 or crb@loc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

In this proceeding, the Copyright 

Royalty Judges (Judges) determine the 

final distribution of royalty funds 

deposited by cable system operators 

(CSOs) for the right to retransmit 

television programming carried on 

distant over-the-air broadcast signals 

during calendar year 1999.1 Participants 

have received prior partial distributions 

of the 1999 cable royalty funds.2 The 

remaining funds at issue are those 

allocated to the Devotional Claimants 

category.3 Two participants are 

pursuing distribution from the 

Devotional Claimants funds for 1999: 

Worldwide Subsidy Group LLC dba 

Independent Producers Group (IPG) and 

the ‘‘Settling Devotional Claimants’’ 

(SDC).4 The Judges conducted three and 

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13424 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices 

Inc. The programming giving rise to the latter 

groups’ claims is not included in the Judges’ 

analysis in this proceeding. 

5From prior partial distributions, the SDC have 

received over $693,000. The SDC alone is 

responsible to make adjustments, if any, to comply 

with the conclusions of this Determination and to 

comply with confidential settlements it reached 

with former participants. 

6 IPG represents Benny Hinn Ministries, Creflo A. 

Dollar Ministries, Eagle Mountain International 

Church aka Kenneth Copeland Ministries, and Life 

Outreach International. 

7See supra, n.4. 

8See 73 FR 5596 (Jan. 30, 2008). Before the 

effective date of the Copyright Royalty and 

Distribution Reform Act of 2004, Public Law 108– 

419, 118 Stat. 2341 (Nov. 30, 2004), the Copyright 

Office, with oversight by the Librarian of Congress, 

managed distribution of cable retransmission 

royalties. To resolve controversies regarding the 

appropriate distribution of royalties, the Librarian 

would order appointment of a Copyright Arbitration 

Royalty Panel (CARP). In 2001, the Library of 

Congress initiated Phase I proceedings to determine 

distribution of, inter alia, royalties for distant 

retransmission by cable in 1999 of broadcast 

television programming. In November 2003, all 

claimants to funds in the 1998 Devotional 

Claimants category reached agreement regarding 

distribution of those funds and the Register of 

Copyrights ordered final distribution of 1998 

Devotional Claimants royalties by order dated 

November 19, 2003. By Order dated April 3, 2007, 

the Register finalized the Phase I allocation of 

uncontroverted funds for 1998 and 1999 cable 

retransmissions among the claimant categories. 

After enactment of the current statute, the Register 

terminated the CARP proceeding relating to the 

1998–99 funds. See 72 FR 45071 (Aug. 10, 2007). 

The Judges have managed all subsequent 

proceedings relating to the 1998 and 1999 cable 

royalties fund. 

9Order Granting Motions to Stay, Docket No. 

2008–1 CRB CD 98–99 (July 23, 2008). The Judges 

granted eight continuations of the original stay 

order, entering the last continuation order on July 

27, 2012. See Eighth Order Continuing Stay of 

Proceedings (July 27, 2012). 

10Order Setting Deadline for Filing Written Direct 

Statements, Announcing Discovery Period, and 

Requiring Settlement Conference (Jul 25, 2013). 

11Because of the delay of the present proceeding 

occasioned by outside litigation, the Judges 

concluded their determination of distributions of 

cable retransmission royalties for the period 2000 

to 2003, inclusive, before completing the instant 

proceeding regarding 1999 funds. The participants 

in the 2000–03 proceeding presented many of the 

same issues relevant to the present proceeding; 

thus, one of the ‘‘prior proceedings’’ from which 

participants could designate testimony is a 

proceeding involving funds deposited after the 

relevant period at issue in the present proceeding. 

12The SDC, whose witness introduced the report, 

sometimes refer to it as the Household Viewing 

Hours Report or ‘‘HHVH Report.’’ 

a half days of hearings. After 

considering written evidence and oral 

testimony, the Judges determine that the 

SDC should receive 71.3% and IPG 

should receive 28.7% of the 1999 fund 

allocated to the Devotional Claimants 

category.5

II. Background 

A. Statement of Facts 

In the present proceeding, IPG 

represents the interests of four entities 6

owning copyrights in 10 distinct 

programs. The SDC represent five 

entities 7 owning copyrights in 20 

distinct programs. CSOs remotely 

retransmitted IPG-claimed titles 11,041 

times and the SDC-claimed titles 6,684 

times during 1999. See IPG PFF at 6; 

SDC PFF at 1–2. 

B. Statement of the Case 

On January 30, 2008, the Judges 

commenced a proceeding to determine 

the Phase II distribution of 1998 and 

1999 royalties deposited by CSOs for the 

cable statutory license.8 Beginning in 

July 2008, the Judges stayed the 

proceeding pending the outcome of 

California state court litigation initiated 

by IPG regarding the validity and 

interpretation of settlement agreements 

by and between IPG, the Motion Picture 

Association of America as 

representative of certain program 

suppliers (MPAA), and the Librarian of 

Congress.9 In a September 2012 filing, 

IPG acknowledged that the California 

proceedings had been resolved in favor 

of MPAA. See Opposition of 

Independent Producers group to Motion 

for Final Distribution of 1998 and 1999 

Cable Royalty Funds at 4, Docket No. 

2008–1 CRB CD 98–99 (September 5, 

2012). IPG continued to assert claims to 

1999 royalties allocated to the 

Devotional Claimants category. In July 

2013, the Judges issued an order 

establishing the schedule and order of 

proceedings for the present matter.10

On May 5 and 6, 2014, the Judges 

held a Preliminary Hearing to adjudicate 

disputes regarding the validity of claims 

asserted by each party. At the 

conclusion of the Preliminary Hearing, 

the Judges dismissed two claims 

asserted by IPG. See Ruling and Order 

Regarding Claims (June 18, 2014). 

Beginning September 2, 2014, the 

Judges presided over three and a half 

days of hearings at which IPG presented 

two witnesses and the SDC presented 

three live witnesses and designated 

testimony of seven witnesses from prior 

proceedings.11 The Judges admitted 35 

paper and electronic exhibits into 

evidence. On September 23, 2014, the 

parties filed their proposed findings of 

fact and conclusions of law. 

III. IPG’s Motion in Limine 

A. Issues Presented 

On August 26, 2014, IPG filed with 

the Judges a motion in limine (Motion) 

to exclude the SDC’s Nielsen Household 

Devotional Viewing Report sponsored 

by SDC witness, Alan Whitt.12 IPG 

contends that the SDC failed to include 

in its exhibit list foundational data for 

the methodology used in the report and 

failed to produce all foundational data 

and electronic files underlying the 

report. Motion at 1. IPG requests that the 

Judges strike any evidence relying on or 

referring to the report that the SDC 

presented. 

The SDC oppose IPG’s request, 

arguing, among other things, that IPG 

has failed to present any competent 

evidence that the purportedly missing 

data either were in the SDC’s custody, 

possession, or control, or were not 

publicly available. SDC Opposition at 1 

(September 2, 2014). The SDC also 

contend that IPG’s motion in limine 

merely attempts to revisit issues the 

Judges resolved in their May 2, 2014, 

Order Denying IPG’s Motion to Strike 

Portions of SDC Written Direct 

Statement (‘‘May 2, 2014, Order’’). The 

SDC contend that IPG has presented no 

new evidence that would justify 

revisiting that decision. SDC Opposition 

at 3 & n.1. 

Moreover, the SDC contend that IPG’s 

arguments go to the weight rather than 

to the admissibility of the proffered 

report. SDC Opposition at 2, citing U.S. 

v. H & R Block, Inc., 831 F.Supp.2d 27, 

34 (D.D.C. 2011) (denying motion in 

limine ‘‘because [defendant’s proffered] 

survey [was] not so unreliable as to be 

deemed inadmissible.’’) and Graves v. 

D.C., 850 F.Supp.2d 6, 13 (D.D.C. 2011) 

(‘‘[M]otions in limine are designed to 

address discrete evidentiary issues 

related to trial and are not a vehicle for 

resolving factual disputes or testing the 

sufficiency of the plaintiff’s evidence.’’). 

Finally, the SDC argue that even if the 

Judges were inclined to believe that the 

unavailability of data underlying the 

proffered report was relevant in an 

admissibility determination, this fact 

would not warrant a prehearing 

exclusion of the evidence. According to 

the SDC, the facts and data underlying 

an expert’s opinion need not be 

admissible for the opinion or reference 

to be admitted if the facts or data are of 

a type reasonably relied upon by experts 

in the field. SDC Opposition at 4, citing 

Rule 703 of the Federal Rules of 

Evidence. On this point, the SDC refer 

to the written direct testimony of the 

SDC’s witness, John S. Sanders, who, 

according to the SDC, determined that 

‘‘Mr. Whitt’s report is sufficiently 

reliable to render his opinion 

concerning the relative market value of 

the SDC and IPG programs.’’ SDC 

Opposition at 5. 

The Judges heard oral argument on 

the Motion on September 2, 2014, and 

deferred ruling until the end of the 

proceeding. For the reasons discussed 

below, the Judges deny the Motion and 

admit the proffered report. 

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B. The Judges’ May 2, 2014, Discovery 

Order 

The dispute between IPG and the SDC 

began with a discovery request from IPG 

in which it requested from the SDC 

‘‘evidentiary support for a report by the 

SDC’s expert witness, Mr. Whitt, setting 

forth viewership levels for Devotional 

programming.’’ See May 2, 2014, Order 

at 1. In the motion to compel discovery 

that gave rise to the Judges’ May 2, 2014, 

Order, IPG sought an order striking Mr. 

Whitt’s report and the SDC’s reliance on 

that report. According to IPG, the SDC 

failed to meet its discovery obligations 

by failing to provide electronic files or 

computer codes that Mr. Whitt 

purportedly used to (1) merge 

viewership data sets compiled by 

Tribune Media Services and the Nielsen 

Company and (2) cull claimed 

devotional titles from numerous 

program titles in the merged data sets 

(referred to in the May 2, 2014, Order 

as ‘‘Merger Information’’). Id. at 3. 

The Judges determined that the 

discovery dispute could not be resolved 

without an evidentiary hearing, and 

scheduled one for April 8, 2014. During 

the hearing, the Judges heard testimony 

from the SDC’s witnesses, Mr. Whitt and 

Dr. Erkan Erdem, as well as from Dr. 

Laura Robinson, who testified for IPG. 

Mr. Whitt testified that he did not 

have access to the files and codes he 

had used that contained the Merger 

Information because he had done most 

of the work in question when he was 

employed with an independent 

company that was a contractor for 

MPAA. Mr. Whitt completed his MPAA 

assignment several years prior to the 

current proceeding. 04/08/14 Tr. at 105 

(Whitt). Therefore, according to Mr. 

Whitt, neither Mr. Whitt nor the SDC 

could provide the requested information 

to IPG. Id. at 121–22. Dr. Robinson 

testified that, based on discovery that 

the SDC provided, she was unable to 

replicate the results that Mr. Whitt had 

reached, although she admitted that she 

could have merged the Tribune and 

Nielsen data sets. Id. at 35–6, 66 

(Robinson). Finally, Dr. Erdem testified 

that, based on discovery the SDC had 

provided to IPG, and certain other 

publicly available information, Dr. 

Erdem was able to closely approximate, 

although not duplicate, Mr. Whitt’s 

results. Id. at 162 (Erdem). 

The Judges found that nothing in the 

record allowed them to conclude that 

SDC violated its duties under the 

applicable procedural rule governing 

discovery by not producing the Merger 

Information. See May 2, 2014, Order at 

9. The Judges further concluded that the 

SDC’s discovery responses were 

sufficient for IPG to ‘‘test’’ the process 

Mr. Whitt used in compiling the report. 

The Judges noted that the purpose of an 

earlier discovery order addressing IPG’s 

discovery request was to 

allow IPG sufficient discovery to allow it to 

confirm either that Mr. Whitt had performed 

his work correctly . . . or that Mr. Whitt had 

performed his work incorrectly or 

inaccurately. In that latter case, IPG would be 

able to: (a) file a Written Rebuttal Statement 

contradicting Mr. Whitt’s work and/or (b) 

cross-examine Mr. Whitt at the hearing on 

the merits regarding claimed errors or 

inaccuracies in his work. 

Id. (emphasis in original). 

The Judges concluded that they 

‘‘would not—and did not—assert that 

discovery regarding expert testimony 

must result in a consensus between 

adverse participants as to the 

correctness of the result (or the amount) 

calculated by the expert.’’ Id. at 11. 

Specifically, the Judges concluded 

with the discovery [the SDC provided to IPG, 

Dr. Robinson] could test Mr. Whitt’s 

computational process by producing her own 

merger of the Tribune Data and the Nielsen 

Data. However, Dr. Robinson also testified 

that her merger and the concomitant results 

might differ from (i.e., falsify) rather than 

replicate Mr. Whitt’s results. Likewise, [Dr. 

Erdem] produced a merger of the Tribune 

Data and the Nielsen Data that was quite 

proximate to Mr. Whitt’s results, albeit not a 

complete replication. Thus, it is clear that 

Mr. Whitt’s computational processes can be 

tested and subject to meaningful crossexamination and rebuttal. 

Id. Based on this conclusion the Judges 

denied IPG’s motion to strike portions of 

the SDC’s written direct statement on 

grounds that the SDC violated its 

discovery obligations. 

In its discovery motion, IPG also 

asked the Judges to strike any reliance 

on or reference to the distant rating 

study presented by the SDC as 

inadmissible. See [IPG] Motion to Strike 

Portions of [SDC] Direct Statement at 

10–11 (February 20, 2014). The Judges 

declined to consider these issues at that 

stage of the proceeding reasoning that: 

[a]n order regarding these issues would 

essentially constitute a premature in limine 

ruling based on SDC’s non-production of the 

Merger Information in discovery. Given that 

SDC introduced new testimony and new 

exhibits at the April 8, 2014, discovery 

hearing, the Judges decline to rule without a 

formal motion in limine, addressing these 

issues in the context of the new hearing 

exhibits and the hearing testimony, should 

IPG decide to renew these arguments. 

May 2, 2014, Order at 11. IPG filed that 

motion in limine on August 26, 2014, 

viz., the Motion at issue here. 

C. Substance of IPG’s Motion 

In the present Motion, IPG asserts that 

‘‘Merger Information existed and was 

not produced to IPG, including sweeps 

period data, a sweeps period algorithm, 

a file that prepared the Tribune data for 

merger, a process to reconcile Nielsen 

and Tribune data, and another ‘quality 

control process’ performed by Mr. 

Whitt.’’ Motion at 2. IPG further asserts 

that ‘‘SDC’s witness [Dr. Erdem] 

approximated Mr. Whitt’s results only 

after utilization of data and information 

that had not been produced to IPG, and 

that the SDC’s attempted replication of 

the Merger Information occurred 

months after both the discovery 

deadline and the deadline for filing 

amended direct statements.’’ Id. 

According to IPG, the ‘‘SDC neither 

produced the original Merger 

Information, nor attempted to replicate 

it until March 28, 2014, all the while 

knowing the evidentiary requirements 

for the introduction of the study. . . .’’ 

Id. at 3. 

IPG continues: 

Alan Whitt asserts that his analysis relied, 

inter alia, (i) on a sample of television 

stations selected by Marsha Kessler [an 

MPAA witness in past cable distribution 

proceedings, including the 2000–2003 

proceeding and the Phase I proceeding for 

the instant royalty year], and (ii) household 

diaries of distant program viewing for those 

programs from Nielsen’s six ‘‘sweep’’ 

months. [Yet, l]iterally no information or data 

regarding the station sampling process exists, 

nor information or data that explains the 

methodological processes utilized in 

connection with the produced Nielsen data. 

Id. at 3 (internal quotations omitted). 

IPG asserts that: 

stations selected by Ms. Kessler for inclusion 

in the 1999 MPAA/Nielsen study were 

altogether different than those appearing in 

data produced by the SDC. . . . [Therefore,] 

Mr. Whitt’s statement that the SDC-produced 

data was derived from a sample of stations 

selected by Marsha Kessler is simply 

inaccurate or, at minimum, without 

evidentiary foundation [but] IPG has been 

denied any ability to investigate that 

determination because of the SDC’s failure to 

produce underlying documents 

substantiating such assertion. 

Id. at 4. 

IPG further asserts that, in prior 

proceedings, Nielsen and the MPAA 

have used a wide variety of sampling 

methodologies and methods of data 

collection. IPG contends that with 

respect to the Nielsen data produced by 

the SDC in the current proceeding, 

however, the SDC provided none of 

those methodological details. 

Consequently, IPG asserts that it has ‘‘no 

means of determining the method by 

which the stations on which the Whitt 

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13Even if the Judges had not addressed the issue 

in the May 2, 2014, Order, they would nonetheless 

reject IPG’s assertion that the SDC was obligated to 

create documents to comply with a discovery 

request. The Judges have consistently held that 

‘‘[t]he limited discovery permitted in proceedings 

before the Judges should permit the parties to test 

admissible evidence, but not create an extensive 

burden of time and expense.’’ Order Granting In 

Part and Denying In Part the Motion of 

SoundExchange to Compel XM Satellite Radio Inc., 

Sirius Satellite Radio Inc., and Music Choice to 

Produce Surveys and Supporting Documents, 

Docket No. 2006–1 CRB DSTRA (May 15, 2007). In 

the May 2, 2014, Order, the Judges ruled that the 

SDC had provided IPG with sufficient discovery to 

enable IPG to test the HHVH report. IPG points to 

no provision in the CRB rules that requires a party 

to create documents in response to a discovery 

request. The Judges see no reason in this instance 

to impose such a requirement by order. 

14The rule states: ‘‘[t]he written direct statement 

shall include all testimony, including each 

witness’s background and qualifications, along with 

all the exhibits.’’ 37 CFR 351.4(b). The SDC’s 

written direct statement included Mr. Whitt’s 

testimony as well as that of Mr. Sanders. The SDC 

included in its rebuttal statement the testimony of 

Dr. Erdem. The SDC’s written direct statement may 

not have been exquisitely complete. Indeed, the 

SDC’s counsel concedes that Mr. Whitt’s written 

testimony did not describe a ‘‘quality control’’ 

process that he conducted to eliminate duplicative 

entries and to fix errors in program titles. 09/02/14 

Tr. at 37 (Att’y MacLean). The SDC contends, 

however, that Mr. Whitt’s process resulted in the 

elimination of a handful of program titles, none of 

which was claimed by either party in this 

proceeding. Id. at 37–8. The Judges find no 

persuasive evidence in the record to contradict the 

SDC’s contention, rendering the SDC’s omission 

harmless. Moreover, the Judges note that the dates 

for Nielsen sweeps weeks, used by Dr. Erdem in his 

analysis to replicate Mr. Whitt’s report, either were 

produced to IPG or were otherwise publicly 

available. See 04/08/14 Tr. at 23–24, 204 (Att’y 

MacLean). The SDC satisfied its discovery 

obligations with respect to this information. 

