Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66433

Subject Firm Location

Date received at

Governor’s

Office

Petition No. Articles Produced

Midland Steel Products (Co.) .......... Janesville, WI ................................. 12/05/2001 NAFTA–5,616 steel.

Electronic Assembly Corp. (Wkrs) .. Neenak, WI .................................... 12/04/2001 NAFTA–5,617 electronic products.

Cherry Automative (Wkrs) ............... Pleasant Prairie, WI ....................... 11/13/2001 NAFTA–5,618 electronic products.

Graham Tech (Co.) ......................... Cochranton, PA .............................. 12/07/2001 NAFTA–5,619 gaging.

EM Solutions (Wkrs) ........................ Longmont, CO ................................ 12/06/2001 NAFTA–5,620

Biltwell Clothing—Rector Sportwear

(Co.).

Rector, AZ ...................................... 12/05/2001 NAFTA/05/2001 men’s tailored pants and slacks.

Lexmark International (Co.) ............. Lexington, KY ................................. 12/05/2001 NAFT–5,622 inkjet printers and cartridges.

Protel, Inc. (Wkrs) ............................ Lakeland, FL .................................. 12/03/2001 NAFTA–5,623 pay phones.

AVX Corporation (Wkrs) .................. Vancouver, WA .............................. 12/04/2001 NAFTA–5,624 electronic capacitor.

Alcatel USA Marketing .................... Andover, MA .................................. 11/30/3001 NAFTA–5,625 router.

Milmaukee Electric (Wkrs) ............... Blytterville, AR ................................ 12/05/2001 NAFTA–5,626 electric power tools.

Freightliner PMP (Wkrs) .................. Gastonia, NC ................................. 12/04/2001 NAFTA–5,627 trucks and parts.

Cooper Bussman (Wkrs) ................. Goldsboro, NC ............................... 12/05/2001 NAFTA–5,628 fuses & fuseholders.

ASARCO (Co.) ................................ Strawberry Plains, TN .................... 12/05/2001 NAFTA–5,629 zinc.

Meridian Automotive Systems

(UAW).

Controlia, IL .................................... 11/30/2001 NAFTA–5,630 fixtures, water jets, heat shield

molds.

VF Jeanswear Limited Partnership

(Wkrs).

Shenandoah, VA ............................ 12/05/2001 NAFTA–5,631 men’s and women’s bluejeans &

casualwear.

VF Jeanswear Limited Partnership

(Wkrs).

El Paso, TX .................................... 12/07/2001 NAFTA–5,632 men’s and women’s pants.

Evergreen Wholesale Florist (Wkrs) Seattle, WA .................................... 12/10/2001 NAFTA–5,633 florist—flower arrangement.

[FR Doc. 01–31633 Filed 12–26–01; 8:45 am]

BILLING CODE 4510–30–M

DEPARTMENT OF LABOR

Employment and Training

Administration

[NAFTA–5254]

Fashion Works, Inc. Dallas, TX; Notice

of Termination of Investigation

Pursuant to Title V of the North

American Free Trade Agreement

Implementation Act (Pub. L. 103–182)

concerning transitional adjustment

assistance, hereinafter called NAFTA–

TAA and in accordance with section

250(a), Subchapter D, Chapter 2, Title II,

of the Trade Act of 1974, as amended

(19 U.S.C. 2331), an investigation was

initiated on August 23, 2001, in

response to a petition filed by the

company on behalf of workers at

Fashion Works, Inc., Dallas, Texas.

The petitioner requests the petition be

withdrawn. Consequently, further

investigation in this case would serve

no purpose, and the investigation has

been terminated.

Signed in Washington, DC this 10th day of

December, 2001.

Edward A. Tomchick,

Director, Division of Trade Adjustment

Assistance.

[FR Doc. 01–31630 Filed 12–21–01; 8:45 am]

BILLING CODE 4510–30–M

DEPARTMENT OF LABOR

Employment and Training

Administration

[NAFTA–005302]

Tyco Electronics, TDI Division,

Romeoville, Illinois; Notice of

Termination

Pursuant to Title V of the North

American Free Trade Agreement

Implementation Act Pub. L. 103–1

concerning transitional adjustment

assistance, hereinafter called NAFTA–

TAA and in accordance with section

250(a), Subchapter D, Chapter 2, Title II,

of the Trade Act of 1974, as amended

(19 U.S.C. 2331), an investigation was

initiated on September 4, 2001, in

response to a petition filed on behalf of

workers at Tyco Electronics, TDI

Division, Romeoville, Illinois. Workers

produced battery packs.

An active certification covering the

petitioning group of workers remains in

effect (NAFTA–004168). Consequently,

further investigation in this case would

serve no purpose, and the investigation

has been terminated.

Signed in Washington, DC this 11th day of

December, 2001.

Linda G. Poole,

Certifying Officer, Division of Trade

Adjustment Assistance.

[FR Doc. 01–31627 Filed 12–21–01; 8:45 am]

BILLING CODE 4510–30–M

LIBRARY OF CONGRESS

Copyright Office

[Docket No. 2000–2 CARP CD 93–97]

Distribution of 1993, 1994, 1995, 1996

and 1997 Cable Royalty Funds

AGENCY: Copyright Office, Library of

Congress.

ACTION: Order.

SUMMARY: The Librarian of Congress,

upon the recommendation of the

Register of Copyrights, announces his

rejection of the initial and revised

reports of the Copyright Arbitration

Royalty Panel (‘‘CARP’’) in the Phase II

proceeding in the syndicated

programming category for distribution

of the 1997 cable royalty funds, and

remands the case for a new proceeding

before a new CARP.

EFFECTIVE DATE: December 26, 2001.

ADDRESSES: The full text of the CARP’s

initial report and revised report to the

Librarian of Congress are available for

inspection and copying during normal

business hours in the Office of the

Copyright General Counsel, James

Madison Memorial Building, Room LM–

403, First and Independence Avenue,

SE, Washington, DC 20559–6000.

FOR FURTHER INFORMATION CONTACT:

David O. Carson, General Counsel, or

William J. Roberts, Jr., Senior Attorney

for Compulsory Licenses, Copyright

Arbitration Royalty Panel (‘‘CARP’’),

P.O. Box 70977, Southwest Station,

Washington, DC 20024–0400.

Telephone (202) 707–8380. Telefax:

(202) 252–3423.

66434 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

SUPPLEMENTARY INFORMATION:

Background

Each year, cable systems in the United

States submit royalties to the Copyright

Office under a statutory license which

allows cable systems to retransmit overthe-air television and radio broadcast

signals to their subscribers. 17 U.S.C.

111. These royalties are, in turn,

distributed in one of two ways to

copyright owners whose works were

included in the cable retransmissions of

over-the-air television and radio

broadcast signals and who timely filed

a claim for royalties with the Copyright

Office. The copyright owners may either

negotiate a settlement agreement

amongst themselves as to the

distribution of the royalty fees or, if they

cannot agree, the Librarian of Congress

may convene one or more Copyright

Arbitration Royalty Panels (‘‘CARPs’’) to

determine the distribution of the royalty

fees which remain in controversy. See

17 U.S.C. chapter 8.

Cable royalty distribution proceedings

are conducted by the Librarian under

the CARP system in two phases. In a

Phase I proceeding, the total cable

royalty pool for a given year or years is

divided among different categories of

copyrighted programming that typically

appear on broadcast programming.

These categories are movies and

syndicated programming, sports

programming, devotional or religious

programming, musical programming,

commercial and noncommercial

broadcast programming, and Canadian

programming. Once the royalty pool is

divided into these categories, the

Librarian conducts one or more

proceedings at Phase II to resolve

disputes within a particular category as

to the division of the royalties. Today’s

royalty distribution determination is a

Phase II proceeding in the movie and

syndicated programming category (often

referred to collectively as the ‘‘program

supplier’’ category).

The litigants in this Phase II

proceeding in the program supplier

category are the Motion Picture

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

which represents the majority of

copyright owners who filed claims for a

distribution of 1997 cable royalties, and

the Independent Producers Group

(‘‘IPG’’), which represents the remaining

copyright owners who filed claims for a

cable royalty distribution. The Librarian

was required to convene a CARP to

resolve this Phase II proceeding because

MPAA and IPG could not agree as to the

division of royalties in the program

supplier category.

After a protracted discovery period,

the Librarian convened the CARP in this

proceeding on October 17, 2000. As

provided by section 802(e) of title 17,

United States Code, the CARP had six

months to hear the evidentiary

presentations and arguments of MPAA

and IPG and to render a decision. The

CARP delivered its initial report to the

Librarian on April 16, 2001, awarding

IPG 0.5% of the royalty pool and the

remainder to MPAA. After review, the

Librarian returned the case to the CARP.

By Order dated June 5, 2001, the

Librarian dismissed all of the claimants

comprising IPG’s case except for Litton

Syndications, Inc. and directed the

CARP to adjust its award to IPG and

MPAA to account for the dismissal. In

addition, the Librarian directed the

CARP to articulate the methodology it

was using to assign the new distribution

percentages and to detail the application

of the methodology to the facts before it.

See Order in Docket No. 2000–2 CARP

CD 93–97 (June 5, 2001). The Librarian

fully explains his reasoning for rejecting

the initial determination of the CARP in

this Order.

On June 20, 2001, the CARP returned

a new determination. It awarded IPG

0.212% of the royalty funds, with the

remaining 99.788% to MPAA. The

Librarian permitted IPG and MPAA an

additional round of petitions to modify

the CARP’s determination and replies.

The Register now makes her

recommendation to the Librarian

following her review of the CARP’s

determination.

Part One—Decisions of the CARP

The Initial CARP Report

The 108-page initial report of the

CARP has three essential parts. The first

part deals with the validity of the

royalty claim filed with the Copyright

Office in July 1998 under 17 U.S.C.

111(d)(4) that forms the basis for IPG’s

participation in this proceeding. The

second part addresses and ascribes the

proper representation of specific

television programs as between MPAA

and IPG. The third part of the report

resolves the division of the royalties in

the program supplier category between

MPAA and IPG. The Panel awarded

MPAA 99.50% of the royalties and

0.50% to IPG.

1. IPG’s Claim

The validity of IPG’s claim was hotly

contested in this proceeding. The first

challenge was raised in the

precontroversy discovery period when

MPAA moved to dismiss IPG’s Phase II

case on the grounds that IPG’s claim

(marked as No. 176 by the Copyright

Office) did not comply with the Office’s

rules and regulations. MPAA asserted

that none of the entities listed in exhibit

D of IPG’s written direct case, which

forms the basis of IPG’s claim for

royalties, appeared on claim No. 176 as

required by § 252.2 of the rules. 37 CFR

252.2. According to MPAA, IPG entered

into representation agreements with the

exhibit D parties after July 31, 1998 (the

closing date for filing cable royalty

claims with the Office for calendar year

1997), thereby circumventing the

requirement of § 252.2 that all claimants

to a joint claim be identified on the

claim as filed with the Office.

IPG’s compliance with § 252.2 was

questionable. Stylized as a ‘‘joint

claim,’’ IPG identified only one

claimant—Artists Collection Group

(‘‘ACG’’). After the Copyright Office

questioned the claim in July of 1998,

IPG amended the claim to include ACG

and Worldwide Subsidy Group

(‘‘WSG’’). This amendment appeared, on

its face, to satisfy the requirements of

§ 252.2, and the Office did not pursue

the matter further. However, when IPG

filed a written direct case identifying 16

other parties as claimants, the Library

considered MPAA’s motion for possible

violation of the rule.

In an Order dated June 22, 2000, the

Library determined that the prudent

course of action was to designate the

matter of MPAA’s motion to the CARP

for further factual findings and final

resolution. The Library did this after

consideration of IPG’s objections to

MPAA’s motion to dismiss, the language

of § 252.2, and the provisions of the

Copyright Act related to filing cable

royalty claims. The Library rejected

IPG’s argument that it was acceptable

for ACG to file a single claim on behalf

of 16 other parties and chastised IPG for

not listing the 16 in its joint claim as

provided in § 252.2 . However, the

Library declined to dismiss IPG’s case

and designated the MPAA motion to the

CARP because:

[T]he Library cannot say with certainty that

all previous claims filed in cable royalty

proceedings have listed all joint claimants. It

is sometimes the case that the Copyright

Office will receive a single claim filed by a

production company that does not identify

any joint claimants. Whether this production

company owns all or some of the copyrights

represented by the claim, or is just a

representative of unidentified copyright

owners, is unknown to the Office. To the

Library’s knowledge, these claims have not

been challenged in the past, and this is a case

of first impression. Consequently, the Library

is not inclined without prior warning to

strictly enforce the requirement that all

owners and distributors be identified in a

joint claim. However, what is clear, and what

the law requires, is a factual determination as

to which of the owners and distributors

identified by IPG in exhibit D of its written

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66435

1 IPG by this time had informed the Library that

ACG had withdrawn its claim and that WSG was

the sole claimant remaining for claim No. 176

2The Library amended its regulations after the

June 22, 2000 Order to prevent future confusion as

to the filing of single and joint claims. See 66 FR

29700 (June 1, 2001).

3Because all remaining monies in the 1997

program supplier category automatically belonged

to MPAA’s claimants once IPG’s claim was

determined, the CARP focused its attention only on

IPG’s programs.

direct case were in fact represented by

Worldwide Subsidy Group 1 at the close of

the filing period for 1997 cable claims. Any

party listed in exhibit D (with the exception

of Lacey Entertainment, which filed its own

claim) that was not represented by

Worldwide Subsidy Group before August

1998 cannot be said to have filed a timely

claim, and therefore testimony contained in

IPG’s written direct case regarding such party

must be stricken.

Order in Docket No. 2000–2 CARP CD

93–97 at 7 (June 22, 2000). The Library

directed the CARP to make factual

determinations as to whether there

existed written agreements between

WSG and each of the exhibit D

claimants dated on or before July 31,

1998, the close of the cable royalty

claim filing period. IPG submitted, as

directed by the Library, copies of the

representation agreements between

WSG and the exhibit D claimants, along

with additional corroborating

documents to prove the existence of a

representation arrangement on or before

July 31, 1998.2

Upon its convocation, the CARP

turned to the task of examining the

representation agreements and

supporting documents to determine

which, if any, of IPG’s exhibit D

claimants would be allowed to remain

in the proceeding. The representation

agreements are standard form contracts

for representation by WSG in collecting

(among other things) cable compulsory

license royalties. The contract is

effective upon the date identified in the

lead paragraph of the contract, which

provides that ‘‘as of (date),’’ WSG and

the identified party have entered into

the agreement. With only two

exceptions, none of the signature pages

in the representation agreements bore a

date indicating when the agreement was

signed and executed. Some of the

additional documents provided by IPG

(copies of letters and faxes) provided

context to some of the representation

agreements to indicate the time period

in which they were signed and

executed.

In its report, the CARP examined the

documents for each of the exhibit D

claimants and decided which claimants

had a signed agreement with WSG on or

before July 31, 1998, and which did not.

The CARP determined that a valid

representation agreement existed for the

following: Abrams/Gentile

Entertainment; Raycom Sports; Flying

Tomato Films; Funimation Productions;

Golden Films Finance Corporation IV

and American Film Investment

Corporation II; Litton Syndications, Inc.;

Sandra Carter Productions; and The

Tide Group d/b/a Psychic Readers

Network. The CARP found that while

there may have existed a valid

representation agreement between WSG

and Mendelson/PAWS, WSG’s claim of

representation was trumped by General

Mills, a claimant ascribed to MPAA’s

claim. The CARP dismissed the United

Negro College Fund from IPG’s case

because it determined that a

representation agreement did not exist

until sometime in November of 1998,

well after the July 31, 1998, deadline.

2. IPG’s Programs

As provided in the section 111 cable

license, copyrighted works that are

retransmitted by cable systems on a

distant basis are entitled to royalties

collected from cable systems. In the

program supplier category, which is the

subject of this proceeding, these works

are movies and syndicated television

programs.

After resolving the matter of which

IPG claimants remained in the

proceeding, the CARP turned to the task

of determining which of the programs

claimed by IPG claimants were entitled

to a royalty distribution.3 Some

programs were claimed by both IPG and

MPAA. The following is a summary of

the programs that the CARP credited to

IPG’s claimants.

a. Abrams/Gentile Entertainment. The

CARP awarded all five programs

claimed by IPG—Dragon Flyz; Happy

Ness, Secret of the Loch; Jelly Bean

Jungle; Sky Dancers; and Van Pires—to

IPG. MPAA asserted that Jelly Bean

Jungle belonged to Audio Visual

Copyright Society d/b/a Screenrights,

rather than Abrams/Gentile, but the

CARP determined that ‘‘Audio Visual

Copyright Society’s own 1997 [program]

Certification [did] not list such program

in its claim.’’ CARP Report at 53.

b. Raycom Sports. The CARP awarded

all four programs claimed by IPG—Elvis,

His Life and Times; Journey of the

African American Athlete; More Than a

Game; Our Holiday Memories—to IPG,

finding that the MPAA did not contest

any of these titles. CARP Report at 53–

54.

c. Flying Tomato Films. The CARP

did not credit the one program, Just

Imagine, to Flying Tomato Films,

because it determined that Litton

Syndications held the syndication rights

to the program. CARP Report at 54–55.

d. Funimation Productions. The

CARP identified only one program

belonging to Funimation Productions:

Dragon Ball Z. The CARP determined

that Fox Family Worldwide, not

Funimation Productions, was the proper

syndicator for Dragon Ball Z, and

therefore IPG was not entitled to a

distribution for this program. CARP

Report at 55–56.

e. Golden Films Finance Corporation

IV and American Film Investment

Corporation II. Two programs were

claimed by IPG for these companies:

Enchanted Tales and Thumbelina. The

CARP determined that Enchanted Tales

is a series of videos, one of which is

Thumbelina, and that the syndication

rights to these programs belong to

Eyemark Entertainment and Summit

Media, not Golden Films and American

Films. CARP Report at 58. Further, the

CARP determined that both Enchanted

Tales and Thumbelina were not

retransmitted by cable systems during

1997. Id. Consequently, the CARP did

not give credit to IPG for these

programs.

f. Litton Syndications, Inc. IPG

identified thirteen programs belonging

to Litton in its written direct case:

Algo’s Factory; Jack Hanna’s Animal

Adventures; Dramatic Moments in Black

Sports History; Dream Big; Harvey

Penick’s Golf Lessons; Shaka Zulu;

Story of a People; Mom USA; Nprint;

Critter Gitters; Sophisticated Gents; The

Sports Bar; and Bloopy’s Buddies. The

CARP eliminated Shaka Zulu and Story

of a People from IPG’s claim, finding

that syndication rights to Shaka Zulu

were properly held by Harmony Gold

USA, not Litton, and that the proper

syndicator for Story of a People was

unknown. CARP Report at 60–61. The

CARP also eliminated Dream Big,

determining that Warner Brothers, not

Litton, was the syndicator of that

program. Id. at 62. Although both IPG

and MPAA claimed Dramatic Moments

in Black Sports History, the CARP

determined that Litton was indeed the

syndicator and credited IPG’s claim

with this program. Id. The remaining

programs were credited to IPG.

g. Mendelson/PAWS. The single

program claimed by Mendelson/PAWS,

Garfield and Friends, was claimed by

both MPAA and IPG. MPAA supplied

documentary evidence from General

Mills indicating that it was the

syndicator of Garfield and Friends, even

though Mendelson/PAWS produced the

program. The CARP did not credit IPG

with Garfield and Friends, determining

that Mendelson/ PAWS resolved the

66436 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

dispute by removing its claim. CARP

Report at 64–65.

h. Sandra Carter Productions. IPG

identified five programs belonging to

Sandra Carter: Bottom Line; By River, By

Rail; Flex; Parenting in the 90’s; Til

Earth and Heaven Ring. MPAA asserted

that Parenting in the 90s belonged to

Audio Visual Copyright Society d/b/a/

Screenrights, but the CARP determined

that Screenrights did not list that

program in their certification to MPAA

and credited it to IPG. CARP Report at

66. The CARP determined that Bottom

Line; By River, By Rail; and Til Earth

and Heaven Ring appeared on television

station WBAL-TV, Baltimore, Maryland,

and was not subject to a distant

retransmission by a cable system. These

programs were removed from IPG’s

claim. Id. at 66–67. Finally, the CARP

credited Flex to IPG.

i. The Tide Group d/b/a Psychic

Readers Network. IPG claimed several

programs for the Tide Group that had

multiple titles. The CARP credited IPG

with Alcatraz as one program, Kenny

Kingston as one program, and Psychic

Readers (with its alternate title Psychic

Readers Network) as one program.

