National Ass'n of Broadcasters v. Copyright Royalty Tribunal, s. 1491-1493

• Decision Date: 22 December 1986
• Docket Number: D,Nos. 1491-1493,s. 1491-1493
• Citation: 809 F.2d 172
• Parties: 1987 Copr.L.Dec. P 26,043, 1 U.S.P.Q.2d 1379 The NATIONAL ASSOCIATION OF BROADCASTERS, Canadian Claimants, Program Suppliers, Petitioners, v. COPYRIGHT ROYALTY TRIBUNAL, Respondent, American Society of Composers, Authors and Publishers; Broadcast Music, Inc.; SESAC, Inc.; Program Suppliers; Multimedia Entertainment, Inc.; Canadian Claimants; Old-Time Gospel Hour; PTL Television Network; Public Broadcasting Service; Joint Sports Claimants; Turner Broadcasting System, Inc.; the Christian Broadcasting Network, Inc.; the National Association of Broadcasters, Intervenors. ocket 86-4042, 4056, 4066.
• Court: U.S. Court of Appeals — Second Circuit

Page 172

809 F.2d 172

1987 Copr.L.Dec. P 26,043, 1 U.S.P.Q.2d 1379

The NATIONAL ASSOCIATION OF BROADCASTERS, Canadian Claimants, Program Suppliers, Petitioners, v. COPYRIGHT ROYALTY TRIBUNAL, Respondent American Society of Composers, Authors and Publishers Broadcast Music, Inc.; SESAC, Inc.; Program Suppliers Multimedia Entertainment, Inc.; Canadian Claimants Old-Time Gospel Hour; PTL Television Network; Public Broadcasting Service; Joint Sports Claimants; Turner Broadcasting System, Inc.; the Christian Broadcasting Network, Inc.; the National Association of Broadcasters, Intervenors.

Nos. 1491-1493, Docket 86-4042, 4056, 4066.

United States Court of Appeals, Second Circuit.

Argued July 16, 1986.

Decided Dec. 22, 1986.

John I. Stewart, Jr., Washington, D.C. (Victor E. Ferrall, Jr., David H. Solomon, Crowell & Moring, Henry L. Baumann, Julian L. Shepard, Nat. Ass'n of Broadcasters, Washington, D.C., of counsel), for petitioner/intervenor Nat. Ass'n of Broadcasters.

W. Thad Adams, III, Charlotte, North Carolina (John H. Midlen, Jr., Washington, D.C., of counsel), for petitioners/intervenors Old-Time Gospel Hour and PTL Television Network.

Douglas G. Thompson, Jr., Washington, D.C. (L. Kendall Satterfield, Finkelstein, Thompson, Levenson & Lewis, Washington, D.C., Erica Redler, Canadian Broadcasting Corp., of counsel), for petitioners/intervenors Canadian Claimants.

Irene M. Solet, Civil Div., Dept. of Justice, Washington, D.C. (Richard K. Willard, Asst. Atty. Gen., John F. Cordes, Civil Div., Dept. of Justice, Robert Cassler, Copyright Royalty Tribunal, Washington, D.C., of counsel), for respondent Copyright Royalty Tribunal.

Gene A. Bechtel, Washington, D.C., (Bechtel & Cole, Washington, D.C., Jacqueline Weiss, Deputy Gen. Counsel, Public Broadcasting Service, Alexandria, Va., of counsel), for intervenor Public Broadcasting Service.

Arnold P. Lutzker, Washington, D.C. (James M. McElfish, Jr., Dow, Lohnes & Albertson, Washington, D.C., of counsel), for intervenor Multimedia Entertainment, Inc.

Dennis Lane, Washington, D.C. (Arthur Scheiner, Leslie A. Swackhamer, Rebecca L. Dorch, Wilner & Scheiner, Washington, D.C., of counsel), for petitioner/intervenor Motion Picture Ass'n of America, Inc., et al. (Program Suppliers).

Bernard Korman, I. Fred Konigsberg, Edward W. Chapin, Nicholas Arcomano, New York, N.Y., Charles T. Duncan, Reid & Priest, Washington, D.C., Michael W. Faber, Lisa Holland Powell, of counsel, for intervenors American Society of Composers, Authors and Publishers, Broadcast Music, Inc. and SESAC, Inc.

David H. Lloyd, Robert Alan Garrett, Terri A. Southwick, Arnold & Porter, Philip R. Hochberg, Baraff, Koerner, Olender & Hochberg; Robert W. Coll, McKenna, Wilkinson & Kittner; Ritchie T. Thomas, Judith Jurin Semo, Squire, Sanders & Dempsey, Washington, D.C., Edwin M. Durso, Office of the Com'r of Baseball, New York, N.Y., of counsel, for intervenors Joint Sports Claimants.

Nathan Lewin, Jamie S. Gorelick, Miller, Cassidy, Larroca & Lewin, Lois J. Schiffer, Carol R. Whitehorn, Nat. Public Radio, Washington, D.C., of counsel, for intervenor Nat. Public Radio.

Before WINTER and MAHONEY, Circuit Judges, and CABRANES, ^* District Judge.