15 IPG raised similar objections in the 2000–03 

distribution proceeding. Docket No. 2008–2 CRB CD 

2000–03. In that proceeding, the Judges excluded 

Mr. Whitt’s testimony, which relied on data similar 

to that which the SDC proffer in the current 

proceeding. The Judges’ decision not to consider 

Mr. Whitt’s testimony in the 2000–2003 proceeding, 

however, was based the SDC’s failure to provide 

Mr. Whitt’s testimony until its rebuttal case, three 

weeks before the hearing. In that context, the Judges 

found the SDC’s delay ‘‘deprived IPG of the 

opportunity to review the work undertaken by Mr. 

Whitt.’’ 78 FR 64984, 65004 (Oct. 30, 2013) 

16Ms. Kessler’s written direct testimony was 

included in the prior testimony designated by the 

SDC for consideration in this proceeding under 37 

CFR 351.4(b)(2). 

analysis relies were selected, and no 

means to determine what Nielsen data 

was collected, how it was collected, the 

limitations on the data, the scope and 

meaning of the data, the possible 

alternatives that were employed, etc.’’ 

Id. at 5–6. As a result, IPG requests that 

the Judges strike any evidence relying 

on or referring to Mr. Whitt’s HHVH 

report. Id. at 8. 

D. Judges’ Analysis and Ruling on the 

Motion 

Much of IPG’s Motion rehashes 

discovery issues that the Judges 

addressed fully in the May 2, 2014, 

Order. The Judges will not revisit those 

discovery-related issues. The Judges 

now consider only whether to grant or 

deny IPG’s Motion, which requests that 

the Judges preclude the SDC from 

relying on or referring to the HHVH 

report on grounds of admissibility. 

IPG’s arguments for excluding the 

HHVH report are that the SDC failed to: 

(1) Retain or produce to IPG input data 

from the HHVH report, (2) produce 

information relating to the sampling 

processes that were followed for the 

selection of stations included as part of 

the Whitt analysis, and (3) produce the 

methodological processes followed by 

Nielsen in the creation of the Nielsen 

data that were referred to in the HHVH 

report. See Motion at 7–8. 

At oral argument on the motion, IPG’s 

counsel contended that even if the SDC 

did not have the underlying documents 

that IPG sought, the SDC was required 

to create such documents and produce 

them to IPG. 09/02/14 Tr. at 14–15. As 

a preliminary matter, the Judges view 

this argument as yet another attempt by 

IPG to resurrect its complaint that the 

SDC failed to meet its discovery 

obligations. The Judges already 

addressed this issue in the May 2, 2014, 

Order.13

IPG also asserts that the SDC’s failure 

to create a document in response to 

IPG’s discovery requests somehow 

violated a statutory provision dealing 

with written direct statements. At the 

hearing, IPG’s counsel contended that 

the SDC ‘‘never put this information or 

alluded to it or referenced or 

incorporated it by reference in an 

Amended Written Direct Statement. 

Therefore, for the record, it does not 

exist. It is not before [the Judges]. And 

as such, the SDC study is hopelessly 

missing a piece, and therefore, it should 

not be heard. It should be excluded.’’ 

09/02/14 Tr. at 15 (Att’y Boydston). 

The requirement to file written direct 

statements is codified in section 

803(b)(6)(C) of the Copyright Act. That 

section circuitously requires the Judges 

to issue regulations that require the 

parties to file written direct statements 

and written rebuttal statements by a 

date specified by the Judges. 17 U.S.C. 

803(b)(6)(C)(i). The statutory provision 

does not address the content of written 

direct statements. Moreover, the 

regulation the Judges promulgated 

under that provision does not impose 

the content requirements that IPG 

suggests.14 Therefore, the Judges reject 

IPG’s assertion that the SDC violated the 

statutory provisions dealing with the 

filing of written direct statements. The 

HHVH report was properly before the 

Judges.15 On balance, the Judges find 

that the SDC’s written direct statement 

was adequate to satisfy the requirements 

of the Act and applicable rules. IPG’s 

complaints about the completeness or 

persuasiveness of that testimony go to 

the weight rather than the admissibility 

of the testimony. 

IPG also objects to the purported lack 

of clarity surrounding the way in which 

the television stations analyzed in the 

HHVH report were selected. Mr. Whitt 

stated in his written direct testimony 

that the television stations he studied in 

the report were based on a list of 

stations compiled by Ms. Kessler. Ex. 

SDC–D–001 at 3. IPG, evidently 

assuming that the list referred to by Mr. 

Whitt was the list of stations that was 

attached to Ms. Kessler’s written direct 

testimony in Phase I of this 

proceeding,16 contends that it compared 

the selection of stations in the Whitt 

HHVH report with Ms. Kessler’s list and 

found that the two do not correspond. 

IPG states that of Mr. Whitt’s 72 

stations, only half of them can be found 

in Ms. Kessler’s list. 09/02/14 Tr. at 16. 

IPG contends that it does not know 

where the other 36 stations that Mr. 

Whitt studied came from. Id. 

The SDC reply that the Kessler list 

that IPG compared with the Whitt list 

was not the basis for the HHVH report. 

The SDC represent that the Kessler list 

of stations that Mr. Whitt used for his 

report was based on the Nielsen data 

that Ms. Kessler ordered for the study 

that she prepared for the 2000–03 

proceeding. 09/02/14 Tr. at 28–30 (Att’y 

MacLean). Mr. Whitt addressed this 

issue in his testimony in the April 

hearing on IPG’s discovery motion. 04/ 

08/14 Tr. at 113–15 (Whitt). That being 

said, the SDC are unsure how Ms. 

Kessler determined what Nielsen data to 

order. 09/04/14 Tr. at 29 (Att’y 

MacLean). Nevertheless, the SDC’s 

witness, Mr. Sanders, testified that the 

list upon which the Whitt report was 

compiled was ‘‘sufficiently 

representative for the purpose that it is 

being put forth.’’ Id. at 31. The SDC 

further assert, based on an analysis by 

Dr. Erdem, that the SDC’s Nielsen 

sample, which was based on the Nielsen 

information that was ordered by Ms. 

Kessler, ‘‘does not have a bias in terms 

of coverage of quarter-hours of IPG 

versus SDC programs. Or, if it does have 

a bias, the same bias is in all of the data 

that IPG is using as well, whatever bias 

there is.’’ Id. at 32. Finally, the SDC 

state that they ‘‘had absolutely nothing 

to do with choosing this [station] 

sample—it was chosen years before we 

ever purchased it from MPAA—there 

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17The Copyright Royalty Tribunal (CRT), a 

predecessor to the CRB, began bifurcation of the 

distribution proceedings to mitigate what it 

perceived to be an unwieldy process. See 1979 

Cable Royalty Distribution Determination, 47 FR 

9879 (Mar. 8, 1982). Bifurcation of distribution 

proceedings is not mandated by statute or 

regulation, but is acknowledged in the Judges’ 

current regulations at 37 CFR 351.1(b)(2). 

18The program categories are: Program Suppliers 

(syndicated programming and movies); Joint Sports 

Claimants (live college and professional team 

sports); Commercial Television (programs produced 

by local commercial TV stations); Public 

Broadcasting; Devotional Claimants; and Canadian 

Claimants. Two additional categories represent nonTV interests: Music Claimants (copyright owners of 

musical works carried on broadcast TV signals); and 

National Public Radio (copyright owners of all nonmusic content broadcast on NPR stations) 

19Section 111(d)(4) of the Act merely provides 

that, in the event of a controversy concerning the 

distribution of royalties, ‘‘the Copyright Royalty 

Judges shall, pursuant to Chapter 8 of [title 17], 

conduct a proceeding to determine the distribution 

of royalty fees.’’ 

20The Librarian was responsible for 

administering the Copyright Arbitration Royalty 

Panel (CARP) process for distributing cable 

royalties from 1993, when Congress abolished the 

CRT, a predecessor adjudicative body, until 2005, 

when Congress established the Copyright Royalty 

Judges program. The Librarian had the obligation of 

reviewing CARP decisions and, on recommendation 

of the Register, adopting, modifying, or rejecting 

them. 

was absolutely zero incentive for 

everybody to intentional [sic] bias the 

data in any way.’’ Id. at 33. 

For purposes of ruling on the Motion, 

the Judges do not examine the weight, 

if any, they might place on the proffered 

evidence. Rather, the Judges must 

examine whether the SDC offered the 

evidence in a manner that was 

consistent with the applicable rules for 

offering this type of evidence. 

The Judges’ procedural rules address 

evidence in proceedings before the 

Judges. Rule 351.10(a) addresses 

admissibility of evidence. Under the 

rule, evidence that is relevant and not 

unduly repetitious or privileged is 

admissible. Proponents must 

authenticate or identify written 

testimony and exhibits for them to be 

admissible. See 37 CFR 351.10(a). The 

admissibility requirements of 

authentication or identification are 

satisfied by evidence sufficient to 

support a finding that the matter in 

question is what its proponent claims. 

Id. 

IPG does not contend that the SDC 

violated any provision of Rule 351.10(a); 

that is, that the Whitt report is 

irrelevant, unduly repetitious, or 

privileged. Rather, IPG focuses on Rule 

351.10(e). That provision of the rule 

provides if studies or analyses are 

offered in evidence, they must state 

clearly ‘‘the study plan, the principles 

and methods underlying the study, all 

relevant assumptions, all variables 

considered in the analysis, the 

techniques of data collection, the 

techniques of estimation and testing, 

and the results of the study’s actual 

estimates and tests.’’ 37 CFR 351.10(e). 

This information must be presented in 

a ‘‘format commonly accepted within 

the relevant field of expertise implicated 

by the study.’’ Id. Facts and judgments 

upon which conclusions are based must 

be ‘‘stated clearly, together with any 

alternative courses of action that were 

considered.’’ Id. The party offering the 

study into evidence must retain 

summaries and tabulations of input data 

and the input data themselves. Id. 

IPG asserts that by not explaining 

precisely how the Whitt report was 

created, the SDC failed to provide an 

adequate foundation for the report. In 

considering whether there was an 

adequate foundation for admitting the 

Whitt report into evidence, the Judges 

must consider not only the exhibit that 

contains the report but also any written 

or live testimony offered to explain how 

the exhibit was created. In his written 

direct statement, Mr. Whitt included the 

household viewing report that he had 

prepared and discussed the sources of 

the data and a description of how he 

prepared the report. In the April 8, 

2014, hearing on IPG’s motion to strike 

portions of the SDC’s written direct 

statement, Mr. Whitt provided 

additional details about he created the 

report, including the sources of the data, 

the processes he followed to merge 

Nielsen and Tribune data files, and the 

‘‘quality control’’ process he used to 

eliminate erroneous program titles. 

IPG’s counsel and the Judges had 

ample opportunity to question Mr. 

Whitt on all elements of the report. 

After noting IPG’s objection, the Judges 

admitted provisionally Mr. Whitt’s 

written testimony during the hearing on 

September 3, 2014. 09/03/14 Tr. at 416. 

IPG’s counsel then had another 

opportunity to cross-examine Mr. Whitt 

on the processes he used to construct 

the report. On both occasions, Mr. Whitt 

was open and forthright about how he 

prepared the report, including the 

manner in which he used a list of 

stations based on a set of Nielsen data 

ordered by Ms. Kessler for MPAA in a 

separate proceeding. See, e.g., 09/03/14 

Tr. at 422 (Whitt) (‘‘I just accepted 

whatever stations they sent me.’’). Mr. 

Whitt made no efforts to gloss over the 

potential weaknesses in the preparation 

of the report. Indeed, the SDC’s counsel 

correctly identified Mr. Whitt as more 

akin to a fact witness than an expert 

witness. 09/02/14 Tr. at 35 (Whitt). 

In the end, the Judges are satisfied 

that the SDC provided an adequate 

foundation for the admission of Mr. 

Whitt’s written direct statement into the 

record. That is not to say that there are 

not issues with respect to how the 

HHVH report was created. The SDC 

concede as much. See 09/02/14 Tr. at 24 

(Att’y MacLean) (‘‘[I]t is not that any of 

the specific problems that the parties 

raised were invalid or that they 

shouldn’t be raised. . . .’’). Not the 

least of these issues is the fact that the 

Whitt report relies on a list of stations 

selected according to criteria that were 

seemingly unknown even to Ms. Kessler 

who purportedly selected the stations. 

These issues go to the weight, not to the 

admissibility, of the report. For the 

foregoing reasons, the Judges DENY 

IPG’s Motion and admit Exhibit SDC–D– 

001 (Written Direct Testimony of Whitt 

with Exhibits) for all purposes in this 

proceeding. 

IV. Applicable Law and Precedent 

Twice each year, CSOs deposit with 

the Copyright Office royalties accrued 

for the retransmission of over-the-air 

television programming outside the 

originating station’s local broadcast 

area. The amount of fee deposits is 

statutory. See 17 U.S.C. 111(d)(1). Every 

July, copyright owners file claims for 

the funds on deposit for the preceding 

calendar year’s retransmissions. On 

motion of a claimant or sua sponte, the 

Judges publish notice of the 

commencement of proceedings to 

distribute those royalty funds. 

By convention, claimants and 

claimants’ representatives begin each 

proceeding with an allocation process 

that has come to be called ‘‘Phase I.’’ 17

Traditionally, the claimants divide 

themselves into eight Phase I categories 

based upon the nature of the programs 

in which they claim copyright.18 If the 

participants do not agree to an 

allocation of deposited royalties among 

the Phase I categories, they submit their 

controversy to the Judges for 

adjudication. Once the allocation is 

decided, the claimants in each category 

seek distribution. If the claimants 

within each category do not agree to the 

distribution scheme among themselves, 

the Judges adjudicate disputes and make 

a determination of the appropriate 

distribution among claimants within 

each category. This process has become 

known as ‘‘Phase II’’ of the distribution 

proceeding. 

A. The Relevant Statutory Language 

The Copyright Act (Act) does not 

mandate (or even suggest) a formula for 

royalty distribution.19 As the 

Librarian 20 has stated: 

Section 111 does not prescribe the 

standards or guidelines for distributing 

royalties collected from cable operators 

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21The 1993–1997 Librarian Order was vacated as 

moot after the parties settled their appeals. 

Distribution of 1993, 1994, 1995, 1996 and 1997 

Cable Royalty Funds, Notice of termination of 

proceeding, Docket No. 2000–2 CARP CD 93–97, 69 

FR 23821 (Apr. 30, 2004). The settlement and 

vacatur of the 1993–1997 Librarian Order did not 

disturb the reasoning articulated therein. Id. at 

23822. 

22 ‘‘Simulations aim at imitating an economically 

relevant real or possible system by creating societies 

of artificial agents and . . . institutional 

structure. . . .’’ A. Lehtinen and J. Kuorikoski, 

Computing the Perfect Model: Why Do Economists 

Shun Simulations?, 74 Phil. of Sci. 304, 307 (2007) 

(emphasis in original). However, the parties to this 

proceeding did not proffer evidence of any 

simulations. Further, the parties did not provide 

evidence or testimony from sellers/licensors and 

buyers/licensees in ‘‘analogous’’ markets, such as 

perhaps the markets for cable programming or 

syndication rights (nor the results of any surveys of 

such market participants) that the Judges might use 

as benchmarks to establish a distribution 

methodology in the present proceeding. The SDC 

did provide, however, evidence of ratings from the 

local markets in which the SDC and IPG programs 

aired. 

23The compulsory license regime requires CSOs 

to license a station’s signal in its entirety, 17 U.S.C. 

111(d)(1)(B), and to retransmit the programs 

under the statutory license. Instead, Congress 

decided to let the Copyright Royalty Tribunal 

‘‘consider all pertinent data and 

considerations presented by the claimants’’ 

in determining how to divide the royalties. 

Distribution of 1993, 1994, 1995, 1996 

and 1997 Cable Royalty Funds, Order, 

in Docket No. 2000–2 CARP CD 93–97, 

66 FR 66433, 66444 (Dec. 26, 2001) 

(quoting H.R. Rep. No. 1476, at 97 

(1976)) (1993–1997 Librarian Order).21

The Act does require, however, that 

the Judges act in accordance with prior 

determinations and interpretations of 

the Copyright Royalty Tribunal, the 

Librarian, the Register of Copyrights 

(Register), Copyright Arbitration Royalty 

Panels, to the extent that precedent is 

consistent with the Register’s opinions 

on questions of copyright law, and 

decisions of the Court of Appeals 

relating to distribution proceedings. See 

17 U.S.C. 803(a)(1). 

Determining the proper distribution of 

cable royalties among claimants requires 

a determination of the ‘‘relative 

marketplace value’’ of the respective 

claimants’ programs. See, e.g., Program 

Suppliers v. Librarian of Congress, 409 

F.3d 395, 401 (D.C. Cir. 2005); 1993– 

1997 Librarian Order, 66 FR at 66445. 

The Judges defined ‘‘relative 

marketplace value’’ in detail in a 

previous Determination. See 

Determination of the Distribution of the 

2000–03 Cable Royalty Funds, Docket 

No. 2008–2, CRB CD 2000–2003, 78 FR 

64984, 64985–6 nn. 8 and 9 (October 30, 

2013) (2000–03 Determination). In the 

present Determination, the Judges adopt 

and restate the ‘‘relative market value’’ 

standard they described in the 2000–03 

Determination, and provide further 

detail consistent with that standard, 

including detail presented through the 

expert economic testimony in the 

present proceeding. 

To assess relative marketplace value, 

the Judges previously have looked to 

hypothetical, simulated, or analogous 

markets, as Congress has imposed the 

compulsory license regime in lieu of an 

unfettered free market for cable 

retransmission of broadcast television 

programs. 2000–03 Determination, 78 

FR at 64986; see also 1993–97 Librarian 

Order, 66 FR at 66445; 1987 Music 

Determination, 55 FR at 11993. 

Consistent with precedent, in the 

current proceeding the Judges look to 

the evidence presented by the parties, if 

any, to identify the parameters of a 

hypothetical market that would exist 

but for the compulsory license regime.22

B. The Economic Standard: ‘‘Relative 

Market Value’’ 

As explained in the 2000–03 

Determination, to construct the 

hypothetical market, it is important at 

the outset to appreciate the reason for 

the statutory license and the 

concomitant distribution proceedings. 

Statutory licenses substitute for free 

market negotiations because of a 

perceived intractable ‘‘market failure’’ 

inherent in the licensing of copyrights— 

particularly the assumed prohibitively 

high ‘‘transaction costs’’ of negotiating a 

multitude of bilateral contracts between 

potential sellers and buyers. See, e.g., R. 

Picker, Copyright as Entry Policy: The 

Case of Digital Distribution, 47 Antitrust 

Bull. 423, 464 (2002) (‘‘The modern 

structure of . . . validating or conferring 

rights in copyright holders yet coupling 

those rights with statutory licenses has 

the virtue of mitigating the exercise of 

monopoly power and minimizing the 

transaction costs of negotiations.’’); S. 

Willard, A New Method of Calculating 

Copyright Liability for Cable 

Rebroadcasting of Distant Television 

Signals, 94 Yale L.J. 1512, 1519 (1985) 

(‘‘One important reason for compulsory 

licensing . . . was to avoid the 

‘prohibitive’ transaction costs of 

negotiating rebroadcast consent.’’); S. 

Besen, W. Manning & B. Mitchell, 

Copyright Liability for Cable Television: 

Compulsory Licensing and the Coase 

Theorem, 21 J.L. & Econ. 67, 87 (1978) 

(‘‘Compulsory licensing . . . has lower 

negotiating costs than a system based on 

full copyright liability. . . .’’). Thus, 

the hypothetical market that the Judges 

must construct must be a market that 

would be unencumbered by either 

transaction costs or the restrictions 

imposed by the statutory license. 

