[Federal Register Volume 60, Number 242 (Monday, December 18, 1995)]
[Notices]
[Pages 65072-65074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30458]



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LIBRARY OF CONGRESS

Copyright Office
[Docket No. 95-8]


Copyright, Cable Compulsory License

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of policy decision.

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SUMMARY: The Copyright Office of the Library of Congress is announcing 
a policy decision with respect to the examination and reporting of 
local broadcast signals in light of the amendment to section 111 of the 
Copyright Act made by the Satellite Home Viewer Act of 1994. For 
examining cable statements of account, the Office will use the same ADI 
list used by the Federal Communications Commission for its must-carry/
retransmission consent election, and will treat a broadcast signal as 
local for copyright purposes only within that station's ADI.

FOR FURTHER INFORMATION CONTACT: Marilyn J. Kretsinger, Acting General 
Counsel, or William Roberts, Senior Attorney for Compulsory Licenses. 
Telephone (202) 707-8380. Telefax (202) 707-8366.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 18, 1994, the President of the United States signed into 
law the Satellite Home Viewer Act of 1994. Public Law No. 103-369. In 
addition to extending and amending the compulsory license for satellite 
carriers in 17 U.S.C. 119, the Home Viewer Act expanded the cable 
compulsory license definition of the ``local service area of a primary 
transmitter'' in 17 U.S.C. 111 to include a broadcast station's 
``television market as defined in section 76.55(e) of title 47, Code of 
Federal Regulations (as in effect on September 18, 1993), or any 
modifications to such television market made, on or after September 18, 
1993, pursuant to section 76.55(e) or 76.59 of title 47 of the Code of 
Federal Regulations'' (parenthetical in original). The amendment was 
made effective beginning with the second accounting period of 1994.
    The definition of the ``local service area of a primary 
transmitter'' in 17 U.S.C. 111(f) determines whether a broadcast 
station is local or distant to a cable system and consequently when it 
must submit a royalty fee for retransmission of that signal. Cable 
systems pay royalties for carriage of distant signals and may 
retransmit local broadcast signals to their subscribers without 
incurring copyright liability.<SUP>1 Prior to the passage of the Home 
Viewer Act, the local service area definition provided that a broadcast 
station was local in the area that it could ``insist upon its signal 
being retransmitted by a cable system pursuant to the rules, 
regulations and authorizations of the Federal Communications Commission 
in effect on April 15, 1976* * *'' 17 U.S.C. 111(f) (1976). This was a 
reference to the Commission's must-carry rules in effect in 1976, and 
the Copyright Act fixed these rules for all future copyright 
determinations. Although these must-carry rules were ultimately 
declared unconstitutional, see Quincy Cable T.V., Inc. v. FCC, 768 F.2d 
1434 (D.C. Cir. 1985), cert. denied, 476 U.S. 1169 (1986) and Century 
Communications v. FCC, 835 F.2d 292 (D.C. Cir. 1987), cert. denied, 486 
U.S. 1032 (1988), they remain in effect for purposes of 17 U.S.C. 111. 
See Quincy, 768 F.2d at 1454 n. 42. However, because of the passage of 
time and changes in telecommunications law and policy, the 1976 must-
carry rules no longer reflect the realities of the current marketplace. 
Congress, therefore, amended the local service area definition in the 
Home Viewer Act to provide an additional means of determining the 
local/distant copyright status of broadcast stations.

    \1\There is one exception to this rule: a cable system which 
retransmits only local broadcast signals must nonetheless submit a 
minimum royalty fee under 17 U.S.C. 111. However, if the system 
carries one or more distant signals, royalties are only paid for 
those distant signals, and the local signals carried are copyright-
free. As a practical matter, there are very few cable systems which 
only carry local broadcast signals and no distant signals.
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    The Home Viewer Act amendment provides that, in addition to the 
area encompassed by the 1976 must-carry rules, a broadcast station is 
local for copyright purposes in the area that comprises that station's 
television market as defined in Sec. 76.55(e) of the FCC's rules, and 
any subsequent modifications made by the FCC to that market. In many 
circumstances, a station's television market under Sec. 76.55(e) 
creates a larger local service area than under the 1976 must-carry 
rules. Cable systems may use either the television market or the 1976 
must-carry 

