Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 57063 

1For a discussion of the operation of the section 

111 license and the establishment of the funds for 

distribution, see, Distribution of 2000–2003 Cable 

Royalty Funds, Distribution order, in Docket No. 

2008–2 CRB CD 2000–2003 (‘‘2000–03 Distribution 

Order’’), 75 FR 26798 (May 12, 2010). 

2Music Claimants are comprised of the 

performing rights organizations (‘‘PROs’’)—the 

American Society of Composers, Authors and 

Publishers (‘‘ASCAP’’), Broadcast Music, Inc. 

(‘‘BMI’’), and SESAC. 

3Prior to this deadline, the participants filed a 

stipulation of settlement as to NPR’s claim to the 

2004 and 2005 cable royalty funds and their 

agreement that NPR no longer needed to participate 

further in this Phase I proceeding. Upon 

notification to the Judges that all Phase II claims 

had been resolved, NPR moved for final distribution 

of their share to the 2004 and 2005 funds. The 

Continued 

Agency: Department of Labor, Office 

of the Assistant Secretary for 

Administration and Management; 

Type of Review: New Collection 

(Request for OMB Control Number). 

Title of Collection: Application for 

Use of Public Space by Non-DOL 

Agencies in the Frances Perkins 

Building. 

OMB Control Number: 1225–0New. 

Agency Form Number: DL1–6062B. 

Affected Public: Private Sector 

(Business or not-for-profit institutions). 

Estimated Number of Respondents: 5. 

Frequency: On occasion. 

Total Estimated Annual Responses: 5. 

Estimated Average Time per 

Response: 5 minutes per application. 

Estimated Total Annual Burden 

Hours: 25. 

Total Estimated Annualized Cost 

Burden (excluding hour cost): $0. 

Comments submitted in response to 

this notice will be summarized and may 

be included in the request for OMB 

approval of the information collection 

request. The comments will become a 

matter of public record. 

Dated: September 13, 2010. 

Michel Smyth, 

Departmental Clearance Officer. 

[FR Doc. 2010–23293 Filed 9–16–10; 8:45 am] 

BILLING CODE 4510–23–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

153rd Meeting of the Advisory Council 

on Employee Welfare and Pension 

Benefit Plans; Notice of Meeting 

Pursuant to the authority contained in 

Section 512 of the Employee Retirement 

Income Security Act of 1974 (ERISA), 29 

U.S.C. 1142, the 153rd open meeting of 

the Advisory Council on Employee 

Welfare and Pension Benefit Plans will 

be held on October 4, 2010. 

The meeting will take place in 

C5515—Room 3, U.S. Department of 

Labor, 200 Constitution Avenue NW., 

Washington, DC 20210. Public access is 

available only in this room (i.e. not by 

telephone). The meeting will run from 

12 p.m. to approximately 5 p.m. The 

purpose of the open meeting is to 

discuss reports/recommendations for 

the Secretary of Labor on the issues of 

(1) Healthcare Literacy, (2) Disparities 

for Women and Minorities in 

Retirement, and (3) Employee Benefit 

Plan Auditing and Financial Reporting 

Models. Descriptions of these topics are 

available on the Advisory Council page 

of the EBSA web site at http:// 

www.dol.gov/ebsa/aboutebsa/ 

erisa_advisory_council.html. 

Organizations or members of the 

public wishing to submit a written 

statement may do so by submitting 30 

copies on or before September 27 to 

Larry Good, Executive Secretary, ERISA 

Advisory Council, U.S. Department of 

Labor, Suite N–5623, 200 Constitution 

Avenue NW., Washington, DC 20210. 

Statements also may be submitted as email attachments in text or pdf format 

transmitted to good.larry@dol.gov. It is 

requested that statements not be 

included in the body of the e-mail. 

Relevant statements received on or 

before September 27 will be included in 

the record of the meeting and posted on 

the Advisory Council page of the EBSA 

Web site. Do not include any personally 

identifiable information (such as name, 

address, or other contact information) or 

confidential business information that 

you do not want publicly disclosed. All 

statements are posted on the Internet 

exactly as received, and can be retrieved 

by most Internet search engines. No 

deletions, modifications, or redactions 

will be made to the statements received, 

as they are public records. 

Individuals or representatives of 

organizations wishing to address the 

Advisory Council should forward their 

requests to the Executive Secretary or 

telephone (202) 693–8668. Oral 

presentations will be limited to ten 

minutes, time permitting, but an 

extended statement may be submitted 

for the record. Individuals with 

disabilities who need special 

accommodations should contact Larry 

Good by September 27 at the address 

indicated. 

Signed at Washington, DC this 14th day of 

September, 2010. 

Michael L. Davis, 

Deputy Assistant Secretary, Employee 

Benefits Security Administration. 

[FR Doc. 2010–23304 Filed 9–16–10; 8:45 am] 

BILLING CODE 4510–29–P 

LIBRARY OF CONGRESS 

Copyright Royalty Board 

[Docket No. 2007–3 CRB CD 2004–2005] 

Distribution of the 2004 and 2005 Cable 

Royalty Funds 

AGENCY: Copyright Royalty Board, 

Library of Congress. 

ACTION: Distribution order. 

SUMMARY: The Copyright Royalty Judges 

are announcing the final Phase I 

distribution of cable royalty funds for 

the years 2004 and 2005. 

DATES: Effective September 17, 2010. 

ADDRESSES: The final distribution order 

also is posted on the Copyright Royalty 

Board Web site at http://www.loc.gov/ 

crb/proceedings/2007-3/finaldistribution-order.pdf. 

FOR FURTHER INFORMATION CONTACT: 

Richard Strasser, Senior Attorney, or 

Gina Giuffreda, Attorney Advisor, by 

telephone at (202) 707–7658 or by email at crb@loc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On July 15, 2008, the Copyright 

Royalty Judges published in the Federal 

Register a notice announcing the 

commencement of a proceeding to 

determine the Phase I distribution of 

royalties collected from cable systems 

under the section 111 statutory license 

for the period 2004 and 2005.1 73 FR 

40623. The notice also requested 

interested parties to submit their 

Petitions to Participate in the 

proceeding no later than August 18, 

2008. Petitions to Participate, all of 

which were joint petitions, were 

received from the following claimants: 

Public Broadcasting Service for Public 

TV Claimants (‘‘PTV’’); National Public 

Radio (‘‘NPR’’); Joint Sports Claimants 

(‘‘JSC’’); Canadian Claimants Group 

(‘‘Canadian Claimants’’); Devotional 

Claimants; the Motion Picture 

Association of America, Inc. (‘‘MPAA’’) 

for certain Program Supplier Claimants 

(‘‘Program Suppliers’’); Music 

Claimants;2 and the National 

Association of Broadcasters for all U.S. 

commercial television broadcast stations 

retransmitted by cable operators as 

distant signals during 2004 and 2005 

(‘‘CTV’’). The Judges accepted these 

petitions. Order Announcing 

Negotiation Period, Docket No. 2007–3 

CRB CD 2004–2005 (October 31, 2008). 

After the expiration of the mandatory 

negotiation period, the parties were 

directed to submit their written direct 

statements on or before June 1, 2009.3 4


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Judges granted the motion. See Order Granting 

Motion for Final Distribution, Docket No. 2007–3 

CRB CD 2004–2005 (April 16, 2009). It is the funds 

remaining after this Order that are the subject of 

this determination. 

4Hereinafter, references to the written direct 

testimony shall be cited as ‘‘WDT’’ preceded by the 

last name of the witness and followed by the exhibit 

number and the page or paragraph number. 

Similarly, references to the written rebuttal 

testimony shall be cited as ‘‘WRT’’ preceded by the 

last name of the witness and followed by the exhibit 

number and the page or paragraph number. 

References to the transcript shall be cited as ‘‘Tr.’’ 

followed by the page number and the name of the 

witness. References to the proposed findings of fact 

and conclusions of law shall be cited as ‘‘PFF’’ or 

‘‘PCL,’’ respectively, preceded by the name of the 

party that submitted same (i.e., Settling Parties 

(‘‘SP’’), Program Suppliers (‘‘PS’’), Canadian 

Claimants (‘‘CCG’’) or Devotionals (‘‘D’’)) and 

followed by the paragraph number. 

5The Judges also admitted the testimony of the 

following witnesses for the Settling Parties without 

live testimony pursuant to the stipulation of all 

parties: Dr. Gregory M. Duncan, Professor, the 

University of California, Berkley, and Managing 

Director, Huron Consulting Group, Tr. at 36–37; 

John F. Wilson, Senior Vice President & Chief TV 

Programming Executive, Public Broadcasting 

Service, id. at 397–98; Jonda K. Martin, President 

of Cable Data Corporation (‘‘CDC’’), id. at 528–29; 

and Alexandra Patsavas, Owner, Chop Shop Music 

Supervision, id. at 1009. 

6The Judges also admitted the testimony of the 

following witnesses for the Canadian Claimants 

without live testimony pursuant to the stipulation 

of all parties: Janice de Freitas, Manager of the 

Rights Management Unit, Canadian Broadcasting 

Corporation/Radio-Canada, Tr. at 1270–72; Alison 

Smith, correspondent for the Canadian 

Broadcasting Corporation, id. at 1272; and Joan 

Fisher, Legal Counsel, Decode Entertainment, Inc., 

id. at 1273. 

7The Judges also admitted the testimony of the 

following witnesses for the Devotional Claimants 

without live testimony pursuant to the stipulation 

of all parties: Dr. Charles F. Stanley, Senior Pastor, 

First Baptist Church, Atlanta, Georgia, and 

President, In Touch Ministries, Tr. at 1393–94; and 

Bruce Johansen, former President and CEO, the 

National Association of Television Program 

Executives, id. at 1394–95. 

8The Judges also admitted the testimony of the 

following witnesses for the Program Suppliers 

without live testimony pursuant to the stipulation 

of all parties: Alex Paen, President, Telco 

Productions, Inc., Tr. at 1529; Jonda K. Martin, id. 

at 1529–30; Dr. Martin R. Frankel, Professor of 

Statistics and Computer Information Systems, 

Baruch College, City University of New York, id. at 

1530–31; and Dr. Alan M. Rubin, Professor 

Emeritus and Director Emeritus, School of 

Communication Studies, Kent State University, id. 

at 1531–32. 

9Neither the Canadian Claimants nor the 

Devotional Claimants objected to the adoption of 

the stipulation. 

10The Judges also admitted the rebuttal testimony 

of two witnesses for the Settling Parties without live 

testimony pursuant to the stipulation of all the 

parties: Michael D. Topper, Vice President & Head 

of the Antitrust & Competition Practice, 

Cornerstone Research, Tr. at 2334–35; and Greg 

Stone, Owner/Chief Executive Officer, Greg Stone 

Media Consulting, id. at 2335. 

11The Judges also admitted the rebuttal testimony 

of two witnesses of the Program Suppliers without 

live testimony pursuant to the stipulation of all the 

parties: Dr. Gruen, Tr. at 3238–39; and Dr. George 

Ford, id. at 3384–86. 

12There remains an outstanding motion filed 

jointly by the parties requesting that the Judges 

adopt specific descriptions of the program 

categories at issue in this proceeding. However, at 

closing argument, the parties deemed the motion as 

no longer necessary. See, e.g., 5/10/10 Tr. at 33, 94 

The Judges received written direct 

statements from Canadian Claimants; 

Program Suppliers; Devotional 

Claimants; and JSC, CTV, PTV, and 

Music Claimants (collectively, the 

‘‘Settling Parties’’). Discovery in the 

direct phase of the proceeding was 

conducted throughout June and July, 

and the hearings were conducted from 

October 6–20, 2009. The Settling Parties 

presented the following witnesses: 

James M. Trautman, Managing Director 

of Bortz Media & Sports Media, Inc.; Dr. 

Robert W. Crandall, Senior Fellow in 

Economic Studies at the Brookings 

Institution; Judith Meyka, independent 

consultant with clients in the cable and 

satellite television industry; Linda 

McLaughlin, Special Consultant to 

National Economic Research Associates, 

Inc.; Dr. Richard V. Ducey, Chief 

Strategy Officer, BIA Advisory Services; 

Dr. Joel Waldfogel, Ehrenkranz Family 

Professor of Business and Public Policy 

at the Wharton School of the University 

of Pennsylvania; Jerald N. Fritz, Senior 

Vice President for Legal and Strategic 

Affairs, Allbritton Communications 

Company; Seth Saltzman, Senior Vice 

President of Member Management in the 

Performing Rights Group, ASCAP; 

Michael O’Neill, Senior Vice President, 

Licensing, BMI; and William P. Zarakas, 

Principal, The Brattle Group.5

The Canadian Claimants presented 

Dr. Debra J. Ringold, Dean, Atkinson 

Graduate School of Management, 

Willamette University.6

The Devotional Claimants presented 

Dr. William Brown, Professor and 

Research Fellow, School of 

Communications and the Arts, Regent 

University.7

The Program Suppliers presented the 

following witnesses: Marsha E. Kessler, 

Vice President of Retransmission 

Royalty Distribution, the MPAA; John 

Mansell, Jr., President/Chief Executive 

Officer, John Mansell Associates, Inc.; 

Howard B. Homonoff, Director in the 

Entertainment, Media and 

Communications advisory practice, 

PricewaterhouseCoopers LLP; Dr. 

Arthur C. Gruen, Partner/Co-Founder, 

Wilkofsky Gruen Associates; Paul 

Lindstrom, Senior Vice President, The 

Nielsen Company (‘‘Nielsen’’); Bruce 

Hoynoski, Senior Vice President and 

Chief Research Officer, Global Media for 

Nielsen; and Dr. George S. Ford, 

President, Applied Economics Studies, 

and Chief Economist, the Phoenix 

Center for Advanced Legal & Economic 

Policy Studies.8

A rebuttal phase to the proceeding 

was requested by the parties, and 

written rebuttal statements were 

submitted by December 11, 2009. As a 

result of discovery on the written 

rebuttal statements, the Settling Parties 

and Program Suppliers filed a motion 

for adoption of a joint stipulation 9

regarding certain programming on 

Station WGN–TV (Chicago, Illinois) 

during the years 1998–99 and 2004–05, 

the adoption of which would obviate 

the need for the testimony of two 

witnesses for the Settling Parties: Dan 

Derian, Vice President of Research and 

Strategic Planning for Major League 

Baseball, and Marc Schader, former 

Senior Vice President of Programming 

for Tribune Broadcasting. The Judges 

granted the motion, and the Settling 

Parties withdrew the testimony of 

Messrs. Derian and Schader. See Order 

on Witnesses and Joint Stipulations, 

Docket No. 2007–3 CRB CD 2004–2005 

(January 27, 2010); see also Tr. at 2335– 

36. 

Rebuttal hearings were conducted 

February 1–5, 2010. The Settling Parties 

presented the rebuttal testimony of: Dr. 

Gregory S. Crawford, Professor of 

Economics, University of Warwick, 

United Kingdom; Jeffrey S. Berman, 

Senior Partner & Executive Vice 

President, C&R Research; Dr. Duncan; 

Edward S. Desser, President/Founder, 

Desser Sports Media, Inc.; and Mr. 

Trautman.10

The Devotional Claimants presented 

the rebuttal testimony of Dr. Michael 

Salinger, Professor of Economics, 

Boston University School of 

Management and Managing Director of 

LECG. 