1. ‘‘Relative’’ Market Value 

The Judges begin, as they did in the 

2000–03 Determination, parsing the 

phrase ‘‘relative market value’’ by first 

considering the import of the word 

‘‘relative.’’ The word ‘‘relative’’ denotes 

that the value of any retransmitted 

program is to be determined in relation 

to the value of all other programs within 

the bounds of the respective Phase I 

category definitions, and thus can be 

expressed as a percentage of total 

‘‘market value.’’ 

2. Relative ‘‘Market Value’’ 

In turn, ‘‘market value’’ is 

traditionally stated in decisional and 

administrative law more fully as ‘‘fair 

market value.’’ The Supreme Court has 

stated the traditional definition of ‘‘fair 

market value’’ as ‘‘the price at which the 

property would change hands between 

a willing buyer and a willing seller, 

neither being under any compulsion to 

buy or sell and both having reasonable 

knowledge of relevant facts.’’ U.S. v. 

Cartwright, 411 U.S. 546, 551 (1973). It 

is necessary to further define the various 

terms that comprise the foregoing 

definition of relative market value. 

a. The Hypothetical ‘‘Willing Sellers’’ 

(the Copyright Owners) 

Copyright Owners seek to maximize 

profit from licensing their programs for 

retransmission by CSOs. Copyright 

Owners’ marginal costs are low and 

approach zero. Most of the costs 

incurred in creating the work are sunk, 

fixed costs. Even so, Copyright Owners 

seek to maximize the revenue they 

receive from CSOs. Given the minimal 

marginal costs, Copyright Owners, as 

the hypothetical willing sellers, will 

always have an incentive to sell at some 

positive price, but will likely engage in 

bargaining whereby a Copyright Owner 

might threaten to deny the license 

unless the CSO offers the Copyright 

Owner’s (undisclosed) reservation price. 

See Besen, et al, supra, at 81. 

b. The Hypothetical ‘‘Willing Buyers’’ 

(the CSOs) 

For CSOs, the economics are less 

straightforward. CSO revenues are 

derived from the sale of cable bundles 

(commonly described as ‘‘packages’’ or 

‘‘tiers’’) to subscribers, i.e., the ultimate 

consumers. In turn, many variables 

affect the number of consumers that 

subscribe to a particular CSO’s service, 

including the retransmitted broadcasts 

that the CSO includes as part of its 

subscription package.23

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(including advertisements) without alteration. 17 

U.S.C. 111(c)(3). Therefore, retransmitting CSOs 

cannot sell advertising on retransmitted broadcast 

channels in the actual market under the 

compulsory license regime. However, in the 

hypothetical market, where the limiting provisions 

of the compulsory license regime would not apply, 

retransmitting CSOs arguably could sell local 

replacement advertising, which would render 

viewership an important metric of relative market 

value. However, this point was not presented by 

either of the parties in the present proceeding. 

24A focus on marginal costs and benefits is not 

only efficient for the hypothetical buyers and 

sellers, but also for the consuming public: ‘‘Optimal 

program diversity will result if cable operators and 

the public they serve pay to copyright owners the 

marginal value derived from viewing syndicated 

programming.’’ Willard, supra, at 1518. 25 If the CSO, as a program licensee, had some 

degree of monopsony power in the factor market, 

it could pay less than a price equal to MRP, but still 

would pay to license programs in a quantity at 

which MRP would equal the marginal cost to 

license an additional program. 

26See L. Shapley, A Value for n-person Games, 

in H. Kuhn and A. Tucker, Contributions to the 

Theory of Games (1953). A definition and an 

example of a Shapley valuation are set forth in the 

text, infra. For the statistical formula for a Shapley 

value, see 9/8/14 Tr. at 1075–79 (Erdem); see also 

SDC Proposed Findings of Fact (PFF) ¶ 64. 

To CSOs, the programs offered by the 

Copyright Owners are inputs—factors of 

production—utilized to create the 

products that the CSOs sell to their 

customers, viz., the various subscription 

bundles of cable channels. In a 

hypothetical program market, CSOs 

would buy the rights to retransmit 

programs as they would purchase any 

factor of production, up to the level at 

which that ‘‘factor price’’ equals the 

‘‘Marginal Revenue Product’’ (MRP) of 

that program. In simple terms, a CSO in 

a competitive factor market would only 

pay for a license to retransmit a program 

if the revenue the CSO could earn on 

the next (marginal) sale of the final 

product were at least equal to that 

price.24 In practical terms, why would a 

CSO pay $50,000 to retransmit a 

program that the CSO estimates would 

add only $40,000 to the CSO’s 

subscriber revenue? See Besen, et al., 

supra, at 80 (‘‘To the cable system the 

value of carrying the signal is equal to 

the revenue from the extra subscribers 

that the programming will attract and 

any higher subscriber fees it can charge 

less the additional costs of importing 

the program.’’).25

c. ‘‘Neither Being Under Any 

Compulsion to Buy or Sell’’ 

In the actual (i.e., non-hypothetical) 

market, terrestrial broadcast stations 

create the program lineup, which is only 

available for purchase by CSOs as a prebundled signal. The CSOs cannot 

selectively license for retransmission 

some programs broadcast on the 

retransmitted station and decline to 

license others; rather, the signal must be 

purchased in toto. 17 U.S.C. 111(d)(1)(B) 

(statutory license royalty computed 

based on number of ‘‘distant signal 

equivalents’’). 

Is this required bundling a form of 

‘‘compulsion’’ upon CSOs? In the actual 

market, they are compelled to take every 

program pre-bundled on the 

retransmitted distant station, despite the 

fact that the various pre-bundled 

programs would each add different 

monetary value (or zero value) in the 

form of new subscriber volume, 

subscriber retention, or higher 

subscription fees. Indeed, some 

programs on the retransmitted station 

may have so few viewers that CSOs—if 

they had the right—would decide not to 

purchase such low viewership programs 

but for the requirements of the 

compulsory license regime. 

Further, certain programs may have 

more substantial viewership, but that 

viewership might merely duplicate 

viewership of another program that 

generates the same sub-set of 

subscribers. To restate the example 

offered in the 2000–03 Determination, 

the viewers of reruns of the situation 

comedy ‘‘Bewitched’’ may all be the 

same as the viewers of reruns of ‘‘I 

Dream of Jeannie,’’ a similar 

supernatural-themed situation comedy. 

However, ‘‘Bewitched’’ may have fewer 

viewers than ‘‘I Dream of Jeannie.’’ 

In the hypothetical market in which 

the compulsory licensing regime did not 

exist, a rational profit-maximizing CSO 

that had already paid for a license to 

retransmit ‘‘I Dream of Jeannie’’ would 

not also pay for ‘‘Bewitched’’ in this 

hypothetical marketplace, because it 

fails to add marginal subscriber revenue 

for the CSO. Rather, the rational CSO 

would seek to license and retransmit a 

show that marginally increased 

subscriber revenue (or volume, if market 

share was more important than profit 

maximization), even if that program had 

lower total viewership than 

‘‘Bewitched.’’ 

Alternately stated, why should CSOs 

in the hypothetical market be compelled 

to pay for a program based on its higher 

viewership, even though it adds less 

value than another show with lower 

viewership? Simply put, the 

hypothetical, rational profit-maximizing 

CSOs would not pay Copyright Owners 

based solely on levels of viewership. 

Rather, the hypothetical CSOs would (1) 

utilize viewership principally as a tool 

to estimate how the addition of any 

given program might change the CSO’s 

subscriber revenue, (2) attempt to factor 

in the economics of various bundles; 

and (3) pay for a program license (or 

eschew purchasing that license) based 

on that analysis. 

Thus, the Judges consider the 

hypothetical market to be free of the 

compulsion that arises from the prebundling that exists in the actual 

market. 

On the other side of the coin, are the 

sellers, i.e., the Copyright Owners, 

under any ‘‘compulsion’’ to sell? In the 

actual market, one in which the 

terrestrial station signal is acquired in a 

single specific bundle by a CSO, the 

answer appears to be yes, there is 

‘‘compulsion.’’ Copyright Owners 

cannot carve out their respective 

programs and seek to maximize their 

values to CSOs independent of the 

prepackaged station bundles in which 

they exist. 

Of course, in the ‘‘hypothetical 

market’’ that the Judges are charged 

with constructing, it would be 

inappropriate not to acknowledge the 

inherent bundling that would occur. 

That is, the bundling decision is a 

‘‘feature’’ rather than a ‘‘bug’’ in even a 

hypothetical market for distant 

retransmissions in which the statutory 

license framework does not exist. Thus, 

while Copyright Owners could offer to 

supply their respective programs at 

given prices, the equilibrium market 

price at which supply and demand 

would intersect would reflect the CSOs’ 

demand schedules, which are based in 

part upon the fact that the buyers, i.e., 

the CSOs, would pay only a price that 

is equal to (or less than) the MRP of that 

program in a bundle to be purchased by 

subscribers. 

3. The Optimal Economic Approach to 

Determining ‘‘Relative Market Value’’ 

In the present proceeding, the Judges 

considered the general interrelationship 

among bundling, subscribership, and 

viewership, and their impact on 

‘‘relative market value,’’ in more detail 

than in prior proceedings. Specifically, 

the Judges inquired as to whether the 

parties’ experts had considered utilizing 

a method of valuation known as the 

‘‘Shapley value’’ methodology 26 to 

determine their respective allocations. 

Broadly stated, ‘‘the Shapley value 

gives each player his ‘average marginal 

contribution to the players that precede 

him,’ where averages are taken with 

respect to all potential orders of the 

players.’’ U. Rothblum, Combinatorial 

Representations of the Shapley Value 

Based on Average Relative Payoffs, in 

The Shapley Value: Essays in Honor of 

Lloyd S. Shapley 121 (A. Roth ed. 1988) 

(hereinafter, ‘‘Roth’’) (quoting Shapley, 

supra). A Shapley valuation in the 

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27This example is inspired by a similar example 

set forth by Professor Richard Watt, Managing 

Editor of the Review of Economic Research on 

Copyright Issues and a past president of The Society 

for Economic Research on Copyright Issues. See R. 

Watt, Fair Copyright Remuneration: The Case of 

Music Radio, 7 Rev. of Econ. Res. on Copyright 

Issues 21, 25–26 (2010). 

28The construction of the hypothetical market is 

of particular importance in this proceeding. As 

explained infra, IPG mistakenly argues that the 

preexisting bundling of programs on the 

retransmitted stations in the actual market renders 

ratings irrelevant to a CSO that must purchase and 

retransmit the actual bundle in toto. IPG confuses 

the actual market with the hypothetical market the 

Judges are obligated to construct. The actual market 

is distorted by the existence of the compulsory 

statutory license, and the Judges are required to 

determine the values of the copyrighted programs 

by hypothesizing an unregulated market in which 

such statutory compulsion does not exist. 

29The SDC designated the following testimony 

from the 1998–99 Phase I Proceeding (Distribution 

of 1998 and 1999 Cable Royalty Funds, Docket No. 

2001–8 CARP CD 98–99) from the following 

witnesses: (a) Marsha Kessler (a retired MPAA vice 

president, responsible for retransmission royalties): 

June 2, 2003 (pp. 6347–6454); June 3, 2003 (pp. 

6456–6613); July 14, 2003 (pp. 9478–9491); and July 

15, 2003 (pp. 9724–9753); (b) Paul Lindstrom (a 

Nielsen employee): June 9, 2003 (7175–7445); and 

(c) Paul Donato (a Nielsen employee) June 9, 2003 

(pp. 7445–7520). From the 2000–2003 Phase II 

Proceeding (In the Matter of Distribution of 2000, 

2001, 2002, and 2003 Cable Royalty Funds, Docket 

No. 2008–2 CRB CD 2000–2003), the SDC 

designated testimony from the following witnesses: 

(a) Ms. Kessler: June 3, 2013 (pp. 101–218); (b) Paul 

Lindstrom: June 3, 2013 (pp. 280–324); and June 4, 

2013 (pp. 368–433); (c) Dr. William Brown: June 6, 

2013 (pp. 1364–1420); (d) Jonda Martin: June 3, 

2013 (pp. 219–236); (e) Kelvin Patterson: June 3, 

2013 (pp. 237–280); and (f) Mr. Whitt: June 6, 2013 

(pp. 1346–1363). 

30The SDC proffered Mr. Whitt’s testimony from 

a prior hearing in this proceeding (discussed in Part 

III, supra) conducted on April 8, 2014, in lieu of 

eliciting his testimony during the September 

hearing. IPG consented to this procedure (subject to 

its foundational challenge as set forth in its Motion 

in Limine discussed supra) and the Judges 

incorporated by reference Mr. Whitt’s April 8, 2014, 

testimony as part of the present record. 9/3/14 Tr. 

at 413–15. IPG also cross-examined Mr. Whitt 

during the September 2014 hearings, and the SDC 

then conducted redirect examination of Mr. Whitt. 

present context is best understood 

through the following example: 27

• Assume there is only one CSO (C), 

and there are two program owners (P1 

and P2) with programs available for 

retransmission. 

In a hypothetical market, the Shapley 

model defines the values of C, P1, and 

P2 under all of the possible orderings of 

arrival of the three entities to 

negotiations and at each point of arrival. 

For C, P1, and P2, there are the 

following 6 (that is 3 factorial, or 3!) 

possible orderings by which each 

arrives in the market: 

(1) C, P1, P2 

(2) C, P2, P1 

(3) P1, C, P2 

(4) P1, P2, C 

(5) P2, C, P1 

(6) P2, P1, C 

• Assume the following. 

(a) An entity (C, P1, or P2)—alone in 

the market—generates $0 in 

retransmission value regardless of who 

that player is (because a cable system 

without programming or a program 

without a CSO will not be viewed and 

thus has no value); 

(b) regardless of the order in which 

the respective owners of P1and P2 

arrive in the market to attempt to license 

their respective programs, both of their 

respective programs generate $0 in 

retransmission value without a CSO 

(because programs without a CSO 

cannot be retransmitted and therefore 

provide no value); 

(c) if C is present, it generates $6 by 

retransmitting P1 alone and $5 by 

retransmitting P2 alone; 

(d) if all three players are present, 

then the retransmission of P1 and P2 by 

C generates an assumed synergistic 

value of $12. 

• The Shapley value of P1 in each of 

the six possible orderings is thus: 

$6 in ordering (1) (because P1 increases 

the value from $0 to $6); 

$7 in ordering (2) (because P1 increases 

the value from $5 to the synergistic 

$12); 

$0 in ordering (3) (because P1 adds no 

value when it arrives first to the 

market); 

$0 in ordering (4) (because P1 adds no 

value when it arrives first to the 

market); 

$7 in ordering (5) (because P1 increases 

the value from $5 to the synergistic 

$12); and 

$0 in ordering (6) (because P1 does not 

add value if there is no CSO in the 

market). 

The Shapley value of P1 is the average 

value of P1 over all possible arrival 

sequences, or 

By a similar calculation, the Shapley 

value of P2 is $2.83. (Similarly, the 

Shapley value of C, the CSO, is $5.83.) 

The sum of the values each provides is 

approximately $12, which equals the 

synergistic business value generated 

when all three entities are present in the 

market. 

Shapley valuations constitute ‘‘the 

unique efficient solution’’ because they 

‘‘valu[e] each player[’s] direct marginal 

contribution to [a] grand coalition.’’ S. 

Hart and A. Mas-Colell, ‘‘The Potential 

of the Shapley Value,’’ in Roth, supra, 

at 127–28. The Shapley value analysis 

not only enriches the development of 

the relative market value standard, but 

it also would allow the Judges in this 

proceeding to carry out their statutory 

mandate to distribute the deposited 

royalties by comparing the parties’ 

respective valuation methodologies to 

that optimal standard, to determine 

which of their methodologies more 

closely reflects the optimal hypothetical 

market. 

To summarize, as in the 2000–03 

Determination, the Judges will apply in 

this Determination a hypothetical 

market that contains the following 

participants and elements: (1) The 

hypothetical sellers are the owners of 

the copyrighted programs; (2) the 

hypothetical buyers are the CSOs that 

acquire the programs as part of their 

hypothetical bundles of programs; and 

(3) the requirement of an absence of 

compulsion dictates that the terrestrial 

stations’ initial bundling of programs 

does not affect the marginal profitmaximizing decisions of the 

hypothetical buyers and sellers.28

V. Description and Analysis of the 

Parties’ Proposals for Distribution 

A. The SDC Methodology 

1. The Details of the SDC Methodology 

The SDC’s calculation of relative 

market value (SDC Methodology) is 

based upon the analyses of two expert 

witnesses who testified on behalf of the 

SDC in their direct case and upon 

certain designated testimony from prior 

proceedings.29 The first live witness 

upon whom the SDC relied was Mr. 

Whitt, a systems analyst, programmer 

and database analyst, who had worked 

for a company he founded, IT 

Processing LLC (IT Processing). 9/3/14 

Tr. at 418 (Whitt).30 Mr. Whitt had 

formed IT Processing to engage in 

‘‘massive data projects’’ that required 

‘‘millions of unique items of data to be 

accurately and efficiently entered and 


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Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices 13431 

31Nielsen ratings estimate the number of homes 

tuned to a program based upon a sample of 

television households selected from all television 

households. The findings within the sample are 

‘‘projected’’ to national totals. Although there was 

no evidence or testimony regarding how Nielsen 

conducted its data collection for sweeps weeks in 

1999, Mr. Lindstrom described the general process 

in his testimony in the 2000–03 proceeding, which 

the SDC designated in this proceeding. In that 

regard, Mr. Lindstrom testified that diary data is 

collected in Nielsen’s diary markets during 

November, February, May, July, and in some cases 

October and March, which are also known as the 

‘‘sweeps’’ ratings periods (Nielsen Diary Data). 

(Diaries are paper booklets in which each person in 

the household manually records viewing 

information.) Nielsen mails seven-day diaries to 

homes randomly selected by Nielsen to keep a tally 

of when each television in the household was on, 

what it was tuned to, and who in the household was 

watching. Over the course of a four-week sweeps 

period, Nielsen mails diaries to a new panel of 

randomly selected homes each week. At the end of 

each sweeps period, all of the viewing data from the 

individual weeks are aggregated into Nielsen’s 

database. Each sweeps period yielded a sample of 

approximately 100,000—aggregating to 400,000 

households over the course of a year. 2000–03 

Determination, 78 FR at 6993; 6/3/13 Tr. at 290, 

296–98, 312 (Lindstrom) (SDC Designated 

Testimony). 

32More precisely, Mr. Whitt had performed this 

merger on behalf of the MPAA. Then, after being 

retained by the SDC, he derived his 1999 HHVH 

Report for Devotional programming by narrowing 

that prior work on behalf of the MPAA to isolate 

the Devotional programming. 4/8/14 Tr. at 108–10 

(Whitt). 

analyzed.’’ Whitt WDT at 2; Ex. SDC–D– 

001 at 2. 