CARP Report at 68.

j. United Negro College Fund. IPG

claimed one program for the United

Negro College Fund: Lou Rawls Parade

of Stars. However, the CARP

determined that the United Negro

College Fund did not have a valid

representation agreement with WSG by

July 31, 1998. Consequently, IPG did not

receive credit for Lou Rawls Parade of

Stars. CARP Report at 69–70.

k. Lacey Entertainment. Both MPAA

and IPG claimed credit for Lacey

Entertainment’s two programs:

America’s Dumbest Criminals and Mega

Man. The CARP found that Lacey

confirmed that MPAA was its

representative for section 111 royalties

for Mega Man and that Lacey was not

the U.S. distributor for America’s

Dumbest Criminals. Consequently, the

CARP did not credit IPG with these

programs. CARP Report at 71–72.

3. The Distribution Percentages

The third part of the CARP’s report,

which awards IPG 0.5% of the royalties

and MPAA 99.5%, is the most troubling

portion. After leveling a number of

criticisms at both MPAA’s and IPG’s

proposed distribution methodologies,

the CARP failed to articulate the method

it settled upon in assigning the 0.5%

and 99.5% awards.

Both MPAA and IPG proposed

detailed methodologies for determining

the royalty awards in this proceeding.

MPAA’s methodology is based upon

viewership analysis of movies and

syndicated television programs

retransmitted by cable systems in 1997

on a distant signal basis. The underlying

premise of the MPAA formula is that

actual viewing of movies and

syndicated television programs by cable

subscribers is the best way to determine

the marketplace value of the

programming. The source elements for

determining actual viewership are: (1)

TVData station logs, which show the

programs broadcast by the stations and

the date and time of their broadcast, for

the 82 television stations used by MPAA

in its sample survey; (2) a special study

of the same 82 stations for the sweeps

period conducted by Nielsen Media

Research; (3) program ownership data

(i.e. which claimants to the 1997 cable

royalties own which programs) as

contained in the Cable Data Corporation

(‘‘CDC’’) database; and (4) the weighting

factors used by CDC to interpolate

viewing for non-sweeps months when

data from Nielsen is not available. CARP

Report at 81.

The CARP described the details of

MPAA’s distribution methodology as

follows:

MPAA selects 82 of the most heavily

carried stations retransmitted as a distant

signal by Form 3 system operators. Form 3

systems subscribers comprise the largest

group of cable subscribers—89% and their

gross receipts represent the largest portion—

96.5%—of the 1997 cable royalty fund.

The program schedules of these stations

are acquired from TVData. The program

information is matched to viewing data

provided by Nielsen Media Research

(‘‘Nielsen’’). In particular, Nielsen provides

the number of quarter hour segments (QH)

each program aired on the station and the

average number of cable subscribers who

viewed each program on that station on a

distant basis.

For each station in the MPAA sample,

Nielsen goes into the diary database of

approximately 150,000 homes for each

sweep, eliminates diaries in local area of the

station (as supplied by MPAA), sums the

weights by quarter hour for each diary and

generates estimated projections on quarterhour-by-quarter-hour basis.

MPAA then calculates the household

viewing hours (HHVH) for each series and

motion picture in the study. Household

viewing hours for every program (claimed

and unclaimed) is [sic] calculated for each

program using the Nielsen data and

interpolated audience data for non-sweeps

periods.

After reconciling programs with broadcast

times, MPAA then calculates the household

viewing hours (HHVH) for each series and

motion picture in the study using the Nielsen

data and interpolated audience data.

The HHVH formula is: (ΣQH/4) x DCHH =

HHVH. The formula may be stated as follows:

Add the total number of QH segments a

program is broadcast in a particular time slot

on a particular station. The sum is divided

by four to get an hourly measure. The result

is multiplied by the average number of

distant cable households (DCHH) that

actually watched the program on that station

during the time period.

CARP Report at 81–82 (footnotes

omitted). Applying MPAA’s formula to

the 1997 data yields, according to

MPAA, a determination that

programming represented by MPAA

received 99.9292% of the total distant

viewing—3,474,810,364 viewing hours

out of 3,477,272,694 total viewing

hours. MPAA therefore asked for

99.9292% of the 1997 cable royalties.

MPAA Findings of Fact at 20, ¶ 55.

IPG proposed a different distribution

methodology which yields a greater

distribution percentage to IPG. Instead

of focusing on viewership as the main

valuation method, IPG’s methodology

operates from the premise that it is best

to look at the availability of

programming offered to subscribers and

the benefits received by the cable

operators who retransmit that

programming. IPG submits that while

the decision of a television station to

transmit a particular program is driven

by a desire for viewership ratings, cable

systems are not concerned with

viewership of a particular program, but

rather are concerned with attracting and

holding the greatest number of

subscribers by offering multiple

programming choices. IPG attempts to

place a value on each and every

broadcast using the following data: (1)

The number of distant cable subscribers

capable of receiving the program

broadcast during 1997; (2) the distant

retransmission royalties generated

during 1997 that are attributable to

stations broadcasting a particular

program; (3) the time placement of the

broadcast; and (4) the length of the

particular broadcast. CARP Report at 95.

The CARP described IPG’s

distribution methodology as follows:

IPG expanded MPAA’s station sample to

99 television stations, including only those

with a combined percentage of distant cable

subscribers and ‘‘fees gen.’’ (fees generated)

significantly greater than the original

selection. The added stations were heavily

retransmitted according to distant

subscribership data for Form 1, Form 2, and

Form 3 cable systems.

IPG secured data from TVData reflecting all

programs broadcast on the 99 Sample

Stations, 24 hours a day, for the entire year

of 1997 and segregated programming

compensable in the syndicated programming

category.

IPG accorded a ‘‘Station Weight Factor’’ to

each and every compensable broadcast

blending of (i) the average percentage of

distant cable subscribers capable of viewing

the station of broadcast and (ii) the average

percentage of ‘‘fees gen.’’ attributable to the

station of broadcast, as compared to the other

99 Sample Stations.

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66437

IPG then accorded a ‘‘Time Period Weight

Factor’’ based on the time period or daypart

of the program broadcast, weighted according

to data derived from the ‘‘1998 Report on

Television’’ published by Nielsen Media

Research, and factored in the length of each

such broadcast.

CARP Report at 96 (footnotes omitted;

parenthetical not in original). Applying

IPG’s methodology to its data yields,

according to IPG, a determination that

0.881% of the aggregate Sum Weighted

Value of all programs claimed in this

proceeding belongs to IPG. IPG Findings

of Fact at 16–17, ¶ 51.

Both MPAA and IPG leveled

criticisms at each other’s methodologies,

and the CARP details those criticisms.

See CARP Report at 82–94 (IPG); 97–102

(MPAA). The CARP accepted the

following criticisms of MPAA’s

approach:

—MPAA’s direct testimony did not

sufficiently lay the foundation for the

survey or explain its results.

—The Panel was forced to call its own

witnesses, Mr. Lindstrom from

Nielsen, and Mr. Larson from Cable

Data Corporation to explain their

methods of data acquisition and

reporting.

—The number of sampled stations [in

MPAA’s station survey] has declined

without adequate explanation.

—Station selection criteria was

excluded Form 1 and Form 2 cable

systems.

—The number of ‘‘zero’’ viewing hours

shows the flaw in attempting to use

the Nielsen data as a proxy for the

retransmission market especially

since Nielsen had 24 hour sampling

capability in 1997.

—There are unanswered technical

questions regarding relative error rates

and mixing diary and meter data.

—The method of interpolation of nonsweep month estimated viewing

needs statistical validation.

—There is an overvaluation of WTBS

and under-valuation of the other

Superstations in the survey.

Id. at 102–103.

The CARP found the following

criticisms of IPG’s methodology:

—A mathematically sound basis for the

creation and application of the station

weight factor and time period weight

factor should have been presented by

a statistician.

—Daypart data was misapplied thus

overstating ‘‘all other’’ viewing.

—It doesn’t directly address the

marketplace value of the works

transmitted, a primary criteria.

Id. at 103.

After stating that it was ‘‘recogniz[ing]

the strengths and weaknesses’’ of

MPAA’s and IPG’s approaches, the

Panel proceeded to summarily award

IPG 0.5% of the 1997 cable fund and the

remaining 99.5% to MPAA. The CARP

did observe that ‘‘certain ‘‘claimants’’

had not satisfied the criteria for

asserting their claims and certain

programs were not qualified. The Panel

did not award any royalty allocation for

such unqualified ‘‘claimants’’ nor did it

award any royalty allocation for

unqualified programs.’’ Id. at 106.

Standard of Review

Section 802(f) of the Copyright Act

directs that, upon the recommendation

of the Register of Copyrights, the

Librarian shall adopt the report of the

CARP ‘‘unless the Librarian finds that

the determination is arbitrary or

contrary to the applicable provisions of

this title.’’ The narrow scope of review

has been discussed in great detail in

prior decisions which have concluded

that the use of the term ‘‘arbitrary’’ in

this provision is no different than the

‘‘arbitrary’’ standard described in the

Administrative Procedure Act, 5 U.S.C.

706(2)(A). See 63 FR 49823 (September

18, 1998); 63 FR 25394 (May 8, 1998);

62 FR 55742 (October 28, 1997); 62 FR

6558 (February 12, 1997); 61 FR 55653

(October 28, 1996). Thus, the standard

of review adopted by the Librarian is

narrow and provides that the Librarian

will not reject the determination of a

CARP unless its decision falls outside

the ‘‘zone of reasonableness’’ that had

been used by the courts to review

decisions of the Copyright Royalty

Tribunal (‘‘CRT’’). See National Cable

Television Ass’n. v. Copyright Royalty

Tribunal, 724 F.2d 176, 182 (D.C. Cir.

1983). Moreover, based on a

determination by the Register and the

Librarian that the Panel’s decision is

neither arbitrary nor contrary to law, the

Librarian will adopt the CARP’s

determination even if the Register and

the Librarian would have reached

conclusions different from the

conclusions reached by the CARP.

The U.S. Court of Appeals for the

District of Columbia Circuit has stated,

however, that the Librarian would act

arbitrarily if ‘‘without explanation or

adjustment, he adopted an award

proposed by the Panel that was not

supported by any evidence or that was

based on evidence which could not

reasonably be interpreted to support the

award.’’ See National Ass’n of

Broadcasters v. Librarian of Congress,

146 F.3d 907, 923 (D.C. Cir. 1998).

For this reason, the Panel must

provide a detailed rational analysis of

its decision, setting forth specific

findings of fact and conclusions of law.

See National Cable Television Ass’n. v.

Copyright Royalty Tribunal, 689 F.2d

1077, 1091 (D.C. Cir. 1992) (requiring

CRT to weigh all relevant considerations

and set out its conclusions in a form

that permits the court to determine

whether it has exercised its

responsibilities lawfully).

It is then the task of the Register of

Copyrights to review the Panel’s report

and make her recommendation to the

Librarian as to whether it is arbitrary or

contrary to the provisions of the

Copyright Act and, if so, whether and in

what manner the Librarian should

substitute his own determination.

Remand to the CARP

After receiving the CARP’s initial

determination, the Register of

Copyrights recommended, and the

Librarian accepted, that the Report be

rejected and remanded to the CARP for

further consideration. It was apparent

from reviewing the Report that the

CARP had acted arbitrarily in three

instances: (1) The CARP

misapprehended the intent of the June

22, 2000, Order designating

consideration of the circumstances of

IPG’s representation agreements with its

exhibit D claimants; (2) the CARP

awarded programs to an IPG claimant

when there was no introduction of

evidence as to the value of the program

and assigned another program to IPG

without adequate explanation of its

decision; and (3) the CARP failed to

articulate the reasoning it used in

arriving at a distribution percentage of

0.5% for IPG and 99.5% for MPAA. See

Order, Docket No. 2000–2 CARP CD 93–

97 (June 5, 2001).

1. Dismissal of Additional IPG

Claimants

As discussed above, the status of

IPG’s claim No. 176 has been a focal

point of this proceeding. MPAA has

moved to dismiss IPG’s entire claim no

less than three times, claiming that

claim No. 176 flouts the Copyright

Office’s rules and the statute, and is a

fraud on the Library. The CARP appears

to agree with MPAA’s contentions, but

stops short of dismissing most if not all

of IPG’s exhibit D claimants, noting that

it ‘‘is attempting to accommodate the

Copyright Office’s previously created,

one-time exception to the strict

enforcement of the Copyright Office’s

claim filing rules, while aspiring to

achieve fairness for all affected

claimants.’’ CARP Report at 42.

The Register concludes that the CARP

did not follow the direction and intent

of the June 22, 2000, Order directing it

to consider the status of IPG’s

representation of the exhibit D

66438 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

4See footnote 2, supra.

5The contract with Jay Ward Productions was

dated ‘‘11/02/99.’’ IPG, however, voluntarily

withdrew Jay Ward Productions from its case.

Likewise, Mainframe Entertainment’s contract was

dated October 8, 1998, and IPG also withdrew

Mainframe from its case.

claimants. The rule and intent of that

Order are as follows.

Section 111(d)(3) of the Copyright Act

states that royalties collected from cable

systems under the cable statutory

license may only be distributed to

copyright owners ‘‘who claim that their

works were the subject of secondary

transmissions by cable systems during

the relevant semiannual period.’’ 17

U.S.C. 111(d)(3). This means that it is

copyright owners—individuals or

entities that own one or more of the

exclusive rights granted by section 106

of the Copyright Act—that are entitled

to royalty fees, not those who represent

them in CARP proceedings. The statute

also provides that royalty fees may only

be distributed to ‘‘claimants’’ that file a

claim with the Copyright Office during

the month of July for royalties collected

in the previous calendar year. 17 U.S.C.

111(d)(4)(A). Further, the statute states

that claims filed with the Copyright

Office shall be submitted ‘‘in

accordance with requirements that the

Librarian of Congress shall prescribe by

regulation.’’ Id.

The Librarian adopted such

regulations, which are found at part 252

of 37 CFR. Section 252.3 of the rules

prescribes the content of a cable claim,

distinguishing between ‘‘individual

claims’’ and ‘‘joint claims.’’ An

‘‘individual claim’’ involves royalties

that are being sought by a single

‘‘claimant,’’ whereas a ‘‘joint claim’’

involves two or more ‘‘claimants.’’ The

requirements for an ‘‘individual claim’’

are ‘‘a general statement of the nature of

the claimant’s copyrighted works and

identification of at least one secondary

transmission by a cable system of such

works establishing a basis for the

claim.’’ 37 CFR 252.3(a)(4). ‘‘Joint

claims’’ have an additional requirement.

If the claim is a ‘‘joint claim,’’ there

must be ‘‘a concise statement of the

authorization for the filing of the joint

claim, and the name of each claimant to

the joint claim.’’ 37 CFR 252.3(a)(3).

Additionally, the ‘‘joint claim’’ must

have ‘‘a general statement of the nature

of the joint claimants’’ copyrighted

works and identification of at least one

secondary transmission of one of the

joint claimants’ copyrighted works by a

cable system establishing a basis for the

joint claim.’’ 37 CFR 252.3(a)(4).4

The June 22, 2000, Order recounts the

history of § 252.3, and it will not be

repeated here. See June 22 Order at 2–

5. The importance about § 252.3 in the

context of this proceeding is that it uses

the word ‘‘claimant’’ in the text, as

opposed to the terms ‘‘copyright owner’’

or ‘‘holder of one or more of the

exclusive rights granted by section 106

of the Copyright Act.’’ IPG argued to the

Library in response to MPAA’s initial

motion to dismiss its claim that it was

acceptable for Artists Collection Group

(‘‘ACG’’) to file an individual claim,

even though it represented several

copyright owners, because it was the

only ‘‘claimant’’ submitting a claim.

June 22 Order at 5. If § 252.3 had used

the term ‘‘copyright owner’’ instead of

‘‘claimant,’’ then this clearly would not

be a permissible interpretation of the

rule. The Library disagreed with IPG’s

interpretation of § 252.3, concluding

instead that what ACG had filed was in

reality a joint claim, because it was

representing only a group of copyright

owners who would ultimately be

entitled, under 17 U.S.C. 111(d)(3), to

the royalties. Id. at 6. However, ACG did

not list the exhibit D claimants it

represented on the claim, as required by

§ 252.3(a)(3) for joint claims, other than

to list Worldwide Subsidy Group

(‘‘WSG’’) which, as was revealed in the

proceedings before the CARP, was

nothing more than an unregistered,

fictitious business name for ACG. CARP

Report at 35. The Library did not take

the harsh step of dismissing IPG’s claim

for ACG’s failure to list the exhibit D

claimants on claim No. 176. Instead, the

Library made a one-time exception to

the requirement by affording IPG the

opportunity to prove that ACG/WSG

had entered into valid written

representation agreements with each of

the exhibit D claimants on or before July

31, 1998, the last day for filing claims

to 1997 cable royalties. The Library did

this because it could not

say with certainty that all previous claims

filed in cable royalty proceedings have listed

all joint claimants. It is sometimes the case

that the Copyright Office will receive a single

claim filed by a production company that

does not identify any joint claimants.

Whether this production company owns all

or some of the copyrights represented by the

claim, or is just a representative of

unidentified copyright owners, is unknown

to the Office. To the Library’s knowledge,

these claims have not been challenged in the

past, and this is a case of first impression.