The Canadian Claimants presented 

the rebuttal testimony of: Ms. Martin; 

Dr. Gary T. Ford, Emeritus Professor of 

Marketing, the Kogod School of 

Business, American University; Dr. John 

E. Calfee, Resident Scholar, American 

Enterprise Institute; and Dr. Brian T. 

Ratchford, Charles and Nancy Davidson 

Professor of Marketing, University of 

Texas at Dallas. 

Program Suppliers presented the 

rebuttal testimony of: Ms. Kessler; Dr. 

John R. Woodbury, Vice President, 

Charles River Associates; and Mr. 

Mansell.11

Proposed Findings of Fact and 

Conclusions of Law were submitted by 

the parties by March 17, 2010, and 

disputed findings were submitted by 

April 9, 2010. The parties also 

submitted Joint Agreed Findings of Fact 

and Conclusions of Law on April 19, 

2010. Closing arguments were held on 

May 10, 2010, and the record to the 

proceeding was closed.12


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(Closing Argument). Consequently, the motion is 

denied. 

13For a more complete discussion of how the 

standards for distribution have changed throughout 

the course of the section 111 license, see 2000–03 

Distribution Order, 75 FR at 26801–02 (May 12, 

2010). 

The Distribution Order was issued to 

the parties on June 29, 2010. Motions for 

Rehearing were filed by Program 

Suppliers and Canadian Claimant 

Group. On July 19, 2010, the Judges 

DENIED the Motions for Rehearing. 

II. The Governing Distribution 

Standard 

Section 803(a)(1) of the Copyright Act 

Provides: 

The Copyright Royalty Judges shall act in 

accordance with this title, and to the extent 

not inconsistent with this title, in accordance 

with subchapter II of chapter 5 of title 5, in 

carrying out the purposes set forth in section 

801. The Copyright Royalty Judges shall act 

in accordance with regulations issued by the 

Copyright Royalty Judges and the Librarian of 

Congress, and on the basis of a written 

record, prior determinations and 

interpretations of the Copyright Royalty 

Tribunal, Librarian of Congress, the Register 

of Copyrights, copyright arbitration royalty 

panels (to the extent those determinations are 

not inconsistent with a decision of the 

Librarian of Congress or the Register of 

Copyrights), and the Copyright Royalty 

Judges (to the extent those determinations are 

not inconsistent with a decision of the 

Register of Copyrights that was timely 

delivered to the Copyright Royalty Judges 

pursuant to section 802(f)(1)(A) or (B), or 

with a decision of the Register of Copyrights 

pursuant to section 802(f)(1)(D)), under this 

chapter, and decisions of the court of appeals 

under this chapter before, on, or after the 

effective date of the Copyright Royalty and 

Distribution Reform Act of 2004. 

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

All parties acknowledge that Congress 

did not set forth a statutory standard for 

cable royalty allocations. See, e.g., SP 

PCL at ¶ 6. Beginning with the 

Copyright Royalty Tribunal, standards 

were created to assist the distribution 

process, which changed through the 

years under the Tribunal and later 

under the Copyright Arbitration Royalty 

Panel (‘‘CARP’’) system administered by 

the Librarian of Congress.13 However, 

for purposes of this proceeding, the 

parties are all in agreement that the sole 

governing standard is the relative 

marketplace value of the distant 

broadcast signal programming 

retransmitted by cable systems during 

2004 and 2005. See CCG PCL at ¶ 9; 

DPCL at ¶ 2; SP PCL at ¶ 6; PS PCL at 

¶ 9. 

In applying the relative marketplace 

value standard to this proceeding, we 

are cognizant of the requirements of 

section 803(a)(1) described above. We 

have considered all of the evidence and 

the arguments presented by the parties. 

To the extent that they are incorporated 

into our determination as to the proper 

distribution of the cable funds, they are 

accepted. To the extent they are not, 

they are rejected. 

III. JSC, CTV, PTV and Program 

Suppliers Claimants’ Awards 

Having carefully reviewed and 

considered all of the evidence in the 

record, the Judges find that the values 

of the program categories at issue among 

these contending claimants are most 

reasonably delineated by a range 

bounded by certain results indicated 

primarily by the Bortz constant sum 

survey, to a lesser extent by the 

Waldfogel regression analysis and, to a 

slight extent, by the Gruen constant sum 

survey. For the reasons discussed 

below, the Judges find that no single 

methodological approach, even when 

ostensibly adjusted to account for 

acknowledged shortcomings, 

persuasively obviates the need for 

relying, at least to some small extent, on 

other reasonable valuation approaches 

that offer additional perspective from a 

different methodological vantage point. 

The market value of the non-network 

programming that appears on distant 

signal stations that are retransmitted by 

cable systems is not directly 

measurable. That is because the price 

charged to the cable system for the right 

to retransmit such programming is not 

determined in a free market, but rather 

is determined statutorily. Therefore, the 

evidence adduced in this proceeding 

aims to show how the programming in 

question would be valued in a 

hypothetical free market that would 

exist but for the regulatory regime 

currently in place. 

However, such a hypothetical free 

market value for non-network distant 

signal programming is also not directly 

observable, because cable operators 

purchase a bundle of programming 

when they purchase a distant signal’s 

entire output. [‘‘Q. And why didn’t you 

ask them about actual expenditures by 

that cable system for programming? A. 

Well, that’s not something that’s really 

possible to do, because cable operators 

buy whole signals. They don’t buy the 

individual–when they’re buying distant 

signals, they buy entire signals that 

include, in—in most instances— 

instances, multiple types of 

programming or multiple categories of 

programming. And, therefore, they’re 

not, in the distant signal purchase 

decisions, making expenditures for 

the—these particular categories of 

programming.’’ Tr. at 78 (Trautman).] 

Ergo, various alternative explanations 

about what induces cable system 

operators (the buyers) in a hypothetical 

distant signal market to exhibit 

preferences for one type of programming 

relative to the other types of 

programming that form part of the 

bundle on a distant signal station are the 

focus in this proceeding. The 

inducement to buy distant signals in the 

cable market stems from the derived 

demand for such distant signals as 

inputs in the various cable systems’ 

channel lineups. In other words, any 

cable operator’s demand for the 

programming input reflected in distant 

signals is only valuable to the extent 

that the demand for the total output of 

any cable system (i.e., bundles of service 

options) can be related to that particular 

input. 

Analysis of the Settling Parties’ 

Evidence 

One approach to valuation, favored by 

the Settling Parties, explains the 

demand for distant signals by cable 

operators in terms of the strength of the 

cable system operators’ expressed 

preferences for the types of 

programming that they identify with the 

distant signal. This is grounded in the 

notion that a cable operator’s 

association of certain kinds of ‘‘signature 

programming’’ with a particular distant 

signal station tends to be the starting 

point for driving value. Tr. at 86 

(Trautman). Thus, the Bortz survey is 

predicated on the notion that the cable 

operator respondents are focusing on 

‘‘signature programming’’ that drives the 

value of the distant signal station to the 

cable operator. [‘‘And I think what 

you’re expressing there in that example 

is exactly what I’m talking about in 

terms of the dominant impression of 

value and the notion of signature 

programming. I think, on any of these 

distant signals, although it may—what 

constitutes signature programming 

could differ from one respondent to the 

next, they are, in fact, in answering this 

question, thinking exactly along the 

lines that you expressed.’’ Tr. at 91 

(Trautman).] Following this line of 

analysis, the Settling Parties offer the 

Bortz constant sum survey of cable 

operators’ relative preferences among 

certain categories of programming 

identifiably present on distant signal 

stations as determinative of the relative 

value of most of the categories of 

programming represented by the 

claimants in this proceeding. 

Yet, it is not clear from the 

preferences expressed by the cable 

system operators who answer the Bortz 

survey questions where the key relative 

value question is limited to defining 

worth only ‘‘in terms of attracting and 


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14 In markets characterized by some degree of 

monopoly power, consumer preferences are not 

honored in the same manner as in perfectly 

competitive markets, resulting in higher prices 

being charged to consumers and lesser quantities of 

goods/services being sold at the market price. Firms 

in such markets are, to varying degrees, pricemakers rather than price-takers as compared to 

firms operating in perfectly competitive markets. So 

while a perfectly competitive firm is motivated to 

sell as much as it can produce up to the point where 

its marginal costs equate with the market price 

established by the market demand curve, a firm 

with some monopoly power is only motivated to 

sell up to the point where its marginal costs equate 

with the marginal revenues associated with the 

higher price it influences or dictates as reflected in 

the firm’s downward sloping demand curve. 

Testimony such as that offered by Judith Meyka 

describing the cable marketplace as competitive 

and declaring that the value of any particular 

programming to a cable operator is derived from the 

perceived value to the subscriber (see Meyka WDT 

(SP Ex. 4) at 4) is simply not credible in the face 

of well-documented studies showing the exercise of 

pricing power based on single cable operator 

dominance in the cable markets serving most 

Americans and in light of the fact that cable 

operators restrict their channel offerings to 

subscribers to bundles of channels, not just to the 

channels subscribers typically view. See, for 

example, U.S. General Accounting Office (GAO), 

Issues Related to Competition and Subscriber Rates 

in the Cable Television Industry, October, 2003 

(‘‘October 2003 GAO Report’’) at 30–31. 

15See, for example, October 2003 GAO Report at 

30–31. [‘‘Most cable operators with whom we spoke 

provide subscribers with similar tiers of networks, 

typically the basic and expanded-basic tiers, which 

provide subscribers with little choice regarding the 

specific networks they purchase * * *. The manner 

in which cable networks are currently packaged has 

raised concern among policy makers and consumer 

advocates about the lack of consumer choice in 

selecting the programming they receive. Under the 

current approach, it is likely that many subscribers 

are receiving cable networks that they do not watch. 

In fact, a 2000 Nielsen Media Research Report 

indicated that households receiving more than 70 

networks only watch, on average, about 17 of these 

networks. The current approach has sparked calls 

for more flexibility in the manner that subscribers 

receive cable service, including the option of a` la 

carte service, in which subscribers receive only the 

networks that they choose and for which they are 

willing to pay.’’] See also, U.S. Government 

Accountability Office, Media Programming: Factors 

Influencing the Availability of Independent 

Programming in Television and Programming 

Decisions in Radio, March, 2010 at 1–24. See also 

the testimony by Dr. Crawford for the Settling 

Parties and Dr. George Ford for the Program 

Suppliers concerning some of the economic effects 

of bundling as summarized in SP PFF at ¶¶ 447– 

49, 534. 

retaining subscribers,’’ whether the 

preferences so expressed would reflect 

actual demand in a more realistic view 

of a hypothetical free market. That is, 

the purchase of one type of channel by 

cable operators (such as distant signal 

stations) and the programming it reflects 

would not occur in a vacuum to the 

exclusion of consideration of the 

remaining content to bundle with that 

distant signal channel in the product 

ultimately offered to subscribers. 

Underlying subscriber demand for the 

programming that appears on a 

particular distant signal station is only 

one part of a more complex decision 

facing cable operators as to whether the 

input in question is more attractive than 

a cable network alternative in terms of 

the net revenue or profit maximization 

goals of the buyers. This is not a trivial 

concern inasmuch as the buyers in this 

case (cable operators) are not 

participants in perfectly competitive 

input markets or in perfectly 

competitive output markets for their 

services. In the input market for cable 

channel programming as well as in the 

output market for providing consumer 

subscribers with cable television 

services, cable system operators exercise 

varying degrees of market power. 

Therefore, it is less than realistic to 

assume that cable operators’ 

programming purchases are driven only 

by meeting their underlying subscriber 

programming preferences when a 

myriad of other net revenue 

considerations may be involved in any 

programming decision.14

One reason that more than just pure 

subscriber interests play a role in 

shaping the underlying demand for a 

cable operator’s output is that the 

distant signal channels highlighted in 

this proceeding are not the subject of a 

direct choice by cable subscribers. 

Rather distant signal offerings are 

bundled together with non-distant 

signal broadcast channels, cable 

network channels and pay-per-view 

channels. Further, they are bundled into 

varying combinations of channels that 

are offered as different tiers of service 

for different prices. The bundles are 

packaged by the cable operator who 

selects the channel offerings, including 

any distant signal offerings. The 

rationale for the cable operator’s 

decision concerning which channels to 

group in any tier offering and at what 

price, may depend not only on the 

impact on direct subscriber revenues, 

but also on such factors as advertising 

revenues associated with cable network 

channels, the relative license fee costs of 

various cable network channels, 

physical capacity constraints on the 

number of channels that can be 

transmitted over a particular cable 

system and even the direct ownership 

interests of the cable system in 

programming content on a given cable 

network.15 In short, the preferences 

expressed by the cable system operators 

who answer the Bortz survey, where the 

key relative value question is limited to 

defining worth only ‘‘in terms of 

attracting and retaining subscribers,’’ 

either may implicitly reflect more than 

an actual underlying subscriber demand 

for the programming that appears on a 

particular distant signal station or, 

alternatively, unrealistically minimize 

factors such as whether the input in 

question is more attractive than a cable 

network alternative in terms of the net 

revenue or profit maximization goals of 

the buyers. 

This is not to say that the Bortz 

constant sum cable operator preference 

survey is substantially flawed, but 

rather that, given the interplay of all of 

the other factors described above that 

may color a cable operator’s decision 

concerning the purchase of a distant 

signal input in a hypothetical cable 

market where the reality of bundling is 

taken into account, the Bortz survey’s 

resulting point estimates are not a 

precise measure of all of those factors 

that may shape cable operator demand 

for the programming on distant signal 

stations. And, the Bortz study is 

certainly not a fully equilibrating model 

of supply and demand in the relevant 

hypothetical market, but rather a market 

research survey of buyer (i.e., cable 

operator) preferences in that market, 

characterized by a less than fully 

comprehensive explanation of what 

shapes those preferences. Therefore, for 

reasons discussed below, while the 

Judges find the Bortz study to be the 

most persuasive piece of evidence 

provided on relative value in this 

proceeding, the Bortz confidence 

intervals around each point estimate 

inspire more confidence than a strict 

adherence to the point estimates, 

particularly in relation to the larger 

claimants. 

This is not to say that the Bortz survey 

should ignore the role of the subscriber 

growth factor in the demand for 

programming content or that subscriber 

growth is not a consideration facing 

cable operators in planning their 

programming decisions. To the contrary, 

as noted above, subscriber growth is one 

consideration facing cable operators in 

making programming decisions; and, 

underlying subscriber demand was 

explicitly and properly a factor which 

the survey respondents were asked to 

consider. Moreover, that there are 

factors other than subscriber growth 

considerations which may also be at 

work in influencing the demand for 

distant signal stations, does not change 

our finding that the Bortz survey focuses 

on the appropriate buyer in the 

hypothetical market—i.e., the cable 

operator. 

Beyond the issue of the relevant 

contours of the hypothetical market, any 

study that purports to provide useful 

information on the relative value of the 

disparate categories of distant signal 

programming at issue in this proceeding 

must be reasonably well-founded 

methodologically. We find that the 

Bortz study is founded on a method— 


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16 Indeed, even PTV does not object to the share 

accorded it under the Settling Parties’ proposed 

shares which are based on the Bortz study as 

augmented by further adjustments. 

the constant sum survey—that has been 

long regarded as a recognized approach 

to market research. Tr. at 50 (Trautman), 

1299 (Ringold), and 3007 (Gary Ford). 