Mr. Whitt’s work on behalf of the SDC 

was derivative of earlier work he had 

undertaken on behalf of MPAA. More 

particularly, Mr. Whitt had been 

engaged by MPAA ‘‘to process large data 

files consisting of cable and satellite 

copyright programming and viewing 

associated with claims filed with the 

Copyright Royalty Arbitration Panels 

. . . and [the] Copyright Royalty 

Board.’’ Id. at 3. 

According to Mr. Whitt, he was 

contacted by the SDC in 2006 to assist 

in preparing their case in this 

proceeding. 4/8/14 Tr. at 106 (Whitt). 

The SDC engaged Mr. Whitt to utilize 

his prior work and data from his MPAA 

assignment to prepare the HHVH Report 

for 1999, relating to the retransmission 

of certain Devotional programming on 

broadcast television stations that were 

distantly retransmitted to other markets. 

Whitt WDT at 3 and Ex. 1 thereto; Ex. 

SDC–D–001 at 3 and Ex. 1 thereto; 4/8/ 

14 Tr. at 106 (Whitt). 

Mr. Whitt’s 1999 HHVH Report was 

based on following three data sources: 

(1) Programs on a sample of television 

stations whose signals were distantly 

transmitted on cable that Mr. Whitt 

believed Ms. Kessler, a former employee 

of the MPAA, chose based on whether 

the signals were ‘‘distant’’ for cable 

copyright purposes; 

(2) distant program viewing data from 

Nielsen, presented on a quarter-hour 

basis, for programs from Nielsen’s six 

‘‘sweeps’’ months of diary data (January, 

February, May, July, October and 

November) (Nielsen Data); 31 and 

(3) program data from Tribune Media 

Services (‘‘TMS’’) (including station, 

date, time, title and program category) 

(TMS Data). 

Id. at 3. 

Mr. Whitt then matched the Nielsen 

Data with the TMS Data in order to 

merge the Nielsen Data for reported 

quarter-hour segments with the titles of 

the programs and other program 

information in the TMS Data. Id. at 4; 

4/8/14 Tr. at 108 (Whitt).32 In addition, 

Mr. Whitt identified what he described 

as ‘‘character strings’’ from program 

titles (44 in total) that he discretionally 

determined were devotional in nature 

but had not been captured in the 

merging of the Nielsen Data and the 

TMS Data. Id. at 4–6. Mr. Whitt also 

used his discretion to delete certain 

programs that he concluded were not in 

fact devotional, although their titles 

initially suggested that they were 

devotional in nature. 4/8/14 Tr. at 126– 

28 (Whitt). 

Mr. Whitt completed his analysis by 

‘‘aggregat[ing] by title and station 

summing the adjusted household 

viewing hours from [the] Nielsen 

[data].’’ Whitt WDT at 6; Ex. SDC–D– 

001 at 3. Thus, Mr. Whitt was able to 

identify the potentially compensable 

broadcasts of the programs claimed by 

SDC and IPG that aired on the sample 

stations. Whitt WDT at 3; Ex. SDC–D– 

001 at 3. 

The SDC also presented John Sanders 

as an expert ‘‘to make a fair 

determination of the relative market 

values of particular devotional 

television programs claimed by the 

parties’’ using Mr. Whitt’s report. Ex. 

SDC–D–002 at 2. Mr. Sanders 

previously had ‘‘actively participated in 

the appraisal of more than 3,000 

communications and media 

businesses,’’ and his work has focused 

on, inter alia, ‘‘the television and cable 

industries and the appraisal of . . . 

subscribership-based assets . . . .’’ Id. at 

3. In the course of that work, since 1982, 

Mr. Sanders has frequently engaged in 

the valuation of television programs for 

both buyers and sellers, and the 

valuation of cable systems, in 

connection with market transactions (as 

contrasted with valuations as an expert 

witness). 9/3/14 Tr. at 461–62 (Sanders). 

Accordingly, and without objection, Mr. 

Sanders was qualified as an expert in 

the valuation of media assets, including 

television programs. 9/3/14 Tr. at 463– 

64. 

Mr. Sanders testified that if he were 

representing a buyer or a seller of a 

license to retransmit a program into a 

distant market, the first step in his 

analysis of value would be to ‘‘measure 

the audience that is being generated by 

the various programs in question . . . .’’ 

9/3/14 Tr. at 476–79 (Sanders). Mr. 

Sanders testified that the reason for this 

initial emphasis on audience viewership 

is as follows: 

[I]n terms of a cable system, the objective is 

to have categories of programming that will 

attract subscribers. But, within those 

categories, to have individual program titles 

that viewers will actually be interested in 

watching. And those that show greater 

evidence of viewership will obviously attract 

more subscribers and, [as a] consequence, 

would have greater value. 

9/3/14 Tr. at 478–79 (Sanders). 

Accordingly, Mr. Sanders based his 

relative valuation estimate primarily on 

Mr. Whitt’s 1999 HHVH Report. Sanders 

WDT at 4; Ex. SDC–D–002 at 4. He 

relied on that measure of viewing for the 

following reasons: 

To allocate reasonably the available funds 

between [the] SDC and IPG in this 

proceeding, it is my opinion that audience 

measurements relying on surveys conducted 

by Nielsen Media Research are the best 

available tools to allocate shares. . . . 

. . . 

Within the category of devotional 

programming, all of the programs claimed by 

[the] SDC and IPG appear to be directed 

predominantly to a Christian audience, and 

can therefore be thought of as homogeneous 

in terms of the subscriber base to which they 

are likely to appeal. Where programs are 

homogeneous, the most salient factor to 

distinguish them in terms of subscribership 

is the size of the audience. A religious 

program with a larger audience is more likely 

to attract and retain more subscribers or [sic] 

the [CSO], and is therefore of proportionately 

higher value. 

Sanders WDT at 5–6; Ex. SDC–D–002 at 

5–6. To ascertain the size of a program’s 

audience, Mr. Sanders relied upon 

Nielsen ratings because he understood 

such ratings to be ‘‘the currency of the 

broadcast and cable industry, and . . . 

generally regarded as the most reliable 

available measure of audience size.’’ Id. 

As Mr. Sanders elaborated in his oral 

testimony: 

Ultimately, the valuation will be based 

upon the benefit that it brings to the holder 

of the programming. And most commonly, 

the measurement of that value is based upon 

the audience that that programming is able to 

generate. . . . Nielsen audience measurement 

data . . . is the most ubiquitous and 

authoritative source of audience 

measurement data in the broadcasting and 

cable fields. 

9/3/14 Tr. at 465–66 (Sanders). 

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13432 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices 

33Professor Watt recognized this practical 

problem. See Watt, supra note 27, at 27 (‘‘The 

Shapley model provides a reasonable working 

solution for regulators . . . . However, it does 

suffer from a particularly pressing problem—that of 

data availability.’’). 

Accordingly, Mr. Sanders added the 

household viewing hours for the 

distantly retransmitted compensable 

programming for each party. This 

calculation totaled 1,237,396 viewing 

hours for the SDC and 280,063 for IPG. 

Sanders WDT at 9; Ex. SDC–D–002 at 9; 

see also id. at Appendix E. In percentage 

terms, SDC-compensable programming 

accounted for 81.5% of the devotional 

viewing of the two parties’ programs, 

and IPG-compensable programming 

accounted for 18.5%. 

Based on his analysis, Mr. Sanders 

calculated the viewership (and 

distribution) shares of the SDC and IPG 

programming as follows. 

SDC: 81.5% 

IPG: 18.5% 

Mr. Sanders was unable to provide 

any confidence interval for these 

allocations, given that the statistical 

bases for the analysis were not random 

in nature. However, Mr. Sanders 

testified that he was able to confirm the 

overall ‘‘reasonableness’’ of his analysis 

by comparing the results with an 

analysis of local Nielsen viewing data 

for the same IPG and SDC programs in 

the February 1999 sweeps period. Mr. 

Sanders testified that he believed the 

Nielsen analysis was performed through 

a random sampling of viewers and 

constituted the ‘‘granular’’ or ‘‘niche’’ 

type of report that Mr. Sanders 

understood to be necessary in order to 

rely with greater certainty on the results 

of the analysis. 9/3/14 Tr. at 512 

(Sanders). 

That analysis revealed the following 

distribution of viewers: 

SDC: 71.3% 

IPG: 28.7% 

Mr. Sanders also noted that there was a 

‘‘correlation coefficient for the HHVH 

shares relative to the Nielsen shares [of] 

approximately 0.75, which ‘‘signifies 

that 75% of the variance between HHVH 

results for different programs is 

connected with the variance between 

local ratings for those programs.’’ 

Sanders WDT at 10; Ex. SDC–D–002 at 

10. The Judges understand Mr. 

Sanders’s testimony to mean that the 

‘‘connected’’ or correlated nature of the 

two sets of viewership data 

demonstrates that each data set is a form 

of confirmation as to the reasonableness 

of the other data set. 

Indeed, Mr. Sanders testified that, in 

his expert opinion, this 71.3%:28.7% 

ratio should be ‘‘characterized as a 

reasonableness check’’ on his analysis. 

9/3/14 Tr. at 501. See also 9/3/14 Tr. at 

510 (Sanders) (restating his 

‘‘reasonableness’’ conclusion). Mr. 

Sanders emphasized the importance of 

his ‘‘reasonableness check,’’ stating that 

the ‘‘body of data’’ that led to a 

71.3%:28.7% distribution ‘‘is very 

relevant and, in my opinion, should not 

be ignored.’’ 9/3/14 Tr. at 503 (Sanders) 

(emphasis added). In that regard, Mr. 

Sanders further noted that, had his 

primary analysis resulted in a 

71.3%:28.7% distribution and, had his 

‘‘reasonableness’’ check resulted in an 

81.5%:18.5% distribution, he would 

have proposed the 71.3%:28.7% 

distribution. 9/3/14 Tr. at 509–10 

(Sanders). 

2. Evaluation of the SDC Methodology 

IPG sets forth several criticisms of the 

SDC Methodology. First, IPG claims that 

the SDC Methodology incorrectly 

assumes that household viewing 

constitutes an appropriate measure of 

relative market value. Assuming 

arguendo viewership can be a basis for 

value, IPG asserts, second, that the SDC 

did not provide a sufficient evidentiary 

foundation for the Nielsen Data and, 

therefore, for the 1999 HHVH Report. 

Third, again assuming, arguendo, that 

viewership is probative of value IPG 

argues that the incidence of ‘‘zero 

viewing’’ sample points in the Nielsen 

Data utilized to create the 1999 HHVH 

Report invalidates the Nielsen Data as a 

reliable source of viewership 

information. Fourth, IPG asserts again 

assuming, arguendo, the probative 

nature of viewership, that the SDC 

could have provided better data to 

support the SDC Methodology. Fifth, 

IPG argues that the SDC’s own 

reasonableness test demonstrates that 

IPG programming has a significantly 

higher value than the 18.5% allocation 

proposed by the SDC. 

a. Viewership Is an Acceptable 

‘‘Second-Best’’ Measure of Value, Even 

Though It Is Not the Optimal Metric 

IPG opposes a relative market value 

assessment based solely on viewership 

because: (1) A CSO primarily benefits 

from attracting subscribers rather than 

viewers; (2) retransmitting a program 

with more viewers will not necessarily 

increase aggregate subscribership for a 

CSO; and (3) retransmitting a program 

with fewer viewers might increase a 

CSO’s aggregate subscribership. 

Robinson WRT at 8. 

The Judges agree that a relative 

market value assessment based solely on 

viewership is less than optimal. In 

reaching this conclusion, the Judges 

refer to their earlier discussion of the 

Shapley valuation approach. In the 

present context, the Judges believe that 

the optimal approach to determining 

relative market value would have been 

to compare the SDC programs with 

those of IPG using Shapley or Shapleyapproximate valuations. Such an 

approach was not possible on the record 

before the Judges in the current 

proceeding because of the nonexistence, unavailability, or, from the 

parties’ perspective, prohibitive 

development cost of the necessary 

evidence upon which such a 

comparison could be made. 

The SDC’s expert economic witness, 

Dr. Erkan Erdem, agreed that, in theory, 

a Shapley valuation would be a more 

precise way to measure relative value in 

this proceeding. 9/8/14 Tr. at 1084 

(Erdem). However, as Dr. Erdem noted, 

there was no evidence in the record (or 

apparently otherwise available) by 

which one could calculate the Shapley 

values in this proceeding. Tr. 9/8/14 at 

1084–85 (Erdem).33 Indeed, no expert 

attempted to utilize a Shapley 

methodology to determine relative 

market value of the SDC and IPG 

programs. 

Dr. Erdem did acknowledge, however, 

that, as an alternative, a CSO could 

utilize the general principles of a 

Shapley valuation to rank ordinally the 

shows available for retransmission in a 

hypothetical market, and thus create 

heuristic Shapley values. 9/8/14 Tr. at 

1100–01 (Erdem). Such a ranking by 

CSOs in the present case could have 

served as a basis for benchmarking the 

‘‘relative marketplace values.’’ However, 

neither of the parties proffered a witness 

who had experience in creating a roster 

of television programs. 

Thus, the Judges have no evidence or 

testimony by which to establish the 

relative marketplace values of the SDC 

and IPG programs in the optimal 

theoretical manner or in a manner that 

uses ‘‘Shapley-approximate’’ values. 

This evidentiary constraint places the 

Judges in a ‘‘second best’’ situation. In 

that situation, it is not necessarily 

optimal to attempt to satisfy other 

efficient conditions, because to do so 

would further worsen the already suboptimal situation. See R.G. Lipsey and 

K. Lancaster, The General Theory of 

Second Best, 24 Rev. Econ. Stud. 11 

(1956). Colloquially stated, the theory of 

the second best may generally be 

defined as ‘‘not letting the perfect be the 

enemy of the good.’’ When the parties 

have not proffered evidence or 

testimony to permit Shapley-type 

valuations, it would not be efficient also 

to reject valuations based 

predominantly on viewing data. 

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34The only other methodology presented in this 

proceeding is the IPG Methodology. For the reasons 

set forth infra, the Judges have concluded that the 

IPG Methodology is seriously deficient and far less 

probative than the SDC Methodology. Thus, even if 

the Judges had not analyzed and considered a 

Shapley-type valuation, they would have analysis 

or consideration by the Judges, they would have 

given far more weight to the viewer-centric SDC 

Methodology than the seriously deficient IPG 

Methodology. 

35The Judges had considered whether they could 

decline to make any distribution determination in 

light of the imperfections of the parties’ evidence, 

and asked counsel for the parties to provide 

guidance as to that alternative. Cf. Final 

Determination, 1993–1997 Cable Proceedings 

(Phase II), 66 FR 66433, 66454 (Dec. 26, 2001) (the 

Librarian accepted the Register’s recommendation 

to reject a CARP Report distributing royalties 

because ‘‘the record . . . is insufficient on which 

to base a distribution determination.’’). Both 

counsel in the present proceeding urged the Judges 

not to render a determination that declined to 

distribute the royalties if a determination that made 

an allocation could be based upon adequate 

evidence and would not be arbitrary or capricious. 

9/8/14 Tr. at 1172–75 (counsel for the SDC); 

9/8/14 Tr. at 1176–79 (counsel for IPG). The Judges 

are confident that this Determination satisfies those 

standards. 

36The limitations might inure to IPG’s benefit. As 

Dr. Erdem explained, when there is an overlap in 

viewership between programs, a purely viewershipbased valuation, such as that proffered by the SDC, 

might understate the relative value of programs 

with higher viewership (i.e., the SDC programs) and 

overstate the IPG distribution percentage compared 

to a Shapley valuation. 9/8/14 Tr. at 1082–83 

(Erdem). The Judges also note that in the 

hypothetical market, several CSOs might be 

competing for the right to retransmit programs. 

Thus, to use a prior example, if a CSO has 

purchased a license to retransmit I Dream of 

Jeannie, rather than Bewitched, because the former 

has more viewers and its viewers overlap 

significantly with the latter’s viewers, a competing 

retransmitter might then find the total viewership 

for Bewitched so valuable (given that the 

retransmission rights to I Dream of Jeannie were no 

longer available) that Bewitched is that competing 

retransmitter’s first choice even under a Shapleytype valuation. Therefore, in a competitive market, 

absolute viewership would be particularly 

probative of program value. 

To reject viewing-centric valuations 

would require the Judges instead either 

to adopt a less probative or seriously 

deficient methodology,34 or figuratively 

to throw up their hands and refuse to 

make any allocation or distribution.35

The Judges will not compound the 

problem of the absence of the most 

theoretically probative evidence by 

rejecting the SDC’s viewer-centric 

valuations, notwithstanding the 

limitations in using those valuations. 36

The Judges’ decision to issue a 

determination based on the extant 

evidence, rather than to reject all 

evidence because it is less than optimal, 

is consistent with D.C. Circuit 

precedent. Specifically, the D.C. Circuit 

has held that, in making distributions 

under Section 111 of the Copyright Act, 

mathematical precision is not required. 

See National Ass’n of Broadcasters v. 

Librarian of Congress, 146 F.3d 907, 

929, 932 (D.C. Cir. 1998); Nat’l Cable 

Television Ass’n v. Copyright Royalty 

Tribunal, 724 F.2d 176, 187 (D.C. Cir. 

1983). Rather, the Judges may render a 

determination premised on ‘‘the only’’ 

evidence presented by the parties, 

notwithstanding that ‘‘the character of 

the evidence presented’’ may fall short 

of more precise evidence that the parties 

did not or could not present. See Nat’l 

Cable Television, 724 F.2d at 187. 

Applying a viewership-based model 

of valuation in deciding distribution 

allocations also is consistent with 

Library precedent. Specifically, in an 

analogous context in a Phase I 

proceeding, the Librarian held that a 

measure of ‘‘relative market value’’ 

could be made by reliance on 

viewership information when a more 

optimal valuation tool was not 

available. Distribution of 1998 and 1999 

Cable Royalty Funds, Docket No. 2001– 

8 CARP CD 98–99, 69 FR 3606, 3614 

(January 26, 2004) (noting that survey 

evidence may be superior to viewing 

evidence but, in the absence of that 

superior evidence, viewing information 

can properly be relied upon by the 

factfinder in a distribution proceeding). 

IPG’s own witness acknowledges the 

importance of viewership data generally 

in assessing the value of programming. 

In her oral testimony, Dr. Robinson 

conceded that viewership is an 

important metric in the determination of 

relative market value. 9/2/14 Tr. at 175; 

9/4/14 Tr. at 784. (Robinson). 

Additionally, Dr. Robinson 

acknowledged that viewership is 

important to a CSO in order to retain 

subscribers, 9/4/14 Tr. at 777–78 

(Robinson), confirming the common 

sense idea that subscribers would not 

continue to subscribe if they did not 

watch the offered programming. 

The Judges are also confident that, 

generally, Nielsen-derived viewership 

data presents a useful measurement of 

actual viewership. They base this 

conclusion on, among other things, the 

fact that the television industry relies on 

Nielsen data for a wide range of 

business decisions. The SDC’s expert 

industry witness, Mr. Sanders, testified 

that those in the television industry 

consider viewership data, as compiled 

by Nielsen, to be the best and most 

comprehensive measure of viewership. 

9/3/14 Tr. at 480–81 (Sanders). Mr. 