Consequently, the Library is not inclined

without prior warning to strictly enforce the

requirement that all owners and distributors

be identified in a joint claim.

June 22 Order at 7.

In designating to the CARP for factual

determination the status of ACG/WSG

as representatives of the exhibit D

claimants, the Library offered some

decisional guidelines:

First, because Worldwide Subsidy Group

did not list any joint claimants, IPG has the

burden of proving that it represented each of

the exhibit D parties for distribution of 1997

cable royalties on or before July 31, 1998.

Second, IPG must submit written proof of

representation for each exhibit D party.

Written proof is required because claim No.

176 does not identify any of the exhibit D

parties, and because testimonial evidence

alone will not preserve the integrity of the

law and the regulations which prohibit

adding parties to a joint claim after the fact.

Proof must be in the form of written

agreements of representation between IPG

and each of the exhibit D parties executed on

or before July 31, 1998. Finally, if the CARP

determines that one or more of the exhibit D

parties were not validly represented by

Worldwide Subsidy Group for distribution of

1997 cable royalties on or before July 31,

1998, the CARP must strike that portion of

IPG’s written direct case related to that party

or parties.

June 22 Order at 7

After issuance of the June 22 Order,

IPG petitioned the Library for

reconsideration, asserting that it had

written material in addition to the

standard form contract entered into

between WSG and the exhibit D

claimants that clarified that a

representational arrangement existed on

or before July 31, 1998. The Library

clarified that the ‘‘June 22 Order’s

requirement that proof of representation

‘‘must be in the form of written

agreements’’ does not mean that IPG’s

standard representational agreement

form is the only acceptable document

that proves timely representation.’’

Order in Docket No. 2002–2 CARP CD

93–97 at 4 (September 22, 2000). The

Library allowed IPG to submit

additional documentation, but did not

permit the introduction of testimonial

evidence. IPG submitted the additional

documents, which consisted of letters

and faxes discussing the

representational contracts submitted

earlier by IPG, on October 10, 2000

(these documents are hereinafter

referred to as the ‘‘October 10

documents’’).

The Library has reviewed the

representational contracts and the

October 10 documents for all sixteen of

the exhibit D claimants. Several things

are evident from this examination. First,

with the exception of two of the

contracts, they do not contain any dates

of execution of the signature page.5

Rather, the contract bears a provision, in

the lead paragraph, that it is effective

‘‘as of’’ a certain date. In all instances

this date is on or before July 31, 1998.

Second, it is apparent from the October

10 documents that the ‘‘as of’’ date in

the contract is not the date of execution

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66439

6The remainder of the exhibit D parties have

been either withdrawn from the preceeding, or their

programs have been credited to another. The

programs of Beacon Communications Corp.,

Cosgrove-Meurer Productions, Jay Ward

Productions, Mainframe Entertainment, and

Scholastic Entertainment were withdrawn by IPG.

Flying Tomato Films’ program was credited to

Litton. CARP Report at 55. Mendelson/PAWS, Inc.’s

programs were credited to MPAA. Id. at 64. The

CARP determined that Golden Films Finance

Corporation IV and American Film Corporation II

were not entitled to a distribution because their

programs were not retransmitted by a cable system

on a distant basis. Id. at 58. Lacey Entertainment’s

programs were credited to MPAA. Id. at 71–72.

of the contract. Rather, it was the

practice of WSG to send a copy of its

contract to a potential client during

negotiations for representation and type

in the ‘‘as of’’ date at that time. The

contract may not have been signed and

executed for weeks, or even months,

after the ‘‘as of’’ date. Third, there are

not October 10 documents for all of the

exhibit D parties. For some, the only

document evidencing representation is

the contract itself bearing the ‘‘as of’’

date.

In each instance, with the exception

of the United Negro College Fund, the

CARP accepted the ‘‘as of’’ date on the

representational contracts as evidence

that a representational agreement

existed on that date. The Register

determines that that decision is arbitrary

because it runs contrary to the evidence

presented to the CARP. The Register

also determines that the Panel’s

decision on this point countervails the

June 22 Order. Pursuant to the terms of

that Order, the burden was squarely on

IPG to demonstrate through

documentary evidence that a valid

representational arrangement existed on

or before July 31, 1998. The ‘‘as of’’ date

is not evidence of such an arrangement,

because it is clear from the October 10

documents that the contracts were

signed sometime after the ‘‘as of’’ date.

In those circumstances where there is

documentary evidence that the contract

was signed on or before July 31, 1998,

IPG has met its burden of proving a

representational arrangement.

For Raycom Sports, Abrams/Gentile

Entertainment, Funimation Productions,

and Sandra Carter Productions, the only

documents supplied by IPG are the

representational contracts. Because the

‘‘as of’’ dates on these contracts do not

prove the dates of their execution, it

cannot be determined whether they

were signed, and a valid

representational arrangement existed,

on or before July 31, 1998.

Consequently, these parties are

dismissed from this proceeding.

There are October 10 documents for

The Tide Group d/b/a Psychic Readers

Network, but they do not prove that the

representational contract had been

signed or that a valid representational

arrangement had been reached on or

before July 31, 1998. Consequently, this

party is dismissed.

The CARP dismissed the United

Negro College Fund because the October

10 documents suggested that the

representational contract was not signed

on or before July 31, 1998. The contract

bears no date on the signature page, and

an ‘‘as of’’ date of July 30, 1998, is

handwritten in the first paragraph.

There are October 10 documents

discussing entering into a

representational agreement in November

of 1998, which led the CARP to

conclude that a representational

arrangement did not exist as of July 30,

1998. IPG has not met its burden of

demonstrating that a representational

arrangement existed on or before July

31, 1998. Consequently, the Register

accepts the CARP’s determination to

dismiss the United Negro College Fund.

The only exhibit D party for which

IPG has met its burden is Litton

Syndications.6 While there is no date of

execution on the Litton/WSG contract,

there is a June 16, 1998, letter from Peter

Sniderman of Litton to Raul Galaz of

WSG stating that ‘‘enclosed are four

copies of the executed Litton

Syndications, Inc.—Worldwide Subsidy

Group agreement.’’ In addition, there is

a June 18, 1998, letter from Galaz to

Sniderman stating that ‘‘enclosed herein

please find two (2) fully executed

originals of the above-referenced

agreement.’’ It is clear from these

documents that a valid representational

arrangement existed between Litton and

WSG prior to July 31, 1998. IPG has

therefore met its burden as provided in

the June 22 Order.

2. The Status of ACG, WSG and IPG

After the extended discussion and

analysis of claim No. 176 in the June 22

Order and above, one might believe that

the validity of claim No. 176 is

definitively resolved. This is not so,

because of issues surrounding the

names—ACG and WSG—that appeared

on the claim. The Library must therefore

resolve whether claim No. 176 was a

deliberately perpetrated fraud on the

Copyright Office and the section 111

filing system.

The CARP Report devotes a

considerable amount of discussion to

the identity and status of ACG, WSG,

and IPG. It is a complicated discussion.

When claim No. 176 was originally filed

with the Copyright Office on July 11,

1998, it listed ACG as the sole claimant.

ACG was incorporated in May of 1998

in the state of California by Raul Galaz,

its principal, for the apparent purpose of

representing claimants before the

Library for cable and satellite television

royalties. Although ACG was the only

claimant on claim No. 176, the claim

stated that it was a joint claim being

filed on behalf of ACG and ‘‘on behalf

of others.’’ Claim No. 176. Mr. Galaz

signed the claim. When Mr. Galaz was

informed by the Copyright Office that in

order for claim No. 176 to be a joint

claim it must identify at least one other

claimant, he amended claim No. 176 to

include WSG. At that time, WSG was

nothing more than an unregistered,

fictitious business name for ACG. The

following year, Mr. Galaz moved from

California to Texas, whereupon he filed

articles of incorporation for WSG in

Texas. Before leaving California, Mr.

Galaz also registered the name WSG in

California as a fictitious business name

for WSG.

Once in Texas, Mr. Galaz took steps

in 2000 to dissolve ACG by filing

articles of dissolution in California for

ACG. This left WSG as a Texas

corporation. Mr. Galaz then adopted an

unregistered, fictitious business name

for WSG in Texas: IPG. When MPAA

moved to dismiss claim No. 176 in June

of 2000, IPG informed the Library in a

footnote of its opposition to the motion

that ACG had voluntarily withdrawn its

claim from the proceeding, leaving WSG

Texas/IPG as the sole claimant in this

proceeding.

The first question is whether these

various changes in identity were an

attempt to perpetrate a fraud on the

Copyright Office by hiding from the

Office the real claimants in this

proceeding. In other words, did IPG

deliberately refrain from listing its

exhibit D claimants in claim No. 176

(Litton, Flying Tomato Films, et al.)

because it was hiding something from

the Office? Assuming that listing only

ACG and WSG (California) on claim No.

176 was not an honest mistake, as IPG

vigorously claims that it was, the only

reason the Library can divine for not

listing the exhibit D claimants was that

ACG/WSG did not then represent some

or all of those claimants or, in the

alternative, ACG/WSG did not want to

preclude the possibility of signing up

additional claimants after the July 31,

1998, deadline.

Whether or not this was ACG/WSG’s

true motivation is unknown, although

the CARP at least suggests a sinister

element in Mr. Galaz’s actions. CARP

Report at 42. In any event, the Register

believes that the Library has

satisfactorily dealt with the status of

IPG’s representation of the exhibit D

claimants in the June 22, 2000, Order

and the above discussion. It is apparent

that WSG—i.e., Mr. Galaz—had a valid

66440 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

7See footnote 2, supra.

8The same cannot be said for Unsolved Mysteries.

Unsolved Mysteries is a network program which can

never be eligible for section 111 royalties. See 17

U.S.C. 111(d)(3)(A) (only nonnetwork programs are

eligible for distributions). ACG should have known

that Unsolved Mysteries failed to satisfy the

requirements of 37 CFR 252.3(a)(4). If this had been

the only program that ACG listed in claim No. 176,

there would be solid grounds for dismissal of the

claim.

representation arrangement with Litton

Syndications in July of 1998 before the

close of the cable claim filing period.

The Library need not make any

determination as to whether Litton’s

agreement was with ACG/WSG

California, WSG Texas, or IPG. Any

attempt to do so would necessarily

involve questions of state law with

respect to the effect of incorporation of

a company and use of fictitious business

names. Such determinations are beyond

the jurisdiction of the Library and are

unnecessary in this proceeding. Mr.

Galaz/WSG had a valid representation

agreement with Litton in July of 1998,

and Litton affirms this relationship by

allowing IPG to represent it in this

proceeding. Because the Library has

agreed—this one time 7—that it was

acceptable that Litton did not appear on

claim No. 176, supra, Litton has a valid

claim in this proceeding.

The second question surrounds ACG’s

voluntary withdrawal from this

proceeding. MPAA contends that when

ACG withdrew its claim that left only

WSG California on claim No. 176, and

WSG California was nothing more than

a fictitious business name for ACG.

MPAA Petition to Modify CARP Report

at 33. Litton’s representation agreement

is with WSG Texas, which is not a

claimant in this proceeding, and

therefore claim No. 176 must be

dismissed. IPG responds that it was

counsel’s mistake to inform the Library

that ACG had withdrawn its claim and

that such mistake should be discounted

because it appeared in a footnote to an

opposition to MPAA’s motion to

dismiss. IPG Reply to MPAA Petition to

Modify CARP Report at 27–29.

Once again, the legal status of ACG,

WSG California, WSG Texas, and IPG

involve questions of state law beyond

the jurisdiction of the Library. While it

is true that IPG did state that the claims

of ACG were withdrawn, it is illogical

to assume that IPG was effectively

ending its case by rendering claim No.

176 void. Rather, it is apparent that IPG

believed that it held all rights of ACG

when it sought to dissolve ACG in

California, particularly since Mr. Galaz

was the principal for both organizations.

It would work a serious injustice to

deny Litton royalties based upon a

determination that Mr. Galaz made a

technical error in assuming that all

rights of ACG were held by IPG before

ACG withdrew from the proceeding.

Indeed, while IPG stated that it was

withdrawing ACG’s claim, the Library

did not enter any order to that effect,

leaving the status of ACG in this

proceeding unresolved. Certainly, the

actions of Mr. Galaz are not to be

condoned and should serve as a

warning to future claimants to make

sure that proper transfers of rights

between corporations are effected prior

to seeking dismissal or dissolution of a

claimant. However, the Library has

determined that a valid representation

arrangement existed for Litton and that,

in this instance, it is appropriate that

Litton’s claim be allowed to go forward.

Finally, there is the question of the

programs listed on claim No. 176.

Section 252.3(d)(4) requires that for

joint claims there must be an

‘‘identification of at least one secondary

transmission of one of the joint

claimants’ copyrighted works by a cable

system establishing a basis for the joint

claim.’’ 37 CFR 252.3(a)(4). ACG listed

two programs on claim No. 176,

Unsolved Mysteries and Garfield and

Friends, neither of which was ultimately

credited to IPG. Unsolved Mysteries was

dropped from IPG’s case because it was

determined that it was a network

program not eligible for section 111

cable royalties. Both IPG and MPAA

claimed Garfield and Friends, and the

CARP ultimately determined that it was

properly credited to MPAA. This means

that ACG did not identify a secondary

transmission on claim No. 176 that

belonged to one or more of its joint

claimants.

The purpose of requiring

identification of at least one secondary

transmission by a cable system is to

permit the Copyright Office to

determine if the claim is facially valid.

In other words, if a claimant lists a

network program, or a program that was

not retransmitted in the calendar year

for which royalties are sought, the

Office can take immediate action either

to request further information, or to

dismiss the claim. The Office has

contemplated amending its rules to

require claimants to identify all the

programs that comprise their claim, but

is aware that there is considerable

opposition among copyright claimants

to adopting such a requirement. If the

program listed on a claim appears

facially valid, the Office does not

attempt to resolve its ownership status

and the claim is allowed to go forward.

In this case, it is apparent that IPG had

a colorable claim to Garfield and

Friends, believing that it had a valid

representation agreement with

Mendelson/PAWS, the producer of the

Garfield programs. The CARP

determined, however, that MPAA had a

stronger claim, ruling that General Mills

held the syndication rights to the

programs. Consequently, this is not a

case where IPG had no realistic claim to

Garfield and Friends.8

Given the dispute over ownership

rights of Garfield and Friends, the

Register determines that it would be

unjust to invalidate all of the claims

covered by claim No. 176 because it was

ultimately determined that MPAA held

the superior claim to the program. Were

we to rule the other way, it would make

§ 252.3(a)(4) a trap for unwary joint

claimants. Since the rule requires

identification of only one secondary

transmission, hundreds of joint claims

could potentially be invalidated if a

single program is identified that, after

litigation before a CARP, is determined

to have a superior claimant. There is

also the question of what might happen

if the joint claimant with the single

identified program withdraws its claim

or changes representation in the

proceeding. Such gamesmanship could

potentially wipe out many otherwise

valid claims from the proceeding.

Because IPG had a colorable claim to

Garfield and Friends at the start of this

proceeding, it would be unjust to

invalidate claim No. 176 because the

program was ultimately awarded to

MPAA.

In sum, the Register concludes that

claim No. 176 is sufficiently valid to

allow the claim of Litton, as described

below, to go forward in this proceeding

and receive a distribution of royalties.

3. Programs Credited to Litton

During proceedings before the CARP,

IPG claimed thirteen programs for

Litton: Algo’s Factory; Jack Hanna’s

Animal Adventures; Dramatic Moments

in Black Sports History; Dream Big;

Harvey Penick’s Private Golf Lessons;

MomUSA; Nprint; Critter Gitters; Shaka

Zulu; Sophisticated Gents; The Sports

Bar, Bloopy’s Buddies and Story of a

People. The CARP did not credit IPG

with Shaka Zulu, finding that the

program properly belonged to Harmony

Gold USA, and determined that Story of

a People was an unclaimed program.

The CARP also did not credit IPG with

Dream Big, determining that it was

properly claimed by Warner Bros. as the

syndicator of the program. The

remaining programs were credited to

IPG.

In its petition to modify the initial

decision of the CARP, MPAA challenges

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66441

9The CARP determined that Just Imagine was

properly credited to Litton, and not to Flying

Tomato Films. Both of these parties are represented

by IPG. No challenge to the CARP’s determination

on this matter was made.

10 In explaining their final numbers, CARPs have

flexibility in the methodologies or approaches they

Continued

the CARP’s determination to credit

Litton with Dramatic Moments in Black

Sports History, Critter Gitters, and

Bloopy’s Buddies. The CARP credited

Critter Gitters and Bloopy’s Buddies to

Litton because these programs appeared

on Litton’s representation agreement

with WSG. CARP Report at 59. Both

MPAA and IPG claimed Dramatic

Moments in Black Sports History. After

allowing evidentiary supplements to

IPG’s and MPAA’s claim on this

program, the CARP stated that ‘‘[i]n

view of the entire supplemented record,

therefore, the CARP finds that Dramatic

Moments in Black Sports History is

represented under the IPG rather than

the MPAA claim.’’ Id. at 61–62.

With respect to Critter Gitters and

Bloopy’s Buddies, MPAA asserts that

‘‘IPG made no claim for either program’’

and ‘‘presented no evidence of their

value.’’ MPAA Petition to Modify CARP

Report at 44. Further, MPAA asserts that

the CARP ‘‘cites no evidence that either

program was broadcast in the United

States.’’ Id. With respect to Dramatic

Moments in Black Sports History,

MPAA argues that:

The program is listed in MPAA’s list of

claimed programs. The claimant—New Line

Cinema Corporation—appears on MPAA’s

list of claimants. It appears on the alpha list

as owned by New Line Cinema. New Line

has certified its entitlement to royalties for

Dramatic Moments in Black Sports History.

The record, therefore, only will support a

conclusion that MPAA represents New Line.

Id. at 43–44 (footnotes omitted).

In response to MPAA’s challenge of

Critter Gitters and Bloopy’s Buddies, IPG

acknowledges that it made no claim in

these programs and did not present any

evidence of their value ‘‘because both

programs appear to have been broadcast

exclusively on non-commercial

television stations.’’ IPG Reply to MPAA

Petition to Modify CARP Report at 34.

IPG ‘‘does not challenge modification of

the Panel Report to reflect that such

programs were not claimed by IPG.’’ Id.

IPG does assert, however, that there was

evidence supporting its claim to

Dramatic Moments in Black Sports

History, stating that the program is

‘‘expressly identified in the contract

between Litton and WSG’’ and was

therefore properly credited to IPG. Id.

It is apparent that the CARP acted

arbitrarily in crediting IPG with Critter

Gitters and Bloopy’s Buddies, and the

Register recommends rejecting this

determination and removing the

programs from Litton’s list. With respect

to Dramatic Moments in Black Sports

History, the CARP offered no reasons or

explanation as to why it was awarding

the program to IPG rather than MPAA,

other than to state that such result was

obtained ‘‘[i]n view of the entire

supplemented record.’’ CARP Report at

61–62. Unexplained decisionmaking is

the hallmark of arbitrary action. The

Register therefore recommends rejection

of the CARP’s award of Dramatic

Moments in Black Sports History to IPG.