Nevertheless, there are at least three 

aspects related to the execution of the 

Bortz survey methodology that we find 

additionally caution against regarding 

the Bortz point estimates as precise 

indicators of the relative value of the 

programming addressed in the record of 

this proceeding. 

First, there may be bias introduced 

into the survey resulting from the 

respondents’ potential 

misunderstanding of the exact 

parameters of the categories of 

programming they are being asked to 

compare in the key question (i.e., 

question 4) addressing valuation in the 

survey. [‘‘There are—there certainly is 

the potential that in—in some instances, 

on—I would say on the—on the fringes 

of these categories that a respondent 

might be thinking that one particular 

thing that is of value to them is in one 

category, when, in fact, for purposes of 

these proceedings, it should fit in 

another.’’ Tr. at 83 (Trautman); and 

‘‘Well, I think—first, I think that it’s 

minor. I think that the program—there 

might be one or two exemptions, but the 

programs that are subject to 

miscategorization tend to be at the 

fringes and—and tend not to be things 

that drive substantial value in our 

service—in our survey. And, therefore, 

I think that the potential for spillover or 

for a change in result is—is limited.’’ Tr. 

at 107–08 (Trautman).] However, 

although such bias may well be 

reflected in the Bortz survey point 

estimates, no one in the proceeding has 

precisely quantified the amount or 

direction of such bias. Therefore, we 

cannot say to what degree such bias may 

skew the Bortz point estimates. 

Moreover, we find no basis for 

concluding that such bias takes the true 

relative value numbers outside of range 

of the confidence intervals for the 

valuation estimates produced by the 

Bortz survey. [‘‘Q. And have you 

considered whether your results are 

reliable in light of the possibility that 

there might be miscategorization in the 

response? A. I have considered that, 

and—and while I indicated that there’s 

certainly some potential for spillover or 

miscategorization of certain types of 

programming, I think I have confidence 

that—that within the bounds of the 

estimation parameters that we set forth 

in the survey, that our results provide 

an accurate indication of relative value.’’ 

Tr. at 107 (Trautman).] 

Second, an acknowledged 

shortcoming of the Bortz survey 

valuations revolves around its handling 

of PTV and Canadian programming 

estimates. Because the Bortz 

methodology calls for surveying cable 

systems that contain at least one U.S. 

independent or network signal, cable 

systems which carry PTV-only or 

Canadian-only distant signals are 

excluded from the survey sample. The 

exclusion of such cable systems clearly 

biases the Bortz estimates downward for 

PTV and Canadian programming. The 

Bortz study seeks to excuse this bias on 

grounds that it is not possible to obtain 

an estimate of relative value where the 

cable system carries only one type of 

distant signal programming. But this 

explanation fails to adequately consider 

the view that: (1) A cable system that 

chooses only PTV or Canadian 

programming may be implicitly making 

a choice in favor of a 100% relative 

value score for such programming; (2) 

an explicit 100% relative value score for 

the Movies category (and concomitant 

0% score for the remaining 

programming categories) is regarded as 

acceptable by the Bortz methodology in 

the case of a U.S. commercial station; 

and, (3) the latter occurrence—a 100% 

relative value score for the Movies 

category—would be recorded by Bortz 

even in the absence of PTV or Canadian 

distant signals from the responding 

cable operator’s system. While the Bortz 

report acknowledges this bias (Bortz 

Report (SP Ex. 2) at 8–9) and the 

Settling Parties offer additional 

adjustments to purportedly remedy the 

problem (see infra at Section IV 

(Analysis of the Evidence)), the 

proffered remedies are not wholly 

satisfactory and, more importantly, 

obscure the basic difficulty that stems 

from asking cable operators to compare 

five different categories of programming 

with two types of distant signals. CCG 

PFF at ¶¶ 112,120. The Bortz survey 

may well be improved in this regard, 

either through the reformulation of the 

questions asked in the survey and/or by 

revisiting the underlying survey sample 

plan. Tr. at 2996–98 (Gary Ford); CCG 

PFF at ¶¶ 154–55. Yet, while this bias is 

troubling and proposed post-survey 

remedies based on the current record 

are discussed infra at Section IV 

(Conclusion and Award), it would be 

inappropriate to overstate the impact of 

this problem. No one in this proceeding 

maintains that it substantially affects 

more than a small portion of the total 

royalty pool (i.e., the combined PTV– 

Canadian portion) under any of the 

competing theories of royalty 

distributions advanced in this 

proceeding. Nor has it been shown that 

the Bortz survey’s remaining non-PTV– 

Canadian estimates were thrown outside 

the parameters of their respective 

confidence intervals solely because of 

this problem. That is, the PTV– 

Canadian problem does not 

substantially affect any of the remaining 

categories in some disproportionate 

way.16

Third, another acknowledged problem 

with the Bortz study flows from its 

handling of compensable as compared 

to non-compensable programming. 

[‘‘* * * respondents to our survey are 

not informed that substantial portions of 

the movies and syndicated 

programming on Superstation WGN (the 

most widely carried distant signal) are 

not compensable in this proceeding 

because these programs are not 

broadcast by WGN on its over-the-air 

Chicago signal; thus the values that 

respondents to our survey attribute to 

these categories likely represent a 

‘ceiling’ in that respondents are 

considering all programming on WGN 

rather than just the compensable 

programming on WGN.’’ Bortz Report 

(SP Ex. 2) at 8.] The same issue affects 

the Devotional Claimants because of the 

presence of devotional programming on 

WGN that is also non-compensable. SP 

PFF at ¶ 686. (See also infra at Section 

V (Conclusion and Award)). 

The Settling Parties offer some 

additional adjustments to the Bortz 

point estimates to address this problem. 

See SP PFF at ¶¶ 347–48. However, the 

Settling Parties do not incorporate their 

proposed adjustments explicitly into 

their proposed awards. Rather, the 

Settling Parties simply note their view 

that with respect to the Program 

Suppliers, their proposed award should 

only be regarded as a ‘‘ceiling’’ from 

which the Program Suppliers share 

should be reduced by some amount to 

reflect the disproportionate effect of the 

non-compensable programming issue. 

The Settling Parties clearly cannot 

precisely quantify an adjustment to the 

Bortz numbers for Program Suppliers 

because they recognize that 

The specific amount of an appropriate 

reduction in the Program Suppliers’ share 

would depend on how much of the value 

attributed by Bortz survey respondents to 

Program Suppliers programming categories 

was attributable to non-compensable 

programming on WGN, as to which there is 

no direct evidence, but it would be 

reasonable to expect that some portion of that 

value was attributed to non-compensable 

Program Suppliers programming. 

SP PFF ¶ 348, n.802 (emphasis added). 

Further, with respect to the Devotional 

Claimants’ share, the Settling Parties do 


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not incorporate an explicit adjustment 

for this factor in their proposed award, 

being merely content to argue its 

relevance to adopting a prior lower 

award in place of its Bortz indicated 

share. See SP PFF at ¶¶ 686–87. 

Moreover, the method suggested by the 

Settling Parties for adjusting the 

Program Suppliers’ share would 

produce no change in the Devotional 

Claimants’ share—that is Dr. 

Waldfogel’s comparison of implied 

royalty shares that resulted when all 

programming minutes on WGN were 

used in share calculations rather than 

just compensable programs showed no 

difference for the Devotional Claimants 

(a zero share in both cases). See SP PFF 

at ¶ 176 at Table 5. Thus, while we 

agree that some adjustment for this 

problem is reasonable, we find no 

reliably quantified adjustment on the 

record before us. However, because we 

focus on the confidence intervals for the 

Bortz estimates, rather than the Bortz 

point estimates themselves, we do not 

find that this issue alone so 

substantially affects the relative values 

of the programming so as to require us 

to discard those intervals as the best 

indicators in the record of the actual 

relative values of the programming of 

the larger claimants in this proceeding. 

A number of other criticisms have 

been raised with respect to the Bortz 

survey by various claimants in this 

proceeding that suggest other 

shortcomings in terms of economic 

theory, statistical analysis or survey 

methodology. Yet, whether taken 

individually or viewed as a group, we 

do not find these other criticisms to 

undermine the general usefulness of the 

Bortz survey for the purpose offered. 

Certainly, none of the criticisms raised 

by the contending parties persuade us to 

‘‘throw out the baby with the 

bathwater,’’ particularly when viewing 

the Bortz survey results in terms of the 

confidence intervals around the point 

estimates rather than strictly limited to 

the point estimates themselves. Instead, 

particularly in the case of the larger 

claimants such as JSC, CTV and 

Program Suppliers, we find the 

confidence intervals provided by the 

Bortz study the best starting point for 

evaluating an award, although we also 

recognize the need to give due 

consideration to the reasonability of 

adjustments to deal with acknowledged 

problems such as the undervaluation of 

PTV and Canadian programming. The 

Bortz intervals certainly mark the most 

strongly anchored range of relative 

programming values produced by the 

evidence in this proceeding. Still, other 

evidence produced in the record also 

helps to more fully delineate all of the 

boundaries of reasonableness with 

respect to the relative value of distant 

signal programming. 

Another piece of evidence helpful to 

some degree in this regard is the 

Waldfogel regression analysis. Dr. 

Waldfogel’s multiple regression analysis 

attempts to analyze the relationship 

between the total royalties paid by cable 

operators for the carriage of distant 

signals in 2004–05 and the quantity of 

programming minutes by programming 

category on those distant signals. In 

addition to considering the impact on 

the dependent variable (total royalties) 

of independent variables representing 

minutes of programming for eight 

category types, Dr. Waldfogel 

considered the following additional 

independent variables in his analysis: 

the number of subscribers to the cable 

system in the prior period, the number 

of activated channels (i.e., utilized 

capacity) for the cable system, average 

household income in the market in 

which the cable system was located, the 

number of channels originating locally, 

and dummy variables to indicate the 

presence of certain payment conditions 

(such whether a system pays any 3.75% 

fees or whether a system carries 

partially distant signals or whether a 

system imported only one DSE or 

whether a system imported less than 

one full DSE). See SP PFF at ¶ 156. Dr. 

Waldfogel’s specification was similar in 

its choice of independent variables to a 

regression model utilized by Dr. Gregory 

Rosston to corroborate the Bortz survey 

results in the 1998–99 CARP 

proceeding. See Report of the Copyright 

Arbitration Royalty Panel to the 

Librarian of Congress, in Docket No. 

2001–8 CARP CD 98–99 (‘‘1998–99 

CARP Report’’) at 46 (October 21, 2003). 

Dr. Waldfogel offered a total minutes 

(i.e., compensable as well as noncompensable) version of his regression 

analysis as corroborative of the adjusted 

Bortz survey estimates. Tr. at 854 

(Waldfogel). 

Conceptually, the Waldfogel 

regression, with its focus on bundles of 

distant signals and inclusion of 

variables to capture both system 

capacity and the impact on the appetite 

for distant signals associated with the 

number of channels originating locally, 

may provide a richer look than the Bortz 

survey into factors that impact the 

purchasing decision of cable operators. 

Yet, unlike the Bortz survey, it does not 

purport to analyze data free from the 

strictures of the regulated market 

because the payment pools analyzed 

ultimately are impacted by the fee 

structure set in the regulated market. 

This raises the question of whether the 

Waldfogel analysis provides useful 

information on the key behavioral 

question or, alternatively, whether it 

merely mirrors the impact of the 

regulated market in its valuation. We 

agree with Dr. Waldfogel that the way to 

think about the bundle of programming 

that is being considered by the cable 

operator is to focus on its incremental 

value. Tr. at 890, 921, 926, and 940–41 

(Waldfogel). Under that theory, Dr. 

Waldfogel has conceptually sought to 

separate the market impact of 

incremental signal purchasing decisions 

from the minimum fee issue and some 

other regulated fee considerations 

through the use of the dummy variables 

specified in the regression. We find, that 

as a result of the manner in which he 

has conceptualized his model, Dr. 

Waldfogel’s regression coefficients do 

provide some additional useful, 

independent information about how 

cable operators may view the value of 

adding distant signals based on the 

programming mix on such signals. 

Although the determinants of distant 

signal prices in a hypothetical free 

market are not necessarily identified as 

such, some indication of what the cable 

operator finds valuable may be obtained 

by observing the way cable operators’ 

total spending relates to the content of 

the bundle of distant signals purchased. 

That is because the cable operators are 

free to decide how many distant signals 

to purchase and, therefore, whether the 

addition of the content of an 

incremental distant signal will 

contribute to the net revenues of the 

system. 

At the same time, while the Waldfogel 

regression analysis provides useful 

information, we also find that there are 

limits to that usefulness in corroborating 

the Bortz survey, largely stemming from 

the wide confidence intervals for the 

Waldfogel coefficients. Thus, the 

implied share of royalties calculated by 

Dr. Waldfogel would change 

substantially if the true value of the 

variable was at one end of the 

confidence interval rather than at the 

point estimate value used by Dr. 

Waldfogel in his calculations. Given the 

size of the standard errors around his 

estimates, Dr. Waldfogel concedes this 

imprecision. SP PFF at ¶ 184. 

Nevertheless, while one may question 

the precision of the results on this basis, 

it only cautions against assigning too 

much weight to its corroborative value. 

As to the methodology employed, we 

find that Dr. Waldfogel employed 

generally reasonable methods to assure 

that the model’s results were consistent 

in the face of changes in the model and 

that the parameter estimates did not 

vary in a statistically significant way 


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17 Just for purposes of clarity, when we say that 

a firm is exercising some degree of monopoly 

power, we mean that the firm has some influence 

over prices—that is, the market in which it 

participates is characterized by something less than 

perfect competition. In short, the firm may exercise 

market power that falls short of being a perfect 

monopoly, but does exercise sufficient market 

power to determine that it does not participate in 

a perfectly competitive market. 

across years. SP PFF at ¶¶167–68. The 

strident criticisms raised by Dr. Salinger 

and Dr. George Ford concerning the 

‘‘instability’’ of the Waldfogel estimates 

over time are excessive. For example, 

there is no a priori reason why the two 

individual years examined by Dr. 

Salinger (by breaking the Waldfogel 

entire sample in two) should have 

exactly matching minutes coefficients. 

Lack of precision can result merely from 

the fact that all items in a population 

were not observed. The smaller the 

sample size, the fewer are the number 

of observations and, hence, the less 

precision. Then too, it is not unusual to 

observe the coefficients of independent 

variables in a model varying between 

two samples because all possible 

combinations of forces at work that 

result in these coefficients can seldom 

be fully encompassed in an efficient 

specification of a model. Finally, the 

‘‘instability’’ suggested by Dr. Salinger 

does not extend to the signs of the 

coefficients—all of the minutes 

variables examined by Dr. Salinger 

continue to carry the same positive or 

negative sign in 2004 as they carried in 

2005. Thus, any instability does not 

extend to the direction of the expected 

explanation—it is the same in both 

years. Dr. Salinger also raises the spectre 

of omitted variables with respect to the 

Waldfogel analysis. Tr. at 2873–74 

(Salinger). But there is no evidence that 

the inclusion of any particular 

additional independent variable would 

improve the explanatory power of the 

Waldfogel regression. Nor is there any 

evidence in the record that the 

independent variables in the Waldfogel 

regression are correlated within an 

important omitted variable thereby 

leading to an unreliable estimate of the 

regression coefficients for the included 

variables. Without such evidence, this 

criticism should not be overstated 

because an omitted variable criticism 

may always be raised, since there are an 

almost limitless number of potential 

variables that may be considered for 

inclusion in any model of some 

complexity. SP PFF at ¶186. 

