CO seeks comments on latest “specialty station” list

Like Santa Claus, Oskar Schindler, David Letterman and Joe McCarthy, the Copyright Office (CO) has a list. The CO’s list consists of TV stations which claim to be “specialty” stations, a desirable status for some in the copyright world (more on that below). The CO is in the process of updating its list, and it has invited comments on some possible changes.

Not that the CO is in the business of deciding who should or shouldn’t be on the list. 

But before we get into all that, a bit of history may be in order. Back in the 1970s, the FCC’s regulation of the cable TV industry included limits on carriage of TV stations beyond the reach of their over-the-air service (known as "distant signals"). Those rules had been adopted against the background of a continuing policy debate about the implications of extended-area cable carriage for copyright owners, who like to be able to restrict distribution of their product, and the public, which likes to be able to watch more stations. Generally speaking, if a cable system carried a distant signal, the system had to pay more in copyright fees. But the FCC recognized that cable carriage of certain “specialty stations” might be desirable even if they originated far away from the cable system, because specialty stations are usually not locally available outside the largest markets. Accordingly, the Commission established a regulatory classification for such stations, which were defined as stations that

generally carrie[d] foreign language, religious, and/or automated programming in one-third of the hours of an average broadcast week and one-third of the weekly prime-time hours.

With the enactment of an overhaul of the copyright law in 1976 that largely eliminated prohibitions on distant signal carriage while imposing a higher royalty premium for such carriage, the need for Commission involvement waned, and in 1981 the FCC repealed its distant signal carriage rules and generally stopped worrying about “specialty stations”. A station’s self-identification as a “specialty station” may still come into play in some limited circumstances before the FCC – for example, if such a station seeks to be added to a DMA for must-carry purposes, its burden might be a tad lighter – but for the most part it’s a dead issue at the FCC.

Not so in Copyright Land.

Under the CO’s rules, a cable system carrying a distant “specialty station” is obligated to pay only the “base [copyright] rate” for such carriage, rather than the higher 3.75% rate that would otherwise apply (a discouraging 3.75% of gross revenue from the entire cable tier on which the station is carried). So “specialty” designation is desirable from the point of view of a cable system that carries such a station: the cable system has to pay less in copyright royalties, and that factor in turn makes it easier for cable operators to carry such distant “specialty stations”.

But with the FCC out of the business of keeping a “specialty station” list, the CO has no ready source to consult when it needs to know which stations qualified as “specialty”. Accordingly, since 1989 the CO has used a kind of honor system. Stations which believe that they would have qualified for “specialty status” under the FCC’s definition last in effect in 1981 can so certify in an affidavit to the CO. The CO will put each such self-certifying station on the CO’s “specialty station” list – but not before (a) other potentially interested parties are invited to comment on the claim and (b) the claiming station has a chance to respond to such comments.

What happens when that barrage of pleadings and counter-pleadings has ended? The CO simply adds all claimant stations to the list. If objections have been raised about any particular station, a notation of the objection(s) is included in the listing. The CO does not itself try to resolve any disagreements: its position for more than 20 years has been, and remains, that the CO “should not itself verify the specialty station status of particular stations”. 

This seems like an odd bureaucratic exercise all around. Why, after all, maintain a list which seems to carry no official imprimatur? According to the CO, the goal of the list is to “establish a set of facts so that cable systems can make an informed decision as to whether copyright owners might continue to contest the carriage of a particular station on a specialty basis.” It’s not clear how much the list might really contribute such an “informed decision”.

And how useful is such a list when the CO’s updating efforts are lethargic at best. Since 1989, the CO has issued a total of five versions of the list (in 1990, 1991, 1995, 1998 and 2007). The version currently out for comment would be Number Six (although the CO itself seems to have lost count: a notice it issued last January listed only four previous versions). Note that a lot has happened in the television industry since 1990.

Whatever may be the case, the CO’s most recent public notice apprises us all that the Motion Picture Association of America has objected to a number of stations’ claims of “specialty” status. MPAA’s members benefit from a smaller list if “specialty stations”, since exemptions from distant signal copyright royalties reduce the pool of revenue available to be distributed to program producers.  (MPAA questions that status for: stations broadcasting all syndicated programs; translators for PBS affiliates; home shopping stations; silent stations; English language stations in Puerto Rico; LPTV stations on Channel 6 broadcasting audio targeted at FM radios; and stations that made no supporting showing.)   

Also, a number of additional claims to that status have arrived at the CO’s door since it initially started this latest update process last January. It’s all open for comment. If you’ve got something to tell the CO about it, you’ve got until January 9, 2012.

Meanwhile, if your cable carriage is being restricted now because you do not want to reimburse cable operators for the distant signal copyright fees they would incur and you believe that your station is entitled to specialty status – but you have not filed with the Copyright Office – it’s time to start thinking about the next round of revisions to the list.  Let us know if you would like our help in exploring your options.