The June 5, 2001, Order directed the

CARP to explain its reasoning for

awarding Dramatic Moments in Black

Sports History to IPG.

In sum, the June 5, 2001, Order

directed the Panel to credit the

following programs to Litton: Algo’s

Factory; Jack Hanna’s Animal

Adventures; Harvey Penick’s Private

Golf Lessons; Mom USA; Nprint;

Sophisticated Gents; The Sports Bar;

and Just Imagine.9 The Order also

directed the CARP to explain its reasons

for crediting Dramatic Moments in

Black Sports History to IPG and, if it

continued to believe that it made the

correct determination, to credit IPG with

that program.

4. The Royalty Awards

The CARP awarded IPG 0.5% of the

program supplier category funds, and

the remaining 99.5% to MPAA. The

CARP, however, failed to explain its

reasoning or its methodology for

bestowing these awards. Because

unexplained decisionmaking by a CARP

is arbitrary, the CARP’s awards must be

rejected. The June 5, 2001, Order

remanded the matter to the CARP to

determine new awards for IPG and

MPAA, in light of the decision

announced in that Order to dismiss

additional IPG claimants and programs,

and to explain the reasoning for the new

awards.

The CARP’s failure to articulate any

reasons for the 0.5% and 99.5% awards,

and the methodology it used to produce

these numbers, is puzzling. The CARP

began its analysis in an appropriate

fashion, fully detailing in its report the

distribution methodologies proposed by

IPG and MPAA. As discussed above,

IPG’s and MPAA’s methodologies were

premised on fundamentally different

principles. MPAA addressed the

marketplace value of the programs it

represented by attempting to evaluate

the amount of viewership they received,

while IPG examined the value of the

programs to cable operators who

retransmitted them. IPG’s methodology

accorded the programs it represented a

higher award—0.881%—than if the

MPAA’s methodology were applied to

the same programs—0.0708%. The

CARP then analyzed each side’s

criticisms of the other’s methodology

and concluded that a number of the

criticisms were valid. It found the

following shortcomings for MPAA’s

methodology:

—MPAA’s direct testimony did not

sufficiently lay the foundation for the

survey or explain its results.

—The Panel was forced to call its own

witnesses, Mr. Lindstrom from

Nielsen, and Mr. Larson from Cable

Data Corporation to explain their

methods of data acquisition and

reporting.

—The number of sampled stations [in

MPAA’s station survey] has declined

without adequate explanation.

—Station selection criteria excluded

Form 1 and Form 2 cable systems.

—The number of ‘‘zero’’ viewing hours

shows the flaw in attempting to use

the Nielsen data as a proxy for the

retransmission market especially

since Nielsen had 24 hour sampling

capability in 1997.

—The method of interpolation of nonsweep month estimated viewing

needs statistical validation.

—There is an overvaluation of WTBS

and under-valuation of the other

Superstations in the survey.

CARP Report at 102–103. For IPG, the

CARP found the following criticisms:

—A mathematically sound basis for the

creation and application of the station

weight factor and time period weight

factor should have been presented by

a statistician.

—Daypart data was misapplied thus

overstating ‘‘all other’’ viewing.

—It doesn’t directly address the

marketplace value of the works

transmitted, a primary criteria.

Id. at 103. The Register has reviewed the

record evidence in this proceeding and

finds that there is ample support for

these criticisms. They are not arbitrary.

What is arbitrary, however, is what the

CARP did next. Rather than address

these criticisms in the context of its

decision making process, the CARP

immediately awarded the 0.5 and 99.5

percentages without any explanation as

to how they arrived at these numbers.

Since no reasoning was provided for

these numbers, they must be rejected.

National Ass’n of Broadcasters v.

Librarian of Congress, 146 F.3d 907, 923

(D.C. Cir. 1998)(royalty distribution

award arbitrary if rendered without

explanation). The June 5, 2001, Order

directed the CARP to provide a full

explanation of the approach it was using

in adopting new distribution awards.10

66442 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

use. The courts have recognized that there is a

considerable ‘‘zone of reasonableness’’ when

awarding a particular distribution percentage. See,

e.g. National Cable Television Ass’n v. Copyright

Royalty Tribunal, 724 F.2d 176, 182 (D.C. Cir.

1983). In other words, there are no magical formulas

that produce precise results. In this proceeding, the

CARP could have chosen either IPG’s or MPAA’s

formulas, adjusted the chosen formula to account

for the CARP’s criticisms of it, and used that

process to yield the final numbers. Or, the CARP

could have chosen a combination of both formulas,

taking into account the criticisms of both, to arrive

at the final numbers. Or, the CARP could have

adopted its own distribution methodology or

formula, using the data in the record of the

proceeding to achieve the final results. Each of

these approaches is acceptable provided that the

CARP articulates the reasons for its choice, explains

how it applied its choice to produce its final

determination, and the determination itself is

reasonable.

The Revised CARP Report

On June 20, 2001, the CARP delivered

its revised report. The revised report

assigns new distribution percentages to

IPG and MPAA and explains the CARP’s

reasoning for both its initial awards and

the revised awards.

As directed by the June 5, 2001 Order,

the CARP only credited IPG with

programs belonging to Litton

Syndications. The programs are: Algo’s

Factory, Jack Hanna’s Animal

Adventures, Harvey Pennick’s Private

Golf Lessons, MomUSA, Nprint,

Sophisticated Gents, The Sports Bar and

Just Imagine. The CARP did not credit

IPG with Dramatic Moments in Black

Sports History, reversing its earlier

determination that Litton was the

syndicator of the program. See Initial

report at 62; Revised report at 2. The

CARP determined that ‘‘[a]lthough both

parties claim this program, New Line

Cinema’s program certification with

MPAA indicates that it claims the

program as syndicator.’’ Revised report

at 2.

With respect to awards, the CARP

modified its initial determination by

reducing IPG’s award from 0.5% to

0.212% , and increasing MPAA’s award

from 99.5% to 99.788%. The CARP then

explained how it determined the initial

0.5% and 99.5% awards, and then

modified them in light of the June 5,

2001, Order to produce the new

percentages.

Although the CARP was presented

with disparate methodologies for

calculating the royalty awards-MPAA’s

methodology based on Nielsen

household viewing hours and IPG’s

methodology based on value of the

programming to cable operators—the

CARP did find two elements of these

competing methodologies in common.

MPAA based its methodology upon a

database obtained from CDC that

contained 82 commercial television

broadcast stations that were

retransmitted by large (Form 3) cable

systems on a distant basis during 1997.

IPG based its methodology upon a CDC

database that contained 99 commercial

television broadcast stations (which

included the same 82 stations used by

MPAA) that were retransmitted by

small, medium, and large (Form 1, 2,

and 3) cable systems on a distant basis

during 1997. Both of these databases

have two overlapping categories:

‘‘Rebroadcasts,’’ the number of times a

particular program was retransmitted;

and ‘‘Airtime,’’ the length of the

program multiplied by the number of

times it was rebroadcast. The CARP

stated that the purpose of examining the

two databases was two-fold: ‘‘First to

verify the accuracy of the numbers

presented in the testimony and exhibits;

and secondly to give the CARP a sense

of the relative positions of MPAA and

IPG represented claimants in the 1997

marketplace by comparing the only two

categories included in both databases,

Rebroadcasts and Airtime.’’ Revised

report at 18.

Appendix A of the revised CARP

report compares the Rebroadcasts of the

eight programs credited to Litton (as

directed by the June 5, 2001 Order) for

both the IPG and MPAA databases. For

the IPG database, these programs

accounted for 0.4394782365% of the

total number of program titles

Rebroadcast in 1997. For the MPAA

database, the eight programs account for

0.2811997603% of the total number of

program titles Rebroadcast in 1997.

Appendix B of the revised CARP

report compares the Airtime of the eight

programs credited to Litton for both the

IPG and MPAA databases. For the IPG

database, these programs accounted for

0.3494840195% of total Airtime of all

programs retransmitted in 1997. For the

MPAA database, the programs

accounted for 0.2171099164% of the

total Airtime of all programs

retransmitted in 1997.

The numbers described in

Appendices A and B provide a range of

comparison as to the amount of time

that Litton’s eight programs were

available on distant broadcast signals

retransmitted by cable systems. But this

range did not account for how much

these programs were watched, or the

value ascribed to these programs by

cable operators. To account for this, the

CARP turned to MPAA’s and IPG’s

methodologies and applied its criticisms

of the evidence presented for each

methodology, assessing penalties

(percentage deductions from the total

award yielded by the methodology) for

each criticism depending upon the

severity of the criticism. The eight

criticisms of MPAA’s methodology and

the three criticisms of IPG’s

methodology, and their accompanying

deductions, are described in Appendix

D of the CARP’s revised report. As a

result of the eight criticisms, MPAA

suffered a 0.450% reduction in the

awards yielded by its methodology, and

IPG suffered a 0.375% reduction in the

awards yielded by its methodology.

As with its comparison of IPG and

MPAA databases, the revised IPG and

MPAA methodologies (i.e. after the

penalty reductions) yielded yet another

range of numbers. For IPG, the revised

MPAA methodology gave it an award of

0.462% of the 1997 royalty funds, while

revision of its own methodology yielded

an award of 0.731%. See Appendix D.

According to the CARP, it is this range

of numbers that yielded the 0.5% award

to IPG in the initial report. Revised

report at 18.

Because the June 5, 2001, Order

eliminated programs credited to IPG

under both MPAA’s and IPG’s

methodologies, the CARP needed a way

to adjust downward IPG’s award, and

increase MPAA’s award, to reflect the

eliminated programs. It did this by

examining the reduction in the

percentages of Rebroadcasts and Airtime

credited to IPG for its original claim and

derived a median change of minus

57.673%. Appendix C. The minus

57.673% figure represents the median

change from the original amount of

Rebroadcasts and Airtime credited to

IPG. According to the CARP,

‘‘[e]liminating all claimants except

Litton, means that on average, IPG now

represents only 42.322% of the

Rebroadcasts and Airtime that they did

before.’’ Revised report at 20. This

meant that ‘‘IPG is entitled to 42.322%

of the Original Award’’ of 0.5%. Id.

Consequently, the CARP awarded IPG

0.212% of the 1997 royalty funds in the

syndicated program category, and the

remaining 99.788% to MPAA.

Petitions to Modify the CARP’s Revised

Report

Both MPAA and IPG level a number

of criticisms at the conclusions reached

by the CARP in the revised report, all of

which they charge rise to the level of

arbitrary action as a matter of law.

MPAA submits that the CARP’s award

of 0.212 of one percent of the royalty

funds to IPG is excessive and must be

reduced. IPG counters that the

methodology used by the CARP is

fundamentally flawed and that its award

must be increased.

MPAA charges that the CARP made

mathematical, methodological, and

evidentiary errors in both the initial and

revised reports. The principal

mathematical error, according to MPAA,

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66443

11 IPG counters this argument by noting that

MPAA’s 82 station data includes all broadcasts,

irrespective of whether the program falls in the

syndicated programming category or another

category (such as sports, local programming, etc.)

and irrespective of whether the program is claimed

by IPG, MPAA or no party. IPG’s 99 station data

makes these distinctions, resulting in fewer

measured broadcasts and broadcast hours.

concerns the CARP’s use of IPG’s

requested royalty distribution

percentage of 0.881. In appendix D to

the revised report, the CARP used the

0.881% distribution percentage offered

by IPG and adjusted it downward by

0.375% to reflect its three criticisms of

IPG’s evidentiary presentation. MPAA

states that 0.881% is the wrong starting

percentage because it reflects all the

programs originally claimed by IPG and

does not take into account the programs

that the CARP eliminated from IPG’s

claim. Using IPG’s valuations for each of

its claimed programs, MPAA asserts that

the CARP should have adjusted the

0.881% claim of IPG downward to

0.332%, since only 37.68% of the

programs originally claimed by IPG

were credited by the CARP in its initial

report. MPAA Petition to Modify

Revised Report at 5. Deducting 0.375%

for the three criticisms of IPG’s

evidentiary presentation from 0.332%

yields a negative distribution percentage

for IPG.

MPAA challenges the methodology

employed by the CARP; in particular the

use of Rebroadcasts and Airtime for

IPG’s and MPAA’s represented

programming. MPAA asserts that this

approach unduly relies upon time

considerations (i.e. time on the air) and

ignores the marketplace value of the

programming in contravention of prior

CARP precedent. CARP Report in

Docket No. 94–3 CARP CD 90–92 at 19–

20 (June 3, 1996). These considerations

aside, MPAA also questions the

usefulness of comparing Rebroadcasts

and Airtime from both MPAA’s and

IPG’s sample surveys, since MPAA’s 82

station sample survey contains more

rebroadcasts and more hours of airtime

than IPG’s 99 station survey. The

inherent illogic of this result should

have, according to MPAA, indicated to

the CARP that reliance solely on these

numbers is flawed.11

MPAA also makes numerous

challenges to the CARP’s treatment of

the evidence presented in this

proceeding. In particular, MPAA asserts

that the CARP’s five criticisms of

various aspects of MPAA’s evidentiary

presentation, that resulted in a 0.450%

upward adjustment to IPG’s share of the

royalties as identified by MPAA, are

baseless. First, MPAA argues that the 82

station sample survey it put forth was

statistically sound since it ‘‘very nearly

reflects the entire universe of distant

signal carriage, accounting for 92.5 per

cent of aggregate subscribers instances.

Therefore, the possibility of a margin for

error that is in any way significant is

nil.’’ MPAA Petition to Modify Revised

Report at 12.

Second, MPAA argues that there is no

record evidence that demonstrates that

exclusion of Form 1 and Form 2 cable

systems from the total instances of

distant cable carriage of syndicated

programming negatively impacts the

results of its 82 station sample survey,

since the Form 3 cable systems used in

the survey account for 89% of all cable

subscribers to distant broadcast stations.

Third, MPAA argues that the CARP had

no grounds to criticize the number of

zero viewing instances reported in the

Nielsen household viewing hours used

in the MPAA survey, especially since

Paul Lindstrom, the only qualified

expert in economics and statistics

testifying in the proceeding, asserted

that they did not have a significant

bearing on the statistical validity of the

survey.

Fourth, MPAA charges that it was

inappropriate and unfair for the CARP

to criticize MPAA for not presenting

relative error figures with respect to its

methodology components and for

mixing Nielsen diary data with Nielsen

meter data. Finally, MPAA charges that

it was groundless for the CARP to

penalize MPAA 0.10% for its

interpolation of data for time periods

not measured by Nielsen (i.e. non

sweeps periods) and only accord IPG a

0.075% penalty for a similar criticism.

IPG also asserts that the CARP made

a series of errors in fashioning both the

original awards and the revised awards.

IPG asserts that the CARP erroneously

assigned two programs—Dream Big and

Dramatic Moments in Black Sports

History—to MPAA. Dream Big was

credited to MPAA in the CARP’s

original report because it identified

Warner Bros. as the syndicator of the

program. With respect to Dramatic

Moments in Black Sports History, the

CARP originally assigned it to IPG (as

claimed by Litton) but was directed by

the Librarian’s June 5, 2001, Order to

provide an explanation for this decision.

In the revised report, the CARP changed

its mind and assigned Dramatic

Moments in Black Sports History to

MPAA because it concluded that New

Line Cinema was the syndicator of the

program, not Litton. IPG submits that if

the Librarian does not restore these two

programs to Litton’s claim, then he

should ‘‘place the funds for the[se]

program[s] * * * in escrow until the

proper recipient is determined.’’ IPG

Petition to Modify Revised Report at 4.

Like MPAA, IPG criticizes the CARP’s

reliance upon the number of

Rebroadcasts and Airtime in fashioning

its awards, noting that undue reliance

on time considerations is contrary to

precedent of the CRT and is not

reflective of the value of the

programming. IPG states that it provided

the CARP with the unit value for each

of its claimed programs (utilizing IPG’s

methodology), thereby giving the CARP

the opportunity to derive an award

based on the programs it credited to

IPG. The eight programs credited to

Litton amount to 79.074% of the

original award to IPG of 0.5%, meaning

that the CARP should have adjusted the

original 0.5% award downward to

0.3958%. Such an award would,

according to IPG, reflect the true value

of the Litton programs.

With respect to the CARP’s criticisms

of MPAA’s methodology, IPG argues

that the CARP did not go far enough.

IPG asserts that the CARP never verified

the number of household viewing hours

attributed to MPAA in its study, noting

that MPAA received credit for

appreciable numbers of programs not

claimed by MPAA or certified by its

members. Further, IPG asserts that the

CARP should have penalized MPAA for

having to call Paul Lindstrom and

Thomas Larson as witnesses to provide

additional support for MPAA’s

methodology. And IPG submits that the

CARP should have penalized MPAA

more than it did for reducing the

number of stations in its station sample

survey and for the large amount of zero

viewing instances of programming

contained in the Nielsen data presented

by MPAA.

Finally, IPG asserts that certain of the

CARP’s criticisms of IPG’s methodology

are not valid. With respect to the

CARP’s critique that IPG misapplied its

daypart data thereby overstating its

weighted viewing factor, IPG asserts that

no evidence was presented to

demonstrate that such misapplication

provided any benefit to IPG. And, with

respect to the CARP’s criticism that

IPG’s methodology attempted to

demonstrate the overall appeal of

broadcast stations to cable operators, as

opposed to the overall appeal of the

programming to cable operators, IPG

argues that the CARP simply

mischaracterized its summary reference

of ‘‘overall station appeal’’ by ignoring

the elements that comprised this aspect

of IPG’s methodology.

Rejection of the Revised Report

The Register makes her

recommendation as to whether the

66444 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

revised royalty awards to IPG and

MPAA should be adopted by the

Librarian of Congress, or whether they

are arbitrary or contrary to the

provisions of the Copyright Act, title 17,

United States Code. In making this

recommendation, the Register has

reviewed both the initial report of the

CARP and the revised report, including

the petitions to modify both reports

filed by the parties. For the reasons

stated below, the Register concludes

that both the initial report and the

revised report are arbitrary and must be

rejected.

Review of the initial report and the

revised report reveals a number of

arbitrary actions by the CARP. These

include: (1) Failure to adequately

explain the evidence supporting the

CARP’s reversal of its award of Dramatic

Moments in Black Sports History from

IPG to MPAA; (2) failure of the CARP

in its initial report to adjust downward

IPG’s requested distribution percentage

after the CARP eliminated a number of

IPG’s claimed programs; (3) failure of

the CARP in its initial report to adjust

upward MPAA’s requested distribution

for IPG given the number of programs

which the CARP credited IPG; (4) failure

of the CARP in the revised report to

adjust both IPG’s and MPAA’s requested

distributions in light of the final

programs credited to IPG; (5) failure of

the CARP to base any of its downward

deductions to both IPG’s and MPAA’s

methodologies (based on the CARP’s

criticisms) on record evidence; and (6)

adoption by the CARP of a distribution

methodology that arguably has little

relationship to the marketplace value of

the programs. In recommending

rejection of the CARP’s determination,

the Register focuses her discussion on

the second failure described above-the

lack of downward adjustment to IPG’s

requested distribution in light of the

programs credited-because it created a

fundamental flaw in the CARP’s

approach that invalidates the

distribution awards granted IPG in both

the initial and the revised reports.