Sanders acknowledged that the Nielsen 

Data are not perfect, but that their status 

as the best and most comprehensive 

measure of viewership has caused the 

television industry to utilize Nielsen 

data as a ‘‘convention’’ for ‘‘economic 

decision makers.’’ Id. IPG did not 

present any evidence to rebut either of 

these points. 

If the Judges were to discount the 

Nielsen Data in this proceeding simply 

on the basis that Nielsen data are 

imperfect, the Judges would in essence 

be substituting their own opinion of the 

Nielsen yardstick for the collective 

opinion of the ‘‘economic decision 

makers’’ in the market. The Judges will 

not engage in such substitution; it is 

their job to develop a hypothetical 

market by eliminating the impact of the 

compulsory licensing regime—but 

otherwise to hew as closely as is 

reasonably appropriate to the conduct, 

performance, customs and standards of 

the actual market. 

Despite the Judges’ conclusion that 

viewership is a type of metric that the 

Judges may consider, the Judges must 

consider whether the particular 

viewership analysis undertaken by the 

SDC contains imperfections, as noted by 

IPG, or otherwise. See, e.g., 1987 

Devotional Determination, 55 FR at 

5650; 1986 Determination, 54 FR at 

16153–54 (noting that viewing 

measurements might not be perfect and 

must be appropriately adjusted if 

claimants are able to prove that their 

programs have not been measured 

properly or may be significantly 

undermeasured). Accordingly, the 

Judges must analyze the SDC’s 

particular viewership evidence and 

address the issues raised by IPG in that 

regard. 

b. The Evidentiary Foundation for the 

SDC Methodology 

(1) ‘‘Replication’’ and ‘‘Testing’’ of the 

SDC’s HHVH Report 

The SDC’s viewership evidence 

consisted largely of the HHVH Report 

presented by SDC’s witness, Mr. Whitt. 

IPG asserts that the SDC did not provide 

sufficient underlying data to allow IPG’s 

expert, Dr. Robinson, to test the 

accuracy of the SDC’s HHVH Report for 

1999. 9/4/14 Tr. at 755–56, 765–68 

(Robinson). However, the Judges 

disagree with IPG’s assertion, based 

upon Dr. Robinson’s own testimony. 

Specifically, Dr. Robinson testified that 

she indeed ‘‘merged the underlying data 

and ran the search terms for devotional 

programming [and] reached 

substantially the same results [as the 

SDC] in all material respects.’’ Id. at 

850–61 (Robinson). In her prior 

testimony on IPG’s Motion to Strike, Dr. 

Robinson had presaged her subsequent 

successful replication of the HHVH 

Report by admitting that she was able to 

merge the Nielsen Data and the TMS 

Data, run Mr. Whitt’s search terms and 

test the accuracy of his results. 4/8/14 

Tr. 68–69 (Robinson); Order Denying 

Motion to Strike at 6. Based on Dr. 

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37Although the SDC provided an example of such 

a Kessler Sample to IPG in discovery (from the 

Phase I 1999 proceeding), the SDC did not represent 

that this earlier sample constituted the sample used 

to select the stations identified in the Nielsen Data. 

See 4/8/14 Tr. at 229 (SDC counsel ‘‘stipulat[ing]’’ 

that ‘‘Ms. Kessler’s list from Phase I is not the list 

of stations that was ordered from Nielsen’’). 

38 In the 2000–03 proceeding, Ms. Kessler 

testified that her sampling was not (and was not 

intended to be) a random sample. See 6/3/13 Tr. at 

122–25 (Kessler). 

39All things being equal, the larger the sample 

size, the more likely it is that the sample will be 

representative of the population the sample 

purports to measure. Although sampling 100% of 

the population is ideal, it is typically not cost 

effective or practicable to sample an entire 

population. The smaller the sample size, however, 

the greater the margin of error. See H. Zeisel, . . . 

And Then There Were None: The Diminution of the 

Federal Jury, 38 U. Chi. L. Rev. 710, 718 (1971). 

40 IPG also asserts that there is an inconsistency 

between the number of stations (123) in the Kessler 

Sample and the number of stations (72) in the 

sample analyzed by Mr. Whitt. See IPG Proposed 

Findings of Fact at 28. That claimed inconsistency 

is a red herring, however, because the sample that 

IPG claims may be the ‘‘Kessler Sample’’ was a 

Phase I sample she had selected—one that the SDC 

acknowledged was not the sample from which Mr. 

Whitt identified stations with Devotional 

programming in this Phase II proceeding. See, e.g., 

4/8/14 Tr. at 113–15, 229. 

41 Dr. Robinson also pointed out that the Kessler 

Sample’s apparent exclusion of Canadian stations 

suggests that the sample was unrepresentative. By 

comparison, Dr. Robinson’s own station selection 

contains only a single Canadian station on which 

programs claimed in this proceeding were 

broadcast; that station broadcasted both an IPG 

program and an SDC program. 9/8/14 Tr. 1092 

(Erdem). The Judges find no persuasive evidence in 

the record that the exclusion of Canadian stations 

from the HHVH Report materially affects the results 

as to either side in this case. Therefore, the Judges 

conclude that the probative value of the HHVH 

Report is not diminished by the absence of 

Canadian stations. Accord Distribution of the 2000– 

03 Cable Royalty Funds, 78 FR at 64998 (‘‘The 

Judges conclude that, while the exclusion of the 

Canadian stations was an error, it did not have a 

significant effect on the relative shares computed by 

MPAA’’). 

42 Given this analysis, it is perhaps inaccurate to 

continue referring to the SDC’s sample of stations 

as the ‘‘Kessler Sample.’’ However, because the 

parties have identified the sample in this manner, 

for ease of reference the Judges have continued with 

that short-hand identifier in this Determination. 

43 ‘‘Form 3 cable systems’’ are cable systems 

whose semiannual gross receipts for secondary 

transmissions total $527,600 or more, and are thus 

required to file statements of account on Copyright 

Office form SA3. See 37 CFR 201.17(d)(2)(ii). 

44When questioned by the Judges, Mr. Sanders 

acknowledged that he would have no basis for also 

asserting that the ‘‘Kessler Sample’’ approximates a 

‘‘census’’ of all retransmitted stations or of all 

broadcasts of IPG and SDC programs. 9/4/14 Tr. at 

637–39 (Sanders). Moreover, IPG takes the SDC to 

task for relying on a sample of only 123 stations 

(about 17.5%) of the approximately 700 stations 

distantly retransmitted by Form 3 cable systems. 

45The term ‘‘DMA’’ is used by Nielsen to identify 

an exclusive geographic area of counties in which 

the home market television stations hold a 

dominance of total hours viewed. See 

www.nielsenmedia.com/glossary/terms/D/ (last 

visited December 3, 2014). 

Robinson’s testimony, the Judges 

conclude that the HHVH Report was 

replicable and that the results were 

capable of being tested. As a result, the 

Judges conclude that the report should 

carry at least some weight in assessing 

the relative market value of the SDC and 

IPG programs. 

(2) Issues Regarding the Kessler Sample 

IPG also criticizes the HHVH Report 

because the SDC (1) did not produce a 

witness with ‘‘firsthand knowledge of 

the method or basis for the station 

sample selection’’ used to create the 

Kessler sampling of stations, (2) 

presented no evidence directly 

establishing that Ms. Kessler selected 

the stations appearing in the Nielsen 

Data, and (3) presented ‘‘[n]o 

information or data regarding the station 

sampling process.’’ See IPG PFF at 26– 

29. 

There is some validity to IPG’s 

criticisms. The SDC did not call Ms. 

Kessler as a witness to explain how she 

selected her 1999 sample of stations. 

Further, Mr. Whitt acknowledged that 

he had not participated in the selection 

of the Kessler Sample of stations, so he 

had no knowledge of the method by 

which those stations were selected. 4/8/ 

14 Tr. at 112 (Whitt). The extent of Mr. 

Whitt’s knowledge in this regard was 

limited to his recollection that ‘‘the 

MPAA conducted a detailed study of 

what stations to select[,] . . . and then 

I was given a list of those stations[,] and 

then that’s what I used to combine the 

two files. . . . So, all the Nielsen 

stations should have represented the 

complete list of the Kessler stations.’’ 

4/8/14 Tr. at 113 (Whitt); 9/3/14 Tr. at 

444 (Whitt).37

Further, the SDC’s expert witness, Mr. 

Sanders, admitted that the Kessler 

Sample and, derivatively, the HHVH 

Report and his own report are subject to 

valid criticism because the Kessler 

Sample—upon which both reports 

rely—was created by a non-random 

selection of stations. 9/3/14 Tr. at 496 

(Sanders).38

IPG properly takes the SDC to task for 

relying on only a small portion (72 of 

800, or 9%) of distantly retransmitted 

stations.39 See 9/4/14 Tr. at 626 

(Sanders) (confirming that Mr. Whitt’s 

analysis covered 72 stations.) 40 As IPG 

noted, in 1986 the CRT found that a 

study of 18.8% of 622 total stations to 

be not sufficiently large to be ‘‘perfectly 

projected to other stations. . . .’’ IPG 

PFF at 50 (emphasis added) (citing 1983 

Cable Royalty Distribution Proceeding, 

Docket No. CRT 84–1 83CD, 51 FR 

12792, 12794 (April 15, 1986)).41

The Judges acknowledge that the 

Kessler Sample was non-random.42 That 

being said, the manner in which the 

sample was chosen will influence the 

weight the Judges place on the station 

sample, and by extension, on the HHVH 

Report. For example, the presence of a 

clear bias either in favor of or against a 

particular participant in the current 

proceeding would render the report all 

but useless. Therefore, for the Judges to 

give any weight to the SDC 

Methodology, the Judges must analyze 

the origination of and the purposes for 

creating the Kessler Sample. 

The SDC argues that the Judges can 

and should rely on the Kessler Sample 

notwithstanding the aforementioned 

defects. Mr. Sanders opined that the 

non-random nature of the Kessler 

sample, and its uncertain genesis, do 

not pose a problem because: 

• The Kessler Sample ‘‘employs 

viewing results from the most distantly 

retransmitted broadcast stations as 

reported by Form 3 cable systems.’’ 43

• Although the Kessler Sample is 

non-random, it is ‘‘close to a census,’’ 

because ‘‘the most important and 

relevant titles [of] the principal 

programs of all SDC- and IPGrepresented claimants appear in the 

survey.’’ (Emphasis added).44

• The Kessler Sample comprises 

many of the regions identified by 

Nielsen as ‘‘Designated Market Areas 

(DMAs),’’ 45 and the first 10 stations in 

the Kessler Sample covered 

approximately 30–40% of the 

population of the country, thereby 

covering some of the largest stations. 

• There is no evidence ‘‘to suggest 

that the sample was chosen to benefit or 

prejudice either party in this proceeding 

[and] . . . it is neutral on that score.’’ 

Sanders WDT at 2; Ex. SDC–D–002 at 7; 

9/4/14 Tr. at 627 (Sanders). Mr. Whitt 

likewise defended the use of the Kessler 

Sample, observing that ‘‘it appeared that 

the stations were national, 

geographically scattered around the 

country[, a]nd they included several 

large stations, but also a few small 

stations.’’ 9/3/14 Tr. at 420 (Whitt). 

Under cross-examination, however, 

Mr. Sanders did acknowledge that many 

large metropolitan areas were not 

represented in the Kessler Sample of 

stations. He noted the ‘‘possibility’’ that 

there was no measurable viewing of the 

SDC and IPG programs in those areas or 

that the programs were not 

retransmitted in those areas. 9/4/14 Tr. 

at 631–33 (Sanders). Of course, those 

speculative ‘‘possibilities’’ are precisely 

the sort of concerns that a truly random 

sample would address objectively. The 

non-random nature of the Kessler 

Sample leaves unanswered the question 

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46Mr. Sanders had informed the SDC that any 

attempt to obtain superior data would have been 

cost-prohibitive, i.e., subjecting the SDC to 

‘‘hundreds of thousands of dollars of additional 

costs,’’ for an amount at stake of ‘‘somewhere north 

of a million dollars,’’ and that the SDC agreed not 

to invest additional sums to acquire more data. 9/ 

3/14 Tr. at 469–72 (Sanders). He also speculated 

that it might have been impossible to acquire better 

data, but the anticipated expense apparently 

foreclosed any attempts to learn if superior data 

could be acquired or developed. Id. In any event, 

Mr. Sanders conceded on cross-examination that he 

never attempted to contact anyone at MPAA (or 

apparently anyone else) to determine if better data 

could be acquired. 9/3/14 Tr. at 591–92 (Sanders). 

47The Judges note that the economic experts for 

willing buyers and willing sellers likewise are 

subject to inevitable constraints. 

of why those metropolitan areas were 

not represented. 

Mr. Sanders concluded that, on 

balance, he could nonetheless give some 

weight to this non-random selection of 

stations. 9/3/14 Tr. at 498–500. It is 

noteworthy that IPG’s expert, Dr. 

Robinson, likewise acknowledged that 

even a non-random sample can be 

representative and therefore probative of 

facts concerning an entire population. 9/ 

3/14 Tr. at 234–35 (Robinson). In fact, 

Dr. Robinson testified that the results of 

her own non-random sample were 

representative of the population she was 

measuring (subscriber fees paid to 

CSOs) because, ‘‘as a practical matter 

. . . in terms of understanding the 

population that we care about, if we 

have the majority of the data, then at 

least we know the truth for the majority 

of the data. . . .’’ 9/2/14 Tr. at 156 

(Robinson). 

Non-random (a.k.a. ‘‘nonprobability’’) 

sampling, although inferior to random 

sampling, can be of some limited use. 

As explained in a treatise on the subject: 

[N]onprobability samples cannot depend 

upon the rationale of probability theory. At 

least with a probabilistic sample, you know 

the odds or probability that you have 

represented the population well. You can 

estimate the confidence intervals for the 

statistic. With nonprobability samples, you 

may or may not represent the population 

well . . . . In general, researchers prefer 

probabilistic or random sampling methods 

over nonprobabilistic ones, and consider 

them to be more accurate and rigorous. 

However, in some circumstances in applied 

social research there may be circumstances 

where it is not feasible, practical or 

theoretically sensible to do random sampling. 

W. Trochim and J. Donnelly, Research 

Methods, The Concise Knowledge Base 

at 41 (2005) (emphasis added). 

In the present case, ‘‘feasibility’’ was 

certainly a constraint because, as Mr. 

Sanders explained, it was costprohibitive for the SDC to invest 

additional money into the development 

of evidence. The costliness of 

undertaking random sampling can 

render an analysis unfeasible. As one 

survey organization has noted, ‘‘costs 

are important and must be considered in 

a practical sense’’ and therefore a 

‘‘broader framework’’ is needed to 

assess the results of nonrandom 

sampling in terms of ‘‘fitness for 

purpose.’’ Rep. of the Am. Ass’n of Pub. 

Opinion Res. Task Force on 

NonProbability Sampling at 96 (2013). 

To summarize, had the HHVH Report 

been based on a random sample of 

stations, it would have been more 

probative. Nevertheless, the Kessler 

Sample was not prepared in 

anticipation of the current proceeding 

and contained no discernible bias either 

in favor of or against the programs that 

are at issue in this proceeding. Cost is 

a reasonable factor for the parties to 

consider in preparing evidence for a 

proceeding and, given the relatively 

modest amount of royalties involved in 

the current proceeding, it likely would 

not have been cost effective for the SDC 

to conduct an entirely new study based 

on a random sample of stations, even 

assuming that one could have been 

prepared so long after the royalty year 

at issue. Therefore, the Judges find that 

the Kessler Sample is sufficiently robust 

to allow the Judges to afford some 

weight to the SDC Methodology while 

remaining mindful of its deficiencies. 

(3) Imperfections in the Nielsen Data 

Mr. Sanders acknowledged that the 

particular Nielsen Data utilized to 

prepare the 1999 HHVH Report was not 

as granular as he would have preferred. 

Specifically, Mr. Sanders explained that 

the 1999 HHVH Report was imperfect 

because it was based upon a ‘‘very, very 

thin slice’’ of the broader broadcasting 

or programming field. 9/3/14 Tr. at 519. 

When such an extremely narrow ‘‘slice’’ 

of the market is the subject of the 

analysis, according to Mr. Sanders, it is 

preferable to obtain a ‘‘niche’’ Nielsen 

report that focuses on the narrow market 

that is the subject of the study. 9/3/14 

Tr. at 514–15 (Sanders). In this 

particular case, Mr. Sanders 

acknowledged therefore that, because 

‘‘it is distant signal viewing that is the 

actual focus of the project, [this] would 

be an example where a customized 

report would be done.’’ 9/3/14 Tr. at 485 

(Sanders) (emphasis added). 

Furthermore, the SDC did not disclose 

the margins of error or the levels of 

confidence associated with the data 

underlying the HHVH Report. Without 

this information, the Judges cannot 

assess the reliability of any statistical 

sample. The Judges infer that, had the 

SDC possessed such information, or if 

such information underscored the 

reliability of the Nielsen data, the SDC 

would have produced it. Further, in the 

2000–03 proceeding, Paul Lindstrom, 

one of the two Nielsen witnesses whose 

prior testimony the SDC designated for 

consideration in this proceeding, 

acknowledged that the size of the 

samples used by Nielsen to measure 

distant retransmissions are relatively 

small, and therefore do not measure 

viewership as accurately as a larger 

sample. Accordingly, Mr. Lindstrom 

acknowledged that ‘‘[t]he relative error 

on any given quarter-hour for any given 

station . . . would be very high,’’ 6/3/ 

13 Tr. at 303 (Lindstrom). Despite these 

shortcomings, the SDC relied upon Mr. 

Whitt’s HHVH Report, in lieu of 

investing in a ‘‘niche’’ Nielsen report, 9/ 

3/14 Tr. at 514 (Sanders),46 and without 

providing information regarding the 

levels of confidence and margins of 

error associated with the HHVH Report 

upon which it has relied. 

In an attempt to minimize the impact 

of the thinness of this slice of data, Mr. 

Sanders shifted the focus, 

distinguishing ‘‘fully informed’’ market 

participants from ‘‘all-knowing’’ 

participants. In his opinion, willing 

sellers and willing buyers in the 

marketplace for television program 

copyright licenses would consider 

themselves ‘‘fully informed’’ if they had 

access merely to the information upon 

which he relied, even if they lacked the 

more granular data of a special ‘‘niche’’ 

Nielsen report of distant viewing of the 

devotional programming at issue. 9/3/14 

Tr. 474–75 (Sanders). As Mr. Sanders 

added, ‘‘fully informed’’ in the context 

of the licensing of television programs 

simply means having adequate knowledge of 

the relevant facts and circumstances to the 

issue or the proposed transaction at 

hand. . . . I don’t think in any engagement 

I’ve ever been involved in . . . we have had 

all the information we would like to have. 

Typically, a valuation exercise is 

endeavoring to reach a conclusion based 

upon the information that is available. 

9/3/14 Tr. 474–75 (Sanders). 

Additionally, in economic terms, Mr. 

Sanders’s testimony is consistent with 

the concept of ‘‘bounded rationality.’’ 

Willing buyers and willing sellers in 

any market 47 are unlikely to have 

complete information regarding all of 

the variables that could contribute to the 

setting of a market price. It would be 

humanly impossible to calculate all the 

relevant economic variables, and it 

would be economically inefficient to 

expend the time sufficient to make such 

calculations even if they were possible. 