Having carefully considered the 

Waldfogel analysis and various 

criticisms of that analysis raised by the 

contending parties, we find the results 

of this regression analysis useful in two 

ways—(1) to, at least in some rough 

way, corroborate the augmented Bortz 

survey results and (2) to provide an 

independent reasoned basis for 

considering movement away from the 

augmented Bortz point estimate for the 

Devotional category toward, or even 

beyond, either boundary of the Bortz 

confidence interval for that category. 

First, we find that, when applied to all 

program minutes to match the scope of 

the programming covered by the Bortz 

surveys, and when the resulting shares 

are compared to Bortz survey results 

that have been augmented to match the 

scope of the systems covered by the 

regression analysis, Dr. Waldfogel’s 

regression analysis coefficients produce 

comparable share numbers for all 

categories except Devotional. Second, to 

the extent that there is imprecision in 

the augmented Bortz estimates, the 

Waldfogel regression analysis may help 

to identify the most imprecise point 

estimates and suggest a direction in 

which they may be adjusted further to 

bring them in line with what is 

occurring where actual decisions have 

been implemented. In this case, the 

Waldfogel analysis suggests the 

augmented Bortz point estimates for the 

Devotional category cannot be 

corroborated and, further, the value of 

the Devotional coefficient points toward 

a lower share for this category 

(consistent with our further 

consideration of this category, infra at 

Section V (Conclusion and Award)). Tr. 

at 922, 924 (Waldfogel). 

Analysis of the Program Suppliers’ 

Evidence 

Although much less useful than the 

Waldfogel regression for the reasons 

delineated below, the Gruen survey 

results advocated by the Program 

Suppliers cannot be totally disregarded. 

As we have previously noted, there are 

factors, other than subscriber growth 

considerations, which may also be at 

work in influencing the demand for 

distant signal stations and that the cable 

operator may be best positioned to 

address these other considerations in a 

hypothetical market setting dealing with 

bundles of signals encompassing 

different programming mixes. That is 

why we have found that, whatever its 

shortcomings, the Bortz survey focuses 

on the appropriate buyer in the 

hypothetical market—i.e., the cable 

operator. Nevertheless, we recognize 

that one consideration facing cable 

operators, even in the subscription 

markets in which their cable systems 

may be exercising some degree of 

monopoly power,17 is the impact of 

programming on subscription revenues. 

To that extent, the preferences of 

subscribers as to distant signals that 

appear as part of the bundle of cable 

stations they receive may provide some 

relevant information, particularly if a 

nexus may be established between 

subscriber demand for such distant 

signals and the programming on those 

distant signals that drives the demand. 

The Gruen survey attempts to shed 

some light on this limited issue. 

Unfortunately, although not persuading 

us to reject the survey altogether, the 

various inadequacies of the Gruen 

approach cause us to place little weight 

on its findings beyond the very general 

notion that the highest valued categories 

of programming identified by the Bortz 

survey as a group remain the highest 

valued categories of programming 

identified by the Gruen survey and the 

lowest valued categories of 

programming identified by the Bortz 

survey as a group remain the lowest 

valued categories of programming 

identified by the Gruen survey. 

Among the design and execution 

problems afflicting the Gruen survey 

were the lack of analysis to determine 

whether there was a representative 

sampling of demographic groups, the 

absence of any gender analysis, the 

application of valuations to the entire 

household rather than the survey 

respondent, the lack of assurance that 

the distant signals in question were 

actually viewed, and, like the Bortz 

survey, the failure to make an 

adjustment for non-compensable 

programming on WGN America (‘‘WGN– 

A’’). DPFF at ¶ 185; Tr. at 3167–68 

(Ratchford); Tr. at 1915 (Gruen). Though 

not rendering it totally useless, the 

narrow focus of the study (subscriber 

preferences) and the difficulties largely 

related to the design and execution of 

the survey, referenced hereinabove, 

detract from the utility of the Gruen 

results, except in some very general way 

that confirms the broad outlines of the 

Bortz findings. It should be noted that 

many of the difficulties identified with 

the survey are capable of repair in the 

future, so that, if properly executed, it 

may provide some better insight into 

subscriber tastes to the extent such 

tastes play some role in cable operators’ 

demand for distant signals as part of 

their offerings. For example, one issue 

on which the Gruen survey attempted to 

acquire some better information was on 

the definition of ‘‘live team sports’’—an 

issue that clearly was of concern to the 

Judges in the context of the Bortz study. 

See, for example, Tr. at 81–84, 100–101 

(Trautman). Still, as derived for this 

proceeding, we find the Gruen survey 

results of only slight, very general 

usefulness. 


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18 Various arguments are made by some parties 

concerning whether or not the Judges must consider 

or require proof of changed circumstances, separate 

and apart from the estimates of relative value 

presented by the parties. We find, as did the 1998– 

99 CARP, that changed circumstances are 

embedded within the methodologies that provide 

reliable estimates of relative valuations and, 

therefore, have already been accounted for and are 

subsumed within the calculus of results. See 1998– 

99 CARP Report at 16, 31–2. 

19Because Ms. McLaughlin’s figures sum to 

slightly more than exactly 100%, we will adjust 

across the board to preserve the same relationships 

and to produce a final distribution of no more than 

exactly 100%. 

20We recognize that this adjustment may not be 

precise. However, we agree with the Settling Parties 

that it would be reasonable to expect that some 

portion of the value assigned by Bortz survey 

respondents to Program Suppliers’ programming 

was attributed to some non-compensable 

programming, even though there is no direct 

evidence in the record that delineates with 

specificity how much of the value attributed by 

Bortz survey respondents to Program Suppliers’ 

programming categories was in fact attributable to 

non-compensable programming on WGN–A. See 

supra at 16–17 and SP PFF at ¶ 348, n.802. 

Furthermore, inasmuch as the Program Suppliers’ 

programming likely involves non-compensable 

In addition to the Gruen survey, the 

Program Suppliers provided another 

quantitative study by Dr. George Ford 

on the question of relative value. Dr. 

Ford, in search of a market that would 

correspond to a hypothetical free market 

for the purchase and sale of the bundles 

of programming on distant signals, 

proposes a proxy for the direct 

observation of such a market. That 

proxy programming market was one that 

focused on local broadcast stations’ 

purchases of exclusive broadcast rights 

in their own local markets. 

We find that Dr. George Ford’s 

advertising based model so far 

attenuated from the relevant 

hypothetical market as to offer no basis 

for reasonable estimates of the relative 

value of programming on distant signal 

stations. Moreover, questionable 

underlying assumptions and the 

methodological flaws plague the 

advertising based model. Finally, 

because we find no merit in this 

advertising market approach and only a 

slight, very general usefulness to the 

Gruen survey results, we reject Dr. 

George Ford’s further suggestion of the 

marriage of the two approaches into a 

hybrid solution. See Ford WDT (PS Ex. 

11) at 49–50. 

Dr. George Ford’s approach wholly 

ignores the value that may be ascribed 

to distant signal programming by cable 

operators (the buyers in the relevant 

hypothetical market) or even by cable 

subscribers (through their derived 

impact on demand). SP PFF at ¶¶ 423– 

24. Therefore, on that basis, a number of 

the professional economists who 

testified in this proceeding on the issue 

found the George Ford advertising based 

approach wanting in terms of providing 

any useful information. See, for 

example, Tr. at 229–30, 254–56 

(Crandall); Tr. at 2344–46 (Crawford); 

Tr. at 2787–88 (Salinger); Tr. at 3060– 

61 (Calfee). 

Furthermore, the George Ford 

advertising approach suffers from 

questionable assumptions underlying 

the basic tenants of his analysis or 

inaccurate assumptions leading to 

flawed adjustments of the results for 

particular categories of programming 

that do not admit of direct analysis in 

his approach. For example, Dr. George 

Ford assumes that the broadcast stations 

he analyzed would buy precisely the 

programming that was actually carried 

by cable systems on distant signals in 

2004 and 2005. Tr. at 2199 (George 

Ford). But he offers no evidence to 

support his assertion that this is a 

‘‘reasonable’’ assumption. Similarly, 

there are assumptions with respect to 

his determination of ‘‘prices’’ paid for 

programming on an advertising spot 

sales price on a ‘‘cost per thousand’’ or 

‘‘CPM’’ basis that are not reasonable. As 

an example, he applied the CPM 

analysis to the Canadian programming 

category, even though none of the 

advertising data were for Canadian 

markets. SP PFF at ¶ 432. On the other 

hand, he assigns the average CPM to 

devotional programming even though 

the Devotional Claimants sell no 

advertising in their programs. Ford 

WDT (PS Ex. 11) at 35, 39 Table 6 and 

Johansen WDT (Devo. Ex. 2) at 7. Dr. 

George Ford further assumes that CTV 

programming did not air during prime 

time, resulting in no credit for Prime 

Time CPMs for such programming—an 

erroneous assumption based on the 

most persuasive evidence received in 

this proceeding. SP PFF at ¶¶ 460–61. 

In short, we find that the George Ford 

advertising approach offers no helpful 

insight into the relevant hypothetical 

market or into the behavior of the 

relevant buyer in that hypothetical 

market—i.e., the cable operator. 

In addition, even the proponent of 

this approach admits that, at bottom, 

changes in relative market values 

calculated between 2004 and 2005 are 

driven principally by the changes in 

viewership shares that were reported in 

the underlying MPAA special study. Tr. 

at 2286–88 (George Ford). Yet, where 

cable systems do not sell advertising in 

connection with distantly retransmitted 

content, a valuation dependent on ad 

sales tied to viewing data is untenable. 

Clearly, this study fails to offer a reliable 

means of translating viewership shares 

to relative value if that is its aim. 

Conclusion and Award 

For all of the above reasons, the 

Judges conclude that the Bortz intervals 

set the appropriate parameters for 

evaluating their award with respect to 

the JSC, CTV, and the Program 

Suppliers.18 Moreover, we do not find 

the Bortz estimates, either before or after 

various adjustments, to be so precise as 

to produce awards extending beyond a 

single decimal place. We deal with 

music separately as described infra at 

Section VI, and, therefore, divide the 

remainder among the JSC, CTV, Program 

Suppliers, Devotional Claimants, PTV 

and Canadian Claimants, using as our 

starting point the augmented Bortz 

survey shares as calculated by Ms. 

McLaughlin19 which includes 

appropriate adjustments to the PTV 

share at SP PFF at ¶ 317; and then, we 

proceed to adjust these values further to 

reflect the differential impact of the 

alternative approach we take to valuing 

the Canadian Claimants’ and Devotional 

Claimants’ shares. See infra at Sections 

IV and V. Although we provide 

somewhat more to the Canadian 

Claimants than the Bortz interval 

suggests for the reasons discussed infra 

at Section IV (Conclusion and Award), 

the negative effect on the remaining 

categories is miniscule. At the same 

time we provide less to the Devotional 

Claimants than the Bortz interval would 

indicate, based on the impact of the 

Waldfogel regression and other 

considerations, including the suggested 

direction (though difficult to quantify 

magnitude) of the impact of the noncompensable programming issue, as 

discussed supra at Section III (Analysis 

of the Settling Parties’ Evidence) and 

infra at Section V (Conclusion and 

Award). The lower Devotional 

Claimants’ share is divided 

proportionately among JSC, CTV, and 

PTV. However, no portion of the 

reduced Devotional Claimants’ share is 

awarded to the Program Suppliers, 

because the latter group’s Bortz share, 

just like that of the Devotional 

Claimants, includes non-compensable 

programming. Therefore, we decline to 

extend the potentially small gain from 

the downward adjustment of the 

Devotional Claimants’ share to the 

Program Suppliers so as to recognize the 

differential standing of the Program 

Suppliers as compared to JSC, CTV and 

PTV with respect to non-compensable 

programming. The effect of this 

approach is to recognize and make the 

equivalent of a directional adjustment in 

the Program Suppliers’ share relative to 

those remaining categories of 

programming which are largely 

compensable.20 However, the resulting 


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programming as does that of the Devotional 

Claimants, fairness demands that both these parties’ 

shares should be impacted relative to the shares of 

the Settling Parties whose programming is largely 

compensable. Despite our lack of precision in our 

adjustment, the direction of the adjustment is 

correct and the magnitude of the impact on the 

Settling Parties’ shares, though positive, is 

relatively small. 

positive effect on the remaining 

categories is small and does not place 

either the JSC shares or CTV shares or 

the share of the Program Suppliers 

substantially outside of its respective 

Bortz interval. Thus, with respect to 

JSC, CTV and the Program Suppliers, 

our award is consistent with the Bortz 

intervals—the strongest piece of 

evidence on these relative values 

submitted in this proceeding for our 

consideration—giving due consideration 

to the reasonability of adjustments to 

deal with acknowledged problems such 

as the undervaluation of PTV and 

Canadian programming. 

Prior to adjusting downward for the 

Music Claimants’ share, but after 

accounting for the respective shares of 

the Canadian Claimants and the 

Devotional Claimants, the shares of the 

Basic Fund for PTV, JSC, CTV and 

Program Suppliers as determined by the 

Judges are as follows: 

2004 

(percent) 

2005 

(percent) 

PTV ....................... 7.7 7.4 

JSC ....................... 33.7 36.8 

CTV ....................... 18.6 14.7 

Program Suppliers 34.5 35.7 

Because PTV does not participate in 

the 3.75% Fund, shares need only be 

calculated for the remaining 

participating claimants by adjusting the 

JSC, CTV, Program Suppliers, Canadian 

Claimants and Devotional Claimants 

Basic Fund shares upward to reflect 

PTV’s non-participation. Prior to 

adjusting downward for the Music 

Claimants’ share, but after accounting 

for the respective shares of the Canadian 

Claimants and the Devotional 

Claimants, the shares of the 3.75% Fund 

for PTV, JSC, CTV and Program 

Suppliers as determined by the Judges 

are as follows: 

2004 

(percent) 

2005 

(percent) 

JSC ....................... 36.7 40.0 

CTV ....................... 20.3 16.0 

Program Suppliers 37.6 38.9 

IV. Canadian Claimants’ Award 

Unlike the other claimant groups, this 

is not the Canadian Claimants’ first 

attempt to demonstrate to the Judges the 

relative marketplace value of their 

programming in a Phase I distribution 

proceeding. The Canadian Claimants 

litigated their distribution share vis-a`- 

vis all the other claimants in Docket No. 

2008–2 CRB CD 2000–2003, covering 

the royalty years 2000 through 2003. 

That proceeding, however, was unlike 

any other cable Phase I determination in 

the 32-plus year history of the section 

111 statutory license. Instead of 

presenting us with competing 

methodologies and evidence as to the 

proper award for Canadian Claimants, 

and letting us determine relative 

marketplace value, the litigants 

restricted us, through two joint 

stipulations, to select one of two 

options: either the average of the 1998 

and 1999 awards given the Canadian 

Claimants in the 1998–99 CARP 

decision, or the CARP’s fee generated 

results—with slight modification—using 

2000–03 data obtained from CDC. As 

described in our decision, 75 FR 26798 

(May 12, 2010), we chose the latter 

option. 