The CARP’s distribution

methodology, articulated only in the

revised report, is fully discussed above.

Briefly recapped, it is the product of two

‘‘ranges.’’ First, the CARP utilized the

Rebroadcast and Airtime data-the only

data categories common to both

methodologies-to give the CARP ‘‘a

sense of the relative positions of MPAA

and IPG represented claimants in the

1997 marketplace.’’ Revised Report at

18. This produced the first range for

locating the CARP’s final awards. Then,

the CARP utilized ‘‘the parties

competing requests for allocations and

the formulas presented advocating their

averred distribution percentages,’’

adjusting them by applying deductions

reflective of the CARP’s criticisms of the

respective methodologies. This

produced the second range for locating

the CARP’s final awards. The second

range appears to be the one actually

used by the CARP to settle upon its

original award of 0.5% to IPG. Id.

A critical flaw occurs with the inputs

for the second prong of the CARP’s

methodology. The CARP started with

IPG’s requested distribution percentage

of 0.881%, drawn from IPG’s proposed

findings of fact and conclusions of law.

The 0.881% is an inflated percentage,

however, because it was based upon

inclusion of all programs originally

claimed by IPG. Earlier in the CARP’s

initial report, it spent considerable time

discussing the validity of IPG’s claimed

programs and found a number of the

claims invalid. See, Initial Report at 72–

74 (royalty allocation for Dragon Ball Z

to MPAA; no royalty allocation for

Enchanted Tales and Thumbelina;

royalty allocation for Dream Big to

MPAA; no royalty allocation for Bottom

Line, By River By Rail, Til Earth and

Heaven Ring; no royalty allocation for

Lou Rawls Parade of Stars; no royalty

allocation for Psychic Friends, Psychic

Friends Network, Psychic Revival

Network, Psychic Solution, Psychic

Talk, Psychic Talk 2, Psychic Talk USA,

Psychic Talk Thirty). These programs

were included in IPG’s 0.881% request.

It was therefore arbitrary for the CARP

to accept the 0.881% figure as a starting

point because it had eliminated many of

the programs that produced this

number.

Likewise, the CARP made the same

error when it looked at the distribution

percentage for IPG yielded by MPAA’s

methodology. MPAA’s distribution

percentage of 0.012% was based on only

seven programs credited to IPG.

However, in its initial award, the CARP

credited IPG with far more than just

seven programs. It was therefore

arbitrary for the CARP to use the

0.012% figure as a starting point for its

application of MPAA’s methodology.

In sum, the faulty inputs to the

second prong of the CARP’s

methodology make the range generated

by that prong wholly inaccurate, thereby

rendering the initial award erroneous.

The revised report, since it merely takes

the original award to IPG and makes a

median change to it based upon the

reduction in programs credited to IPG,

is likewise erroneous. Although there

are other serious flaws in the CARP’s

approach, as described above, the

Register need go no further. The CARP’s

determination must be rejected, and the

Librarian must substitute his own

determination.

Part Two—Recommendation of the

Register

This is not the first time that the

Register of Copyrights has

recommended, and the Librarian of

Congress has accepted, a rejection of a

decision of a CARP. In most of those

cases, the Register has recommended

that only portions of a CARP’s decision

be rejected, see, e.g., 61 FR 55653

(October 28, 1996)(cable distribution);

62 FR 55742 (October 28, 1997)(satellite

rate adjustment). In one case, the

Register recommended that the

Librarian reject the royalty rate

established by the CARP, and substitute

his own determination. 63 FR 25394

(May 8, 1998)(digital performance right

in sound recording rate adjustment).

Section 802(f) of the Copyright Act

provides that ‘‘[i]f the Librarian rejects

the determination of the arbitration

panel, the Librarian shall * * * after

full examination of the record created in

the arbitration proceeding, issue an

order setting the royalty fee or

distribution of fees, as the case may be.’’

17 U.S.C. 802(f). As discussed above,

the distribution methodology applied by

the CARP in this proceeding is so

flawed that any distribution percentages

generated by it are inherently arbitrary.

As a consequence, there must be an

independent review of the record to

resolve this proceeding.

Distribution Criteria

Section 111 does not prescribe the

standards or guidelines for distributing

royalties collected from cable operators

under the statutory license. Instead,

Congress decided to let the Copyright

Royalty Tribunal ‘‘consider all pertinent

data and considerations presented by

the claimants’’ in determining how to

divide the royalties. H.R. Rep. No. 1476,

at 97 (1976). In the first cable

distribution proceedings, the Tribunal

fashioned five distribution criteria: three

primary criteria and two secondary

criteria. The three primary criteria were:

(1) The harm caused to copyright

owners by secondary transmissions of

their copyrighted works by cable

systems; (2) the benefit derived by cable

systems for secondary transmissions of

the copyrighted works; and (3) the

marketplace value of the works. The

secondary criteria were: (1) the quality

of the copyrighted program and (2) timerelated considerations. National Ass’n

of Broadcasters v. Librarian of Congress,

146 F.3d 907 (D.C. Cir. 1998). In 1989,

the Tribunal eliminated the secondary

criterion of program quality from its

consideration. 57 FR 15286, 15303

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66445

12As a practical matter, the focus will be on the

programs represented by IPG. The reason for such

focus is obvious. There are only two claimants in

this proceeding; one that represents most of the

programs eligible for distribution (MPAA), and one

that represents only a few (IPG). Once it is

determined which IPG-represented programs are

eligible for a distribution of the 1997 royalty funds,

the value of those programs can be ascertained and

IPG’s distribution share can be established.

Assuming that ineligible and unclaimed programs

are excluded from consideration, there is no need

to focus on the eligibility of MPAA programs

(except as they affect IPG’s claim to the same

program), since the remainder of the 1997 fund will

go to MPAA once IPG’s share is deducted. But see

discussion of MPAA’s methodology, infra.

(April 27, 1992). In 1998, the Librarian

determined that a CARP did not act

arbitrarily by eliminating the primary

criterion of harm to the copyright

owner. NAB, 146 F.3d 907 (D.C. Cir.

1998).

In considering the value of

programming in a Phase II cable

distribution proceeding, we must

simulate the marketplace for that

programming. Under the statutory

license regime of section 111, programs

are not bought and sold in the open

marketplace-the statutory license

substitutes for the marketplace. Cable

operators pay an established fee for the

privilege of retransmitting all the

programs contained on a particular

broadcast signal, rather than license the

programs individually. However, just

because cable systems pay a single fee

for all the programs does not mean all

the programs are of equal value. The

established distribution criteria, as

modified, must be applied in an effort

to simulate a marketplace for these

programs where one does not exist

because of section 111. We now turn to

a consideration of the evidence

presented by MPAA and IPG as to the

value of their programs.

The Programs

Before considering the appropriate

methodology for distributing the 1997

cable royalties in the syndicated

programming category, the programs to

be credited to MPAA’s and IPG’s royalty

distribution claims must be

determined.12 In the Librarian’s June 5,

2001 Order, IPG’s program claim in this

proceeding was pared down to the

following eight programs: Algo’s

Factory; Jack Hanna’s Animal

Adventures; Harvey Pennick’s Golf

Lessons; Mom USA; Sophisticated

Gents; Nprint; Just Imagine and The

Sports Bar. Order in Docket No. 2000–

2 CARP CD 93–97 at 1 (June 5, 2001).

Each of these programs is claimed by

Litton Syndications. IPG claims an

additional two programs on behalf of

Litton: Dream Big and Dramatic

Moments in Black Sports History.

A. Dream Big

Dream Big is listed in exhibit D of

IPG’s written direct case as belonging to

Litton. Litton’s representation

agreement with IPG lists Dream Big as

a program claimed by Litton, and the

representation agreement contains the

following boilerplate language:

Principal (i.e. Litton) warrants that to the

best of Principal’s knowledge Principal has

the right to collect the Distribution Proceeds

to Programs, and has not previously

conveyed the right to collect the Distribution

Proceeds to any third party.

Representation agreement at 2, clause 7.

At hearing, on cross-examination of

IPG’s witness Raul Galaz, the following

exchange took place:

Q: The program Dream Big, Mr. Galaz,

do you know who the copyright owner

of that program is?

A: No.

Q: And, again, do you know who the

syndicator of that program is?

A: My understanding is that Litton

Syndications is the syndicator.

Q: And do you know, again, the

nature of the particular right or interest

owned by Litton with respect to their

entitlement to Section 111 royalties?

A: No, I don’t know whether they are,

additionally, an owner.

Q: I didn’t hear you. I’m sorry.

A: I don’t know whether they are,

additionally, an owner or not.

Tr. 1063–64. No additional testimony

regarding Dream Big took place.

In its petition to modify the initial

decision of the CARP, IPG requests that

the Librarian reopen the record to admit

a copy of an agreement between Warner

Vision Entertainment and Litton which,

according to IPG, conclusively proves

that Litton holds the syndication rights

to Dream Big. The agreement states that

Warner Vision ‘‘hereby grants to Litton,

and Litton hereby accepts, the right to

syndicate a children’s audio-visual

series tentatively entitled ‘Real Kids.’’ ’

IPG Petition to Modify CARP Report at

appendix 2. IPG asserts that Warner

Vision is a subsidiary of Warner Bros.,

and that ‘‘Real Kids’’ is the initial name

for Dream Big.

MPAA claims Dream Big in exhibit D

of its written direct case. Dream Big is

identified on MPAA’s Alpha List (a

listing of all programs broadcast in 1997

and including both MPAA-represented

and IPG-represented programs) as

belonging to Warner Bros. MPAA also

obtained a program certification form

from Warner Bros. that lists Dream Big

as a Warner Bros. program. The

certification form, signed by Michael

Troxler, Vice President of Finance,

contains MPAA’s boilerplate language

stating that Warner Bros. is entitled to

receive 1997 cable royalties for Dream

Big by virtue of being ‘‘An officer (if a

corporation) or a partner (if a

partnership) of the legal entity

identified as the owner or the

authorized agent of the owner of the

programs on the printout.’’ IPG Exhibit

7XR at 389. Other than the crossexamination of Mr. Galaz identified

above, MPAA did not put forth any

further information at hearing regarding

Dream Big.

In reaction to IPG’s request to reopen

the record and have the Librarian

consider the Warner Vision/Litton

agreement, MPAA submits an April 11,

2000, letter of Michael Troxler of

Warner Bros. stating:

WarnerVision is the rightful copyright

holder to the series Dream Big. This was

subdistributed on behalf of WarnerVision by

Litton for a clearance fee based upon U.S.

coverage. Since Litton was paid a clearance

fee, they are not entitled to any of the Cable

Copyright Royalties.

MPAA Reply to IPG Petition to Modify

CARP Report at appendix 2.

In National Broadcasting Co., Inc. v.

Copyright Royalty Tribunal, 848 F.2d

1289 (D.C. Cir. 1988), the Court

reviewed the Copyright Royalty

Tribunal’s attempt to resolve competing

claims for the program Little House on

the Prairie. NBC created and produced

the program and granted to

Worldvision, Inc. exclusive rights to

distribute the program for a period of 35

years. The Tribunal determined that

Worldvision, as the exclusive syndicator

of the program, was the party entitled to

section 111 royalties. The Court upheld

this conclusion, stating:

The CRT determined that the directly

affected party [from the harm caused by

retransmission of the program by cable

systems] will typically be the exclusive

syndicator, and that the CRT will therefore as

a general rule always distribute royalties

initially to the syndicator. This presumption

by the CRT, in the face of congressional

silence, is a permissible interpretation of the

statute, to which we defer.

848 F.2d at 1296.

Examining the record evidence, the

Register cannot ascertain who is

currently the exclusive syndicator of

Dream Big. The non-record evidence,

even if admitted, still does not resolve

the issue. And section 802(f) of the

Copyright Act states that the Librarian

shall base his decision only upon the

record evidence.

Given the dearth of record evidence,

it would be arbitrary for the Register to

recommend that Dream Big be awarded

to either MPAA or IPG. Consequently,

66446 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

13MPAA also presented testimony from David E.

Farbman regarding activities of IPG’s principal,

Raul Galaz. His testimony is not relevant to the

calculation of royalty shares.

14The study only attempts to estimate viewership

for programming retransmitted by cable systems on

a distant basis, since local retransmissions of the

same program are not compensable under the cable

license. See 17 U.S.C. 111(d)(3)(A).

the Register recommends that the only

acceptable course of action is to seek

further evidence from the parties to

determine the proper status of the

program when the proceeding is

remanded to a new CARP.

B. Dramatic Moments in Black Sports

History

Dramatic Moments in Black Sports

History (‘‘Dramatic Moments’’) is also

claimed by both MPAA and IPG. The

record for Dramatic Moments is as

follows.

IPG identifies Dramatic Moments in

exhibit D of its written direct case as

belonging to Litton. The program is

identified in Litton’s representation

agreement with IPG and contains the

same contract warranty provision that

applies to Dream Big. At hearing, the

following exchange took place on crossexamination of Mr. Galaz, IPG’s sole

witness.

Q: Okay. The program Dramatic

Moments in Black Sports History, do

you know who the copyright owner of

that program [is], Mr. Galaz?

A: No.

Q: Do you know the syndicator?

A: My understanding is that Litton

Syndications is the syndicator.

Q: And do you know the particular

right or interest owned by Litton relative

to their entitlement to Section 111

royalties?

A: Whether it’s as the owner or

syndicator, I don’t know.

Q: But if it is the owner or syndicator,

do you know who they—when they

acquired and how they acquired the

right? If they are a syndicator, not if

they’re an owner?

A: Restate your question.

Q: If they’re a syndicator, if indeed

they are the syndicator, do you know

how that right was acquired?

A: Well, they can be both the owner

and the syndicator.

Q: Right.

A: So your question was asking

whether or not

Q: Right. If they—

A:—the nature of the right, and the

nature of the right could be as both the

owner or the syndicator. I don’t know

which.

Q: You don’t know whether they’re

the owner as well as the syndicator?

A: My understanding is that they’re

the syndicator. I do not know whether

they are, additionally, the owner.

Tr. 1062–63. No further record evidence

was presented by IPG regarding the

program.

In exhibit 3 of its written direct case,

MPAA identifies Dramatic Moments as

part of its claim. The program appears

on the revised Alpha List of MPAA

programming, identifying New Line

Cinema as the claimant. MPAA

presented a program certification form

for New Line Cinema, which states that

New Line is an officer or partner of the

‘‘legal entity identified as the owner or

the authorized agent of the owner of the

programs on the printout.’’ IPG ex. 7XR

at 188. The certification is signed by

Frank A. Buquicchio, who identified

himself as the Senior Vice president of

Television and Ancillary Accounting for

New Line. Other than the crossexamination of Mr. Galaz, MPAA

presented no other evidence as to the

ownership of Dramatic Moments.

In its petition to modify the further

report of the CARP, IPG argues that the

burden should be on MPAA to prove its

claim to Dramatic Moments. IPG asserts

that MPAA did not produce the program

certification forms until one day before

the start of the hearings, thereby

precluding IPG’s ability to prepare an

effective cross-examination on program

ownership. IPG further asserts that if the

Librarian cannot resolve the proper

ownership of the royalties attributable

to Dramatic Moments, the money

should be placed in escrow to permit

resolution between Litton and New Line

Cinema.

As with the case of Dream Big, neither

IPG nor MPAA have presented

sufficient evidence to permit a

determination as to who should receive

credit for Dramatic Moments.

Consequently, the Register recommends

that further evidence must be adduced

on remand to resolve the status of this

program.

The Evidentiary Presentations

As discussed above, IPG and MPAA

presented competing statistical

methodologies to support their claims to

the 1997 syndicated programming

royalty pool. MPAA’s presentation

operates from the assumption that

viewership of programs retransmitted by

cable operators in 1997 is the way to

measure the value of those programs,

and provides a sample survey

purporting to gauge viewing. IPG’s

presentation operates from the

assumption that every program

retransmitted in 1997 has value and

should be compensated from the royalty

pool, and provides a sample survey that

attempts to value each program based

upon the royalty fees generated by

television stations broadcasting the

programming.

A. MPAA’s Presentation

1. Description of the methodology.

MPAA’s written direct case consists of

the testimony of Marsha Kessler, Vice

President of Retransmission Royalty

Distribution at MPAA, and the nine

exhibits that she sponsors. In addition,

MPAA designated the direct testimony

and exhibits of Paul Lindstrom, Leonard

Kalcheim, and James Von Schilling from

Docket No. 97–1 CARP SD 92–95 (1992–

1995 satellite royalty distribution) and

the direct and rebuttal testimony and

exhibits of Marsha Kessler, Allen

Cooper and Paul Lindstrom from Docket

No. CRT 91–2–89CD (1989 cable royalty

distribution). During the course of the

proceeding, at the behest of the CARP,

MPAA presented two additional

witnesses: Paul Lindstrom of Nielsen

Media Research and Thomas Larson of

Cable Data Corporation.13

MPAA attempts to demonstrate the

marketplace value of movies and

syndicated programs retransmitted by

cable systems in 1997. As it has done in

previous royalty distribution

proceedings before the Copyright

Royalty Tribunal and the CARPs, MPAA

submits that the best way to determine

the marketplace value of a television

series or movie is to examine how many

people watched the program in the

given distribution year. The greater the

number of people who watched the

program, the more valuable the program

is. MPAA notes that in cable and

broadcast markets where programs are

bought and sold without the constraint

of a compulsory license, broadcasters

purchase the rights to broadcast a

particular program based upon the

number of viewers they believe the

program will attract. The same is true

for cable programmers. Kessler Direct at

12–13. And advertisers are willing to

pay broadcasters and cable programmers

higher fees to have their ads aired

during programs that attract many

viewers. Id. Thus, from MPAA’s

perspective, viewer avidity for a

particular program is the best

determinative of the program’s

marketplace value.

MPAA constructs a study—a

sampling of the cable retransmission

universe in 1997—that attempts to

demonstrate the amount of viewing that

the programs claimed by MPAA and IPG

garnered on broadcast stations that were

retransmitted on a distant basis.14 It is

not a study that reveals how many

people in the United States actually

watched a given program; the cost of

such an undertaking would be too high.

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66447

Rather, the MPAA study generates

estimates of viewing, described as total

household viewing hours (HHVH) for

each program claimed by MPAA and

IPG.