[[Page 65073]]
rules, or both, in determining the local service area of each broadcast 
station they retransmit to their subscribers.
    Section 76.55(e) of the FCC's rules defines a television market for 
purposes of the Commission's new must-carry rules adopted to implement 
the Cable Television Consumer Protection and Competition Act of 1992. 
Public Law 102-385. The section provides in its entirety:

    (e) Television market. For purposes of the must-carry rules:
    (1) A local commercial broadcast television station's market 
shall be defined as its Area of Dominant Influence (ADI) as 
determined by Arbitron and published in its Television ADI Market 
Guide or any successor publication, as noted below, except that for 
areas outside the contiguous 48 states the area of dominant 
influence may be defined using Nielsen's Designated Market Area 
(DMA), where applicable, and that Puerto Rico, the U.S. Virgin 
Islands and Guam will each be considered one ADI;
    (2) A cable system's television market(s) shall be the one or 
more ADIs in which the communities it serves are located;
    (3) In addition, the county in which a station's community of 
license is located will be considered within its market.

    Note: For the 1993 must-carry/retransmission consent election, 
the ADI assignments specified in the 1991-1992 Television ADI Market 
Guide, available from the Arbitron Ratings Co., 312 Marshall Ave., 
Laurel MD, will apply. ADI assignments will be updated at three year 
intervals. For the 1996 election period, the 1994-1995 ADI list will 
be used; the applicable list for the 1999 election will be the 1997-
1998 list, etc.

47 CFR 76.55(e) (1993). The Home Viewer Act fixes 47 CFR 76.55(e) as of 
September 18, 1993, but expressly includes any subsequent modifications 
to television markets made under Sec. 76.55(e) or Sec. 76.59 of the 
Commission's rules. Modifications were recognized by the Home Viewer 
Act because, at the time of its passage, the Arbitron Company had 
discontinued its publication of the Television ADI Market Guide and had 
filed for bankruptcy.
    Subsequent to the enactment of the Home Viewer Act, the Copyright 
Office amended its cable and satellite carrier compulsory license rules 
and discussed the changes brought about by the Act. 59 FR 67635 
(December 30, 1994). The new definition of the ``local service area of 
a primary transmitter'' did not require amendment of the rules; 
however, the Office described the change in the definition:

    The other change to the cable compulsory license made by the 
1994 Home Viewer Act is the broadening of the section 111(f) 
definition of the ``local service area of a primary transmitter.'' 
The definition is used to determine when a broadcast station is 
local or distant to a cable operator, which in turn determines 
whether the operator must pay a royalty fee for that station. 
Effective July 1, 1994, the local service area of a broadcast 
station for copyright purposes also includes the area in which the 
station is entitled to insist upon carriage of its signal by a cable 
system (i.e. its must-carry zone), in accordance with the rules of 
the Federal Communications Commission in effect on September 18, 
1993, and any subsequent modification of those rules.

Id. To date, this is all the Office has said regarding the change made 
to the local service area definition by the Home Viewer Act.

II. Policy Issues

    Amendment of the definition of the ``local service area of a 
primary transmitter'' has led to questions in the administration of the 
cable compulsory license. Two of these questions must be resolved in 
order for the Copyright Office to administer the cable compulsory 
license. The first question involves the Copyright Office's use of ADI 
in its examination of cable statements of account. As discussed above, 
the amendment to the local service area definition was made effective 
beginning with the second accounting period of 1994, and cable systems 
are now using broadcast stations' ADI for determining the local/distant 
status of the signals. The question has arisen, however, as to the 
appropriate ADI information to consider in calculating the local 
service area of a broadcast signal. The Note to 47 CFR 76.55(e) states 
that the FCC is using the 1991-1992 Television ADI Market Guide for the 
1993 must-carry/retransmission consent election, and that ADI 
assignments will be updated at three year intervals.<SUP>2 Should cable 
systems use the 1991-1992 Television ADI Market Guide for the 1994/2 
accounting period and the 1995 accounting year, or should they apply 
the current ADI list to the corresponding accounting period--i.e. the 
1994 list to the 1994 accounting year and the 1995 list to the 1995 
accounting year, where such information is available?

