National Cable Television Ass'n, Inc. v. Copyright Royalty Tribunal, 82-2389

Citation724 F.2d 176
Decision Date30 December 1983
Docket NumberNo. 82-2389,82-2389
Parties, 221 U.S.P.Q. 1044, 1984 Copr.L.Dec. P 25,614 NATIONAL CABLE TELEVISION ASSOCIATION, INC., Petitioner, v. COPYRIGHT ROYALTY TRIBUNAL, Respondent, Peyton Broadcasting, Ltd., Motion Picture Association of America, Inc., Turner Broadcasting Systems, Inc., New York State Commission on Cable Television, National Association of Broadcasters, Broadcast Music, Inc., United Video, Inc., Major League Baseball, et al., American Society of Composers, etc., Southern Satellite Systems, Inc., Longview Cable Television, Co., Inc., Sin, Inc., Allen's TV Cable Service, Inc., et al., Intervenors.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeal from an Order of the Copyright Royalty Tribunal (CRT 81-2).

Robert St. John Roper, Washington, D.C., with whom Brenda L. Fox, Michael S. Schooler, and Stuart F. Feldstein, Washington, D.C., were on the brief, for petitioner. Jay E. Ricks and David J. Saylor, Washington, D.C., also entered appearances for petitioner.

Bruce G. Forrest, Atty., Dept. of Justice, Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., and William Kanter, Atty., Dept. of Justice, Washington, D.C., were on the brief, for respondent.

Arthur Scheiner, Washington, D.C., with whom Dennis Lane, Washington, D.C., for the Motion Picture Ass'n of America, Inc.; Bernard Korman and I. Fred Koenigsberg, New York City, for American Society of Composers, Authors and Publishers; and Charles T. Duncan, Michael W. Faber, and Joel S. Winnik, Washington, D.C., for Broadcast Music, Inc. were on the joint intervenors' brief. Richard H. Waysdorf, Washington, D.C., also entered an appearance for Motion Picture Ass'n of America, Inc., et al.

Charles D. Ferris, Bruce D. Sokler, and L. Gregory Ballard, Washington, D.C., were on the brief for intervenor, Turner Broadcasting System, Inc.

John R. Harder, Albany, N.Y., was on the brief for intervenor, New York State Com'n on Cable Television.

Victor E. Ferrall, Jr., John I. Stewart, Jr., Erwin G. Krasnow, and Michael D. Berg, Washington, D.C., were on the brief for intervenor, National Ass'n of Broadcasters.

Robert F. Corazzini and Peter H. Feinberg, Washington, D.C., were on the brief for intervenor, Southern Satellite Systems, Inc.

John P. Cole, Jr., Robert L. James, David M. Silverman, and James F. Ireland, III, Washington, D.C., were on the brief for intervenors, United Video, Inc., et al.

David H. Lloyd, Robert S. Thorpe, and Robert Alan Garrett for Major League Baseball; Philip R. Hochberg, Washington, D.C., for the National Basketball Ass'n and the North American Soccer League; Robert W. Coll, Washington, D.C., for the National Hockey League; Judith Jurin Semo, Washington, D.C., for the National Collegiate Athletic Ass'n; Charles T. Duncan, Michael W. Faber, and Joel S. Winnik, Washington, D.C., for Broadcast Music, Inc.; Bernard Korman, I. Fred Koenigsberg, New York City, and Benjamin L. Zelenko, Washington, D.C., for American Society of Composers, Authors and Publishers were on the joint intervenors' brief.

Gary Shaver, Asst. City Atty., Longview, Tex., was on the brief for amicus curiae, City of Longview, Texas, urging that the decision should be vacated.

Martin E. Firestone and Neal A. Jackson, Washington, D.C., entered appearances for intervenor, Peyton Broadcasting, Ltd.

Michael S. Horne and Paul J. Berman, Washington, D.C., entered appearances for intervenor, Longview Cable Television, Co., Inc.

Norman P. Leventhal, Barbara K. Kline, and Edwina Dowell, Washington, D.C., entered appearances for intervenor, SIN, Inc.

Robert W. Kastenmeier, Washington, D.C., entered an appearance as amicus curiae as the Chairman of the House Subcommittee on Courts.

Robert S. Golden, Jr., Asst. Atty. Gen., Hartford, Conn., State of Connecticut as amicus curiae for the State of Connecticut.