The details of the decision need not 

be repeated here, but there is one aspect 

that is worthy of reemphasis. We did 

not determine that the fee generation 

methodology used by the 1998–99 

CARP, nor the modified version 

proposed by the Canadian Claimants, 

was the method to determine relative 

marketplace value of Canadian 

programming. 75 FR at 26802 (‘‘It very 

well may be that there are other 

methods or other evidence that best 

represent the relative marketplace value 

of Canadian Claimants’ programming as 

well as the programming of other 

claimant groups. Such is not the case in 

this proceeding, where the parties have 

presented us with only two choices. The 

Judges, therefore, do not opine as to 

what may be the best means of 

determining the relative marketplace 

value of Canadian Claimants’ 

programming, or other claimant groups’ 

programming, in future proceedings.’’) 

(emphasis in original). No alternative 

methodology to determine relative 

marketplace value was presented. The 

Canadian Claimants, however, argue in 

this proceeding that our 2000–03 

decision was an ‘‘affirmation’’ of the fee 

generation methodology to determine 

their award and that the decision, 

coupled with the 1990–92 and 1998–99 

CARPs’ use of fee generation for 

Canadian Claimants’ awards, ‘‘solidifies 

the deference owed and the high 

standard that must be overcome to 

challenge fee generation as a viable 

indication of relative market value.’’ 

CCG PCL at ¶ 30. This argument is 

plainly wrong. We sided with the 

Canadian Claimants’ presentation in the 

2000–03 proceeding because we were 

given only two choices and the other 

claimant groups failed to demonstrate 

that ‘‘the fee generation approach is so 

arbitrary, so meritless that it is without 

probative value with respect to 

determining the Canadian Claimants’ 

royalty share.’’ 75 FR at 26804. Fee 

generation, as used in the 2000–03, 

1998–99, or 1990–92 proceedings is not 

given overarching weight in this 

proceeding. In order for it to be adopted 

in this proceeding, the Canadian 

Claimants must demonstrate that it is 

the best means of determining Canadian 

programming’s relative marketplace 

value. 

Analysis of the Evidence 

As they have done in prior 

proceedings, the Canadian Claimants 

urge us to determine their award on the 

basis of a fee generation methodology 

they have developed. We discussed in 

detail in the 2000–03 proceeding the 

origin and operation of fee generation, 

and how it was applied by the 1998–99 

CARP. See 75 FR at 26800–03. Using 

full-year data obtained from CDC, the 

Canadian Claimants demonstrated that 

distant Canadian broadcast signals 

generated 4.15% of the total Basic Fund 

royalty fees paid by U.S. cable systems 

in 2004 and 4.36% of the fees paid for 

2005. For the 3.75% Fund, Canadian 

distant signals generated 3.50% of the 

2004 royalties and 3.23% of the 2005 

royalties. 

In years past, the Canadian Claimants’ 

fee generation approach would stop at 

this juncture. However, beginning with 

the 2000–03 proceeding, the Canadian 

Claimants performed additional 

computations to address two ‘‘problem’’ 

facets of the section 111 royalty 

payment scheme. The first difficulty 

occurs in analyzing royalties paid by 

cable operators in the Basic Fund. 

Under the statutory scheme, royalties 

are paid on a sliding scale of 

percentages of gross receipts obtained 

by cable systems for the privilege of 

retransmitting broadcast stations. 

Coupled with an additional factor that 

cable systems that carry no distant 

signals pay the same amount as if they 

had carried one distant signal (the socalled ‘‘minimum fee’’), it is not possible 

to determine precisely at what royalty 

rate the cable system paid for the 

Canadian signal (or any other distant 

signal, for that matter). To attempt to 

address this, Jonda Martin, president of 

CDC, performed what she described as 

a ‘‘Min/Max’’ analysis, whereby she 

calculated royalties from cable systems 

as if they had paid for the Canadian 

distant signal at the first DSE value, and 

as if they had paid for it at the last DSE 


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21The Canadian Claimants do not have a claim 

to Syndex Fund royalties. 

22As previously noted, the Bortz survey excludes 

the responses of cable systems carrying only 

Canadian and/or PTV signals because they 

presumably can respond by only giving 100% value 

to Canadian and/or PTV programming, to the 

exclusion of all other program categories. SP PFF 

at ¶ 313. 

23The Settling Parties accept 60% for both years. 

SP PFF at ¶ 336. 

24 Indeed, on the most important relative 

marketplace value question, the Canadian 

Claimants did not supply any additional testimony 

or support beyond the assertions of Dr. Calfee from 

the prior proceeding. 

value. Martin WRT (CCG Ex. CDN–R–1) 

at 4. The purpose of this analysis was 

an attempt to demonstrate that the 

Canadian Claimants’ selection of the 

mid-point of these royalties as actual 

royalties paid was a reasonable exercise. 

Calfee WRT (CCG Ex. CDN–R–3) 

Appendix B at 8. 

A similar exercise was performed for 

the 3.75% Fund. Under the section 111 

scheme, one cannot determine which 

signals are paid for at the 3.75% 

‘‘nonpermitted’’ rate when more than 

one carried distant signal could have 

been identified as a Basic Fund 

‘‘permitted’’ signal. Ms. Martin 

calculated cable system royalties as if 

cable systems paid for Canadian distant 

signals at the 3.75% ‘‘nonpermitted’’ 

rate, and at the basic ‘‘permitted’’ rate, 

once again in an effort to demonstrate 

that the selection of the mid-point for 

3.75% Fund royalties paid was 

reasonable. Martin WRT (CCG CDN–R– 

1) at 5, Table 3. 

Armed with Basic and 3.75% Fund 

fee generated royalties for 2004 and 

2005, the Canadian Claimants next 

sought to provide the division of 

royalties among the program categories 

contained on Canadian distant signals. 

This was done, as it had been in the 

prior proceeding, by Drs. Gary Ford and 

Debra Ringold, who conducted a 

constant sum survey of large cable 

systems carrying distant Canadian 

signals in an effort to determine what 

value they attached to the Canadian 

programming (as opposed to JSC and 

Program Supplier programming, the 

only other two types of programming 

appearing on Canadian distant signals) 

contained on the Canadian distant 

signals. The results, presented by Dr. 

Ringold, showed a purported value of 

59.94% for 2004 and 60.37% for 2005. 

Thus, of the fees generated by Canadian 

signals for 2004 and 2005, 59.94% and 

60.37%, respectively, were attributable 

to Canadian programming. 

The Canadian Claimants’ calculations 

do not, however, end there. This is 

because the Canadian Claimants urge us 

to follow the distribution methodology 

adopted by the 1998–99 CARP for 

parties whose royalties were determined 

by means other than using their Bortz 

survey results. This 16-step process 

results in a requested award to Canadian 

Claimants of 2.365% of the Basic Fund 

and 1.586% of the 3.75% Fund for 

2004,21 and 2.499% of the Basic Fund 

and 1.308% of the 3.75% Fund for 2005. 

CCG PFF & PCL Appendix A at 14. In 

the event that the Judges do not follow 

the 1998–99 CARP’s distribution 

methodology, Canadian Claimants urge 

awards of 2.515% of the Basic Fund and 

1.656% of the 3.75% Fund for 2004, and 

2.665% of the Basic Fund and 1.365% 

of the 3.75% Fund for 2005. Id. at 

Appendix B, 3–4. 

The Settling Parties contend that they 

have made significant improvements 

from prior proceedings to the results 

yielded by the Bortz survey and urge 

adoption of particular ‘‘augmented’’ 

point estimates for Canadian Claimants. 

First, they submit that the survey itself 

has been improved by increasing the 

number of large cable systems carrying 

a Canadian signal to 11 (18% of the 

total) in the 2004 Bortz survey and 13 

(25.5% of the total) in the 2005 survey. 

SP PFF at ¶ 326. Second, to account for 

the exclusion from the survey of cable 

systems that carried only Canadian and/ 

or PTV distant signals,22 they offer the 

testimony of economist Linda 

McLaughlin, who purports to 

mathematically compute the values the 

2004 and 2005 Bortz surveys would 

likely have found had they not excluded 

these systems. These ‘‘augmented’’ Bortz 

results produce a Canadian Claimants’ 

royalty share of 0.5% for 2004 and a 

range of 1.5% to 1.8% for 2005. 

McLaughlin WDT (SP Ex. 6) at 11, Chart 

4. Third, the Settling Parties accept the 

observation of Dr. Gary Ford, a 

Canadian Claimants witness, that one 

large cable system which carried a 

distant Canadian signal, Comcast of 

Washington IV, was improperly 

excluded from the 2004 Bortz results 

due to a clerical error. SP PFF at 

¶¶ 330–31. Finally, the Settling Parties 

accept the results of the Ford/Ringold 

constant sum surveys, whereby Dr. 

Ringold testified that 59.94% of 2004 

Canadian signals and 60.37% for 2005 

were attributable to Canadian 

programming.23

The Settling Parties conclude that the 

Canadian Claimants’ award should be 

determined by multiplying their 

augmented Bortz survey results for 2004 

and 2005 by the Ford/Ringold constant 

sum survey results for Canadian 

programming. This yields a distribution 

of 1.2% for both the 2004 Basic and 

3.75% Funds, and 1.0% of the Basic 

Fund and 1.1% of the 3.75% Fund for 

2005. 

The Waldfogel regression analysis, 

discussed supra, yielded an estimated 

royalty share of 2.92% for Canadian 

Claimants. SP PFF at ¶ 179. Not 

surprisingly, the Settling Parties do not 

advocate use of the Waldfogel number 

as the Canadian Claimants’ award. 

Nevertheless, in Dr. Waldfogel’s view, 

his regression share compares favorably 

to the Settling Parties’ augmented Bortz 

shares for Canadian Claimants, more so 

when the Dr. Gary Ford adjustment to 

the augmented results is included. SP 

PFF at ¶¶ 180–81. 

The Gruen subscriber survey yielded 

0.8% for 2004 and 1.8% for 2005, 

respectively. Gruen WDT (PS Ex. 8) at 

23, Table 3. The survey did not 

distinguish between the Basic Fund or 

the 3.75% Fund. Program Suppliers 

dispute use of the Ford/Ringold 

constant sum survey as the means for 

determining the division of royalties 

among the categories of programming 

contained on Canadian distant 

broadcast signals, but do not offer an 

independent basis for making such 

distinctions. See, PS Disputed CCG PFF 

& CCL at ¶¶ 82–83. 

Conclusion and Award 

Unburdened by the attendant 

limitations of the last proceeding, the 

Judges are free to determine distribution 

awards for 2004 and 2005 that best 

reflect the relative marketplace value of 

Canadian broadcast programming 

retransmitted by cable systems. We do 

not rely solely upon fee generation in 

general nor the specific fee generation 

methodology offered by the Canadian 

Claimants. 

Our declination from use of fee 

generation to determine relative 

marketplace value stems from the 

Canadian Claimants’ inability to 

demonstrate that the relationship 

between royalties generated by the 

section 111 license for Canadian signals 

and the overall hypothetical 

marketplace value of programming in 

this proceeding is, in the words of the 

Canadian Claimants’ own witness, Dr. 

Calfee, more than ‘‘rough,’’ ‘‘far from 

perfect,’’ and ‘‘crude.’’ 24 The wobbly 

relationship between the two does not 

mean, as the other parties in this 

proceeding would have it, that we are 

precluded from utilizing the evidence of 

fee generation in shaping our award. 75 

FR 26798, 26805 (May 12, 2010). What 

it does mean, and what we were unable 

to consider in the prior proceeding, is 

that other evidence of relative 

marketplace value presented by the 

parties should be considered. See, id. at 


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25The 2004 inclusion of the Seattle, Washington, 

signal discussed by Dr. Gary Ford does as well. 26The Settling Parties renew their argument, 

made in the 2000–03 proceeding, that it would be 

an error of law for us to adopt the Canadian 

Claimants’ fee generation methodology as applied 

to the royalties collected from all large cable 

systems in the U.S., as opposed to only those in the 

Canadian zone. SP PCL at ¶ 30. We were not 

persuaded by the argument, particularly given the 

fact that fee generation had been applied to all large 

cable systems in the 1998–99 proceeding and had 

been found acceptable by the Register of 

Copyrights, Librarian of Congress and the United 

States Court of Appeals for the District of Columbia 

Circuit. 75 FR 26798, 26805 (May 12, 2010). In any 

event, we need not reconsider the argument here 

because we are not adopting the Canadian 

Claimants’ fee generation approach as the method 

for determining their award. 

27 Devotional Claimants assert that after taking 

into account the Music Claimants’ award, their 

Bortz shares fall into a reasonable range of 5.8%– 

8.5% and that the 7% and 7.3% they request fall 

within that range. DPCL at ¶¶ 106–107. The 

requested 3.75% Fund share is adjusted only to 

reflect the fact that PTV does not have any claim 

to the 3.75% Fund. DPFF & PCL at p. 7 

(Introduction and Summary). Devotional Claimants 

do not seek a share of the Syndex Fund. Id. at ¶ 

107. 

26820–03 (Judges’ discussion of the 

checkered history of acceptance of fee 

generation in section 111 distribution 

proceedings). 

The augmented Bortz data presented 

by the Settling Parties attempts to 

correct for prior primary criticisms; in 

sum, that it is does not sufficiently 

measure the particular circumstances of 

smaller claimants such as Canadian 

Claimants. Ms. McLaughlin’s efforts to 

correct for cable systems excluded from 

the survey because they only carry a 

distant Canadian signal do somewhat 

ameliorate the under-representation of 

Canadian signals in the overall survey 

results.25 But, consistent with our 

earlier expressed concerns about the 

Bortz survey, there are still not enough 

cable systems carrying distant Canadian 

signals among the respondents. As a 

result, small adjustments to the data 

result in proportionately enormous 

increases in distribution shares. For 

example, when the omitted Seattle, 

Washington, cable system data is 

included in the augmented 2004 results, 

it produces more than a three-fold 

increase in the distribution share. 

Whether the survey sample needs to be 

tripled in size to be accurate, as Dr. Gary 

Ford suggests, is debatable, but 

improved response rates are necessary 

before the survey can be considered the 

best marker of relative marketplace 

value. 

We conclude that the augmented 

Bortz results, with the Dr. Gary Ford 

2004 adjustment and the application of 

the Ford/Ringold survey, understate the 

value of Canadian programming and, 

therefore, represent the floor for 

establishing the Canadian Claimants’ 

award. Our determination on this point 

is bolstered by the results of the 

Waldfogel regression analysis, which 

values Canadian programming at a 

higher level for both years and, to a 

lesser extent, the Gruen survey which 

yields an appreciably higher result for 

2005. 

Having determined the floor of the 

award, we turn to the weight that 

should be accorded the fee generation 

approach offered by the Canadian 

Claimants. We focus our attention on a 

‘‘straight’’ fee generation approach, 

described in Appendix B of the 

Canadian Claimants’ proposed findings, 

and not the fee generation methodology 

employed by the 1998–99 CARP. The 

CARP’s approach applied to an 

evidentiary record, and a relationship of 

the parties, considerably different from 

this proceeding, and therefore is neither 

controlling nor useful here. 

The Canadian Claimants’ fee 

generation numbers for the Basic Fund 

are 2.515% for 2004 and 2.665% for 

2005, and for the 3.75% Fund are 

1.656% for 2004 and 1.365% for 2005. 