    \2\The Note further states that the 1994-1995 ADI list will be 
used for the 1996 election, the 1997-1998 list for the 1999 
election, etc. Arbitron, however, discontinued the Market Guide 
after publication of the 1993-1994 edition. New criteria, presumably 
Nielsen's Designated Market Area, must be adopted before the 1996 
must-carry/retransmission consent election, and the Commission has 
stated that it will address the issue before October 1, 1996. See 
Opinion & Order in MM Docket No. 92-259 at 10 n. 45 (November 4, 
1994).
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    The second question involves the determination of a broadcast 
station's ``television market'' for a cable system that serves a 
community or communities in more than one county where those counties 
are assigned to different ADIs. Is the broadcast station local for 
copyright purposes only in those counties assigned to its ADI, or are 
there circumstances where the station may be reported as local outside 
of its ADI?

III. Policy Decision

    As part of its responsibility to administer the cable compulsory 
license, the Copyright Office is resolving both the issues raised in 
this Notice. With respect to which ADI (or subsequent) list to use in 
examining statements of account, the Office will use only the list 
designated by the Commission for the must-carry/retransmission consent 
election. For determinations of the local/distant status of a broadcast 
station, the Office is clarifying the circumstances under which a 
station may be reported as local for copyright purposes.

A. The ADI list

    The amended local service area definition expressly adopts 
Arbitron's ADI list in effect on September 18, 1993, plus any 
subsequent modifications made to that list pursuant to Sec. 76.55(e) or 
Sec. 76.59 of the FCC's rules. Section 76.55(e) provides that the ADI 
list in effect on September 18, 1993, is the list appearing in the 
1991-1992 Television ADI Market Guide. 47 CFR 76.55(e)(Note). It is 
further provided that 1991-1992 Television ADI Market Guide list will 
remain in effect until the time of the 1996 must-carry/retransmission 
consent, when the 1994-1995 ADI list will be used. While it is presumed 
that the ADI list applicable for 1996 will account for the termination 
of publication of the Television ADI Market Guide, Sec. 76.55(e) makes 
it clear that the Commission will only revise the ADI list at three-
year intervals. Because of the Home Viewer Act's direct reference to 47 
CFR 76.55(e), the Copyright Office believes that it is consistent with 
legislative intent to use only the ADI (or replacement) list used by 
the Commission for the must-carry/retransmission consent election. 
Thus, for the 1994/2 accounting period, and both accounting periods for 
1995, the Copyright Office will use the 1991-1992 Television ADI Market 
Guide in determining the local/distant status of broadcast signals. 
Cable operators should use only this list for these accounting periods; 
in examining Statements of Account, the Copyright Office will not 
recognize the ADI of a broadcast station derived from any source other 
than the 1991-1992 Television ADI Market Guide. For the 

[[Page 65074]]
1996, 1997 and 1998 accounting years, cable operators should use the 
list adopted by the Commission for the 1996 must-carry/retransmission 
consent election, and, for subsequent years, the list adopted by the 
Commission for each must-carry/retransmission consent election period. 
If the Commission should make modifications to television markets in 
accordance with Secs. 76.55(e) and/or 76.59, or should generate a 
television market list for the must-carry/retransmission consent 
election other than at three-year intervals, those modifications should 
be applied to their corresponding compulsory license accounting periods 
in determining the local service area of a broadcast station.

