A hearing prompted by media emperor Rupert Murdoch's bid to get federal law to accommodate his proposed new satellite TV service became a forum on just how - and at what price - consumers will see copyrighted video content.
The focus of Tuesday's US Copyright Office hearing was the "compulsory licenses" that allow cable TV operators and satellite service providers to retransmit broadcast TV programs for set per-subscriber fees rather than negotiate separate payments.
As might be expected, content owners who spoke at Tuesday's hearings want to ax the compulsory license altogether and reap the presumably higher fees that would result from individual negotiations. Cable TV operators, on the other hand, want to keep the current system intact because it's an administrative breeze and generally nets them lower fees than would the marketplace. And satellite companies, which complain they're getting a much worse deal than cable for no good reason.
The issue has been simmering for some time. But Murdoch touched off a storm in the industry with his suggestion that, to accelerate development of his proposed 500-channel ASkyB satellite TV service, federal law be changed to allow him the advantage of the compulsory license while allowing him to remain free of cable operators' burden of carrying all local stations.
"Something has to be done," asserted Chuck Hewitt, president of the Satellite Broadcasting and Communications Association. He claimed Tuesday that satellite companies pay more than twice what cable TV operators do for the same compulsory license. Ellen Agress, News Corp.'s ASkyB general counsel, pointed out, "It's the same signal, containing the same programming, being offered to the same subscribers. The only difference is the technology."
But that makes all the difference, says Decker Anstrom, president of the National Cable Television Association. He said direct broadcast satellite operators shouldn't get the same deal as cable unless they agree to endure the excruciating local obligations that now face cable companies. For example, cable operators must carry all local broadcast stations and deal with local governments for passage across public rights-of-way. Satellite operators, operating with little or no local oversight, are free of such constraints.
On this point, broadcasters have found rare agreement with the cable camp. That's because they've been irked for years by satellite companies that import distant broadcast signals into local markets, effectively diluting TV stations' ad dollars. Benjamin Ivins, a National Association of Broadcasters lawyer, said compulsory licenses for satellite companies should be considered only case by case. But he argued that the market, and not legislators or regulators, ought to provide the solution to the problem.
The hearing also heard a pitch for market forces from the Motion Picture Association of America, which would like to squeeze every cent possible out of its copyrighted material by negotiating individual deals for all use of movie content. Pointing out that cable companies pay license fees to carry most nonbroadcast cable networks like Home Box Office, MPAA representative Fritz Attaway argued the same deal should work fine for content on broadcast networks whether it's carried on cable or satellite.
"Get rid of the compulsory license and the marketplace will work quite nicely," he said.
The stakes for everyone involved in the industry, including consumers, are huge. If the cable TV/satellite compulsory licenses are altered or abolished, the entire economic model that drives the TV business could get turned on its head.
Some say local TV stations - which provide the vast majority of local news coverage and emergency information - will go broke. Others say content will get so expensive that the only way viewers will be able to check out Independence Day on cable is on pay-per-view. And still others say the marketplace is king and will solve these problems better than a government formula.
The Copyright Office will make recommendations to Capitol Hill this summer based on the hearings and other comment. Congress may act on the issue this fall.