CCG PFF & PCL at Appendix B. We 

discussed above that fee generation is 

not persuasive as the best method for 

determining relative marketplace value 

because of the Canadian Claimants’ 

failure to firmly link the relationship 

between section 111 royalties to that 

value. The question is whether fee 

generation tends to overstate or 

understate the value. We believe the 

answer is the former. The Canadian 

Claimants applied their fee generation 

methodology to royalties collected from 

all large cable systems in the United 

States, even though many, if not most, 

of those systems are not permitted by 

the section 111 license to retransmit 

Canadian broadcast stations. The 

inclusion of all royalties, rather than 

just those from cable operators in the 

‘‘Canadian zone,’’ inflates Canadian 

Claimants’ numbers. Therefore, the 

Judges determine that the Canadian 

Claimants’ fee generation numbers 

represent the ceiling for their award.26

Having determined a floor and a 

ceiling for the Canadian Claimants’ 

award, the ‘‘zone of reasonableness’’ is 

framed. National Ass’n of Broadcasters 

v. Librarian of Congress, 146 F.3d 907, 

918–19 (DC Cir.1998) (citing National 

Ass’n of Broadcasters v. Copyright 

Royalty Tribunal, 772 F.2d 922, 926 (DC 

Cir. 1985)). The Canadian Claimants’ 

final awards are as follows (prior to 

accounting for the Music Claimants’ 

share): 

Year Basic fund 3.75% fund 

(percent) 

Syndex fund 

(percent) 

2004 ............................................................................................................................................. 2.0 1.5 0 

2005 ............................................................................................................................................. 2.0 1.2 0 

V. Devotional Claimants’ Award 

The Devotional Claimants have not 

participated in a Phase I distribution 

proceeding since the 1990–92 CARP 

proceeding. DPCL at ¶ 102. The 

Devotional Claimants reached a 

settlement with the other Phase I parties 

regarding their share to the 1998–99 

cable royalties and therefore did not 

participate in the 1998–99 CARP 

proceeding. See Tr. at 1368 (Opening 

Statement); SP PFF at p. 29 

(Introduction and Summary). 

Analysis of the Evidence 

Devotional Claimants have 

consistently supported the JSC’s cable 

operator valuations of the program 

categories throughout the history of 

their participation in these distribution 

proceedings. Id. Their position in this 

proceeding is no different: In their view, 

the Bortz survey continues to represent 

the best evidence of the relative 

marketplace value of the various 

program categories. 5/10/10 Tr. at 35 

(Closing Argument). Accordingly, they 

argue that they are entitled to the shares 

afforded them by the 2004 and 2005 

Bortz surveys and thus are seeking an 

award of 7% of the Basic Fund for each 

of 2004 and 2005 and 7.3% of the 3.75% 

Fund for each year.27 DPCL at ¶¶ 106– 

107. 

Devotional Claimants argue that such 

an increase is warranted for several 

reasons. First, they note that previous 

awards were based primarily on the 

Nielsen data, not the Bortz survey. 5/10/ 

10 Tr. at 43 (Closing Argument). If the 

Judges find the Bortz survey acceptable 

in this proceeding, then their shares 


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28Nearly 50% of Form 3 cable systems carried 

WGN–A as their only distant signal and 

approximately 70% of Form 3 systems carried 

WGN–A as one of their distant signals. See SP PFF 

at ¶ 343. 

should increase. Second, since the 

1990–92 proceeding, their average 

shares under the Bortz surveys have 

nearly doubled from an average of 3.9 in 

the 1990–92 surveys to an average of 7.2 

in 2004–2005. DPCL at ¶ 104. According 

to Devotional Claimants, such an 

increase constitutes ‘‘changed 

circumstances’’ thus requiring ‘‘a 

significant repositioning’’ of the 

Devotional Claimants’ relative shares of 

the 2004–2005 cable royalty funds. 

DPFF at ¶ 17; see also DPCL at ¶ 103. 

Third, the Devotional Claimants assert 

that their 2004–2005 Bortz Survey 

results have been corroborated by Dr. 

Gruen’s cable subscriber survey, which 

was introduced for the first time in this 

proceeding, and attributed a share to the 

Devotional Claimants of 7.3% in 2004 

and 8.19% in 2005. DPFF at ¶ 190; see 

also Tr. at 2787 (Salinger). 

Fourth, Devotional Claimants 

attribute the dramatic increase in their 

Bortz shares since the 1990–92 

proceeding in part to an evolution in 

devotional programming over time, 5/ 

10/10 Tr. at 44–45 (Closing Argument), 

and an increase in viewer avidity and 

loyalty. Brown WDT (Devo. Ex. 3) at 8. 

The evolution of programming consists 

of new additions in children’s 

programming, e.g., cartoons, animated 

programming, and a greater emphasis on 

counseling, healing, and interpersonal 

relationships. DPFF at ¶ 146. 

The increase in loyalty and avidity for 

devotional programming is premised on 

the testimony of Dr. William Brown. 

Brown WDT (Devo. Ex. 3) at 8–18; Tr. 

at 1405–1411 (Brown) (Dr. Brown 

identified eight factors that, in his view, 

demonstrated increased value to 

devotional programming: (1) Desire to 

avoid increased sex and violence on 

television; (2) increased desire for more 

moral and spiritual content on 

television; (3) hostility of intellectual 

elite toward religious faith, i.e., ‘‘culture 

wars’’—more progressive views that man 

can answer all problems versus a more 

traditional value of looking to God for 

answers; (4) distrust of the news media; 

(5) desire for political awareness; (6) 

technology growth and competition; (7) 

threat of radical Islam and the wars in 

Afghanistan and Iraq; and (8) important 

demographic changes resulting in 

greater ethnic diversity). 

The Settling Parties argue that 

Devotional Claimants are not entitled to 

receive their Bortz shares and should 

instead receive the same awards they 

received in the 1990–92 proceeding, 

namely, 1.19% of the Basic Fund and 

0.91% of the 3.75% Fund for each of the 

1990–92 cable royalties. SP PFF at 

¶ 673. They contend that as in the 1990– 

92 proceeding, Devotional Claimants 

have not provided evidence of any price 

at which Devotional Claimants sold 

their programming nor did they provide 

evidence constituting a change in 

circumstances since the 1990–92 

proceeding. Id. In other words, 

according to the Settling Parties, 

Devotional Claimants have not met their 

burden by failing to ‘‘provide any 

evidence in this proceeding about what 

their share of distant signal 

programming should be.’’ 5/10/10 Tr. at 

109, 111 (Closing Argument). 

The Settling Parties also point to the 

large amount of non-compensable 

devotional programming contained on 

WGN–A, which they view as 

inappropriately increasing the Bortz 

survey responses. In their view, these 

inflated results were confirmed by the 

results of the Waldfogel regression 

analysis, see supra at Section III 

(Analysis of the Settling Parties’ 

Evidence), which produced a zero value 

for devotional programming, thereby 

further justifying Devotional Claimants’ 

receipt of the same award as received in 

the 1990–92 proceeding. 

The Canadian Claimants propose a 

method for addressing the noncompensable programming issue: 

2004: 7.8% (Bortz) × 60% (WGN carried) × 

10.1% (WGN compensable) + 7.8% 

(Bortz) × 40% (non-WGN) × 100% (nonWGN compensable) = 3.593% 

2005: 6.6% (Bortz) × 60% (WGN carried) × 

9.8% (WGN compensable) + 6.6% 

(Bortz) × 40% (non-WGN) × 100% = 

3.028%. 

CCG PCL at ¶ 128. 

Although Canadian Claimants argue 

that 3.593% and 3.028% most likely 

should be the upper boundary of 

Devotional Claimants’ awards, they 

concede that Devotional Claimants ‘‘may 

be entitled to more in this proceeding 

than as prior proceedings based on their 

higher results on the Bortz survey 

compared to 1998 and 1999.’’ Id. at 

¶ 130. 

Conclusion and Award 

The Devotional Claimants seek 7% of 

the Basic Fund and 7.3% of the 3.75% 

Fund for 2004 and 2005. For the reasons 

stated below, we decline to give the 

Devotional Claimants their Bortz point 

estimate results and award them 3.5% 

of the Basic Fund and 3.8% of the 

3.75% Fund for the period. 

As discussed previously, we direct 

our consideration to the Bortz survey 

confidence intervals, rather than the 

point estimates offered by the 

Devotional Claimants. This results in a 

range of 7.1% to 8.5% for 2004 and a 

range of 5.8% to 7.4% for 2005. See SP 

PFF at ¶ 132. However, there are two 

factors that warrant a downward 

adjustment in the relative value of 

devotional programming: the matter of 

the amount and significance of noncompensable devotional programming 

contained on WGN–A during the 

period, and the results of the Waldfogel 

regression analysis. 

WGN–A was the most widely carried 

distant signal by cable systems during 

2004 and 2005, SP PFF at ¶ 343, and a 

full 90% of the devotional programming 

contained on the WGN–A signal was 

non-compensable under the section 111 

license. Ducey WDT at 6; Tr. at 565 

(Ducey). A decided shortcoming of the 

Bortz survey was its handling of 

compensable programming versus noncompensable programming since the 

survey respondents were not made 

aware of the issue and therefore could 

not confine their responses to only 

compensable programming. Although 

none of the witnesses were able to 

quantify the likely impact of noncompensable programming on the Bortz 

results, Mr. Trautman and Ms. 

McLaughlin each recognized that an 

adjustment was necessary. Tr. at 195 

(Trautman); see also, Tr. at 170 

(Trautman) (cable operators ‘‘don’t make 

any such adjustment [for noncompensable programming] in the 

responses * * * and that some 

adjustment needs to be made in these 

proceedings to account for that fact’’); 

Tr. at 474–76 (McLaughlin) (noncompensable programming resulted in 

‘‘extra value’’ to Devotional Claimants 

that ‘‘you would want to take out’’). The 

Judges determine that, given the 

widespread carriage of WGN–A among 

the cable systems measured by Bortz, 

and the predominant volume of noncompensable devotional programming 

contained on that signal,28 the Bortz 

results likely significantly overstate the 

relative value of devotional 

programming during the 2004–05 

period. 

The likelihood of overstatement is 

confirmed by the results of the 

Waldfogel regression analysis. As noted 

previously, Dr. Waldfogel’s regression 

coefficients do provide some additional 

useful, independent information about 

how cable operators may view the value 

of adding distant signals based on the 

programming mix on such signals. In 

the case of devotional programming, his 

results trend in the extreme, suggesting 

a zero value. See supra at Section III 

(Analysis of the Settling Parties’ 

Evidence). While this is certainly not 

the case, at a minimum, his results 


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29 In addition to Mr. Zarakas, the Settling Parties 

also presented the testimony of certain other 

witnesses who testified about the value of music in 

programming generally. Based on testimony from 

these witnesses the Settling Parties contend that 

‘‘[t]here is substantial qualitative evidence * * * 

that music’s contribution to the overall television 

entertainment experience has increased over the 

past ten years.’’ SP PFF at p. 35 (Introduction and 

Summary). Absent quantitative corroboration, we 

are unable to credit significantly anecdotal and 

subjective opinion evidence. See Webcasting II, 72 

FR at 24095 n.30 (May 1, 2007). 

30 Dr. Schink derived his data from a U.S. Census 

Bureau Report. 1998–99 CARP Report at 84. 

31Mr. Zarakas identified two data sources that 

provide information concerning music license fees 

for 2004 and 2005: (1) Music blanket local 

television license fee data provided by the PROs; 

and (2) actual music license fee expenditures made 

by the broadcast stations. Zarakas WDT (SP Ex. 27) 

at ¶ 31. After 1998, individual data points for music 

license and broadcast rights payments were no 

longer available from the U.S. Census Bureau. Id. 

at n.17. Mr. Zarakas chose to use the blanket license 

fee data available from the PROs because he 

concluded that such negotiated fees provide strong 

evidence of the market value of the music licenses 

to the local broadcast stations and are the only 

available measures of total market-based prices. Id. 

at ¶¶ 32–33. 

32For a negotiated annual fee, a blanket license 

grants the licensee unlimited use of all music in the 

PRO’s repertoire. SP PFF at ¶ 366. The local 

television industry includes, among others, stations 

that are affiliated with the Big-3 networks with 

respect to non-network programming. The Big 3 

networks pay separate music license fees to license 

music they use in their respective network 

programming. Zarakas WDT (SP Ex. 27) at ¶ 34 and 

n.19. Television stations that are affiliated with the 

non-Big 3 networks, with one exception, pay music 

license fees for stations and network programming. 

The Univision network pays a blanket license fee 

that covers all the programming for the stations that 

Univision owns. Id. at n.21. 

33The fees that Univision paid totaled $5.31 

million in 2004 and $5.72 million in 2005. Zarakas 

WDT (SP Ex. 27) at n.21. Mr. Zarakas includes the 

Univision blanket license fees in a category of the 

numerator called ‘‘other,’’ which totals $14.51 

million in 2004 and $15.16 million in 2005. In that 

category he also includes blanket license fees for 

off-air and small stations. Id. at ¶ 34, Table 2. It is 

unclear what portion of the fees in the ‘‘other’’ 

category is attributable to those off-air and small 

stations. It is noteworthy, however, that Mr. Zarakas 

excludes small and ‘‘unlicensable’’ stations in 

calculating an important component of the 

denominator regarding broadcast rights payments. 

See Zarakas WDT (SP Ex. 27) at ¶ 36. 

suggest that the Bortz results are too 

high and therefore require a downward 

adjustment. 

None of the testimony offered by 

Devotional Claimants supports 

sustaining the Bortz survey point 

estimates, nor counsels against a 

downward adjustment. The testimony 

offered regarding growth of devotional 

programming and avidity and loyalty of 

devotional viewers was anecdotal in 

nature and comprised largely of 

unsupported opinion. See, Digital 

Performance Right in Sound Recordings 

and Ephemeral Recordings, Final rule 

and order, in Docket No. 2005–1 CRB 

DTRA (‘‘Webcasting II’’), 72 FR 24084, 

24095 n.30 (May 1, 2007) (anecdotal 

testimony not persuasive). Devotional 

Claimants did not offer any survey 

results or data supporting these 

contentions, and we do not have 

sufficient evidence upon which to base 

any conclusions or adjustments. 

After taking into account the 

adjustments just discussed, we 

determine that Devotional Claimants are 

entitled to the following awards (prior 

to accounting for the Music Claimants’ 

share): 

Year Basic Fund 3.75% 

2004 .................. 3.5 3.8 

2005 .................. 3.5 3.8 

VI. Music Claimants’ Award 

We now turn to Music Claimants. 

Music is not a stand-alone category but 

rather permeates all other program 

categories. During closing arguments the 

Judges posed the question whether the 

Music Claimants’ share should be taken 

off of the top and the Claimants appear 

in general agreement that it should. 

5/10/10 Tr. at 5–6, 31, 91, and 145–46 

(Closing Argument). 

Analysis of the Settling Parties’ 

Evidence 

To develop a benchmark for assessing 

the relative value of music in the distant 

signal marketplace for 2004 and 2005, 

the Settling Parties presented William P. 