MPAA’s study utilizes data from three

sources—Cable Data Corporation

(‘‘CDC’’), TV Data and Nielsen Media

Research (‘‘Nielsen’’). MPAA Proposed

Findings at 20, ¶ 55. First, MPAA

determines the number of television

stations that it wishes to include in its

survey. For the 1997 study, MPAA

selected 82 TV broadcast stations. These

stations were retransmitted by Form 3

cable systems (MPAA excluded Form 1

and Form 2 systems) and account for

92.5% of aggregated subscriber

instances. Id. ‘‘Aggregated subscriber

instances,’’ means that subscribers

receiving broadcast programming were

viewing it on a distant signal basis only,

since section 111 of the Copyright Act

does not allow compensation for

programming that is retransmitted on a

local basis. Thus, the 82 stations used in

MPAA’s study account for 92.5% of

distant signal viewing of MPAA and IPG

programs. This data was supplied by

CDC.

Next, MPAA consults the TV Data

television log books to determine what

programs were broadcast at what times.

For 1997, MPAA examined the log

books for the 82 stations it included in

its survey. Exhibit 3 of MPAA’s written

direct case identifies the programs

which MPAA claims that it represents

in this proceeding, along with the

number of broadcasts of each program

on the 82 stations surveyed. Of the over

3,700 titles, over 500 of these are

television series (sitcoms, dramas, etc.)

while the remaining titles are movies.

MPAA Proposed Findings at 14, ¶ 42.

MPAA makes great effort to demonstrate

that its claim includes most of the toprated syndicated television series and

movies. Kessler Direct at 6–7.

Finally, MPAA takes the

programming data from these two

sources and matches it to viewing data

supplied by Nielsen. Nielsen provides

the names of the programs that were

broadcast for each station in the study,

the number of 15-minute segments

(referred to as quarter hours (QH)) each

program aired on that station, and what

MPAA describes as the average number

of cable subscribers who viewed each

program on that station on a distant

basis. Kessler Direct at 8. Using this

information, MPAA then calculated the

household viewing hours for each

program appearing in the study. The

formula that MPAA utilized to make

this calculation is as follows:

(ΣQH/4) x average DCHH = HHVH

Id. Marsha Kessler stated the formula

thus:

Add together the total number of 15 minute

(QH) segments a program is broadcast in a

particular time slot on a particular station.

Divide that number by 4 to get an hourly

measure. Multiply the result by the average

number of distant cable households (DCHH)

that actually watched [the] program on that

station during that time period.

Id.

It is important to note that the data

supplied by Nielsen does not attempt to

measure viewing 365 days a year.

Rather, Nielsen conducts ‘‘sweeps’—

0limited periods of time in which actual

viewing to programming is measured.

Nielsen can only provide viewing data

for four or six sweeps periods, meaning

that substantial portions of the year are

not measured. To counteract this

problem, MPAA devised a method for

interpolating viewing for those periods

when Nielsen data is not available.

Using data supplied by Nielsen, MPAA

assigns an estimated number of viewers

for a given broadcast station for a given

quarter hour in a given day. For

example, there are no Nielsen sweeps in

June. To determine viewership for a

program broadcast on a specific station

during a specific time period in June,

MPAA averages the viewing for the

same time slot in May (a sweeps month)

and July (also a sweeps month) to

estimate what viewership would be for

the corresponding time slot in June. The

process is described as straight line

interpolation. Tr. 1615–16.

Once armed with household viewing

data for all programs broadcast by the 82

stations in its survey, MPAA

determined the household viewing

hours for all of its programs and IPG’s

programs. MPAA determined that the

total household viewing hours for

MPAA and IPG programming was

3,476,625,750. MPAA Proposed

Findings at 73, ¶ 291. MPAA’s

programming received 3,476,218,917

household viewing hours, while IPG’s

programming received 406,833. Id. This

calculation was based on MPAA’s

assignment of household viewing hours

to the following IPG programs:

Algo’s Factory—11,707 viewing

hours.

Harvey Pennick’s Private Golf

Lessons—5,193 viewing hours.

Jack Hanna’s Animal Adventures—

372,488 viewing hours.

Mom USA—0 viewing hours.

Nprint—1645 viewing hours.

Sophisticated Gents—7010 viewing

hours.

The Sports Bar—8790 viewing hours.

Id. at 72, ¶¶ 285–291. Missing from

this calculation is Just Imagine, which

the Librarian has credited to IPG’s

claim. See June 5, 2001 Order at 2.

Based on its household viewing hour

calculations, MPAA claims that it is

entitled to 99.9871% of the 1997 cable

royalties, while IPG is entitled to

0.0117% of the royalties (for the seven

Litton programs). MPAA Proposed

Findings at 73, ¶ 291.

2. Validity of the methodology.

Throughout the course of this

proceeding, IPG has attempted to sully

both the construct and the application

of the MPAA methodology. Many of

these criticisms were accepted by the

CARP. See, generally, Initial report at

102–103; Revised report at 5–12. We

now consider these criticisms as part of

our evaluation of the evidentiary

presentation of MPAA.

At the outset, we affirm what the

Copyright Royalty Tribunal long ago

stated: that actual measured viewing of

a broadcast program is significant to

determining the marketplace value of

that program. 51 FR 12792, 12808 (April

15, 1986). In a perfect world, we would

know all viewing to all programs that

were retransmitted on a distant basis by

all cable systems in 1997. We recognize

that the cost of attempting to present

such evidence would be prohibitive.

Even if we had access to such

information, the inquiry would not end

there because there are other factors

besides viewing that can have a bearing

on the marketplace value of a program.

Because we are charged with the task of

simulating the marketplace for a

broadcast program in an effort to

determine the value of the program, the

Register must consider those factors,

where relevant, in the equation as well.

Given the recognition that viewing of

programs has probative value, we turn

to a consideration of MPAA’s

presentation. The construct of MPAA’s

methodology is generally similar to that

presented in previous cable distribution

proceedings before the Tribunal and the

CARPs. There are, however, some

notable differences. In prior

proceedings, particularly at Phase I,

experts from Nielsen participated in the

construct and presentation of the study,

as well as supplying the viewing data.

Nielsen’s participation in MPAA’s study

in this proceeding is limited to

providing select data for use by others.

Lindstrom Tr. 1387–88; 1407; 1421;

1439–42. Consequently, we have

refrained from describing the 82 sample

station survey as the ‘‘Nielsen’’ survey.

In addition, MPAA has derived a

considerable volume of viewing hours

from a process described as

‘‘interpolation,’’ which it is has not

presented extensively in prior

66448 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

15Although the Tribunal never described the

Nielsen study as a ‘‘good starting off point’’ for

Phase II proceedings, it readily accepted Nielsen

results that were presented by MPAA in Phase II

proceedings. See, e.g. 53 FR 7132, 7136 (March 4,

1988)(1985 cable Phase II)(‘‘[W]e give great reliance

on the Nielsen data’’)

proceedings. ‘‘Interpolation’’ is

discussed infra.

When the MPAA presented its

viewing study to the Copyright Royalty

Tribunal in Phase I proceedings, the

Tribunal described the study as a good

‘‘starting off point.’’ 57 FR 15286,

15288(April 27, 1992)(1989 cable Phase

I distribution). Is the MPAA’s 82 station

sample survey a ‘‘good starting off

point’’ for this proceeding?15

The CARP concluded that MPAA’s 82

station sample survey was ‘‘stretched to

cover more ground and answer more

questions than it was originally

designed to do.’’ It listed eight specific

criticisms of the MPAA approach:

—MPAA’s direct testimony did not

sufficiently lay the foundation for the

survey or explain its results.

—The Panel was forced to call its own

witnesses, Mr. Lindstrom from

Nielsen, and Mr. Larson from Cable

Data Corporation to explain their

methods of data acquisition and

reporting.

—The number of sampled stations has

declined without adequate

explanation.

—Station criteria excluded Form 1 and

Form 2 cable systems.

—The number of ‘‘zero’’ viewing hours

shows the flaw in attempting to use

the Nielsen data as a proxy for the

retransmission market especially

since Nielsen had 24 hour sampling

capability in 1997.

—There are unanswered technical

questions regarding relative error rates

and mixing diary and meter data.

—The method of interpolation of nonsweep month estimated viewing

needs statistical validation.

—There is an overvaluation of WTBS

and under-valuation of the other

Superstations in the survey.

Initial report at 102–03. There is a

theme underlying this critique of

MPAA’s case that can be summarized as

follows: the broad brush that is used to

paint the big picture is a poor tool for

crafting the details. MPAA’s viewer

study can paint a statistically useful

picture of how much sports

programming, for example, the viewing

public watches relative to the amount of

syndicated programming it watches. But

when the same study is used in an effort

to determine how much the viewing

public watches an individual television

program, the accuracy of the results

comes into question. Accord 51 FR

12792, 12817 (April 15, 1986)(1983

cable Phase II distribution)(‘‘[O]verall

reliability [of the Nielsen study] may be

somewhat less when the focus is on

individual programs.’’).

How much confidence can we place

in the results yielded by MPAA’s 82

station sample survey? MPAA does not

provide an answer. Section 251.48(f)(4)

requires parties submitting studies

involving statistical methodology to

provide confidence levels for the

methodology. Specifically, the rule

requires calculation of the standard

error for each component of the

methodology. 37 CFR 251.48(f)(4)(ii).

MPAA acknowledges that it did not

comply with the rule, but offers that

‘‘the absence of relative error figures has

raised no bar to significant reliance on

the Nielsen study in [prior] Phase II

proceedings.’’ MPAA Reply Findings at

38.

Regardless of what may have sufficed

in prior proceedings before the

Copyright Royalty Tribunal, there is

reason to believe there is considerable

relative error in MPAA’s results in this

proceeding. On cross-examination, Paul

Lindstrom stated the following:

Q: In past CRT proceedings, it’s my

understanding that Nielsen reports have

been entered into the record, is that

correct?

A: That is correct.

Q: And when Nielsen reports have

been entered into the record, they have

come with qualifications or

characterizations to assist the parties

and the Panel understand the data and

the relative errors, standard error factors

and the like, is that correct?

A: It is correct that we have produced

the relative error figures for the category

data.

Q: And did you produce relative error

figures for the 1997 data?

A: The relative error figures were not

produced by us because the final data

would not be produced by us. We’re

basically developing a database which is

being passed on to Mr. Larson who then

takes it and produces the aggregated

report. The standard errors are really

relevant on the aggregated data and so

we’re kind of a mid-product in the

process.

Q: Is there any—in Mr. Larson’s work

would you consult with him so that he

makes proper assessment of the data?

A: We have had opportunities at times

where we have needed to work together

in order to work out issues or to make

clear on definitions or categorizations,

but on a day to day basis, he’s not

directing us on how to produce our

portion of it and we’re not directing him

on how to produce his.

Q: But again, in terms of the portion

you produced, you basically are asked

to produce from your database of data,

information regarding quarter hours of

viewing to particular stations within a

subset of counties that would qualify as

distant for purposes of cable copyright

rules?

A: That is correct.

Q: And in past proceedings you’ve

aggregated the information into program

categories and provided relative errors

for that. In this proceeding you have not

done that, is that correct?

A: That is correct.

Q: And in past proceedings you have

not been asked to address, except in

incidental situations specific programs,

you have only addressed program

categories, is that correct?

A: To the best of my knowledge, yes.

Q: Do you see any difference in

Nielsen, just focusing on independent

Mr. Larson’s responsibilities in terms of

the way Nielsen data for purposes of

this proceeding, should be viewed—

should it be viewed the same or

differently from prior data presented

where you do not have program

categories, but the data is solely

addressed to quarter hours of particular

stations?

A: If I’m understanding correctly, I’ll

repeat what I think I hear you say, is

that is there a difference in—I imagine

you’re talking about the accuracy or use

[sic] that word, for aggregated category

data versus individual program

information and if that’s the question,

then that is absolutely correct. Once the

data is beginning to get aggregated, the

sampling errors go down and go down

substantially.

Q: But conversely, if it’s not

aggregated, the sampling errors would

increase?

A: The sampling errors for any—

again, any given program on any given

station on any given day so that we’re

talking about an individual week,

individual program, individual station

will be subject to huge relative errors.

Tr. 1406–10.

Mr. Lindstrom’s testimony

underscores the pitfalls of using

MPAA’s 82 station sample survey to

measure household viewing hours for

individual programs. When large

amounts of programming and household

viewing hours are measured, such as in

a Phase I proceeding, the aggregation of

the measuring data is substantial and

the relative error is low. This is what

makes the MPAA’s sample survey ‘‘a

good starting off point.’’ However, when

the number of programs and household

viewing hours are small, the aggregation

of the data is minimal and, in the words

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66449

16The word ‘‘royalties’’ should probably read

‘‘methodology.’’

of Mr. Lindstrom, ‘‘subject to huge

relative errors.’’ Tr. 1409–10. Of the

thousands of programs and billions of

viewing hours represented in MPAA’s

sample survey, IPG’s claim only

accounts for eight programs and less

than 500,000 viewing hours. Although

we do not know how large the error

factor is for this calculation since MPAA

failed to present such information, it is

reasonable to presume that it is quite

large given that it is drawn from such a

small piece of the data. This leads us to

the conclusion that, as a methodological

approach, it cannot be said that the

MPAA sample survey is a ‘‘good’’

starting off point; at best, it is simply

‘‘a’’ starting point.

Having considered MPAA’s sample

survey conceptually, we now turn to the

specifics of its application. As discussed

above, the CARP concluded that there

were a number of flaws in certain

aspects of the sample survey. Although

we do not necessarily agree with the

number and severity of the CARP’s

criticisms, there is no need to discuss

them here. What matters are what the

Register, and ultimately the Librarian,

conclude are the flaws in the sample

survey, and what impact those flaws

have on the usefulness of the MPAA

approach.

(i). Program ownership. Program

ownership is an important and highly

contested issue in this proceeding. The

issue, however, has centered on the

claim of IPG and the programs it has

purported to represent in this

proceeding. Little attention was given to

MPAA’s ownership of programs. The

CARP requested that MPAA submit

program certifications obtained from its

member companies, apparently in an

effort to resolve issues surrounding

certain programs claimed by both

MPAA and IPG. MPAA provided these

certifications to the CARP as a

‘‘courtesy,’’ carefully noting that it was

not ‘‘legally’’ required to do so. Tr.

2571–73. MPAA’s position is that it is

not required to prove its program

ownership because it will receive all

remaining funds in the 1997 syndicated

program royalty pool once IPG’s claim

is established. While it is true that

MPAA will receive all funds less IPG’s

share, program ownership is

nonetheless essential to the application

of MPAA’s methodology.

As discussed above, MPAA’s 82

station sample survey is straightforward

in its approach. Calculate the universe

of programs in this proceeding,

determine the total number of viewing

hours for these programs, and then

calculate the percentage of the total of

viewing hours for IPG programs,

yielding IPG’s royalty distribution

percentage. The so-called ‘‘alpha list’’

submitted by MPAA supposedly

contains the household viewing hours

for all IPG and all MPAA programs. Id.

at 28, ¶ 79. The number of IPG programs

on this list is known; it is the eight

programs of Litton Syndications which

the Library has determined are properly

attributable to IPG. How do we know

that all the remaining programs are

properly attributable to MPAA? The

answer is that we do not know. MPAA

created the alpha list, but it did not

provide any testimony to verify the

accuracy of the list. It may be that the

alpha list contains programs which are

not properly represented by MPAA. IPG

raises concerns about the status of

several program certifications submitted

by MPAA, including a number of MPAA

claimants for which no certifications

were submitted. IPG Proposed Findings

at 44–48, ¶¶ 153–169. The CARP

allowed the record of this proceeding to

remain open after argument had ended

to allow submission of additional

certifications from MPAA. We cannot

determine the sufficiency of these

additional filings because there is no

testimony to review.

The import of these omissions to the

confidence to be placed in MPAA’s

sample survey is considerable. If

MPAA’s program ownership cannot be

verified, then the total number of

household viewing hours for programs

in this proceeding cannot be verified.

What is even more troubling is that if

the alpha list does contain programs

which are not properly a part of this

proceeding, the benefit of those

inclusions inures directly to MPAA

because the MPAA’s methodology

measures IPG’s claim as a percentage of

the total number of household viewing

hours. In other words, the more

programs—and consequently the more

household viewing hours—that are

included in the total, the smaller is

IPG’s percentage share of that total and

consequently the smaller is its royalty

share under MPAA’s formula.

MPAA points out there is no

regulation that requires that it put into

evidence program certifications. This is

correct. However, MPAA is requesting

us to accept its methodology as the

means of determining the division of

royalties in this proceeding. Unless

MPAA can prove that it properly

represents all the programs it claims on

the alpha list, we cannot verify that

MPAA’s methodology is being correctly

applied. We cannot assume that the

copyright owners of all the programs

claimed by MPAA are actually

represented by MPAA simply because it

says so.

(ii). Zero viewing hours. The amount

of zero viewing hours in MPAA’s 82

station sample survey—instances where

Nielsen recorded no viewing for a

particular program—was especially

troubling to the CARP, and the CARP

penalized MPAA the most for this

anomaly. The CARP made the following

finding:

The record reveals that 68% of the quarter

hours measured by Nielsen were attributed

with ‘‘zero’’ viewing. Factoring in broadcasts

occurring between 2:00–6:00 a.m. for which

the MPAA methodology automatically

attributes a ‘‘zero’’ value, a total of 73% of

the quarter-hour broadcasts occurring on

such stations during such measurement

period were attributed with ‘‘zero’’ viewing.

With one exception, each station in MPAA’s

study has a significant percentage of

measured quarter-hour broadcasts accorded

‘‘zero’’ viewing, ranging from 26% to 96%.

Of the 82 stations in the MPAA study, 64

measured by Nielsen recorded no viewing in

excess of 50% of their broadcasts, a figure

that increases to 74 of the television stations

when ‘‘zero’’ viewing for the 2:00–6:00 a.m.

daypart is factored in. Eight stations

including the New York affiliate of CBS,

WCBS–TV, were credited with ‘‘zero’’

viewing during more than 90% of their

measured broadcasts.

The only exception to the significant

percentages of ‘‘zero’’ viewing are programs

broadcast on Superstation WTBS. The

Nielsen study credited WTBS, the most

retransmitted station during 1997, with only

.5% of ‘‘zero’’ viewing. Inexplicably, the

Nielsen ‘‘special study’’ credited other

superstations with significant distant cable

subscribers with large percentages of ‘‘zero’’

viewing. Of note for example, is WGN–TV,

the second most retransmitted station with

an average of 28 million distant cable

subscribers during 1997. Despite its

substantial distant subscribership, WGN–TV

was credited with ‘‘zero’’ viewing in 52% of

its measured broadcasts. Three other

‘‘Superstations’’ were credited with ‘‘zero’’

viewing ranging between 26% and 62% of

their measured broadcasts.

