Statutory Cable, Satellite, and DART License Reporting Practices

<RULE> LIBRARY OF CONGRESS <SUBAGY>Copyright Office</SUBAGY> <CFR>37 CFR Part 201</CFR> <DEPDOC>[Docket No. 2005-6]</DEPDOC> <SUBJECT>Statutory Cable, Satellite, and DART License Reporting Practices</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> U.S. Copyright Office, Library of Congress. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The U.S. Copyright Office (“Office”) is issuing a final rule governing royalty reporting practices of cable operators, and the Statement of Account form and filing requirements. This final rule makes regulatory changes regarding procedures for cable system operators. In some areas, similar changes are being made to the regulations governing statutory licenses for satellite carriers and digital audio recording devices or media. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Effective January 27, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Rhea Efthimiadis, Assistant to the General Counsel, by email at <E T="03">meft@copyright.gov,</E> or by telephone at 202-707-8350. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. Statutory Background</HD> Section 111 of the Copyright Act (“Act”), title 17 of the United States Code, provides cable operators with a statutory license to retransmit a performance or display of a work embodied in a “primary transmission” made by a television station licensed by the Federal Communications Commission (“FCC”). Cable operators that retransmit broadcast signals in accordance with this provision are required to pay royalty fees to the Copyright Office (“Office”), among other requirements. The royalty amounts are determined based on a specified percentage of cable operators' reported gross receipts collected for secondary transmissions, as well as additional amounts for any distant signal equivalent (“DSEs”) carried by the cable system. <SU>1</SU> <FTREF/> These royalty fees are remitted semi-annually to the Office, which invests the royalties in United States Treasury securities pending distribution to copyright owners eligible to receive a share of the royalties. <SU>2</SU> <FTREF/> <FTNT> <SU>1</SU>  17 U.S.C. 111(d)(1)(B). </FTNT> <FTNT> <SU>2</SU>   <E T="03">Id.</E> at 111(d)(2). The Office distributes those royalties in accordance with periodic distribution orders issued by the Copyright Royalty Board (“CRB”). <E T="03">Id.</E> </FTNT> In conjunction with their royalty payments, cable operators must complete and file statements of account (“SOAs”), which provide a record regarding their retransmissions and associated royalty payments to “promote uniform and accurate reporting, assist cable operators in meeting their obligations under the Act and regulations, and aid copyright owners, the Copyright Office, and the Copyright [Royalty Judges] in reviewing and using the information provided.”  <SU>3</SU> <FTREF/> Section 111 identifies a variety of information that must be reported to the Copyright Office on the SOA, including the number of channels by which the system made secondary transmissions, the names and locations of all primary transmitters used, and, as particularly relevant here, the “total number of [cable system] subscribers” and the “gross amounts” paid to the cable system by these subscribers “for the basic service of providing secondary transmissions of primary broadcast transmitters.”  <SU>4</SU> <FTREF/> <FTNT> <SU>3</SU>   <E T="03">Compulsory License for Cable Systems,</E> 42 FR 61051, 61054 (Dec. 1, 1977) (explaining benefits of using a standard SOA form, referencing the Copyright Royalty Tribunal, a precursor to the current Copyright Royalty Judges system). <E T="03">See</E> 17 U.S.C. 111(d)(1)(A). </FTNT> <FTNT> <SU>4</SU>  17 U.S.C. 111(d)(1)(A). </FTNT> Section 111 tasks the Register of Copyrights (“Register”) with prescribing the specific requirements for the SOA by regulation. <SU>5</SU> <FTREF/> <FTNT> <SU>5</SU>  17 U.S.C. 111(d)(1). </FTNT> <HD SOURCE="HD2">B. Regulatory Background</HD> As directed by section 111, the Office has adopted regulations to implement the statute's reporting requirements  <SU>6</SU> <FTREF/> as well as the design of the SOA form. <SU>7</SU> <FTREF/> In 1977, to address the law's requirement that the “number of subscribers” and “gross amounts” paid to cable operators be reported, <SU>8</SU> <FTREF/> the Office “proposed . . . that the number of subscribers be accompanied by certain related information concerning subscriber categories and charges in order reasonably to accomplish this purpose.”  <SU>9</SU> <FTREF/> In the subsequent 1978 final rule, which adopted regulatory language almost identical to the present § 201.17(e)(6), the Office noted that “although this information `will not provide a definitive or detailed comparison with the reported gross receipts,' it will be useful for at least a rough comparison with the reported gross receipts, and gives meaning to the statutory requirement that the `number of subscribers' be given.”  <SU>10</SU> <FTREF/> The Office has consistently followed this approach in its subsequent rulemakings in this area. <FTNT> <SU>6</SU>  37 CFR 201.17(e)(6) and (7). </FTNT> <FTNT> <SU>7</SU>   <E T="03">Id.</E> § 201.17(d). The SOA forms are available in PDF and Excel format on the Office's website at <E T="03">https://www.copyright.gov/licensing/sec_111.html.</E> </FTNT> <FTNT> <SU>8</SU>  17 U.S.C. 111(d)(2) (1977). </FTNT> <FTNT> <SU>9</SU>  42 FR at 61054. </FTNT> <FTNT> <SU>10</SU>  43 FR 958, 959 (Jan. 5, 1978). </FTNT> The Office's current regulations require the following information, among other data, to be reported on SOAs by cable operators: “[t]he designation `Area Served', followed by the name of the community or communities served by the system”; “[a] brief description of each subscriber category for which a charge is made by the cable system for the basic service of providing secondary transmissions of primary broadcast transmitters”; “[t]he number of subscribers to the cable system in each such subscriber category”; and “[t]he charge or charges made per subscriber to each such subscriber category for the basic service of providing such secondary transmissions.”  <SU>11</SU> <FTREF/> The SOA form organizes this information into specific areas, several of which are relevant to this rulemaking. Space D of the SOA (titled “Area Served”) requests information identifying “each separate community served by the cable system.” Space E (titled “Secondary Transmission Service: Subscribers and Rates”) requests information that “should cover all categories of secondary transmission service of the cable system,” including “the number of subscribers to the cable system, broken down by categories of secondary transmission service,” and the “rate charged for each category of service.”  <SU>12</SU> <FTREF/> Space K (titled “Gross Receipts”) requires cable operators to “[e]nter the total of all amounts (gross receipts) paid to [the] cable system by subscribers for the system's secondary transmission service (as identified in Space E) during the accounting period.”  <SU>13</SU> <FTREF/> Finally, Space F (titled “Services Other Than Secondary Transmissions: Rates”) requires cable operators to list rate information “with respect to all . . . services that were not covered in space E, that is, those services that are not offered in combination with any secondary transmission service for a single fee.”  <SU>14</SU> <FTREF/> <FTNT> <SU>11</SU>  37 CFR 201.17(e)(4), (6)(i) through (iii). </FTNT> <FTNT> <SU>12</SU>  Paper Form SA1-2 at 2, Space E (“Short Form SOA”); Paper Form SA3 at 2, Space E (“Long Form SOA”). </FTNT> <FTNT> <SU>13</SU>  Short Form SOA at 6, Space K; Long Form SOA at 7, Space K; <E T="03">see also</E> 37 CFR 201.17(e)(6) and (7) (describing corresponding SOA requirements). </FTNT> <FTNT> <SU>14</SU>  Short Form SOA at 2, Space F; Long Form SOA at 2, Space F. <E T="03">See</E> 37 CFR 201.17(e)(8). </FTNT> <HD SOURCE="HD2">C. Procedural Background</HD> This rulemaking began after the Motion Picture Association of America, Inc. (“MPA”)  <SU>15</SU> <FTREF/> filed a petition on behalf of its member companies and other producers and/or distributors of movies and television series (hereinafter “Program Suppliers”) asking the Office to address a number of issues relating to the SOA reporting practices of cable operators under section 111. <SU>16</SU> <FTREF/> The Program Suppliers expressed concerns that the subscriber and rate information reported by cable operators under the Office's regulations failed to provide sufficient data to support the intended “rough comparison” copyright owners should be able to conduct between subscriber information and gross receipts. Their concerns focused on the relationship between the information provided in Space E and Space K. <SU>17</SU> <FTREF/> They asked the Office to “require greater congruity between the `gross receipts' information and the subscriber and rate information provided on the SOAs,” and “greater detail concerning the nature of revenues that a cable operator includes and excludes in its `gross receipts.' ”  <SU>18</SU> <FTREF/> <FTNT> <SU>15</SU>  The Motion Picture Association of America is now known as the Motion Picture Association, or MPA. </FTNT> <FTNT> <SU>16</SU>  The petition can be found at <E T="03">https://www.copyright.gov/rulemaking/section111/petition20050607.pdf</E> (the “Petition”). </FTNT> <FTNT> <SU>17</SU>  Program Suppliers Initial NOI Comment at 6. Broadcast Music, Inc., The American Society of Composers, Authors and Publishers, Broadcast Music Inc., and SESAC, Inc. 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