Suggesting cable and satellite operators may be underpaying to retransmit distant stations, the U.S. Copyright Office is urging Congress to stop setting the compensation procedures and let stations and cable operators freely negotiate retransmission pricing.
“Based on the record in this proceeding, it appears that the royalties in the statutory licenses are set at below-market levels,” said the report issued today. “Below-market rates may have been justifiable when cable and satellite were nascent industries. … However, the current distribution marketplace is robust. It is now time to phase out [regulation] so that copyright owners can negotiate market rates for the carriage of their programming.”
Currently the Copyright Office is mandated to set compensation after going through a process that includes talking to both sides.
The 249-page report also calls current carriage procedures “deeply flawed,” citing the lack of any recognition of secondary DTV channels; it urged a five-year transition to negotiation.
The recommendation could benefit TV stations at the expense of cable distributors, said Blair Levin, a broadcasting industry analyst at Stifel Nicolaus in a research note prepared with colleagues. He noted, however, that the current procedure is written into law and the recommendation would require congressional action to have any impact.
The National Cable & Telecommunications Association said in a statement that it’s reviewing the report, whose length “underscores the complexity of this issue.”
“That said, we continue to believe that the current royalty regime for cable—under which rates were negotiated upwards twice in the last 10 years—is appropriate,” said the NCTA statement. “It not only provides program producers with fair value but also enables consumers to access distant signal programming at reasonable prices.”