We conclude that of the eight deficiencies

we have noted in MPAA’s distribution

royalties,16 this ‘‘zero’’ viewing hours

deficiency is, by far, the most egregious. The

evidence offered by MPAA to explain this

perceived deficiency in its methodology was

less than enlightening. Mr. Lindstrom, who is

not a statistician, clarified that attribution of

‘‘zero’’ viewing does not mean that no

persons were watching, only that no diaries

recorded viewing, and that any suggestion to

the Panel that no viewing occurred would

reflect a misunderstanding of the data. But

then he stated that the ‘‘zero’’ viewing hour

information consists of pieces of data that are

imprecise; that they are among a series of

estimates that may be either high or low; that

such individual quarter hour entries have

little usefulness; but that they aggregate up to

an accurate result, and ‘‘the more imprecise

66450 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

17 ‘‘Form 3’’ refers to the statement of account

form used by the Copyright Office in collecting

royalty fees under the section 111 cable license.

‘‘Form 3’’ cable systems are the largest systems

filing with the Office, having in excess of $292,000

in gross receipts from subscribers for the

retransmission of over-the-air broadcast signals.

bricks you throw in the pile, the more

accurate the overall number is going to be.’’

Accepting this and other testimony of Mr.

Lindstrom at face value, we find that it does

not even begin to explain the enormous

discrepancies described above regarding the

crediting of ‘‘zero’’ viewing hours. There is

little if any evidence in this record that these

high credits of ‘‘zero’’ viewing hours were

offset in 1997 by credits of excessively high

units of viewing hours. Thus, we are left with

a record that more than merely suggests that

the MPAA methodology is significantly

defective in the manner in which it credits

‘‘zero’’ viewing hours.

Revised report at 8–10 (citations

omitted).

MPAA describes the CARP’s rationale

as follows: ‘‘Wow. That many zeros

must mean something. We haven’t a

clue what it is, but there are just too

many of them to ignore.’’ MPAA Reply

to IPG Petition to Modify Revised

Report at 7. MPAA then summarily

concludes that ‘‘[t]he zeros mean

nothing.’’ Id. Contrary to MPAA’s

assertions, we believe that the zeros

mean something. They cannot mean

‘‘nothing.’’

MPAA continues to insist that Mr.

Lindstrom has adequately explained the

high number of zero viewing hours,

assuring that the aggregation of the

viewing data makes up for the zeros;

‘‘the more of these, sort of, imprecise

bricks you throw in the pile, the more

accurate the overall number is going to

be.’’ Tr. 1432. We make a layperson’s

observation that when you aggregate lots

of zeros, the result is still zero. As the

CARP noted, almost three-quarters of

the quarter hour viewing measured by

Nielsen for the stations in MPAA’s 82

station sample survey received a zero,

despite the fact that Mr. Lindstrom

stated that a zero viewing rating did not

mean that no viewing was actually

taking place, only that it was not

measured. Tr. 1424. To us the

extraordinarily high level of zero

viewing does not mean that the overall

results of MPAA’s sample survey are

more accurate; rather, it means that the

sample survey actually measures much

less viewing than MPAA suggests.

WTBS is the one station with a

modest level of zero viewing; 0.5%

according to the CARP. This is not

surprising, given the large number (52

million) of distant cable subscribers to

WTBS. What is surprising is the number

of zero viewing instances for WGN

which had an average of 28 million

distant cable subscribers during 1997.

Over half of the measured WGN

broadcasts resulted in zero viewing.

Revised report at 9. Even further, three

other superstations had zero viewing

ranging between 26% and 62% of their

measured broadcasts. Id. How is it

possible that some of the most

distributed broadcast stations in the

cable industry have such little viewing?

MPAA offers a couple of possible

explanations for such discrepancies. For

WGN, MPAA suggests that the number

of zero viewing instances ‘‘could be

accounted for by the fact that WGN

because WGN (sic) satellite feed to

distant cable systems includes programs

not part of the station’s local broadcast

program schedule. These programs are

not credited to WGN’s distant viewing

by Nielsen.’’ MPAA Petition to Modify

Revised Report at 17–18. This is a post

hoc speculation, because there is

nothing in the record of this proceeding

that demonstrates or even suggests that

there are substantial differences

between the programs contained on the

WGN satellite feed distributed to cable

operators and the over-the-air feed of

the station. MPAA presented no

evidence to support this argument.

Furthermore, if MPAA’s assertion is

true, it demonstrates that certain

programming contained on WGN is

greatly undervalued because Nielsen is

not measuring its viewing.

MPAA also points to Mr. Lindstrom’s

testimony where he states that there

could be ‘‘loads of reasons’’ why there

are so many instances of zero viewing.

Tr. 1424. Unfortunately, Mr. Lindstrom

does not describe the ‘‘loads of

reasons,’’ other than to suggest that the

FCC’s network nonduplication rules

may have resulted in a considerable

number of distant programs being

blacked out in local markets, and

consequently not measured in the

sample survey. Once again, there is no

record evidence to support Mr.

Lindstrom’s suggestion. Ms. Kessler’s

testimony that she was unconcerned

about the number of zero viewing

instances is not helpful. Even if one

assumes that Mr. Lindstrom’s

observation is correct, the network

nonduplication rules only apply to

network stations and do not explain the

vast amounts of zero viewing on

superstations which are considered to

be independent stations under the

section 111 license.

The considerable sums of zero

viewing, and MPAA’s failure to explain

it, further undermines the value of the

82 station sample survey. The practical

effect of zero viewing is to overvalue

those few stations in the survey that

received more measured viewing, and

thereby overvalue the programs

broadcast on those stations. Meanwhile,

programs that even MPAA admits are

seen by some viewers are given no value

whatsoever. In the future, if MPAA

continues to present a Nielsen-based

viewer methodology, it needs to present

convincing evidence, backed by

testimony of a statistical expert, that

demonstrates the causes for the large

amounts of zero viewing and explains in

detail the effect of the zero viewing on

the reliability of the results of the

survey. In addition, MPAA needs to take

steps to improve the measurement of

broadcasts in the survey to reduce the

number of zero viewing hours, thereby

increasing the reliability of its study.

(iii) The 82 station sample. According

to Ms. Kessler, the 82 stations used in

MPAA’s sample survey were selected

because they each had 90,000 or more

Form 317 distant cable subscribers as

identified by Cable Data Corporation.

Tr. 242. MPAA chose the 90,000

subscribers as its minimum in selecting

its sample of broadcast stations because

such criteria ‘‘hit virtually all

subscribers and accounted for generally

all of the money that was paid into the

fund during that time.’’ Tr. 243.

During the proceeding, IPG presented

testimony that demonstrated that MPAA

did not apply the 90,000 subscriber

criteria as it claimed. Several broadcast

stations with more than 90,000

subscribers were excluded from the

survey, and several with less than

90,000 subscribers were included in the

survey. IPG written rebuttal at 30–31. In

one extreme circumstance, station

KDVR was included in the sample

survey despite the fact that it had less

than 3,000 distant subscribers in 1997.

Id. at 31. MPAA did not refute this

testimony, nor did it explain why

certain stations that satisfied the criteria

were excluded, while others that did not

were included in the sample survey.

We cannot determine what effect, if

any, MPAA’s selection of stations had

on the results generated by its sample

survey. Likewise, we cannot determine

from the record whether MPAA’s failure

to apply its 90,000 subscriber criteria

was deliberate, or the result of oversight.

What is clear is that MPAA’s failure to

apply its chosen selection criteria

consistently further undermines our

confidence in the accuracy of the results

generated by its sample survey. In the

future, when presenting a

methodological survey, MPAA needs to

rigorously adhere to its announced

standards and parameters for the survey.

(iv). Interpolation. As mentioned

above, the MPAA sample survey

submitted in this Phase II proceeding is

similar to the one it has submitted in

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66451

18The partial sweeps periods are confined, for the

most part, to broadcast stations in the top television

markets in the country.

past Phase I proceedings with one

exception. The exception is the use of

‘‘straight line,’’ ‘‘forward,’’ and

‘‘backward’’ interpolation. The reason

for and operation of interpolation is as

follows. Nielsen measures viewing of all

broadcast stations in the 82 station

sample survey for only four months of

the year. These measured viewing

periods are referred to as the ‘‘sweeps.’’

Nielsen also conducts two partial sweep

periods, in which some of the 82

stations’ broadcasts are measured, but

not others.18 This leaves six full months

of unmeasured viewing, plus an

additional two months for stations not

covered by the partial sweeps periods.

If MPAA relied only upon the sweeps

and partial sweeps periods to measure

viewing of programs, many programs

belonging to MPAA members (as well as

to IPG) would receive zero household

viewing hours because they were

broadcast on stations not covered by the

sweeps. To compensate for this

considerable omission, MPAA

developed an interpolation method that

allegedly estimates what the viewing

might be for these programs had they

been included in the sweeps periods.

Briefly described, MPAA’s

interpolation method makes three

measurements in an effort to estimate

viewing for programs outside the

sweeps period. The first measurement is

‘‘straight line’’ interpolation. In ‘‘straight

line’’ interpolation, MPAA ascertained

the number of household viewing hours

for a specific time period from the two

closest sweeps periods, and then took

the average of those hours. For example,

May and July are sweeps periods, but

there is no measured viewing for the

month of June. MPAA looked at the May

sweeps results and the July sweeps

results and applied the average of those

results to each corresponding time

period in the month of June. Thus, the

‘‘straight line’’ interpolated viewing

result for the quarter hour of 10 a.m. to

10:15 a.m. on June 7, 1997, is the

average of the measured household

viewing hours for that time period for a

particular station on May 7, 1997, and

July 7, 1997. Tr. 1614–17.

Both ‘‘forward’’ and ‘‘backward’’

interpolation use data obtained from

Nielsen meter rankings, as opposed to

the data obtained from viewing diaries

during the sweeps periods. Meter

rankings are different from the diary

method in that meter rankings do not

capture specific viewing, but rather

merely record when a television is on in

a given Nielsen household (whether or

not anyone is actually watching it) and

what station the television is tuned to.

Tr.1273–74; 1347–50. ‘‘Forward’’

interpolation uses the sweeps

household viewing measurement

obtained from the viewing diaries for

the period preceding the time frame to

be measured and multiplies that by the

ratio of Nielsen meter rankings for the

preceding period and the period to be

measured. In the above example,

‘‘forward’’ interpolation takes the

corresponding daypart measurement

from the May sweeps period and

multiplies that by the Nielsen meter

ranking for the same daypart in June

divided by the May meter ranking for

that daypart. Tr. 1616.

‘‘Backward’’ interpolation utilizes the

same approach as ‘‘forward’’

interpolation, except that it uses the

sweep data for the period following the

one to be measured, as well as the meter

ranking from that period. Again, in the

above example, the household viewing

hours from the July sweeps period

would be multiplied by the June meter

ranking for the corresponding daypart

divided by the July meter ranking. Tr.

1617. After the three interpolated results

have been obtained through ‘‘straight

line,’’ ‘‘forward,’’ and ‘‘backward’’

interpolation, they are divided by three

to obtain an average number of

household viewing hours for the

daypart being examined. Id. The

purported purpose of ‘‘straight line,’’

‘‘forward,’’ and ‘‘backward’’

interpolation is to provide more

accuracy to the Nielsen meter rankings

through the process of averaging. Tr.

1602–03, 1614–17.

We recognize the purpose of

interpolation and appreciate that MPAA

is forced to estimate viewing for

programs broadcast during non-sweeps

periods. Our problem with interpolation

is the manner in which MPAA

presented it in this proceeding. First,

MPAA laid no foundation for a

statistical methodology that it was

presenting for the first time in a cable

distribution proceeding. Marsha Kessler

is not a statistician who could testify as

to the statistical validity of the

interpolation approach; and moreover,

she did not compile or review the

interpolation data presented by MPAA

and, apparently, did not participate in

the creation of the methodology or its

application. Tr. 1603. The interpolated

data was created by Tom Larson of

Cable Data Corporation who only

presented testimony on the interpolated

data when called as a witness by the

CARP. In the future if MPAA uses

viewing studies to present data on

household viewing hours obtained

through interpolation, MPAA should

present expert testimony as to the

statistical validity of the approach,

including the confidence intervals for

the data.

Second, the testimony establishes that

Mr. Larson made the interpolated data

calculations, applying ‘‘straight line,’’

‘‘forward,’’ and ‘‘backward’’

interpolation ‘‘millions of times’’ in

order to generate viewing data for

programs broadcast during the 6–8

months of 1997 for which Nielsen did

not measure viewing. Tr. 1603. MPAA

apparently asks us to trust that Mr.

Larson performed these interpolations

accurately, because there is nothing in

the record that permits verification. This

is especially troubling given that more

than half of the viewing data presented

in MPAA’s sample survey is obtained

from interpolated results. MPAA should

in the future present evidence that

permits some verification of the results

of interpolated viewing, rather than just

total household viewing hours for all

programs.

Finally, we note the Copyright

Royalty Tribunal’s admonition that data

that is not specific to programs is

unreliable in determining actual

viewing of specific programs. 57 FR

15286, 15299 (April 27, 1992) (1989

cable distribution). MPAA’s

interpolation methodology assigns

viewing hours to time slots, not to

programs. Tr. 1688–89. It is likely that

the viewing assigned these time slots

was in many cases derived from

programs of a completely different type,

perhaps not the same programming

category, than the programs measured

during the Nielsen sweeps periods. And

it is certain that many of the individual

programs accounted for by interpolation

were not actually transmitted during the

period of interpolation. This is

particularly troubling given the large

amount of total viewing hour data

presented by MPAA which was

obtained from interpolation.

3. Relevance of the methodology.

While we agree that viewing of

programs is probative in assessing their

value in a Phase II proceeding, the

results generated by MPAA’s sample

survey are so unreliable that they cannot

support an assessment of IPG’s and

MPAA’s claims in this proceeding. All

that can be garnered from the MPAA

presentation is that MPAA’s claim is

large and IPG’s is quite small, something

that is readily ascertainable from that

fact that IPG only represents eight

programs in this proceeding. Precisely

how small IPG’s claim is, which is the

task at hand, cannot be ascertained

using MPAA’s results. Further, MPAA’s

results cannot be used to establish a

zone of reasonableness within which to

66452 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

place IPG’s award because of the high

probability of error in MPAA’s results.

Consequently, we cannot accept

MPAA’s presentation as providing any

basis for the determination of the

distribution of royalties in this

proceeding.

B. IPG’s Presentation

1. Description of the Methodology

IPG’s written direct case presents the

testimony of Raul Galaz, IPG’s president

and principal, and the exhibits that he

sponsors. As a first-time participant in

a cable distribution, IPG did not

designate any prior testimony, nor did

the CARP request IPG to call additional

witnesses.

IPG takes a different approach in

attempting to demonstrate the value of

programming in this proceeding. Rather

than rely on the estimated viewing of a

particular program, IPG attempts to

determine the value of a program based

upon the carriage of the program by

cable operators. IPG Proposed Findings

at 14, ¶ 42. According to IPG, a cable

operator is not interested in the viewer

ratings generated by a particular

broadcast program it retransmits; rather,

it is the overall appeal of all the

programs on the broadcast signal that is

of value to the operator. Galaz Direct at

6–7. ‘‘Overall appeal’’ is important to

the cable operator because the operator

attempts to attract as many subscribers

as possible to its system. When deciding

which stations to retransmit, the

operator will attempt to appeal to as

wide a subscriber base as possible by

providing multiple program

opportunities, so-called ‘‘niche’’

programs that appeal to particular

tastes.

In some instances it will be the desire of the

cable system operator to exhibit certain

sports programming, in other instances it

may be the desire to have news programming

from a market that is of interest to the cable

system operator’s market, the desire to

increase the amount of children’s

programming offered to the cable system’s

subscribers, or the desire to carry more game

shows.

Id. at 7. According to IPG, in a

compulsory license marketplace it is the

overall appeal of a broadcast station to

the cable operator that determines the

value of the programming on that

station.

Since overall appeal of a station is

equated with value, the greater the

number of subscribers to a station, the

greater the value of that station and,

consequently, the programming on that

station. Id. at 8. The relative value of the

programs contained on the station is

determined, according to IPG, by the

time placement of the program and the

frequency of its telecast. Thus, a

program that is retransmitted in primetime once a week is of greater value than

a program broadcast once a month at 2

o’clock in the morning.

In sum, IPG focuses on four elements

to determine program value: (1) The

number of distant cable subscribers

capable of receiving the program

broadcast during 1997; (2) the cable

license royalties generated during 1997

that are attributable to stations

broadcasting the program; (3) the time

placement of the broadcast; and (4) the

length of the broadcast. IPG Proposed

Findings at 14, ¶ 43.

In order to measure these elements,

IPG, like MPAA, surveyed a number of

broadcast stations that were

retransmitted by cable systems on a

distant basis in 1997. IPG sampled 99

stations that were carried on Form 1, 2,

and 3 cable systems, and examined all

the programs that were broadcast by

these stations during 1997. Id. at 15,

¶¶ 46–47. Such data comprised

approximately 1.1 million logged

broadcasts. Id. at 15, ¶ 47. IPG then

segregated all programming not within

the syndicated programming category,

leaving only movies and syndicated

series.

Because of the parallel between the

number of cable subscribers receiving a

station and the amount of royalty fees

generated by that station, IPG created a

factor to weigh the relative significance

of any given station and the broadcast

of any program on that station. Dubbed

the ‘‘Station Weight Factor,’’ it was

‘‘derived from the concept that the

relative significance of any given station

should be affected by both (i) the

number of distant cable subscribers that

could potentially view such station, and

(ii) the amount of distant cable

retransmission fees generated by such

station.’’ Galaz Direct at 11. The Station

Weight Factor was created as follows.

For each of the 99 sampled stations, IPG

summed the figure representing the

percentage of subscribers in the survey

that received the given station with the

figure representing the percentage of

total cable royalty fees generated by the

99 sampled stations. This figure was

then divided in half. Id. The figure

generated by this equation equals,

according to IPG, the relative

significance of each of the 99 sampled

stations.

Having determined the relative value

of each station—and the corresponding

programming on that station—IPG then

attempted to determine the relative

value of each program on each station

by examining the number of broadcasts

of the program and its time placement

within the broadcast day. In order to do

this, IPG created a factor that uses data

on anticipated viewership of all persons

during time periods of the day (referred

to as ‘‘dayparts’’) in order to weigh the

relative significance of any given

broadcast. Dubbed the ‘‘Time Period

Weight Factor,’’ it was determined as

follows:

The Time Period Weight Factor was derived

from data published by Nielsen Media

Research (‘‘Weekly Viewing Daypart’’ table

within the ‘‘1998 Report on Television’’),

reflecting the weekly viewing habits of all

persons in 1997. Weekly viewing is stated in

terms of the number of television hours

viewed during the week, specifies the

amount of viewing attributable to specific

time periods, allowing allocation amongst

such time periods. IPG then determined the

‘‘Average Minutes Viewed Per Hour in

Viewing Period’’ (i.e. the ‘‘Time Period

Weight Factor’’) in order to apply such Time

Period Weight Factor against each and every

logged broadcast on the ‘‘99 Sample

Stations,’’ and according to the period during

which such logged broadcast appeared.