Thus, economists recognize that willing 

buyers and willing sellers are bounded 

by the ‘‘external constraint[ ] . . . [of] 

the cost of searching for information in 

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48The SDC designated Mr. Lindstrom’s testimony 

in the 2000–03 cable distribution proceeding for 

consideration in this present proceeding. 

49Before submitting her final recommendation, 

Dr. Robinson amended her program count to 

conform to the Judges’ rulings and to capture data 

that she (apparently inadvertently) omitted in her 

first analysis. See notes 6, 7, supra, and 

accompanying text; note 57, infra, and 

accompanying text. 

the world . . . [and they] attempt to 

make optimal choices given the 

demands of the world leading to the 

notion of optimization under 

constraints.’’ G. Gigerenzer, Is the Mind 

Irrational or Ecologically Rational? in F. 

Parisi & V. Smith, The Law and 

Economics of Irrational Behavior at 38 

(2005). Thus, ‘‘[t]he focus on the 

constraints in the world has allowed 

economists to equate bounded 

rationality with optimization under 

constraints.’’ Id. at 40. 

Finally, IPG leveled a broad criticism 

of the SDC Methodology, asserting that 

it is ‘‘the product of several degrees of 

projection.’’ Robinson AWDT at 7 n.10. 

That is, the SDC derived its royalty 

distribution by analyzing the viewership 

of a few sampled individual airings 

projected over the population of a 

Nielsen Designated Market Area during 

‘‘sweeps’’ weeks, and then projected 

over the entire year, for only a relatively 

small (nonrandom) set of stations 

projected to represent all retransmitted 

stations. Id. The Judges recognize the 

validity of this criticism. However, the 

nature of viewership-type estimates is to 

engage in such sampling and 

extrapolation. Thus, the SDC 

Methodology may be compromised, but 

it is not subject to outright 

disqualification. 

(4) The Incidence of Zero Viewing 

IPG criticizes the SDC Methodology 

because it is based on what IPG 

characterizes as a ‘‘disproportionately 

large number of ‘0’ entries’’ [i.e., zero 

viewing sampling points] in the Nielsen 

data for distant viewing.’’ IPG PFF at 38. 

More particularly, IPG notes that the 

Nielsen Data include a recorded ‘‘0’’ for 

72% of all quarter-hours of broadcasts 

measured by the 1999 Nielsen Data, and 

recorded a ‘‘0’’ for 91.2% of all quarterhours of devotional broadcasts. Id. 

Zero viewing sampling points 

represent the quarter-hour sampling 

points at which no sample households 

recorded that they were viewing that 

station. See 2000–03 Determination, 78 

FR at 64995. IPG criticized the 

incidence of zero viewing sampling 

points in the 2000–03 proceeding, and 

the Judges addressed the issue in their 

Determination in that proceeding. 

[T]he Judges agree with Mr. Lindstrom that 

these ‘‘zero viewing’’ sampling points can be 

considered important elements of 

information, rather than defects in the 

process. As Mr. Lindstrom testified, when 

doing sampling of counts within a 

population, it is not unusual for a large 

number of zeros to be recorded, 6/4/13 Tr. at 

391–93, 410 (Lindstrom), and those ‘‘zero 

viewing’’ sample points must be aggregated 

with the non-zero viewing points. 6/3/13 Tr. 

at 323 (Lindstrom). 

. . . . 

[A]s Mr. Lindstrom testified, distantly 

retransmitted stations typically have very 

small levels of viewership in a television 

market fragmented (even in the 2000–2003 

period) among a plethora of available 

stations. 6/4/13 Tr. at 393 (Lindstrom). Thus, 

it would be expected, not anomalous, for 

Nielsen to record some zero viewing for any 

given quarter-hour period within the diary 

sampling (sweeps) period. 

Id.48

In the present proceeding, Mr. 

Sanders offered the following practical 

reasons why zero viewing would be 

recorded for these retransmitted 

programs: (1) There is much less 

viewing of out-of-market signals, (2) the 

lion’s share of viewing in any market is 

going to be viewing of the local stations, 

(3) stations within a market tend to have 

a long legacy and a history in the 

market, (4) stations within a market 

have preferred dial positions, and (5) 

local television stations devote 

incredible resources to promoting 

themselves. 9/4/14 Tr. at 681–83 

(Sanders). This testimony was not 

rebutted by any IPG witness. 

Despite these seemingly reasonable 

and credible explanations of ‘‘zero 

viewing’’ sampling points, the probative 

force of these ‘‘zero viewing’’ data 

points, as a general matter, is not 

without doubt. As the Judges also noted 

in the 2000–03 Determination regarding 

Nielsen sampling: 

The sample size is not sufficient to 

estimate low levels of viewership as 

accurately as a larger sample. Mr. Lindstrom 

acknowledged that ‘‘[t]he relative error on 

any given quarter-hour for any given station 

. . . would be very high,’’ 6/3/13 Tr. at 303 

(Lindstrom). 

Furthermore, Mr. Lindstrom acknowledged 

that he had not produced the margins of error 

or the levels of confidence associated with 

the Nielsen viewership data, despite the fact 

that such information could be produced. 6/ 

3/13 Tr. at 391–93, 410 (Lindstrom). Without 

this information, the reliability of any 

statistical sample cannot be assessed. (The 

Judges infer that, had such information 

underscored the reliability of the Nielsen 

data, it would have been produced by 

MPAA.) 

78 FR at 64995. The Judges note that the 

evidence in the present proceeding does 

not resolve these issues regarding 

sample size, margins of error and levels 

of confidence. 

Nonetheless, the Judges concluded in 

the 2000–03 Determination that 

‘‘viewership as measured after the airing 

of the retransmitted programs is a 

reasonable, though imperfect proxy for 

the viewership-based value of those 

programs.’’ Id. at 64995. IPG has not 

provided record evidence or testimony 

in this proceeding that would persuade 

the Judges to depart from the conclusion 

reached in the 2000–03 Determination. 

In light of the reasonable and credible 

explanations offered by the SDC for the 

‘‘zero viewing’’ sampling points, and the 

absence of any persuasive evidence or 

testimony to the contrary, the Judges 

again find and conclude that the 

incidence of such zero viewing points 

does not invalidate a viewership-based 

valuation study such as utilized in the 

SDC Methodology. 

IPG did introduce in this proceeding 

evidence that it did not introduce in the 

2000–03 proceeding regarding the 

incidence of ‘‘zero viewing’’ sample 

points for individual programs (rather 

than for the aggregate of quarter-hours). 

Compare 2000–03 Determination, 78 FR 

at 64995 (finding that IPG had failed to 

introduce evidence that the Nielsen data 

revealed particular programs with ‘‘zero 

viewing’’) with Ex. IPG–R–011 

(analyzing zero viewing by title). As the 

Judges noted in the 2000–03 

Determination, the distinction between 

‘‘zero viewing’’ overall and ‘‘zero 

viewing’’ for individual programs or 

titles is important because ‘‘under the 

hypothetical market construct, royalties 

would accrue on a program-by-program 

basis to individual copyright owners, 

not to the distantly retransmitted 

stations.’’ 2000–03 Determination, 78 FR 

at 64995. However, an analysis of the 

evidence upon which IPG relied does 

not support its assertion that ‘‘zero 

viewing’’ for individual programs was 

particularly pervasive among the SDC or 

IPG programs, or that the incidences of 

‘‘zero-viewing’’ that did occur were 

disproportionately harmful to IPG. 

First, the incidence of ‘‘zero viewing’’ 

for individual, retransmitted SDC and 

IPG programs was no more than 15.8%, 

according to IPG’s own economics 

expert witness, Dr. Robinson. See Ex. 

IPG–R–011. This 15.8% figure 

represented only three of the 19 

programs believed at issue in this 

proceeding or, alternatively stated, 16 of 

the 19 programs (84.2%) did not have 

‘‘zero viewing’’ throughout the 

sample.49

Second, of the three programs with 

‘‘zero viewing’’ throughout the sample, 

two were SDC programs (‘‘700 Club 

Super Sunday’’ and ‘‘James Kennedy’’), 

whereas only one of the three programs 

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50 IPG attempts to deflect attention from the 

paucity of the relevant evidence regarding the 

programs at issue in this proceeding by noting a 

higher incidence of ‘‘zero viewing’’ for programs in 

other categories, such as Alfred Hitchcock Presents 

and Today’s Homeowner. Ex. IPG–R–012; IPG PFF 

at 44. However, data sample points in other 

categories of programming are not relevant because 

they do not address the issues relating to the 

Devotional category and, further, there is no 

evidence to place such data in an appropriate 

context. 

51 IPG notes that the SDC could have improved 

its analysis to attempt to attribute value to the 

distant ‘‘zero viewing’’ data points, as performed by 

experts in prior proceedings. Although such 

improvements might have permitted the Judges to 

give more weight to the HHVH Report, the absence 

of such improvements did not invalidate the HHVH 

Report. 

52 Dr. Robinson was unfamiliar with the 

industry’s use of a ‘‘make good’’ provision as a tool 

to account for viewership levels. 9/3/14 Tr. at 270 

(Robinson). 

53The Judges anticipated the existence of such 

‘‘post-viewing adjustments’’ in their 2013 

determination. See 2000–03 Determination, supra, 

at 64995, n.48 (‘‘Since it is a hypothetical market 

we are constructing, it also would not be 

unreasonable to hypothesize that the CSO and the 

Copyright Owner might negotiate a license that 

would contain a provision adjusting the value of the 

license, post-viewing, to reflect actual 

viewership. . . . In that regard, the Judges refer to 

one of the preconditions for relative market value— 

reasonable knowledge of relevant facts. Actual 

viewership would be a ‘relevant fact’ that could be 

applied if post-viewing adjustments to the license 

fees were hypothetically utilized by the bargaining 

parties.’’). 

54 Interestingly, Dr. Erdem explained that, as 

between two programs with overlapping 

viewership, the program with higher viewership 

would have a greater proportionate Shapley value 

than the less viewed program; the difference would 

be even greater than the difference between the two 

programs based strictly on relative viewership. 

9/8/14 Tr. at 1082–83 (Erdem). Given the relative 

homogeneity of devotional programming (compared 

to the apparent relative heterogeneity between and 

among other Phase II category programs), 

viewership overlaps between and among the SDC 

and IPG programs are likely. Therefore, because the 

SDC programs had higher overall ratings than IPG 

programs and because the SDC Methodology is 

based solely on ratings, the SDC’s percentage 

distribution (if accurately measured) could in fact 

understate the SDC percentage and overstate the 

IPG percentage, compared to percentages based on 

potential Shapley values. See supra note 36, and 

accompanying text. 

55 IPG initially asked the Judges to qualify Dr. 

Robinson as a testifying expert ‘‘regarding the value 

of the programming issue in this matter for IPG and 

for the SDC,’’ or, as alternatively stated by IPG’s 

counsel, as an expert ‘‘valuing the relative value of 

these programs to these royalties.’’ 9/2/14 Tr. at 73– 

74, 80. However, SDC’s counsel objected, and the 

Judges then qualified Dr. Robinson as an expert in 

the areas of knowledge listed in the text, supra. 

IPG’s counsel did not renew his request that Dr. 

Robinson be qualified as an expert in the areas set 

forth in this footnote. Even if Dr. Robinson had been 

qualified as an expert in the areas originally 

identified by IPG, that would not have made any 

difference in the Judges’ findings and conclusions 

in this determination. 

(‘‘Creflo A. Dollar Jr. Weekly’’) was an 

IPG program. See Ex. IPG–R–013. 

Further, the IPG program was 

retransmitted only three times and 

represented less than one-tenth of one 

percent (.097%) of both the total 

quarter-hours and the number of 

retransmitted broadcasts of IPG 

programs at issue in this proceeding. Id. 

Similarly, the two SDC retransmitted 

programs with ‘‘zero viewing’’ 

throughout the sample represented a de 

minimis percent of the SDC’s total 

devotional programming at issue in this 

proceeding (for ‘‘700 Club Super 

Sunday,’’ four retransmitted broadcasts, 

representing less than .25% of the total 

SDC quarter-hours and programs 

retransmitted and, for ‘‘James 

Kennedy,’’ approximately 1% of total 

SDC quarter-hours and programs 

retransmitted). Id. Moreover, the 

copyrights for all three of the aboveidentified programs with supposed zero 

viewing throughout the sample were 

owned by respective claimants who also 

owned the copyrights for programs with 

virtually identical or similar names, viz., 

‘‘Creflo A. Dollar,’’ ‘‘700 Club,’’ and 

‘‘James Kennedy’’, none of which had 

zero viewing sample points for all 

retransmitted broadcasts of their 

programs. Id. Based on these facts, Dr. 

Robinson acknowledged at the hearing, 

that, in her view, she ‘‘would not say 

that for the IPG and the SDC titles that 

we have any that we have 100 percent 

zero viewing.’’ 9/4/14 Tr. at 827–28 

(Robinson) (emphasis added).50

For all of the foregoing reasons, the 

Judges find and conclude that there was 

not persuasive or sufficient evidence of 

‘‘zero viewing’’ for individual SDC and 

IPG programs to invalidate any reliance 

on the SDC Methodology.51

3. Viewership as an Ex Ante or Ex Post 

Measure of Value 

IPG asserts that viewership and 

ratings cannot form a measure of 

relative market value because the extent 

of viewership and the ratings measuring 

viewership are not available until after 

the programs have been retransmitted. 

Thus, IPG argues, the hypothetical 

willing buyer and willing seller could 

not utilize this viewership data ex ante 

to negotiate a license. Galaz AWDT at 9; 

Ex. IPG–D–001 at 9. 

Although IPG’s premise is literally 

correct, it does not preclude the use of 

such viewership data to estimate the 

value of the hypothetical licenses. As 

Mr. Sanders testified, this problem can 

be overcome—and indeed is overcome 

in the industry—by the use of a ‘‘make 

good’’ provision in the contracts 

between program copyright owners and 

licensees. That is, program copyright 

licenses in the television industry are 

established based upon an ex ante 

prediction of viewership as measured by 

ratings. If the ex post ratings reveal that 

the program’s measured viewership was 

less than predicted and set forth in the 

license agreement, the licensor must 

provide compensatory value to the 

licensee. 9/4/14 Tr. at 685–95 

(Sanders).52 In this manner, such a 

rational measure of viewership can also 

be expressly incorporated into the 

bargain in the hypothetical market 

constructed by the Judges.53

The Judges also agree with Mr. 

Sanders that the programs within the 

Devotional Claimants category on the 

surface appear to be more homogeneous 

inter se than they are in comparison 

with programs in either the Sports 

Programming or the Program Suppliers’ 

claimant categories. Sanders WDT at 6. 

This relative homogeneity suggests that 

a rational CSO would not be as 

concerned with whether different 

programs would attract different 

audience segments (compared with 

more heterogeneous programming) and 

therefore the CSO would rely to a 

greater extent on absolute viewership 

levels. 

For these reasons, the record 

testimony supports the conclusion that 

viewership data is a useful metric in 

determining relative market value, in 

the absence of optimal data that would 

permit a precise or an estimated 

Shapley value.54 Accordingly, the 

Judges reject IPG’s argument that 

household viewing cannot constitute a 

measure of value in this proceeding. 

IPG notes, though, that even assuming 

arguendo the SDC’s viewership analysis 

is probative of value, the SDC’s own 

‘‘reasonableness’’ check demonstrates a 

significant disparity between the results 

derived from the HHVH Report 

(81.5%:18.5% in favor of the SDC) and 

the results from the ‘‘reasonableness’’ 

check of local viewing for the SDC and 

IPG programs at issue in this proceeding 

(71.3%:28.7% in favor of the SDC). The 

Judges agree with IPG that this is an 

important disparity, suggesting that IPG 

may well be entitled to a larger 

distribution than indicated by the SDC’s 

HHVH Report. Because of the 

importance of this point, the Judges 

discuss its significance in their analysis 

set forth in Part VI, infra, synthesizing 

and reconciling the parties’ positions. 

B. The IPG Methodology 

1. The Details of the IPG Methodology 

IPG proffered its distribution 

methodology (the IPG Methodology) 

through its expert witness, Dr. Laura 

Robinson, whom the Judges qualified to 

testify as an expert in economics, data 

analysis, and valuation. 9/2/14 Tr. at 87 

(Robinson).55 Through her application 

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56 In the hypothetical marketplace the terrestrial 

stations’ initial bundling of programs does not affect 

the marginal profit-maximizing decisions of the 

hypothetical buyers and sellers. 

of the IPG Methodology, Dr. Robinson 

set forth her opinion of the relative 

market value of the retransmitted 

broadcasts of the compensable 

copyrighted program titles represented 

by IPG and the SDC and estimated the 

share attributable to both parties. 

Robinson AWDT at 14, 25; Ex. IPG–D– 

001 at 14, 25. 

Consistent with the conclusions of the 

Judges in this and other determinations, 

Dr. Robinson identified the ‘‘willing 

sellers’’ in the hypothetical market to be 

the owners of the copyrights to the 

programs subject to retransmission and 

the ‘‘willing buyers’’ to be the CSOs that 

would acquire the license to retransmit 

the program. 9/2/14 Tr. at 92 

(Robinson). However, Dr. Robinson 

defined the hypothetical marketplace in 

a manner different from that of the 

Judges in this proceeding and in the 

2000–03 Determination. Dr. Robinson 

defined the hypothetical marketplace as 

equivalent to the actual marketplace in 

which the CSO is required to acquire 

the retransmitted programs in the same 

bundle as created by the station that the 

CSO retransmits. See, e.g., 9/4/14 Tr. at 

782 (Robinson) (‘‘[I]t is certainly the 

case that when a cable system operator 

is actually making the decision about 

whether or not to retransmit a broadcast, 

that comes within their decision 

whether or not to retransmit the station, 

which is a little bit at odds with this 

whole notion of a hypothetical 

negotiation over an individual 

broadcast. . . . They don’t have the 

choice to broadcast a particular 

program.’’).56

Dr. Robinson identified the following 

‘‘obtainable data’’ that she claimed to 

comprise ‘‘various indicia of value of 

the retransmitted broadcasts’’: 

• The length of the retransmitted 

broadcasts. 

• The time of day of the retransmitted 

broadcasts. 

• The fees paid by CSOs to retransmit 

the stations carrying the broadcasts. 

• The number of persons distantly 

subscribing to the station broadcasting 

the IPG-claimed program. 

Robinson AWDT at 17; Ex. IPG–D–001 

at 17. 

Dr. Robinson relied upon four sets of 

data. First, she utilized data from the 

Cable Data Corporation (CDC). This data 

included information on more than 

2,700 cable systems regarding: 

• The stations transmitted by each 

CSO. 

• The distant retransmission fees paid 

by each CSO. 

• The number of distant subscribers 

to each CSO. 

For each station distantly 

retransmitted by these CSOs, the CDC 

data also included: 

• The number of CSOs retransmitting 

each station. 

• The number of distant subscribers 

to the CSOs retransmitting the station. 

• The average number of distant 

subscribers to the CSOs retransmitting 

the station. 

• The distant retransmission fees paid 

by the CSOs to retransmit each station. 