B. Local/Distant Status

    In the December 30, 1994, adjustment of our regulations to account 
for the statutory changes made by the Home Viewer Act, we described the 
Act's amendment to the local service area definition in 17 U.S.C. 
111(f) as ``includ[ing] the area in which the station is entitled to 
insist upon carriage of its signal by a cable system (i.e. its must-
carry zone), in accordance with the rules of the Federal Communications 
Commission in effect on September 18, 1993, and any subsequent 
modification of those rules.'' 59 FR 67635 (December 30, 1994). We 
believe we need to clarify this statement as it relates to cable 
systems that serve communities in more than one county assigned to 
different ADIs.
    Cable carriage by one system across one or more ADIs does not 
appear to be an uncommon occurrence. Each county in the United States 
is allocated to a market based on which home-market stations receive a 
preponderance of total viewing. Because many larger cable systems 
typically serve several counties, a ``straddle'' situation can occur 
where a cable system carries a broadcast signal assigned to one market 
in communities within counties assigned to other markets. This 
situation is further complicated when such carriage is pursuant to the 
FCC's new must-carry rules. How should cable systems straddling 
different markets report carriage of broadcast signals in those markets 
for compulsory license purposes?
    The Home Viewer Act amendment to the 17 U.S.C. 111(f) local service 
area definition makes it clear that a broadcast station's television 
market is its ADI. The Home Viewer Act defines ``television market'' by 
reference to Sec. 76.55(e) of the FCC's rules, which provides that a 
broadcast station's television market is ``its Area of Dominant 
Influence (ADI) as determined by Arbitron and published in its 
Television ADI Market Guide * * *'' 47 CFR 76.55(e)(1). A broadcast 
station's ADI is also the area in which it is entitled to assert 
mandatory carriage rights on cable systems located in that ADI. See 
Broadcast Signal Carriage Issues, 8 FCC Rcd 2965, 2976-2977 (1993). 
Thus, the Office acknowledged in its December 30, 1994, Federal 
Register notice the correspondence between a broadcast station's must-
carry area and its ADI; however, it did not describe what application, 
if any, this would have to cable systems straddling more than one ADI.
    After reviewing the provisions of the Cable Television Consumer 
Protection and Competition Act of 1992 (``1992 Cable Act''), Public Law 
No. 102-385, and the FCC's implementing rules, it is apparent that 
there are circumstances, e.g., the ``straddle'' situation, where the 
must-carry zone of a broadcast station exceeds its ADI. The FCC stated 
in its Report & Order implementing the 1992 Cable Act's must-carry 
requirements that in circumstances where a cable system serves a 
community or communities in more than one county and those counties are 
assigned to different ADIs, ``all broadcast stations in both ADIs will 
be considered `local' for must-carry purposes.'' 8 FCC Rcd at 2976.
    We do not believe that the application of the must-carry rules 
adopted pursuant to the 1992 Cable Act have any direct bearing in 
determining the size of the local service area of a broadcast station 
for copyright purposes. The copyright local service area is a broadcast 
station's television market as defined in 47 CFR 76.55(e), which means 
that it is the station's ADI, plus any modifications made to the ADI by 
the Commission under Sec. 76.55 or Sec. 76.59 of its rules.<SUP>3 The 
Office should not have stated in the December 30, 1994, Federal 
Register notice that the local service area was equal to the station's 
must-carry zone, since such zone can, in certain circumstances, be 
considered to extend beyond a station's ADI. Thus, in the ``straddle'' 
situation, a cable system may only report carriage of a broadcast 
station as local under 17 U.S.C. 111 in those communities assigned to 
the station's ADI, even though the system may have must-carry 
obligations to deliver the signal to communities located in other ADIs.

    \3\We acknowledge that changes made to a station's ADI under 47 
CFR 76.55(e) or 76.59 will undoubtably be for reasons related to the 
must-carry rules; however, it is only changes made to a station's 
ADI under these two rules that matter for copyright purposes.
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    We believe that this interpretation is consistent with Congress' 
intent in amending the local service area definition. The legislative 
history to the Home Viewer Act does not indicate any intention to 
equate the copyright local service area with the must-carry obligation, 
and to do so would do violence to 17 U.S.C. 111(d)(1)(B) by 
substantially reducing the occurrence of partially local/partially 
distant signals. Furthermore, Congress expressly recognized in the 1992 
Cable Act that broadcast stations could be considered distant signals 
for copyright purposes in communities where they enjoyed must-carry 
rights. 1992 Cable Act, section 614(h)(1)(b)(ii). Nothing in the Home 
Viewer Act indicates an intention to change this result.

    Dated: December 4, 1995.
Marybeth Peters,
Register of Copyrights.

    Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 95-30458 Filed 12-15-95; 8:45 am]
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