Before MIKVA and GINSBURG, Circuit Judges, and BAZELON, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

The Copyright Act of 1976 (Act or 1976 Act) 1 establishes a compulsory licensing scheme encompassing phonorecords and jukebox performances of musical works, certain noncommercial broadcasting transmissions, and certain cable television retransmissions. 17 U.S.C. Secs. 111, 115, 116, 118 (1982). To superintend the scheme, Congress created the Copyright Royalty Tribunal (Tribunal or CRT). Id. Secs. 801-810. The Tribunal is empowered to adjust royalty rates and to allocate among copyright owners royalty fees collected from copyright users. Id. Secs. 111(d), 116(c), 118(b), 801(b). This petition for review concerns the Tribunal's order adjusting the compulsory licensing rates for cable television operators in response to certain Federal Communications Commission (FCC) deregulatory measures. See Adjustment of the Royalty Rate for Cable Systems; Federal Communications Commission's Deregulation of the Cable Industry, 47 Fed.Reg. 52146 (Nov. 19, 1982), reprinted in Joint Appendix (J.A.) 11-24 (CRT Decision ).

Petitioner National Cable Television Association, Inc. (NCTA) and several intervenors seek reversal of the CRT's final decision. Our examination of the record and consideration of the arguments tendered persuade us that the Tribunal has not abused its broad discretion to adjust rates. Because we conclude that the CRT has made adjustments we cannot characterize as unreasonable, and has adequately explained them, we affirm its decision in all respects.

I. BACKGROUND

A principal use of cable technology, since its inception, has been the retransmission of broadcast signals to areas beyond the reach of conventional "over the air" facilities. The Copyright Act of 1909, as construed by the Supreme Court, made no provision for cable operators' copyright liability. See Teleprompter Corp. v. CBS, Inc., 415 U.S. 394, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974); Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968). In the 1976 Act, however, Congress expressly imposed such liability. 17 U.S.C. Sec. 111. Individual marketplace negotiations between copyright owners and users, Congress believed, would entail inordinately high transaction costs. See HOUSE JUDICIARY COMMITTEE, COPYRIGHT LAW REVISION, H.R.REP. NO. 1476, 94th Cong., 2d Sess. 89 (1976) (House Report), U.S.Code Cong. & Admin.News 1976, 5659. Congress therefore licensed cable operators to carry whatever television programming FCC rules permitted; in exchange for this permission, however, Congress required cable operators to pay royalties for carriage of distant broadcast stations' nonnetwork programming. 2 17 U.S.C. Sec. 111(c)(1) (d)(2). These compulsory license fees, paid by cable operators to the Copyright Office, are distributed to copyright owners by the Tribunal. Id. Secs. 111(d)(3)-(5), 801(b)(3).

The 1976 Act sets initial fee schedules for cable carriage of distant broadcast signals, 17 U.S.C. Sec. 111(d)(2)(B), (C), (D), and authorizes the CRT to make periodic adjustments to account for inflation and changes in the rates cable systems charge their subscribers. Id. Secs. 801(b)(2)(A), (D); 804(a). In addition, Congress authorized the Tribunal to adjust rates, in accordance with a reasonableness standard, in the event of changes in FCC rules regulating cable--specifically, alteration of the FCC's restrictive distant signal and syndicated program exclusivity rules. Id. Sec. 801(b)(2)(B), (C). 3 The authority accorded the CRT regarding FCC distant signal rule changes is limited, however. The Tribunal may not, in response to such FCC action, adjust rates for signals cable operators could carry under FCC rules in effect on April 15, 1976. The CRT is empowered to adjust rates only as to newly added signals, i.e., those carried for the first time after change in the FCC's distant signal rules. Id. Sec. 801(b)(2)(B); see also House Report, supra, at 176.

The FCC's distant signal and syndicated program exclusivity rules were promulgated in 1972. Cable Television Report and Order, 36 FCC2d 143 (1972). The distant signal rules restricted the number of distant broadcast signals a cable system was permitted to carry; the limit varied according to the size and signal density of the market within which the cable system operated. 4 The syndicated program exclusivity rules limited cable carriage of particular programs otherwise permitted under the FCC's distant signal quotas; program producers and local broadcasters who had purchased exclusive rights to particular programming could demand that a local cable operator delete that programming from its distant signals. 5 These FCC rules "were fashioned in the context of a continuing policy debate as to whether cable operators should face copyright liability for the programs they retransmitted to subscribers." Malrite T.V. v. FCC, 652 F.2d 1140, 1145 (2d Cir.1981), cert. denied, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 295 (1982). In 1976, when Congress determined to create a form of copyright liability for cable operators, the FCC "commenced an inquiry into the need for maintaining its copyright surrogates, the distant signal and syndicated exclusivity rules." Id. at 1146 (citations omitted). In 1980, the FCC repealed both sets of rules.

In response to the FCC's action, NCTA as well as representatives of copyright owners 6 petitioned the Tribunal to commence a rate adjustment proceeding. See 17 U.S.C. Sec. 804(b). In that proceeding, the CRT determined that cable systems must pay 3.75% of their gross receipts from basic services for each "distant signal equivalent" added as a result of the FCC's deregulation. 7 Further, the Tribunal adjusted the then current distant signal fee scale to compensate copyright owners for the FCC's repeal of syndicated program exclusivity protection. In this review proceeding, NCTA and supporting intervenors ask us to vacate the CRT's...

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