Cable Copyright Fees May Rise Under New Programming Accord
Cable operators’ royalty fees likely will grow in a deal with programmers boosting rates for transmitting some signals, cable lawyers said. The hike will be offset partly by raising certain revenue thresholds, perhaps shifting some systems to lower rate tiers, they said. The deal, approved with little notice by the Copyright Office, took effect July 1, according to a Oct. 6 Federal Register document.
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The arrangement’s exact cost is uncertain, but copyright fees clearly mean big money. In 2004 cable operator deposits with the Copyright Office totaled $132.4 million, a 1.1% rise from 2003, Office records show. The rules apply to twice-yearly payments operators make to a fund disbursed later to copyright owners. Rates can be reset every 5 years. The new deal amends “basic royalty rates and the gross receipts limitations,” the Copyright Office said. Rate rises averaged about 6% for retransmitting signals, mostly from distant stations. “Overall, there will be an increase in the total amount paid by cable operators,” said a cable lawyer, who asked not to be identified.
But some cable systems may pay less. That’s because the “gross receipts” level triggering the filing of forms to the Copyright Office rose an average of 39%. For instance, a cable system’s owner need not file Form 3 unless revenue over six months exceeds $527,599, up from the previous threshold of $379,600. Form 3 filers, usually the largest cable systems, may pay the most in royalties, lawyers said. The trigger for submitting Form 2, often for slightly smaller systems, went up to $137,100 from $98,600. “Some would pay less because they might have been right on the margin between a Form 2 and a Form 3, and this might bring them back into where they should have been,” another cable lawyer said. “By the same token, if you're a Form 3 [filer], and you're only carrying one distant signal, if the royalty rate on that distant signal has gone up, then you're going to pay more.”
Still unresolved at the Copyright Office are what cable lawyers call more important long-term issues. These include addressing the fact that cable operators must pay 4 times more for imported signals from TV stations not affiliated with ABC, CBS or NBC (CD Aug 24 p6). The NCTA has asked the Copyright Office to resolve that issue and phantom signal fees. Such fees accrue when an operator must pay for all subscribers served by a headend when only some customers receive distant stations (CD Aug 18 p10). “Phantom signal attribution remains unsolved, and the treatment of networks as independents remains a problem to be solved,” said a cable attorney. “So the [royalty] pool is not going to be right sized until those problems are addressed.”