Zarakas, an economist.29 Mr. Zarakas 

developed a music ratio conceptually 

similar to the ratio proffered by JSC 

witness Dr. George Schink in the 1998– 

99 CARP proceeding.30 Under the 

Schink ratio, music license fees were 

divided by the sum of music license fees 

and broadcast rights payments (i.e., total 

payments made by the stations and 

networks in the over-the-air broadcast 

market for the rights to broadcast the 

programs aired on such stations). SP 

PFF at ¶¶ 350 and 374. The Schink ratio 

was not designed specifically to 

measure music’s value in the distant 

signal market, the relevant market in 

this proceeding, but rather was based on 

industry-wide television broadcast 

licensing fees and rights payments in 

the over-the-air broadcast market. Id. at 

¶ 375. Indeed, the Schink ratio included 

music license fees and broadcast rights 

payments by the ‘‘Big 3’’ networks (ABC, 

CBS and NBC), even though that 

programming is not compensable under 

section 111 of the Copyright Act. 

Moreover, no weighting was applied to 

the Schink ratio in the 1998–99 CARP 

proceeding to account for the difference 

between the mix of station types 

retransmitted on distant signals and the 

stations that generally make up the 

entire broadcast television market. Id. 

Although Mr. Zarakas determined that 

the Schink ratio was a reasonable 

method to assess the relative value of 

music, he concluded that the ratio 

inputs would need to be changed to 

enable the ratio to provide a more useful 

benchmark for assessing the relative 

market value of music in this 

proceeding. Id. at ¶¶ 375–376. In 

particular, Mr. Zarakas excluded from 

his ratio music license fees and 

broadcast rights payments for Big 3 

network programming, which are not 

compensable under section 111 of the 

Copyright Act. Moreover, he concluded 

that ‘‘the market for retransmitted 

distant signals by cable system operators 

differs from the local broadcast 

television market in terms of the mix of 

programming transmitted.’’ SP PFF at 

¶ 391. Therefore, he weighted the music 

ratio that he developed using distant 

signal subscriber instances for each 

different category of television stations 

in an effort to reflect the relative 

importance of the various stations 

actually carried by cable system 

operators and received by subscribers as 

distant signals during 2004 and 2005. 

Id. at ¶ 376. 

To form the numerator of his ratio, 

Mr. Zarakas used television ‘‘blanket 

license’’ fee data that the PROs 

provided.31 These fees were agreed to by 

each PRO and the Television Music 

License Committee (‘‘TMLC’’) (an 

industry committee of local television 

broadcasters) for all local stations in the 

broadcast market for their local (i.e., 

non-Big 3 network) programming.32 SP 

PFF at ¶ 369 and 377. The Settling 

Parties contend that the blanket license 

fees are the most comprehensive, 

accurate data in the record and are the 

only data that values all music use in 

local broadcast markets. Id. at ¶ 377. 

The Settling Parties further contend 

that, in the absence of the compulsory 

license, cable systems would most likely 

acquire blanket licenses from the PROs 

for the music that they represent in the 

open market, as the TMLC and the 

Univision network do currently. Id. at 

¶ 381. Mr. Zarakas included local 

broadcast station blanket PRO license 

fees of $195.5 million in 2004 and $186 

million in 2005. To those totals he 

added the blanket license fees that 

Univision paid, which include license 

fees for local and nonlocal 

programming,33 to sum $200.8 million 

for 2004 and $191.7 million for 2005. 

These sums constituted the numerator 

in the music ratio and one component 

of the denominator. Id. at ¶ 383. 

As discussed above, Mr. Zarakas used 

blanket license fees negotiated between 


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34 Given the lack of evidence in the record to the 

contrary, for purposes of our analysis of Mr. 

Zarakas’ music ratio denominator we assume that 

the four components he has proposed to include in 

the denominator represent the total of programming 

expenditures in the over-the-air market. 

35The Broadcast Cable Financial Management 

Association Web site indicates that its name has 

since been changed to Media Financial 

Management Association (http://www.bcfm.com/ 

index.aspx?PageID=338). 

36The NAB reports music license fees paid to 

PROs based on a survey of television stations. 

Zarakas WDT (SP Ex. 27) at n.18. By 2004, the U.S. 

Census Bureau no longer reported actual 

expenditures on music license fees by the television 

broadcasters as it did in the 1998 Annual Survey 

of Communication Services. Id. 

37According to SNL Kagan’s Web site, SNL Kagan 

integrates online research, data and projections in 

real time for the media and communications 

industry. http://www.snl.com/Sectors/MediaCommunications/. 

38Mr. Zarakas multiplied the factor by the 

broadcast rights payments for local commercial 

television station non-network programming and 

non-Big 3 network programming, calculated in the 

previous two components of the denominator, ‘‘to 

form a complete estimate of broadcast rights 

payments applicable to the Music Ratio.’’ Zarakas 

WDT (SP Ex. 27) at ¶ 47. 

the PROs and the TMLC as the 

numerator for his music ratio. We agree 

with the Settling Parties that the blanket 

license fees provide a useful starting 

point in determining the relative 

marketplace value of music in the overthe-air market. See also infra at Section 

VI (Analysis of the Program Suppliers’ 

Evidence). As such, we find that the use 

of blanket license fees both in the 

numerator of the music ratio and as the 

first component of the denominator is 

not misplaced. The other components of 

the denominator, discussed below, are 

more problematic.34

The second component of the Zarakas 

denominator seeks to estimate broadcast 

rights payments. Mr. Zarakas divides 

these payments into three categories: (1) 

Payments local television stations make 

for non-network programming; (2) 

payments made for non-Big 3 network 

programming; and (3) payments to local 

stations for programs they produce 

themselves. Id. at ¶ 385. 

Mr. Zarakas extrapolated payments 

local television stations make for nonnetwork programming from the 

Television Financial Report, which 

NAB and Broadcast Cable Financial 

Management Association 35 publish 

annually (known as the ‘‘NAB 

Survey’’).36 The NAB Survey provides 

an annual average of television station 

expenditures for broadcast rights. 

Zarakas WDT (SP Ex. 27) at ¶ 36. Mr. 

Zarakas then calculated the total 

number of stations that were operating 

in the U.S. in 2004 (1,372) and 2005 

(1,371). He then excluded ‘‘several’’ of 

these stations for 2004 and 2005 because 

he determined that those stations were 

unlikely to have been included in the 

NAB Survey, largely because they were 

too small. He then multiplied the 

remaining number of stations (1,187 for 

2004 and 1,192 for 2005) by the average 

annual expenditures from the NAB 

Survey to estimate the total broadcast 

rights expense for this component for 

2004 and 2005 ($2.015 billion and 

$2.029 respectively). Zarakas WDT (SP 

Ex. 27) at ¶¶ 36–37. 

However, the Settling Parties 

provided no evidence that would bolster 

the accuracy of the NAB Survey 

numbers (e.g., what was the sample size 

of the respondent group and what 

methodology was used in the survey to 

ensure that it accurately represented the 

respondents’ expenditures). Moreover, 

Mr. Zarakas’ methodology for narrowing 

the number of stations to which the 

average expenditure number was 

applied appears on less firm footing. 

These weaknesses, which could have 

been easily remedied, diminish the 

weight we ascribe to Mr. Zarakas’ ratio. 

Although network programming on 

the Big 3 networks is not compensable 

under section 111 of the Copyright Act, 

network programming on FOX, WB, 

UPN and other non-Big 3 networks is 

compensable. The NAB Survey 

referenced above, however, does not 

estimate such programming 

expenditures. As a proxy, Mr. Zarakas 

used total programming expenses data 

from SNL Kagan, which the Settling 

Parties represent is a ‘‘recognized source 

of economic information for the 

television broadcast industry.’’ SP PFF 

at ¶ 388.37 SNL Kagan data did not 

separate broadcast rights payments from 

other categories of program expenses, 

and Mr. Zarakas did not believe he had 

a principled basis for determining the 

percentage of the programming 

expenses that were attributable to 

broadcast rights expenses. Therefore, he 

included the entire amount of program 

expenses in this component of the 

denominator. Zarakas WDT (SP Ex. 27) 

at ¶ 40. The totals were $3.254 billion 

for 2004 and $3.550 billion for 2005. Id. 

at ¶ 39, Table 4. 

While Mr. Zarakas’ decision to 

include all program expenses in this 

component of the denominator may 

have been a conservative approach on 

his part, this limitation diminishes the 

precision of the measurement. Another 

drawback of the SNL Kagan data: It is 

derived from a different source than the 

one that conducted the NAB Survey. 

Using multiple data sources in the same 

denominator creates a potential risk of 

methodological inconsistency, a 

weakness that was made worse by the 

fact that the Settling Parties did not 

present witnesses from either SNL 

Kagan or those that conducted the NAB 

Survey, which would have allowed an 

on-the-record examination of their 

respective methodologies so that the 

claimants could probe their 

comparability. 

Mr. Zarakas was unable to use market 

transactions to value locally produced 

programming, such as local news and 

locally produced public affairs shows. 

According to Mr. Zarakas, such stations 

do not typically sell the broadcast rights 

or otherwise measure the equivalent 

value of such rights. Zarakas WDT (SP 

Ex. 27) at ¶ 41. Therefore, he estimated 

the number by relying on the CARP’s 

determination of the various claimants’ 

shares of the Basic Fund in the 

1998–99 cable royalty distribution 

proceeding. Zarakas WDT (SP Ex. 27) at 

¶ 42. In particular, he calculated the 

relative value that the CARP assigned to 

locally produced programming (using 

CTV’s share in 1998 and 1999 as a 

proxy) compared to the combined local 

commercial television station nonnetwork programming and non-Big 3 

network programming (using the 

combined JSC, Program Suppliers, and 

Devotional Claimants’ shares in 1998 

and 1999 as a proxy). He then took this 

relative value from the 1998–99 

proceeding and applied it to the relative 

value in this proceeding of broadcast 

rights in locally produced programming 

compared to broadcast rights payments 

in these other types of programming. Id. 

This multiplier (0.185, Zarakas WDT 

(SP Ex. 27) at ¶ 43) was used to derive 

an average factor (1.185, Zarakas WDT 

(SP Ex. 27) at ¶ 46 and Table 6), which 

Mr. Zarakas then used to develop an 

estimated value of broadcast rights for 

locally produced programming in this 

proceeding (approximately $975 million 

for 2004 and $1.03 billion for 2005). Id. 

at ¶ 46 and Table 7.38

Use of the various claimants’ shares 

from the 1998–99 proceeding seems to 

be a haphazard attempt to guesstimate a 

material component of the denominator 

of the music ratio. Such ad hoc 

extrapolation diminishes our confidence 

in the Zarakas ratio. 

When all components of the 

denominator were combined, Mr. 

Zarakas determined that the estimated 

value of broadcast rights payments were 

approximately $6.2 billion in 2004 and 

$6.6 billion in 2005. Zarakas WDT (SP 

Ex. 27) at ¶ 47. He then added the 

blanket music license fees to each of 

these totals to derive a grand total 

denominator of $6,445.4 billion for 2004 

and $6,803.6 billion for 2005. Id. at ¶ 49 


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39Mr. Zarakas reasons that although ‘‘[t]he local 

over-the-air market is broadcast to anyone with a 

television set within range of transmission * * * 

the market for distant signals on a cable system is 

dependent upon both the portfolio of signals a cable 

system operator elects to retransmit and upon the 

subscription choices made by the cable system 

operator’s customers.’’ Zarakas WDT (SP Ex. 27) at 

¶ 50. 

40Mr. Zarakas’ adjustment requires a multiplestep process: (1) Determine the relative numbers of 

distant subscribers by television station category 

(Zarakas WDT (SP Ex. 27) at ¶ 54 and Table 9); 

(2) convert those relative subscriber numbers into 

weights for each television station category by 

excluding educational, non-U.S. and low-power 

television stations from the distant subscriber totals 

(Zarakas WDT (SP Ex. 27) at ¶¶ 56–57 and Table 

10); (3) determine the percentage of blanket license 

fees attributed to each television station category 

(Zarakas WDT (SP Ex. 27) at ¶ 59 and Table 11); and 

(4) apply the weights in step 2 to the percentages 

in step 3 to derive weighted percentages. Zarakas 

WDT (SP Ex. 27) at ¶ 60 and Table 12. 

41See also Tr. at 1158 (Zarakas) (‘‘[C]opyrighted 

content that’s paid for by the local stations or the 

equivalent value of local programming, would be 

3.1 percent * * *. But the 3.1 [percent] is 

somewhat misleading in the distant signal market 

because the composition of signals is different in 

the distant signal market compared to the over-theair market.’’). 

42 Dr. Woodbury also questioned Mr. Zarakas’ 

treatment of WGN as an independent station rather 

than a WB affiliate for purposes of assigning a 

percentage music royalty due to the carriage of 

WGN. The Settling Parties represent that the distant 

signal market is dominated by WGN America, an 

independent station that does not retransmit any 

network programming and accounts for 

approximately half of the distant signal subscriber 

instances. SP PFF at ¶ 391. Dr. Woodbury contends 

that the ‘‘effect of this reclassification appears to 

have dramatically increased the weight on the 

percentage music rate of independent stations 

because WGN is apparently one of the most 

widely—if not the most widely—carried distant 

signal[s].’’ Woodbury WRT (PS Ex. 14) at ¶ 29 

(footnote omitted). 

and Table 8. Dividing the numerator by 

the denominator yields a relative market 

value of music of 3.1% for 2004 and 

2.8% for 2005. Zarakas WDT (SP Ex. 27) 

at ¶ 60. 

The unadjusted Zarakas percentages 

attempt to estimate the relative value of 

music in the over-the-air market. Mr. 

Zarakas states, however, that the 

unadjusted percentages are ‘‘misleading 

in the distant signal market because the 

composition of signals is different in the 

distant signal market compared to the 

over-the-air market.’’ Tr. at 1158 

(Zarakas). Mr. Zarakas contends that 

‘‘the relative value of music in the 

distant signal market should take into 

account differences in the programming 

mix between the local and distant signal 

markets.’’ Zarakas WDT (SP Ex. 27) at 

¶ 51.39 As a result, Mr. Zarakas adjusts 

his over-the-air percentages in an effort 

to make them more comparable to the 

target distant signal market by 

accounting for the relative number of 

distant subscribers associated with three 

categories of television stations (i.e., Big 

3 networks, non-Big 3 networks, and 

independent stations). Zarakas WDT (SP 

Ex. 27) at ¶ 54–57 and Tables 9–12.40

Applying this adjustment, Mr. Zarakas 

concludes that the relative value of 

music was 5.2% (from the unadjusted 

3.1%) in 2004 and 4.6% (from the 

unadjusted 2.8%) in 2005. Zarakas WDT 

(SP Ex. 27) at ¶ 61. See also SP PFF at 

¶ 392 and Table 12. In other words, the 

adjusted percentages represent increases 

of approximately 67.7% and 64.3% over 

the respective unadjusted percentages. 

Under either the adjusted or the 

unadjusted numbers, Mr. Zarakas 

concluded that the relative market share 

of music declined from 2004 to 2005 (a 

decline of approximately 9.7% for the 

unadjusted percentages compared to a 

decline of approximately 11.5% for the 

adjusted percentages). 

The over-the-air market and the 

distant signal market may well differ in 

ways that could impact the relative 

values of music across those markets. 