• The average distant retransmission 

fees paid by the CSOs to retransmit each 

station. 

Id. at 21. 

Second, Dr. Robinson relied on TMS 

Data (the same source as that relied 

upon by the SDC). The TMS data 

provided the following information for 

the IPG and the SDC programs 

represented in this proceeding: 

• The date and time each broadcast 

was aired. 

• The station call sign. 

• The program length in minutes. 

• The program type (e.g., Devotional). 

• The program title. 

Id. at 21–22. 

Third, Dr. Robinson relied upon the 

following information from Nielsen: 

• Data reporting 1997 viewing, 

segregable according to time period of 

the measured broadcast. 

• Reports reflecting the long-run 

stability of day-part (time period) 

viewing patterns. 

Id. at 22. 

Applying this data, Dr. Robinson 

made several computations and 

observations, as summarized in Tables 1 

and 2 below: 

TABLE 1—DATA ON IPG AND NON-IPG CLAIMED TITLES 1999 

IPG SDC 

Number of distantly retransmitted broadcasts of claimed titles .............................................................................. 12,017 6,558 

Number of hours of distantly retransmitted broadcasts of claimed titles ................................................................ 6,010 5,856 

Number of quarter-hours of distantly retransmitted broadcasts of claimed titles ................................................... 24,040 23,423 

TABLE 2—RELATIVE MARKET VALUE

IPG 

(percent) 

SDC 

(percent) 

Hours of claimed distantly retransmitted broadcasts .............................................................................................. 51 49 

Time of day of distantly retransmitted broadcasts .................................................................................................. 46 54 

Fees Paid by CSOs distantly retransmitting devotional broadcasts ....................................................................... >50 <50 

Number of distant subscribers to CSOs distantly retransmitting devotional broadcasts ........................................ 51 49 

Id. at 26–27. 

Dr. Robinson stressed repeatedly that 

the Judges should not consider the 

above measures of value individually. 

Rather, she testified that the Judges 

should consider the several approaches 

as a whole, with any weakness in one 

approach offset by the other approaches 

that do not suffer from that weakness. 

See, e.g., 9/3/14 Tr. at 243, 326, 329, 403 

(Robinson); 9/4/14 Tr. at 775 

(Robinson). Dr. Robinson also testified 

that this approach was an important 

method of analysis because her multiple 

valuation methods all tended toward a 

similar result—approximately a 50:50 

distribution—despite any weaknesses or 

limitations in any one method. See 9/2/ 

14 Tr. at 90 (Robinson) (‘‘In summary, 

I looked at four different measures of 

value, of the relative value. And the IPG 

versus SDC are roughly equal.’’); 9/3/14 

Tr. at 245 (Robinson) (‘‘since everything 

came out roughly equal, all the 

indicators pointed to a roughly 50/50 

split.’’). Based upon these calculated 

percentages, Dr. Robinson concluded 

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57Because Dr. Robinson’s adjusted analyses 

supersede her original analyses (they admittedly 

included IPG programs that should have been 

excluded and omitted SDC programs that should 

have been included), the Judges choose not to 

clutter this determination with the details of those 

now irrelevant calculations. 

that the proper allocation of royalties 

should be in a range from 54%:46% 

favoring the SDC to 51%:49% favoring 

IPG. Id. at 25. 

With regard to the particular factors 

Dr. Robinson applied, she noted that her 

first measurement—of total broadcast 

time—was essentially identical for both 

the IPG and the SDC programs when 

measured by quarter-hour segments. 9/ 

2/14 Tr. at 90–91 (Robinson). Second, 

with regard to her ‘‘time of day’’ 

analysis, Dr. Robinson testified that 

‘‘certain times of days are associated 

with different amounts of viewership 

[a]nd everything else equal, it would be 

reasonable to think that higher 

viewership might be associated with a 

higher value.’’ 9/2/14 Tr. at 93 

(Robinson). Dr. Robinson concluded 

that this time-of-day measurement, like 

the first measurement (total broadcast 

time) revealed a ‘‘roughly similar’’ value 

measurement for the IPG programs and 

the SDC programs. 9/2/14 Tr. at 94 

(Robinson). 

With regard to the third factor—the 

fees paid by the CSOs to distantly 

retransmit the broadcasts—Dr. Robinson 

found that ‘‘on average, IPG broadcast 

quarter hours are shown on stations that 

are retransmitted by CSOs who pay 

relatively more in distant retransmission 

fees than do the CSOs who retransmit 

the stations with the SDC broadcasts.’’ 

Ex. IPG–D–001 at 31. From this metric, 

Dr. Robinson concluded ‘‘the IPG 

broadcasts have more value than the 

[SDC] broadcasts.’’ Id. at 32. 

Finally, with regard to her fourth 

factor—the number of subscribers to the 

cable systems—Dr. Robinson found that 

when considering the average number of 

subscribers to the cable systems on 

which the IPG and the SDC programs 

are retransmitted, ‘‘the IPG distantly 

retransmitted broadcasts are 

retransmitted by CSOs on stations with 

approximately 6% more distant 

subscribers than [the SDC] distantly 

retransmitted broadcasts.’’ Id. at 33. 

Based upon this final metric, Dr. 

Robinson opined: ‘‘To the extent the 

value of the broadcast relates to the 

number of distant subscribers to the 

CSOs retransmitting the station, this 

metric indicates that IPG-distantlyretransmitted broadcasts have more 

value than [the SDC]-distantlyretransmitted broadcasts.’’ Id. at 34. 

Dr. Robinson corrected her analyses 

before and during the hearing to reflect 

changes in the program titles that she 

could allocate to IPG and to the SDC. 

First, she removed from her analyses the 

several IPG programs that the Judges 

had concluded at the preliminary claims 

hearing were not properly subject to 

representation by IPG. 9/2/14 Tr. at 146 

(Robinson). Second, Dr. Robinson added 

several program titles that were properly 

subject to representation by the SDC but 

had not been included in her original 

analyses. 9/2/14 Tr. 181–84 (Robinson). 

See also 9/8/14 Tr. at 1016 (Robinson) 

(confirming that she made these 

program inclusions and exclusions in 

her amended analysis). With these 

adjustments, Dr. Robinson modified her 

conclusions as set forth on Table 3 

below: 

TABLE 3 

IPG 

(percent) 

Non-IPG 

(percent) 

Total 

(percent) 

Hours of claimed distantly retransmitted broadcasts .................................................................. 48 52 100 

Time of day of distantly retransmitted broadcasts ...................................................................... 46 54 100 

Fees paid by CSOs distantly retransmitting devotional broadcasts ........................................... 41 59 100 

Number of distant subscribers to CSOs distantly retransmitting devotional broadcasts ............ 52 48 100 

Ex. IPG–D–013. 

Dr. Robinson acknowledged that the 

data available to her was incomplete, in 

that she did not have information 

regarding all of the fees, cable systems 

and stations that retransmitted the 

programs of IPG and the SDC. Moreover, 

she acknowledged that the sample of 

CSOs and, derivatively, the sample of 

stations retransmitted by those CSOs, 

were not random samples. Accordingly, 

Dr. Robinson undertook what she 

described as a ‘‘sensitivity analysis’’ to 

adjust for the missing data. Robinson 

AWDT at 34–36; Ex. IPG–D–001 at 34– 

36. 

Specifically, Dr. Robinson noted that 

she did not have data regarding 29% of 

the total fees paid by all the CSOs that 

distantly retransmit stations. Rather, she 

had information from CSOs who in the 

aggregate had paid only 71% of the total 

fees paid in 1999 to distantly retransmit 

stations. Dr. Robinson acknowledged 

that she also lacked full information or 

a random sampling of CSOs and of 

stations (in addition to her lack of full 

information or a random sampling of the 

fees paid by CSOs to distantly 

retransmit stations). However, Dr. 

Robinson did not attempt to adjust her 

original results to compensate for the 

missing information or the fact that the 

data set was not random. 

Accordingly, in her ‘‘sensitivity 

analysis,’’ Dr. Robinson adjusted all of 

her metrics by assuming that she was 

missing 29% of the data in all of her 

valuation data categories (even though 

only one of her metrics was calculated 

based on fees). By this ‘‘sensitivity 

analysis,’’ Dr. Robinson first calculated 

how her allocations would change if all 

of the assumed missing 29% of fees paid 

by CSOs to distantly retransmit stations 

were allocated (in each of the categories 

in Table 3) to IPG and, conversely, how 

her allocations would change if all of 

the assumed missing 29% of such fees 

instead was allocated (in each of the 

categories in Table 3) to the SDC. Id. Dr. 

Robinson initially applied this 

sensitivity analysis to her original 

allocations and, subsequently (at the 

request of the Judges), applied this 

sensitivity analysis to her adjusted 

analyses that took into account the (1) 

removal of certain IPG programs that 

had been eliminated by the Judges in 

the preliminary hearing and (2) addition 

of certain SDC programs that Dr. 

Robinson had overlooked in her initial 

report. Ex. IPG–R–16 (revised). The 

application of this ‘‘sensitivity analysis’’ 

to Dr. Robinson’s adjusted analyses 57

resulted in the proposed allocations set 

forth on Table 4 below: 

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58See 2000–03 Determination, 78 FR at 65000. By 

contrast, the SDC’s expert witness, Mr. Sanders, was 

qualified as ‘‘an expert in the valuation of media 

assets, including television programs.’’ 9/3/14 Tr. at 

463–64, and, in that capacity, he testified that the 

broadcast industry relied on Nielsen viewing data 

as the ‘‘best and most comprehensive’’ basis for 

valuing programs, 9/3/14 Tr. at 480–81 (Sanders). 

Thus, Mr. Sanders was qualified to testify as to the 

actual commercial use of a viewership-based 

valuation methodology. Mr. Galaz, on the other 

hand, was not qualified to testify as to the 

appropriateness of the data he selected for use in 

the IPG Methodology and, it should be noted, 

neither he nor Dr. Robinson testified that the factors 

relied upon in the IPG Methodology had ever been 

relied upon commercially. See Tr. 9/3/14 at 348– 

49 (Robinson). 

Not only did Mr. Galaz lack the expertise to 

approve or select the type of data necessary to 

construct a persuasive methodology, his credibility 

has been seriously compromised by his prior fraud 

and criminal conviction arising from his 

misrepresentations in prior distribution 

proceedings. See 78 FR at 6500 (‘‘Mr. Galaz was 

TABLE 4 

IPG high 

(percent) 

IPG low 

(percent) 

Non-IPG high 

(percent) 

Non-IPG low 

(percent) 

Hours of claimed distantly retransmitted broadcasts ...................................... 63 34 66 37 

Time of day of distantly retransmitted broadcasts .......................................... 62 33 67 38 

Fees paid by CSOs distantly retransmitting devotional broadcasts ................ 58 29 71 42 

Number of distant subscribers to CSOs distantly retransmitting devotional 

broadcasts .................................................................................................... 66 37 63 34 

Ex. IPG–D–014. 

2. Evaluation of the IPG Methodology 

The SDC have raised the following 

specific criticisms of the IPG 

Methodology. First, the SDC critiqued 

each of the four purported measures of 

value presented by Dr. Robinson. See 

SDC PFF at ¶¶ 10–13 (regarding 

volume); ¶¶ 14–17 (regarding time of 

day); ¶¶ 18–24 (regarding fee 

generation); and ¶¶ 26–27 (regarding 

subscribership). Second, the SDC noted 

that the sensitivity analysis undertaken 

by Dr. Robinson revealed that SDC 

programming had an eighteen 

percentage point higher value than IPG 

programming. SDC PFF at ¶ 25. Before 

undertaking an analysis of the specific 

elements of the IPG Methodology or the 

SDC’s critiques thereof, it is important 

to consider several important 

overarching defects in the approach 

undertaken by IPG. 

a. General Deficiencies in the IPG 

Methodology 

It bears repeating that a fundamental 

problem with the IPG Methodology is 

that it is based on a decision by Dr. 

Robinson to presume the existence of 

the compulsion arising from the prebundled status of the retransmitted 

programs as it existed in the actual 

compulsory-license market, rather than 

the compulsion-free hypothetical fair 

market consistently applied by the 

Judges. See, e.g., Tr. 9/4/14 at 781–82 

(Robinson) (quoted supra); see also 9/2/ 

14 Tr. at 175–76 (Robinson) 

(acknowledging that the IPG 

Methodology does not address the 

relationship between value and 

bundling). 

A second problem with the IPG 

Methodology is that, although it 

ostensibly is intended to eschew 

viewership as a primary measure of 

program value, IPG’s Methodology 

implicitly uses indicia of viewership to 

measure program value. In particular, 

IPG’s Methodology considers and values 

programs based on their indirect 

contribution to viewership: The 

duration of a program serves as an 

indicium of value (a program of 

relatively longer duration would be 

more valuable because of its viewership 

over a longer period), as does the time 

of day a program is aired (there are more 

viewers at some times of day than 

others), and the number of subscribers 

(potential viewers) to CSOs 

retransmitting the program. Simply put, 

IPG’s Methodology is not true to its own 

critique of valuing programs based on 

viewership. Thus, the IPG Methodology 

fails to address either the initial 

necessity of considering absolute 

viewership or the subsequent necessity 

of undertaking a Shapley type of 

measurement or estimation in order to 

create a ‘‘bundle’’ of programs. 

The Judges also find that Dr. Robinson 

did not truly undertake her own 

independent inquiry and develop her 

own methodology, because she worked 

solely with the data IPG, through Mr. 

Galaz, provided her. See 9/2/14 Tr. at 

110–11 (Robinson); IPG PFF at 11. The 

type of data that Mr. Galaz supplied to 

Dr. Robinson was the same type he 

utilized in the 2000–03 proceeding, 

when he presented his own 

methodology on behalf of IPG. Mr. 

Galaz’s response to a question from the 

Judges confirmed this point: 

Q. [I]n constructing the methodology that 

you relied on in the 2000–2003 proceeding, 

you used certain data from the CDC, from 

Tribune, or whatever it was called at the 

time, and so forth. Is that—were those types 

of data essentially the same as the types of 

data that were provided to Dr. Robinson for 

purposes of this proceeding? 

Mr. Galaz: I would say it was essentially 

the same. 

9/8/14 Tr. at 997 (Galaz). 

It is not surprising, therefore, that Dr. 

Robinson conditioned her analysis and 

conclusions by noting that she was only 

able to express an opinion as to relative 

market value ‘‘given the data that are 

available in this matter.’’ Ex. IPG–D–001 

at 20. In fact, Dr. Robinson premised her 

analysis on the fact that it was based 

upon the limited data available to her. 

See, e.g., 9/2/14 Tr. at 111 (Robinson) 

(‘‘I looked at the data, looked at what I 

could do with them, and this is what I 

could do.’’). 

Indeed, Mr. Galaz’s methodology in 

the 2000–03 proceeding and Dr. 

Robinsons’ methodology in the present 

proceeding overlap. Compare 2000–03 

Determination, 78 FR at 64998 (‘‘The 

weight that IPG accorded to any given 

compensable broadcast was the product 

of (x) a ‘Station Weight Factor’ [based on 

subscriber or fee levels], (y) a ‘Time 

Period Weight Factor,’ and (z) the 

duration of the broadcast . . . .) with 

Robinson AWDT at 28; Ex. IPG–D–001 

at 28 (‘‘[T]he indicia of the economic 

value of the retransmitted broadcasts 

. . . are: The length of the retransmitted 

broadcasts, the time of day of the 

retransmitted broadcast, the fees paid by 

cable system operators to retransmit the 

stations carrying the devotional 

broadcasts, and the number of persons 

distantly subscribing [to] the stations 

broadcasting the devotional 

programs.’’). 

Dr. Robinson clearly was 

straitjacketed in attempting to devise an 

appropriate methodology by the limited 

data she received from Mr. Galaz. In this 

regard, it is important to note that Mr. 

Galaz is not an economist, statistician, 

econometrician or an expert in the field 

of valuation of television programs or 

other media assets, and that he therefore 

had no particular expertise that would 

permit him to select or approve the use 

of appropriate data, especially when 

that selection dictated the construction 

of a methodology to establish ‘‘relative 

market value’’ in a distribution 

proceeding.58 The Judges therefore 

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previously convicted and incarcerated for fraud in 

the context of copyright royalty proceedings—a 

fraud that caused financial injury to MPAA. In 

connection with that fraud, Mr. Galaz also 

admittedly lied in a cable distribution proceeding 

much like the instant proceeding. Mr. Galaz’s fraud 

conviction and prior false testimony compromises 

his credibility.’’) Further, in the present case, the 

Judges carefully observed that Mr. Galaz testified 

that ‘‘what we gave to Dr. Robinson was everything 

that we had in our possession that we thought might 

affect . . .’’ before catching himself and stating 

instead ‘‘or would—I should say with which [s]he 

could work.’’ 9/8/14 Tr. at 996 (Galaz) (emphasis 

added). In any event, the Judges recognize that even 

a party that does not have such a checkered history 

has an inherent self-interest in selecting the types 

of data for use by its expert that is inconsistent with 

the independence of the expert in identifying his 

or her own categories of data. 

59When Dr. Robinson adjusted for the proper 

addition of SDC programs and deletion of IPG 

programs, and then applied her sensitivity analysis, 

she changed this allocation to 67%:33% in favor of 

SDC (not giving IPG any credit for the assumed 29% 

of the data it declined to obtain). 

60Mr. Galaz asserted that information 

subsequently published by Nielsen confirmed that 

‘‘there had been virtually no change’’ in day-part 

viewing between 1997 and 1999. 9/8/14 Tr. at 984 

(Galaz). However, IPG presented no evidence to 

support that assertion. 

conclude that the overall IPG 

Methodology carries no more weight 

than IPG’s methodology did in the 

2000–03 proceeding. See 2000–03 

Determination, 78 FR at 65002 (while 

IPG Methodology ‘‘cannot be applied to 

establish the basis for an allocation’’ it 

can be used to adjust ‘‘marginally’’ an 

allocation derived from other evidence). 

Finally, IPG contends that the 

purpose of the IPG Methodology is to 

compensate every claimant, even if 

there is no evidence of viewership of the 

claimant’s program. See Galaz AWDT at 

8; Ex. IPG–D–001 at 8. The Judges find 

no basis for that purpose to guide the 

methodology. Even if viewership as a 

metric for determining royalties 

theoretically would be subject to 

adjustment to establish or estimate a 

Shapley valuation, there is certainly no 

basis to allow for compensation of a 

program in the absence of any evidence 

of viewership. 

b. Specific Deficiencies in the IPG 

Methodology 

In addition to the foregoing 

overarching criticisms of the IPG 

Methodology, the Judges note the 

following more particular deficiencies 

in that methodology. 

As a preliminary matter, Dr. Robinson 

acknowledged that IPG’s sample of 

stations had not been selected in a 

statistically random manner. 9/2/14 Tr. 

at 155 (Robinson). Thus, the sample 

upon which Dr. Robinson relied 

suffered from the same infirmity as the 

Kessler Sample relied upon in part by 

the SDC. Moreover, each prong of the 

IPG Methodology raised its own 

concerns. 