WINTER, Circuit Judge:

These consolidated petitions involve various challenges to the 1983 distribution of cable television royalty fees by the Copyright Royalty Tribunal ("CRT" or "Tribunal"), an agency established pursuant to Sections 801-810 of the 1976 Copyrights Act ("Act" or "1976 Act"), 17 U.S.C. Secs. 801-810 (1982). After four of the five previous annual distributions, dissatisfied cable royalty claimants appealed the Tribunal's determinations to the District of Columbia Circuit. See National Association of Broadcasters v. Copyright Royalty Tribunal (NAB v. CRT I), 675 F.2d 367 (D.C.Cir.1982) (reviewing Tribunal's first cable royalty distribution, of royalties paid for calendar year 1978); Christian Broadcasting Network, Inc. v. Copyright Royalty Tribunal (CBN v. CRT), 720 F.2d 1295 (D.C.Cir.1983) (reviewing cable royalty distribution for calendar year 1979); National Association of Broadcasters v. Cable Royalty Tribunal (NAB v. CRT II), 772 F.2d 922 (D.C.Cir.1985) (reviewing cable royalty distributions for calendar years 1980 and 1982), cert. denied, --- U.S. ----, 106 S.Ct. 1245, 89 L.Ed.2d 353 (1986).

Each distribution was affirmed in substantial part by a court increasingly critical of "the claimants' studied tack to date of 'boundless litigiousness,' " NAB v. CRT II, 772 F.2d at 940 (quoting CBN v. CRT, 720 F.2d at 1319), and increasingly unwilling to engage in a detailed analysis of "the various nooks and crannies of the Tribunal's decisions." 772 F.2d at 940. Thus encouraged either to forgo the usual automatic challenge to the Tribunal's determinations, no doubt an unthinkable alternative in the "highly litigious copyright-owner subculture," id., or to seek a different Court of Appeals, claimants to the 1983 Cable Royalty Fund petitioned us for review of the cable royalty distribution. With the exception of two issues, however, only the circuit is new, and the petitions raise the usual array of noisily contested minutiae concerning the precise allocations of cable royalty fees. An elaborate response to these latter claims is not justified, and our discussion of the merits will be devoted largely to the two new issues.

We deny the petitions.

I. GENERAL BACKGROUND

Because this case is but the latest in a series of appeals from cable royalty distribution proceedings, see supra, familiarity with which is assumed, we need discuss only briefly the Act's compulsory licensing scheme. Under 17 U.S.C. Sec. 111, cable television operators may obtain a license permitting retransmission of certain copyrighted programming, known as distant broadcast signals. ¹ A cable system is protected from copyright liability when it carries only those signals and programs designated under the rules of the Federal Communications Commission ("FCC"), and deposits semi-annual royalty payments into a central fund ("Fund"). Id. Sec. 111(c)(2)(A), (B). The 1976 Act set initial royalty fee schedules and authorized the Tribunal to make adjustments in light of inflation, changes in cable subscription rates, and alterations by the FCC of certain of its rules. See id. Sec. 801(b)(2). The Fund is then distributed annually by the Tribunal to the copyright owners whose works have been the subject of distant signal retransmissions. The 1976 Act did not provide precise standards for distributing the Fund to various claimants, ² but left that task largely to the Tribunal's discretion. However, the Tribunal's determination rarely represents the last step in an annual cable royalty distribution; as noted above, all but one of the Tribunal's final orders have been appealed to the courts, generally without success.

In upholding in large part the Tribunal's cable royalty determinations, each of the previous appellate decisions has emphasized the very limited power of reviewing courts. See NAB v. CRT II, 772 F.2d at 926; CBN v. CRT, 720 F.2d at 1304; NAB v. CRT I, 675 F.2d at 374. The narrow scope of review results from the nature of the Tribunal's task in determining what share of the Fund should go to which claimants. Prior courts understandably have viewed the Tribunal's royalty distributions as "scarcely a typical agency adjudication," and as decisions that, by their very nature, are "doomed to be somewhat artificial." NAB v. CRT II, 772 F.2d at 926. In the most recent cable royalty distribution case, the District of Columbia Circuit stated:

In reviewing the Tribunal's determinations, the judicial task is not to weigh the evidence and fix what in our view would constitute appropriate percentages, for that would be to intrude into the function entrusted to the Tribunal. Our job, rather, is to determine whether the royalty awards are within a "zone of reasonableness"--not unreasonably high or unreasonably low--and that the [Tribunal's] decision is neither arbitrary nor capricious, and is supported by substantial evidence.

Id. (citing NAB v. CRT I, 675 F.2d at 371, 374-75). We share that view of the role of a reviewing court.

The 1983 distribution proceeding was preceded by two pertinent developments in cable regulation and licensing. First, in a 1980 order that we upheld in Malrite T.V. of New York v. FCC, 652 F.2d 1140 (2d Cir.1981), cert. denied, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 295 (1982), the FCC repealed two sets of regulations restricting cable carriage. One set of rules, called the "distant signal rules," had restricted the number of distant signals a cable system was permitted to carry, depending on the size and signal density of the market within which the cable system operated. The other set, styled the "syndicated program exclusivity rules," had required cable systems to black out certain syndicated programming from their distant signals. The blackout right was enforceable either by the program syndicators or by local broadcast stations that had acquired exclusive broadcast rights from the syndicators. ³

Second, the Tribunal adjusted the copyright royalty rates in light of the FCC's elimination of the distant signal and syndicated exclusivity rules. This adjustment was specifically authorized, although not mandated, by the 1976 Act. 17 U.S.C. Sec. 801(b)(2)(B), (C). The Tribunal's adjustments added two new royalty fees to be paid by cable systems. The first, the "3.75% rate," requires cable systems to pay 3.75% of their gross receipts from basic services for each distant signal equivalent they add as a result of the repeal of the FCC's distant signal rules. The second is a syndicated exclusivity ("syndex") surcharge to be paid by cable systems retransmitting signals formerly subject to the FCC's blackout provisions. See Adjustment of Royalty Rate for Cable Systems; Federal Communication's Commission's Deregulation of the Cable Industry, 47 Fed.Reg....