On the record before us, however, it is 

not clear why those differences, if any, 

would translate into a variation in the 

market value of music of the order that 

Mr. Zarakas contends. In other words, 

given that music permeates all other 

programming categories, what factors 

make the use of music over 60% more 

valuable relative to other programming 

categories in the distant signal market 

than it is in the over-the-air market? The 

Settling Parties offer little justification 

for Mr. Zarakas’ comparability 

adjustment, noting only that ‘‘the market 

for retransmitted distant signals by cable 

system operators differs from the local 

broadcast television market in terms of 

the mix of programming transmitted.’’ 

SP PFF at ¶ 391, quoting Zarakas WDT 

(SP Ex. 27) at 25.41 We do not mean to 

suggest that a comparability adjustment 

is unnecessary. Nor do we suggest that 

an adjustment that uses subscriber 

instances should be dismissed out of 

hand. We find, however, that the 

Settling Parties did not fully establish 

the differences in valuation that the 

comparability adjustment is meant to 

address or the efficacy of the specific 

adjustment that Mr. Zarakas proposes. 

Therefore, we cannot place full weight 

on Mr. Zarakas’ comparability 

adjustment. 

Analysis of the Program Suppliers’ 

Evidence 

Program Suppliers retained John R. 

Woodbury, PhD, a consultant, as an 

expert to rebut Mr. Zarakas’ 

presentation. Dr. Woodbury questioned 

Mr. Zarakas’ use of blanket license fees 

as a means for estimating the relative 

share of music, stating that ‘‘there is no 

reason to believe that the use of blanket 

license fees is in fact a more accurate 

and reliable measure of the actual music 

rights payments made by broadcast 

stations than the payments actually 

recorded by the PROs.’’ Woodbury WRT 

(PS Ex. 14) at ¶ 12. He noted that ‘‘to the 

extent that stations opt for a direct 

license rather than the blanket license, 

the payments made by the broadcast 

stations in the aggregate to the PROs 

will be less than the negotiated fee 

amounts used by Mr. Zarakas.’’ Id. at 

¶ 14. Dr. Woodbury opined that ‘‘[a]t 

best, those blanket license fees are an 

upper bound on the actual payments 

made by broadcast stations * * *’’ Id. at 

¶ 13. However, while the blanket fee 

data does not include fees that a 

copyright owner receives when it enters 

into a direct license with a broadcaster, 

the Settling Parties’ evidence suggests 

that the difference between the 

negotiated blanket fee and the actual 

license fees paid, including direct 

license fees, is not significant. SP PFF 

at ¶ 382. 

Dr. Woodbury also questioned the 

Zarakas comparability adjustment 

discussed above. He contended that Mr. 

Zarakas offered no justification for using 

subscriber instances to weigh station 

types. Tr. at 3298 (Woodbury) and 

Woodbury WRT (PS Ex. 14) at ¶ 25. He 

surmised that Mr. Zarakas did so 

because he assumed that the number of 

music performances on a distant signal 

is related to the number of subscribers 

that have access to that signal. Dr. 

Woodbury stated that there is no reason 

to believe that this is the case. Id. Dr. 

Woodbury noted that 

it seems reasonable to think that subscriber 

viewership [a method that the TMLC uses to 

allocate blanket license fees across stations] 

might be related to the number of music 

performances of a particular show on a 

distant signal, but that has no relationship— 

no obvious relationship to the fraction of 

subscriber instances accounted for by a 

particular distant signal on a particular cable 

system * * *. The viewership of any distant 

signal on a cable system can differ for lots of 

reasons, even if the two systems have the 

same number of subscribers. 

Tr. at 3299 (Woodbury).42

Dr. Woodbury contended that a better 

approach would have been to use the 

actual music rights payments that 

ASCAP and BMI received from 

broadcast stations and networks (i.e., 

over-the-air market participants) for 

2004 and 2005 and divide those 

numbers by the total rights payments, 

which the Bureau of Census reported for 

2004 ($11,710 million) and 2005 


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43 Dr. Woodbury did not include per-program 

license fees for SESAC because, he represents, 

SESAC did not offer a per-program license to local 

stations in 2004 and 2005. Woodbury WRT (PS Ex. 

14) at ¶ 20. 

44 In the 1998–99 proceeding, the CARP awarded 

the Music Claimants 4.0% for the Basic Fund, the 

3.75% Fund and the Syndex Fund. The Librarian 

adopted the CARP’s determination. Distribution of 

1998 and 1999 Cable Royalty Funds, Final order, in 

Docket No. 2001–8 CARP CD 98–99, 69 FR 3606, 

3620 (January 26, 2004). 

45We do not find the ratio evidence presented 

either before or after adjustments to be so precise 

as to warrant awards beyond a single decimal place. 46With respect to the Zarakas ratios, the decline 

from 2004 to 2005 is larger for the adjusted ratio 

than for the unadjusted ratio. Having found 

hereinabove that the upper boundary of the zone of 

reasonableness for the music award lies below the 

Zarakas adjusted ratio, a slightly less than 

proportionate adjustment from 4% (i.e., less than 

that indicated by the decline in the adjusted 

Zarakas ratio of 11.5%) is appropriate because the 

amount of variance between the adjusted and 

unadjusted ratios shrinks as the amount of 

adjustment decreases toward the limit of an 

unadjusted ratio. We further note, that even 

applying the calculated change in the Zarakas 

unadjusted ratio from 2004 to 2005 to the 4% 2004 

award (i.e., a decline in the unadjusted Zarakas 

ratio of 9.7%), after rounding to the nearest single 

decimal, the resulting 2005 award (3.6%) would be 

the same as if we had applied a changed value as 

high as 11.2%. 

47As the CARP noted in the 1998–99 proceeding, 

‘‘[i]n past proceedings, Music has always received 

the same net award for each fund.’’ 1998–99 CARP 

Report at n.60. In that proceeding, no evidence was 

adduced in the proceeding to award a difference 

between the three funds. 

($12,036).43 Dr. Woodbury stated that 

for 2004 the total music rights payments 

received by the PROs were 

approximately $239 million for 2004 

and $234 million for 2005. Dividing 

these numbers by the Census data yields 

2.04% for 2004 and 1.94% for 2005. 

Woodbury WRT (PS Ex. 14) at ¶ 22. Dr. 

Woodbury conceded that ‘‘[t]he 

approach that I have adopted * * * may 

to some extent understate the actual 

overall percentage, but my approach is 

tied to the underlying reality of what 

stations actually pay for music rights.’’ 

Id. at ¶ 23. Indeed, Dr. Woodbury 

conceded that he excluded direct 

license fees from his numerator but not 

from his denominator, which had the 

effect of understating his music rights 

ratios. Tr. at 3335 (Woodbury). 

Moreover, Dr. Woodbury conceded that 

the Census data he used to compile his 

ratios were outdated in a way that 

resulted in his ratios being understated 

compared to their value when using the 

revised Census data. Id. at 3327–28. He 

also conceded that his numerator 

included payments by commercial 

stations but that his denominator 

included payments by both commercial 

and non-commercial stations, which 

could have lowered his ratios. Id. at 

3344–45. 

Dr. Woodbury acknowledged that 

there are differences between the overthe-air market and the distant signal 

market, but he made no effort to adjust 

for those differences. Id. at 3347–48. 

Given the acknowledged flaws in Dr. 

Woodbury’s approach, we place 

substantially less weight on his 

proposed estimates of the Music 

Claimants’ shares compared to the 

weight ascribed to the Zarakas 

methodology. However, even the latter 

cannot be fully adopted by the Judges as 

offered. 

Conclusion and Award 

Despite the caveats discussed 

hereinabove, we find that the Zarakas 

ratio is useful in identifying the ceiling 

for a zone of reasonableness for 

determining the relative market value of 

music in the distant signal market for 

2004 and 2005. This ceiling must lie 

below Zarakas’ 5.2% adjusted ratio for 

2004 and his 4.6% adjusted ratio for 

2005, due to the previously noted 

weaknesses with respect to his ratios 

and his comparability adjustment. We 

are persuaded that the Zarakas adjusted 

ratios may more likely somewhat 

overstate rather than understate the 

relative value of music. On the other 

hand, the floor for the zone of 

reasonableness clearly must exceed by 

some substantial margin the 2.04% that 

Dr. Woodbury offered for 2004 and the 

1.94% he calculated for 2005, in 

recognition of the flaws in the 

methodology and data on which he 

relied and his own admission that his 

ratios likely understated the relative 

value of music. 

Within this zone of reasonableness as 

established by the record, we are 

persuaded by the greater weight we 

accord the Zarakas adjusted ratios as 

compared to the Woodbury alternative 

ratios, that the relative value of music 

lies closer to the former than the latter. 

That is, a value close to the upper 

boundary is more strongly supported 

than one close to the lower boundary. 

We find that value is 4% for 2004. We 

are comforted as to the reasonableness 

of this value in light of its congruence 

with the share received by the Music 

Claimants in their last litigated award.44

We further find that the relative value 

of music for 2005 is 3.6%. That is 

because the zone of reasonableness has 

been shifted somewhat below the 2004 

range by the evidence as discussed 

hereinabove. The major contending 

parties recognize this shift in their 

alternative proposals. For example, the 

Settling Parties’ proposed shares for 

2005 concede that the relative market 

value of music decreased from 2004 to 

2005. This movement is evident both in 

the unadjusted and the adjusted Zarakas 

percentages between 2004 and 2005. 

Zarakas WDT (SP Ex. 27) at 31, Table 

12. After rounding to the nearest single 

decimal place,45 the 2004 award is 

found to decline in 2005 by 0.4—a 

decline on the order of 10%.46 That is, 

an award of 4% in 2004 must 

necessarily correspond to an award of 

3.6% in 2005. Both awards remain 

within the respective ranges which we 

have previously identified as setting the 

parameters of a zone of reasonableness 

for each award year. 

The 4.0% award for 2004 and the 

3.6% award for 2005 apply to the Basic 

Fund as well as the 3.75% Fund and the 

Syndex Fund for each of the respective 

award years. We take this approach 

because all the proposals provide a 

uniform award for these funds and no 

evidence was presented in opposition.47

The awards for the other claimant 

groups will be calculated net of the 

Music Claimants’ awards. 

The Music Claimants’ final awards are 

as follows: 

Syndex fund 

(percent) Year Basic fund (percent) 

3.75% fund 

(percent) 

2004 ....................................................................................................................................................... 4.0 4.0 4.0 

2005 ....................................................................................................................................................... 3.6 3.6 3.6 

VII. Final Awards 

After adjusting downward for the 

Music Claimants’ share (the equivalent 

of taking the Music Claimants’ share ‘‘off 

the top’’), the respective shares of the 

Basic Fund determined by the Judges 

are as follows: 

2004 

(percent) 

2005 

(percent) 

Music Claimants 4.0 3.6 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 57079 

2004 

(percent) 

2005 

(percent) 

Canadian Claimants ............... 1.9 1.9 

Devotional 

Claimants ...... 3.4 3.4 

PTV ................... 7.4 7.1 

JSC ................... 32.3 35.4 

CTV ................... 17.9 14.2 

Program Suppliers .............. 33.1 34.4 

Similarly, adjusting downward to 

account for the Music Claimants’ share, 

the respective shares of the 3.75% Fund 

determined by the Judges are as follows: 

2004 

(percent) 

2005 

(percent) 

Music Claimants 4.0 3.6 

Canadian Claimants ............... 1.4 1.2 

Devotional 

Claimants ...... 3.7 3.7 

JSC ................... 35.3 38.6 

CTV ................... 19.5 15.4 

Program Suppliers .............. 36.1 37.5 

We agree with the Settling Parties that 

because only Music Claimants and 

Program Suppliers participate in the 

Syndex Fund and for the reasons 

provided supra at Section VI 

(Conclusion and Award), Music 

Claimants should receive 4.0% of the 

Syndex Fund for 2004 and 3.6% of the 

Syndex Fund for 2005. As a result, the 

respective shares of the Syndex Fund 

determined by the Judges are as follows: 

2004 

(percent) 

2005 

(percent) 

Music Claimants 4.0 3.6 

Program Suppliers .............. 96.0 96.4 

VIII. Order of the Copyright Royalty 

Judges 

Having fully considered the record 

and for the reasons set forth herein, the 

Copyright Royalty Judges order that the 

2004 and 2005 cable royalties shall be 

distributed according to the following 

percentages: 

2004 DISTRIBUTION

Claimant group Basic fund 

(percent) 

3.75% fund 

(percent) 

Syndex fund 

(percent) 

Music Claimants .................................................................................................................................... 4.0 4.0 4.0 

Canadian Claimants .............................................................................................................................. 1.9 1.4 0 

Devotional Claimants ............................................................................................................................. 3.4 3.7 0 

PTV ........................................................................................................................................................ 7.4 0 0 

JSC ........................................................................................................................................................ 32.3 35.3 0 

CTV ........................................................................................................................................................ 17.9 19.5 0 

Program Suppliers ................................................................................................................................. 33.1 36.1 96.0 

2005 DISTRIBUTION

Claimant group Basic fund 

(percent) 

3.75% fund 

(percent) 

Syndex fund 

(percent) 

Music Claimants .................................................................................................................................... 3.6 3.6 3.6 

Canadian Claimants .............................................................................................................................. 1.9 1.2 0 

Devotional Claimants ............................................................................................................................. 3.4 3.7 0 

PTV ........................................................................................................................................................ 7.1 0 0 

JSC ........................................................................................................................................................ 35.4 38.6 0 

CTV ........................................................................................................................................................ 14.2 15.4 0 

Program Suppliers ................................................................................................................................. 34.4 37.5 96.4 

So ordered. 

Dated: July 21, 2010. 

James Scott Sledge, 

Chief Copyright Royalty Judge. 

William J. Roberts, Jr., 

Copyright Royalty Judge. 

Stanley C. Wisniewski, 

Copyright Royalty Judge. 

Dated: July 21, 2010. 

James Scott Sledge, 

Chief, U.S. Copyright Royalty Judge. 

Approved by: 

James H. Billington, 

Librarian of Congress. 

[FR Doc. 2010–23266 Filed 9–16–10; 8:45 am] 

BILLING CODE 1410–72–P 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

[Notice: (10–110)] 

NASA Advisory Council; Information 

Technology Infrastructure Committee; 

Meeting 

AGENCY: National Aeronautics and 

Space Administration. 

ACTION: Notice of meeting. 

SUMMARY: In accordance with the 

Federal Advisory Committee Act, Public 

Law 92–463, as amended, the National 

Aeronautics and Space Administration 

(NASA) announces a meeting for the 

Information Technology Infrastructure 

Committee of the NASA Advisory 

Council (NAC). 

DATES: Tuesday, September 28, 2010, 8 

a.m.–5:30 p.m., Local Time. Meet-MeNumber: 1–877–613–3958; #2939943. 

ADDRESSES: NASA Ames Conference 

Center, 500 Severyns Avenue, Building 

3, Ballroom, NASA Research Park, 

Moffett Field, CA 94035–1000. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Tereda J. Frazier, Executive Secretary 

for the Information Technology 

Infrastructure Committee, National 

Aeronautics and Space Administration 

Headquarters, Washington DC 20546, 

(202) 358–2595. 

SUPPLEMENTARY INFORMATION: The topics 

of discussion for the meeting are the 

following: 

• NASA IT Summit Post Mortem 

Briefing. 

• NASA’s Chief Technology Officer 

Briefing. 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1