(1) Broadcast Hours 

Dr. Robinson acknowledged that the 

number of hours of broadcasts is not 

actually a measure of value; rather it is 

a measure of volume. 9/3/14 Tr. at 243– 

51 (Robinson). ‘‘Volume’’ fails to 

capture the key measure of whether 

anyone is actually viewing the 

retransmitted program. See 9/3/14 Tr. at 

247 (Robinson); SDC PFF ¶ 12. Further, 

‘‘volume’’ i.e., number of hours of air 

time, does not even reflect how many 

subscribers have access to the programs. 

9/8/14 Tr. at1085–86 (Erdem). 

(2) Time of Day of Retransmitted 

Broadcasts 

IPG’s second measure of value 

compares the time of day viewership of 

IPG and SDC programs. Using 1997 

Nielsen sweeps data produced by the 

MPAA in a previous proceeding, Dr. 

Robinson estimates the average number 

of total television viewers for each 

quarter-hour when IPG or SDC programs 

were broadcast according to the Tribune 

Data analyzed by Dr. Robinson. 9/3/14 

Tr. at 254–55 (Robinson). 

Dr. Robinson’s time-of-day measure 

does not measure the value of the 

individual programs that are 

retransmitted. The proper measure of 

value for such individual programs, 

when considering ratings, would hold 

the time of day constant, and then 

consider relative ratings within the 

fixed time periods. To do otherwise—as 

Dr. Robinson acknowledged—absurdly 

would be to give equal value to the 

Super Bowl and any program broadcast 

at the same time. 9/3/14 Tr. at 264 

(Robinson). 

Further, Dr. Robinson’s analysis does 

not show, as she asserted, that the SDC 

and IPG programs are broadcast at times 

of day that have approximately equal 

viewership. Rather, her time-of-day 

analysis pointed to a 54%:46% 

distribution in favor of the SDC.59

Finally, IPG utilized 1997 data to 

estimate the level of viewing throughout 

the broadcast day, rather than data that 

was contemporaneous with the 1999 

royalty distribution period at issue in 

this proceeding. 9/3/14 Tr. at 229, 255 

(Robinson).60

(3) Fees Paid 

Dr. Robinson’s third metric is derived 

from an analysis of fees paid by CSOs 

per broadcast station. That is, several 

CSOs might pay royalty fees to 

retransmit the same over-the-air station. 

Dr. Robinson testified that stations 

generating relatively greater fees could 

be presumed to have higher value 

programs in their respective station 

bundles. 9/3/14 Tr. at 406–07 

(Robinson). To measure this factor, Dr. 

Robinson combined CDC data on royalty 

fees the CSOs paid (on a per-station 

basis) and TMS data on broadcast hours 

by station in order to compare the fees 

paid for retransmission of stations 

carrying SDC and IPG programs. 9/3/14 

Tr. at 229, 271 (Robinson). 

In Phase I of this proceeding, the 

Librarian adopted the use of a fees-paid 

metric for value, where that measure 

appeared to be the best alternative 

valuation approach. See Distribution of 

1998 and 1999 Cable Royalty Funds, 69 

FR 3606, 3609 (January 24, 2004). The 

use of a fee-based attempt at valuation 

is particularly problematic, however, for 

a niche area such as devotional 

programming, which constitutes only a 

small fraction of total station 

broadcasting. See 9/8/14 Tr. at 1087–88 

(Erdem). Because of the tenuous nature 

of this approach to valuation, a royalty 

allocation based on a fees-paid metric 

might serve as, at best, a ‘‘ceiling’’ on a 

distribution in favor of the party 

proposing that approach. See 

Distribution of the 2004 and 2005 Cable 

Royalty Funds, 75 FR 57063, 57073 

(September 17, 2010). That being said, 

when Dr. Robinson adjusted her feespaid based valuation by applying her 

sensitivity analysis, she calculated a 

value ratio of 71%:29% in favor of the 

SDC. As the SDC noted, this appears to 

be ‘‘a fact that Dr. Robinson had tried 

hard to obscure.’’ SDC PFF ¶ 25. 

(4) Subscribership Levels 

Dr. Robinson’s final metric measures 

the average number of distant 

subscribers per cable system 

retransmitting IPG programming versus 

SDC programming. 9/3/14 Tr. at 311–12 

(Robinson). This metric measures 

average subscribers per cable system, 

without taking into account the number 

of cable systems retransmitting a station. 

Therefore, this metric is of no assistance 

in measuring the total number of distant 

subscribers even receiving a program, let 

alone the number of distant subscribers 

who watch the program. 

As Dr. Erdem demonstrated—and as 

Dr. Robinson admitted—this 

subscribership metric can actually 

increase when a program is eliminated, 

if the program had been retransmitted 

by a cable system with lower than 

average numbers of subscribers. Erdem 

WRT at 8–9 (Redacted); Ex. SDC–R–001 

at 8–9 (Redacted); 9/3/14 Tr. at 331–45 

(Robinson). Indeed, this metric actually 

increased in favor of IPG after the 

dismissal of two of IPG’s claimants— 

Feed the Children and Adventist Media 

Center. Ex. SDC–R–001 at 7–10; 9/3/14 

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Tr. at 329–30 (Robinson). Simply put, 

when a purported measure of program 

value can move inversely to the 

addition or subtraction of a claimant, 

the measure is, at best, of minimal 

assistance in determining relative 

market value. 

Dr. Robinson suggests that the Judges 

nonetheless should rely on her opinion 

as to relative market value because all 

of her alternative measures resulted in 

similar proportionate valuations. 9/2/14 

Tr. at 102–03 (Robinson) (‘‘[B]y coming 

at this with four different metrics . . . 

the fact that the estimates all came out 

quite similarly gives me some comfort 

that the numbers are reasonable.’’); see 

also id. at 170 (Robinson) (emphasizing 

that she was ‘‘looking at all of these 

factors in combination’’). However, if 

four measures of value are individually 

untenable or of minimal value, they do 

not necessarily possess a synergism 

among them that increases their 

collective probative value. 

VI. Judges’ Determination of 

Distribution 

A. The Judges’ Distribution of Royalties 

Is Within the Zone of Reasonableness 

As the foregoing analysis describes, 

the evidence submitted by the two 

parties is problematic. First, the optimal 

measure or approximation of relative 

value in a distribution proceeding—the 

Shapley valuation method—was neither 

applied nor approximated by either 

party. Second, the methodologies 

proposed by both parties have 

significant deficiencies. 

As between the parties’ competing 

methodologies, however, the Judges 

conclude that the approach proffered by 

the SDC is superior to that proffered by 

IPG. The SDC Methodology, consistent 

with measures of value in the television 

industry, relies on viewership to 

estimate relative market value. The 

Judges conclude that in constructing a 

hypothetical market to measure the 

relative market values of distantly 

retransmitted programs viewership 

would be a fundamental metric used to 

apply a Shapley valuation model. 

Therefore, a methodology that uses 

viewership as an indicium of program 

value is reasonable, appropriate, and 

consistent with recent precedent in 

distribution proceedings. 

IPG’s expert, Dr. Robinson, agreed 

that viewership is relevant to the 

determination of program value. IPG’s 

own methodology uses viewership as a 

valuation proxy, although it does so in 

a much less direct and transparent way 

than does the SDC Methodology. 

Further, the SDC presented unrebutted 

testimony that estimating relative 

market value based on viewership data 

alone when considering homogeneous 

programming, as the Devotional 

Claimants category, might actually 

understate the value of the more highly 

viewed programs vis-a`-vis a Shapley 

valuation of the same programs. Because 

the SDC programs had higher ratings, 

the Judges conclude that the SDC 

Methodology, ceteris paribus, may well 

tend to understate the SDC share of the 

royalties in this proceeding. 

By contrast, the IPG Methodology is 

reliant on data that does not focus on 

the property right the Judges must 

value—the license to retransmit 

individual programs in a hypothetical 

market that is unaffected by the 

statutory license. Moreover, the IPG 

Methodology fails to value the 

retransmitted programs in the 

hypothetical market as applied by the 

Judges in this and prior proceedings. 

Rather, IPG has assumed tacitly that the 

valuation of the individual programs 

has been compromised by the 

preexisting bundling of the programs in 

the actual market, and therefore all 

programs must be subject to common 

measurements, based on broadcast 

hours, time of day, subscriber fees, and 

subscriber levels. The Judges conclude, 

as they did in the 2000–03 

Determination, that this failure to value 

programs individually is erroneous. 

Accordingly, at best, as stated in the 

2000–03 Determination, the IPG 

Methodology can serve as no more than 

a ‘‘crude approximation’’ of value that 

may have some ‘‘marginal’’ impact on 

the determination of relative market 

value. See 2000–03 Determination, 78 

FR at 78002. 

The Judges’ preference for the 

valuation concept of the SDC 

Methodology does not mean that the 

Judges find the SDC’s application of that 

concept to be free of problems or 

unimpeachably persuasive in its own 

right. The application of the 

theoretically acceptable SDC 

Methodology is inconsistent as regards 

its probative value. 

The Judges’ task in this and every 

distribution determination is to 

establish a distribution that falls within 

a ‘‘zone of reasonableness.’’ See 

Asociacion de Compositores y Editores 

de Musica Latino Americana v. 

Copyright Royalty Tribunal, 854 F.2d 

10, 12 (2d Cir. 1988); Christian 

Broadcasting Network, Inc. v. Copyright 

Royalty Tribunal, 720 F.2d 1295, 1304 

(D.C. Cir. 1983). Based on the entirety of 

the Judges’ analysis in this 

determination, the Judges find that the 

SDC’s proposed royalty distribution of 

81.5%:15.5% in favor of the SDC can 

serve only as a guidepost for an upper 

bound of such a zone of reasonableness. 

The Judges decline to adopt the 

81.5%:15.5% split as the distribution in 

this proceeding, however, because the 

Judges conclude that the several defects 

in the application of the SDC 

Methodology render the 81.5%:15.5% 

split too uncertain. That is, the defects 

in the application of the SDC 

Methodology require the Judges to 

examine the record for a basis to 

establish a distribution that 

acknowledges both the merits and the 

imperfections in the SDC Methodology. 

To that end, the Judges look to the 

alternative confirmatory measure of 

relative market value utilized by Mr. 

Sanders in his report and testimony. 

More particularly, the Judges look to his 

analysis of the viewership data for the 

SDC and IPG programs in the local 

market, one that served as an 

‘‘analogous’’ market by which to 

estimate the distribution of royalties in 

this proceeding. The allocation of 

royalties suggested by that confirmatory 

analysis was a 71.3%:28.7% 

distribution in favor of the SDC. 

On behalf of the SDC, Mr. Sanders 

testified that this analogous body of data 

‘‘is potentially very relevant and should 

not, in my opinion, be ignored.’’ 9/3/14 

Tr. at 503 (Sanders) (emphasis added). 

The Judges agree. That distribution ratio 

arises from the Nielsen local viewership 

ratings over a three-month period in 

1999 and covers all of the programs 

represented in this proceeding. 

Importantly, that approach does not 

suffer from the uncertainty created by 

the selection and use of the Kessler 

Sample of stations, nor any of the other 

serious potential or actual deficiencies 

in the application of the SDC 

Methodology, as discussed in this 

determination. 

There was no sufficiently probative 

evidence in the record for the Judges to 

establish a lower bound to a zone of 

reasonableness. That being said, it is 

noteworthy that even under IPG’s 

Methodology the relative market 

valuations of the SDC and IPG programs 

would be no more favorable to IPG than 

roughly a 50/50 split. Under at least two 

prongs of IPG’s Methodology, Dr. 

Robinson acknowledged that an 

adjusted allocation would likely be 

closer to a 67/33 split (based on time of 

day of retransmitted broadcasts) or a 71/ 

29 split (based on fees paid) in SDC’s 

favor. 

Further, as IPG correctly argued, the 

71.3%:28.7% distribution is 

significantly different (to the benefit of 

IPG) compared with the uncertain 

results derived by the SDC 

Methodology. Given that the 

81.5%:18.5% allocation derived by the 

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61As noted supra, the Judges may rely on the 

evidence presented by the parties to make a 

distribution within the zone of reasonableness, and, 

in so doing, mathematical precision is not required. 

See Nat’l Ass’n of Broadcasters, 140 F.3d at 929; 

Nat’l Cable Television Ass’n, 724 F.2d at 182. 

62The fact that Dr. Robinson’s adjustment was 

based on multiplying her allocations by 71% (to 

account for the missing 29%) and that the 

adjustment led to a recommended distribution to 

the SDC of 71% is only coincidental. 

63The Judges’ acknowledgement that IPG’s worstcase scenario (arising out of its fees-paid approach) 

overlaps with the SDC’s worst case scenario 

constitutes the extent to which the Judges credit the 

IPG Methodology. 

64As noted previously, IPG criticized the SDC 

Methodology for failing to utilize better data. That 

criticism applies equally to both parties and reflects 

their respective decisions not to invest additional 

resources to obtain more evidence. See supra notes 

46–47 and accompanying text. 

SDC Methodology represents a 

guidepost to the upper bound of a zone 

of reasonableness, the ‘‘very relevant’’ 

(to use Mr. Sanders’s characterization) 

71.3%:28.7% distribution has the added 

virtue of serving as a rough proxy 61 for 

the need to reflect the imperfections in 

the application of the SDC 

Methodology. 

Accordingly, the Judges find and 

conclude that a distribution ratio of 

71.3%:28.7% in favor of the SDC lies 

within the zone of reasonableness. 

B. The Judges’ Distribution is Consistent 

With a Valuation Derived From an 

Application of the IPG Methodology 

The Judges also note a consensus 

between this 71.3%:28.7% distribution 

and the least deficient of IPG’s proposed 

valuations—the ‘‘fees-paid’’ valuation. 

More particularly, Dr. Robinson made 

‘‘sensitivity’’ adjustments to all her 

values to account for the 

incompleteness of her data. However, 

her only adjustment was to multiply all 

her alternative value measures by 71% 

to adjust for the 29% of fees paid that 

her data set did not include. The Judges 

find and conclude that Dr. Robinson 

could adjust only her fees-paid 

valuation approach in this manner 

because the ‘‘missing 29%’’ only 

pertained to that data set. In the other 

categories, Dr. Robinson (to put it 

colloquially) was subtracting apples 

from oranges. 

When Dr. Robinson made her 

adjustment in the fees-paid category 

(and properly accounted for all 

programs), she changed her valuation 

and distribution estimate to 71%:29% 

in favor of the SDC. See Table 4 supra.62

Moreover, Dr. Robinson testified that 

her sensitivity analysis resulted in 

values that she would characterize as 

within an economic ‘‘zone of 

reasonableness.’’ 9/2/14 Tr. at 158 

(Robinson) (emphasis added). 

Thus, not only do the Judges 

independently find that a 71.3%:28.7% 

distribution in favor of the SDC 

proximately adjusts the distribution 

within the zone of reasonableness, there 

is also a virtual overlap between what 

can properly be characterized as the 

worst case distribution scenarios that 

the parties’ own experts respectively 

acknowledge to be ‘‘very relevant’’ and 

falling within a ‘‘zone of 

reasonableness.’’ 63 Accordingly, given 

that IPG’s expert witness testified 

explicitly that a 71%:29% distribution 

in favor of the SDC was within the 

‘‘zone of reasonableness’’ and that the 

SDC’s expert witness testified explicitly 

that a 71.3%:28.7% distribution in favor 

of the SDC was ‘‘reasonable’’ and 

‘‘should not . . . be ignored,’’ such a 

distribution is also consonant with the 

parties’ understanding of a reasonable 

allocation. 

C. The Judges’ Distribution Is Consistent 

With the Parties’ Economic Decisions 

Regarding the Development and 

Presentation of Evidence 

The parties admittedly proffered their 

respective worst-case scenarios because 

each had chosen not to obtain data that 

are more precise—because each party 

deemed the cost of acquiring additional 

data to be too high relative to the 

marginal change in royalties that might 

result from such additional data (and 

perhaps the overall royalties that remain 

in dispute in the current proceeding). 

The parties’ independent yet identical 

decisions in this regard underscore the 

Judges’ reliance on the parties’ worstcase scenarios in establishing relative 

market value. When a party acts, or fails 

to act, to cause evidentiary uncertainty 

as to the quantum of relief, the party 

that created the uncertainty cannot 

benefit from its own decision in that 

regard. As one commentary notes: 

Factual uncertainty resulting from missing 

evidence is a salient feature of every litigated 

case. Absolute certainty is unattainable. 

Judicial decisions thus always involve risk of 

error. This risk cannot be totally eliminated. 

However, it is sought to be minimized by 

increasing the amount of probative evidence 

that needs to be considered by the triers of 

fact. Missing evidence should therefore be 

perceived as a damaging factor. 

A. Porat and A. Stein, Liability for 

Uncertainty: Making Evidential Damage 

Actionable, 18 Cardozo L. Rev. 1891, 

1893 (1997) (emphasis added). 

Alternatively stated, the SDC and IPG 

have failed to satisfy their respective 

evidentiary burdens to obtain anything 

above the minimum values indicated by 

their evidence, by failing to obtain 

random samples, full surveys, the 

testimony of television programmers, or 

other more probative evidence or 

testimony to support their respective 

arguments for a higher percentage 

distribution. 

Although the SDC and IPG each had 

an incentive to procure and proffer 

additional evidence, that incentive 

existed only if the additional evidence 

would have advanced the offering 

party’s net economic position. As the 

parties acknowledged at the hearing, the 

amount at stake simply did not justify 

their investment in the discovery, 

development, and presentation of 

additional evidence.64 When a party 

makes the choice to forego the expense 

of producing more precise evidence, 

that party has implicitly acknowledged 

that the value of any additional 

evidence is less than the cost of its 

procurement. As Judge Richard Posner 

has noted: ‘‘The law cannot force the 

parties to search more than the case is 

worth to them merely because the 

additional search would confer a social 

benefit.’’ R. Posner, An Economic 

Approach to Evidence, 51 Stan. L. Rev. 

1477, 1491 (1999). 

VII. Conclusion 

Although there is a virtual overlap 

between the worst-case scenarios of 

both parties, the Judges adopt the SDC’s 

distribution proposal, in light of the 

more fundamental deficiencies in the 

IPG Methodology. Accordingly, based 

on the analysis set forth in this 

Determination, the Judges conclude that 

the distribution at issue in this 

proceeding shall be: 

SDC: 71.3% 

IPG: 28.7% 

This Final Determination determines 

the distribution of the cable royalty 

funds allocated to the Devotional 

Claimants category for the year 1999, 

including accrued interest. The Register 

of Copyrights may review the Judges’ 

final determination for legal error in 

resolving a material issue of substantive 

copyright law. The Librarian shall cause 

the Judges’ final determination, and any 

correction thereto by the Register, to be 

published in the Federal Register no 

later than the conclusion of the 

Register’s 60-day review period. 

January 14, 2015. 

SO ORDERED. 

Suzanne M. Barnett, 

Chief United States Copyright Royalty Judge. 

David R. Strickler, 

United States Copyright Royalty Judge. 

Jesse M. Feder, 

United States Copyright Royalty Judge. 

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13444 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Notices 

Dated: January 14, 2015. 

Suzanne M. Barnett, 

Chief United States Copyright Royalty Judge. 

Approved by: 

James H. Billington, 

Librarian of Congress. 

[FR Doc. 2015–05777 Filed 3–12–15; 8:45 am] 

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