Id. at 13.

After ascribing the Station Weight

Factor and the Time Period Weight

Factor to each broadcast, IPG applied

the figures for each broadcast against the

length of such broadcast, in order to

ascribe a final value to each

compensable broadcast. IPG Proposed

Findings at 16, ¶ 50.

As a final step to the process, IPG

summed the resulting value for its

programs and all other programs in its

survey and accorded a ‘‘Sum Weighted

Value’’ to both these categories of

programs. Id. at 16, ¶ 51.

In its written direct case, IPG applied

its methodology for 43 programs that it

believed that it represented in this

proceeding. Galaz Direct at 5–6. It

determined that IPG-represented

programs produced a Sum Weighted

Value of 2,3791.7968, as compared to

the Sum Weighted Value of

1,369,901.837 for all syndicated

broadcasts within the 99 sample station

survey. Id. at 14. This yielded a

percentage of 1.7367519% for IPG

programs. Because IPG did not have

access to the programs claimed by

MPAA, it could not apply its

methodology to determine the Sum

Weighted Value of MPAA’s programs.

Consequently, IPG argued that ‘‘[t]o the

extent that MPAA represents less than

100% of the non-IPG programming

appearing on the ‘99 Sample Stations,’

IPG’s respective percentage must be

adjusted upward.’’ Id. at 14–15.

Once proceedings began before the

CARP, MPAA produced the program

certifications for some, but not all, of its

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66453

19MPAA submitted additional certifications to

the CARP prior to closing arguments in the case. Tr.

2576.

claimants.19 Also, during proceedings

before the CARP, a number of IPGclaimed programs were eliminated from

consideration, either through voluntary

dismissal by IPG or as a result of the

CARP’s rejection of IPG’s representation

agreements with Jay Ward Productions,

Mainframe Entertainment, and

Scholastic Productions. IPG Proposed

Findings at 53, ¶ 2. IPG then

recalculated its own share, and that of

MPAA’s, and determined that its

programs accounted for 0.881% of the

aggregated Sum Weighted Value of all

programs claimed in this proceeding.

Although IPG’s methodology yielded

0.881% for its claimed programs, it

argued that it was nonetheless entitled

to 2% of the royalty pool. IPG justified

the 2% figure based upon certain

alleged failures, abuses, and

shortcomings on MPAA’s part,

including: (1) Failure to produce

program certifications for 33 of MPAA’s

claimants, and production of 6

certifications that were not properly

authorized; (2) failure to establish

entitlement to 1,100 programs that were

not, according to a 1986 Advisory

Opinion of the Copyright Royalty

Tribunal, eligible for compensation in

the syndicated programming category;

(3) abuse of the discovery process by

failing to produce documents

underlying its methodology in

contravention to Library and CARP

discovery orders; and (4) serious

shortcomings in the application of

MPAA’s distribution methodology. Id.

at pp. 52–55.

2. Validity of the Methodology

This marks the first time that IPG has

appeared in a cable royalty distribution

proceeding, and the first time its

distribution methodology has been

presented. As such, we do not have the

benefit of prior consideration or

acceptance of the IPG methodology by

either the Copyright Royalty Tribunal or

a CARP, other than the CARP’s opinion

in this proceeding. We must consider

IPG’s methodology from a theoretical

point of view, as well as examine its

particular application to this Phase II

proceeding.

At the outset, we note that IPG’s

methodology attempts to blend two

approaches that have been presented to

the Tribunal and the CARPs. The first

part of the methodology, the Station

Weight Factor, is a fee generation

approach in that it considers the royalty

fees paid by cable systems during 1997

for the 99 broadcast stations used in the

IPG survey. Each of the stations in the

99 station sample survey is ranked from

highest to lowest depending upon the

amount of fees the station generated for

the 1997 royalty pool. IPG submits that

the Station Weight Factor is relevant to

the marketplace value of broadcast

programs because cable systems’

decisions to retransmit a particular

broadcast station are ‘‘based on the

‘‘overall appeal’’ of the retransmitted

station and its ability to generate

additional cable system subscribers, not

the ratings of a particular program

appearing on the retransmitted station.’’

IPG Proposed Findings at 14–15, ¶ 45.

IPG’s focus on the value of distant

signals to cable operators recalls the

Bortz survey that has been presented for

many years at Phase I in cable royalty

distribution proceedings. The Bortz

survey attempts to measure the value of

different categories of programming

appearing on retransmitted broadcast

signals by presenting to persons from

cable companies a hypothetical

programming budget for a given year,

and then asking how much value they

place on different kinds of programming

(sports, movies, syndicated series, etc.)

in compiling their program schedule. 57

FR 15286, 15292 (April 27, 1992). The

more value placed on a program

category, the more cable Phase I

royalties it should receive, according to

proponents of the Bortz survey.

The focus on value to the cable

operator has been endorsed by both the

Tribunal and the CARPs as one of the

ways to assess marketplace value, and

the results of the Bortz survey have

received credit in Phase I proceedings.

See, e.g. 57 FR 15286, 15301 (April 27,

1992)(1989 cable Phase I) IPG’s Station

Weight Factor attempts to ride the

coattails of the Bortz survey’s

acceptance by ranking the ‘‘overall

appeal’’ of stations as an expression of

the value of the programming broadcast

on those stations. While it must be true

that a station such as WTBS, for

example, has a significant ‘‘overall

appeal’’ to cable operators by virtue of

the number of cable systems that

retransmit it, the ‘‘overall appeal’’ does

not translate well to a Phase II

proceeding dealing with one program

category. It is quite possible, and

perhaps likely, that the ‘‘overall appeal’’

of stations in the 99 station sample

survey is based upon programming that

is not in issue in this proceeding. Thus,

the reason that so many cable operators

carry WTBS may have more to do with

Atlanta Braves baseball and Atlanta

Hawks basketball than it does with

syndicated series and movies. IPG failed

to present any evidence that established

a clear nexus between the syndicated

programming category and the ‘‘overall

appeal’’ of the 99 broadcast stations

subjected to the Station Weight Factor.

This is a significant omission which

raises serious concerns regarding the

validity of IPG’s methodology. The

Copyright Royalty Tribunal has rejected

estimating techniques that are not tied

to programming categories because of

their inherent unreliability. 57 FR at

15299 (1989 Phase I cable distribution).

In the absence of convincing evidence

that demonstrates that the ranking of the

99 stations is based upon the syndicated

programming category, and not some

other, the validity of the Station Weight

Factor is not established.

The second element of IPG’s

methodology is the Time Period Weight

Factor. The Time Period Weight Factor

uses data from the 1998 Report on

Television published by Nielsen. Galaz

Direct at 13. The Report on Television

provides viewing estimates for early

morning (M–F 7–10 a.m.), daytime (M–

F 10 a.m.–4 p.m.), prime time (M=—at

8–11 p.m. and Sun. 7–11 p.m.), and late

night (11:30 p.m.–1 a.m.) dayparts. For

all other dayparts, weekly viewing was

extrapolated from the data in the above

categories and lumped into the ‘‘All

Other’’ category. IPG Exhibit H. These

viewing estimates enable IPG to rank the

dayparts. Like the ranking of the 99

stations in IPG’s sample survey, the

ranking of dayparts is not tied to

programming. The Nielsen viewing

estimates for these dayparts are drawn

from viewing of all program categories.

In fact, the estimates apparently also

include viewing of local stations overthe-air and on cable, cable networks,

and VCR recording of programming,

which are completely outside the scope

of the section 111 license. Tr. 1369. As

with the Station Weight Factor, the

Time Period Weight Factor is not tied to

programming. IPG did not present any

testimony establishing a link between

syndicated programming and the

ranking accorded to dayparts by

Nielsen. Unless such link is established,

the relevance of the Time Period Weight

Factor is in question.

This is our evaluation of the theory of

IPG’s methodology. In addition, there

are specific concerns about its

application in this proceeding with

respect to the use of daypart data

obtained from Nielsen. While we

acknowledge that obtaining specific

daypart data from Nielsen is costly, the

dayparts culled by IPG from the 1998

Report on Television are far too broad

because they ignore variations in

viewing within dayparts. For example,

IPG’s methodology assigns the same

value to any program broadcast within

the 1 a.m. to 7 a.m. daypart. MPAA

66454 Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices

20There is record evidence that shows that as

much as 30% of IPG’s originally claimed programs

were broadcast between 1 a.m. and 7 a.m. Tr. 1035–

37.

points out that Nielsen estimates that

household viewing falls from 18.9% to

8.2% at 4:30 a.m. and then begins to rise

back to 19.7% in the 6:30 a.m. to 7 a.m.

half hour. MPAA Proposed Findings at

60, ¶ 261. Thus, a program broadcast at

4:30 a.m. gets the same value under

IPG’s methodology as a program

broadcast at 6:30 a.m., even though it

has less than half the viewers. Even

within IPG’s own construct, which

attempts to assign value based on

relative viewing, this result is illogical.

Dayparts must be broken down into

smaller increments before the Time

Period Weight Factor could be given any

credence.

In addition, IPG’s extrapolated

daypart data, the ‘‘All Other’’ category,

is plainly overweighted. For example,

IPG applies the weight applicable to the

‘‘All Other’’ category to the 1 a.m. to 7

a.m. daypart. This is the same weight

factor that is applied to programming

broadcast between 4 p.m. and 8 p.m.,

where viewing, according to Nielsen, is

considerably higher than in the 1 a.m.

to 7 a.m. time frame. The result is that

a program broadcast at 3 a.m. is of equal

value under IPG’s methodology as a

program broadcast at 7:30 p.m.20

Further, the 1998 Report on Television

contains viewing estimates for the

Saturday 7 a.m. to 1 p.m. daypart and

the Sunday 1 p.m. to 7 p.m. daypart,

neither of which IPG used in its

methodology. Instead, IPG applied the

‘‘All Other’’ category to these time

periods. As the CARP correctly

observed, the value of the ‘‘All Other

Category’’ is overstated, thereby

inflating the value of IPG’s claim.

Revised Report at 14.

3. Relevance of the methodology. As

with MPAA’s presentation, we conclude

that the results of IPG’s presentation are

so unreliable that they cannot be used

as a basis for determining the

distribution of royalties in this

proceeding. The theory of IPG’s case

lacks statistical foundation, and places

value on programs unconnected to their

actual viewership. The evidence

demonstrates that IPG’s methodology

overstates the value of its claim,

although by how much cannot be

determined. Given the lack of reliability

of the results, IPG’s presentation cannot

be used as a basis for the distribution of

royalties in this proceeding.

Determination

1. Remand. Having determined that

the results presented by MPAA and IPG

are wholly unreliable, we examined the

record to determine if there is any

evidence sufficient to base a distribution

of royalties. As part of its distribution

methodology, the CARP examined the

number of rebroadcasts of programs and

the airtime of programs contained in

both the 82 sample stations presented

by MPAA and the 99 stations presented

by IPG. The CARP examined this data

because it was the only data common to

both MPAA’s and IPG’s presentations.

Revised report at 17. This gave an

indication of the relative size of MPAA’s

and IPG’s claims; i.e. that MPAA’s was

large and IPG’s small. Id. at 18. The

CARP then turned to the methodologies

presented by the parties and used them

as a means of creating final distribution

percentages.

We determine that the number of

rebroadcasts and airtime of programs

contained in the 82 station and 99

station sample surveys cannot form the

basis of a distribution. All that data

demonstrates is that MPAA’s

programming dominated the broadcast

marketplace, something that is already

known. The number of times a program

is broadcast and the amount of time it

is on the air is no indication of the

marketplace value of the program.

While the number of times a program is

broadcast might intuitively suggest that

it is of more value, the opposite is often

true. Programs which garner low

syndication fees are often broadcast by

television stations many times because

the rights are cheap. And other

programs, such as motion pictures, may

be broadcast relatively few times

because the rights are expensive, but

they are nonetheless of greater

marketplace value. Number of

broadcasts and airtime are therefore not

the answer.

What then is the answer? We

determine that the record of this

proceeding is insufficient on which to

base a distribution determination. The

record does not permit us to assess what

is the zone of reasonableness for the

distribution awards, let alone determine

the awards themselves. Given the lack

of reliability of MPAA’s and IPG’s

presentations, crafting awards from the

current record would constitute

arbitrary action.

We conclude that a distribution of

royalties cannot be made based on the

current record. Consequently, this case

must be remanded to a new CARP for

a new proceeding under chapter 8 of the

Copyright Act.

2. New proceeding. In the new

proceeding, the parties will be required

to submit new written direct cases and

present evidence that takes into account

the concerns expressed in this Order,

with the new CARP rendering its

determination based upon the new

record. All procedural and substantive

requirements for a CARP proceeding

will apply to the new proceeding.

Although the parties will able to

present new cases and new evidence in

the new proceeding, there are two

matters that have been decided. As

discussed above, the Librarian has ruled

that IPG represents Litton Syndications

for distribution of 1997 cable royalties,

and no other claimant. Consequently, in

the new proceeding, IPG is barred from

relitigating whether it represents other

claimants. The Librarian also

determined that Litton’s claim consists

of at least 8 programs, and listed them

in the June 5, 2001 Order. This part of

Litton’s claim is decided and may not be

relitigated. Whether there are additional

programs that should be credited to

Litton’s claim (such as Dream Big and

Dramatic Moments in Black Sports

History) may be addressed in the new

proceeding. Likewise, all other matters

as to program ownership, and the

proper division of the royalties, are

open to consideration in the new

proceeding.

The Library will issue a scheduling

order for the new proceeding once the

arrangements have been made.

Order of the Librarian

Having duly considered the

recommendation of the Register of

Copyrights regarding the initial report

and the revised report of the CARP in

the above-captioned proceeding, the

Librarian determines the following.

First, the Librarian has accepted the

recommendation of the Register to reject

the initial report of the CARP and

remand the proceeding to the CARP

with instructions for further action. This

was done in the June 5, 2001, Order in

this proceeding, and the Librarian

incorporates that Order as a part of his

final determination. See Appendix A.

Second, the Librarian accepts the

recommendation of the Register to reject

the revised report of the CARP. Third,

the Librarian accepts the

recommendation of the Register to

remand this proceeding to a new CARP

for a new proceeding to determine the

proper distribution of 1997 cable

royalties between MPAA and IPG. The

Library will issue a scheduling order for

the new CARP proceeding once

arrangements have been made.

Federal Register / Vol. 66, No. 247 / Wednesday, December 26, 2001 / Notices 66455

Dated: December 14, 2001.

Marybeth Peters,

Register of Copyrights.

APPENDIX A—LIBRARIAN’S

REMAND ORDER DATED JUNE 5, 2001

[Docket No. 2002–2 CARP CD 93–97]

In the Matter of Distribution of 1993, 1994,

1995, 1996 and 1997 Cable Royalty Funds

Order

On April 16, 2001, the Librarian of

Congress received the report of the Copyright

Arbitration Royalty Panel (CARP) in the

above-captioned proceeding. Both the Motion

Picture Association of America (MPAA) and

the Independent Producers Group (IPG), the

two litigants in this proceeding, have filed

their petitions to modify and/or set aside the

determination of the CARP, and their replies

to those petitions.

After a review of the report and

examination of the record in this proceeding,

the Register recommends that the Librarian

reject the decision of the CARP, and remand

the case to the CARP for modification of the

decision. The Register concludes that the

CARP acted arbitrarily in three ways. First,

the CARP did not follow the decisional

guidelines and intent of the June 22, 2000,

Order issued in this proceeding which

directed the CARP to dismiss any claimants

listed in exhibit D of IPG’s written direct case

that did not have a written representation

agreement with Worldwide Subsidy Group

on or before July 31, 1998.

Second, the CARP arbitrarily included two

programs—Critter Gitters and Bloopy’s

Buddies—in the claim of Litton Syndications,

Inc. (represented by IPG) when IPG did not

introduce any evidence as to the value of

those programs. In addition, the CARP

arbitrarily assigned the program Dramatic

Moments in Black Sports History to IPG

without adequate explanation of its decision.

Third, the CARP acted arbitrarily in

awarding 0.5% of the 1997 cable royalties to

IPG, and the remaining 99.5% of the royalties

to MPAA, because it did not provide any

explanation of the methodology or analysis it

used to arrive at these numbers.

A full discussion of the Register’s reasons

for these conclusions shall appear in the final

order in this proceeding published in the

Federal Register.

Wherefore, the Register recommends that

the Librarian reject the CARP’s report and

remand to the CARP to take the following

actions in modifying its report:

1. That the CARP award royalties to IPG

only on the claims of Litton Syndications and

not award any royalties to IPG based upon

the other claimants in exhibit D of IPG’s

written direct case;

2. That the CARP credit Litton with only

the following programs: Algo’s Factory; Jack

Hanna’s Animal Adventures; Harvey

Penick’s Golf Lesson; Mom USA; Nprint;

Sophisticated Gents; Just Imagine and The

Sports Bar;

3. That the CARP explain its reasons for

crediting Dramatic Moments in Black Sports

History to Litton’s claim; and, if it concludes

that its initial decision was correct, add the

program to the list contained in #2;

4. That the CARP enter a new distribution

percentage for IPG, based only on the claim

of Litton and the programs listed in #2 and,

if appropriate, #3, and allocate the remainder

of the royalties to MPAA; and

5. That the CARP fully explain its reasons

and methodology for the distribution

percentages it assigns to IPG and MPAA.

The Register further recommends that the

CARP be given until June 20, 2001, to report

its modified decision to the Librarian and

that section 251.55 of the rules, 37 C.F.R.,

apply to the CARP’s modified report, except

that the periods for petitions and replies be

shortened from 14 days to 7 days for

petitions, and from 14 days to 5 days for

replies, due to the proximity of the time

period for issuance of the Librarian’s final

order in this proceeding.

So recommended.

Dated: June 5, 2001.

Marybeth Peters,

Register of Copyrights.

So Ordered.

James H. Billington,

The Librarian of Congress.

[FR Doc. 01–31607 Filed 12–21–01; 8:45 am]

BILLING CODE 1410–33–P

MORRIS K. UDALL SCHOLARSHIP

AND EXCELLENCE IN NATIONAL

ENVIRONMENTAL POLICY

FOUNDATION

Institute for Environmental Conflict

Resolution—Program Evaluation

Instruments: Agency Information

Collection Activities: Proposed

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AGENCY: Morris K. Udall Scholarship

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SUMMARY: In compliance with the

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3501 et seq.), this document announces

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part of the Morris K. Udall Foundation,

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provide a more coherent picture of

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estimated to be $4.91.

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review and approval, the U.S. Institute

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labeled ‘‘Supplementary Information.’’

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Environmental Conflict Resolution, 110

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web: www.ecr.gov.

FOR FURTHER INFORMATION CONTACT:

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U.S. Institute for Environmental Conflict

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Suite 3350, Tucson, Arizona 85701, Fax:

520–670–5530, Phone: 520–670–5299,

E-mail: bernard@ecr.gov.

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is required to produce, each year, an

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outlined in the Institute’s five-year

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