http://www.broadcastingcable.com/news/washington/padden-targets-cable-license/143735
Padden Targets Cable License
Preston Padden, a former top News Corp. and ABC/Disney executive now
representing auction-interested TV stations, wants broadcasters to mount a
challenge to cable’s compulsory license, which is the blanket license that
allows them to deliver out-of-market and in-market TV stations without
negotiating separately for all the network and syndicated content they contain.
The National Association of Broadcasters has signaled it may be ready to push
for its elimination as well, at least of the distant-signal license.
Not surprisingly, cable operators represented don’t want the license to go away.
The FCC commissioners are being asked to vote on a proposal by FCC chairman Tom
Wheeler to eliminate the syndicated exclusivity and network non-duplication
rules, which prevent cable operators from importing TV station, network,
syndicated and local programming where that would duplicate in-market versions.
Padden, head of the Expanding Opportunities for Broadcasters Coalition, says if
the exclusivity rules are going to be excised, the license needs to go too,
though that would require action from a notoriously inactive Congress.
He explains why the two are linked and why their fates should be in this Q&A
with B&C Washington bureau chief John Eggerton.
What’s wrong with the compulsory license?
Simply stated, the cable and satellite compulsory license, which applies to all
broadcast programs, makes broadcasters second-class copyright citizens.
How so?
Cable networks, which are not subject to compulsory license, get paid under
copyright amounts that make our retrans dollars look like chump change.
So, that blanket license is not an artificially low price vs. a negotiation?
Because cable operators and satellite operators have to pay full copyright for
cable networks, those networks get vastly more money than we do.
Congress adopted the compulsory license when cable was a fledgling, struggling
industry. And when they adopted it, the consensus agreement provided
protections for broadcasters so this government license granted to cable did
not trump the licenses broadcasters have to negotiate in the marketplace. Those
protections were syndex and nondupe. It is absolutely unthinkable to repeal
syndex and network nondupe without also repealing the underlying compulsory
license.
Can you explain the consensus agreement?
In 1971, I was a kid lawyer on the edge of the room as the cable, broadcast and
movie industries struck the historic copyright and communications policy
agreement. It had three parts. The copyright owners got the Copyright Act
changed so that cable retransmission of programs was a performance. The cable
industry got a compulsory copyright license, and the broadcasters got nondupe
and syndex. They were all part of one integrated agreement and you can’t break
syndex and nondupe off from the compulsory license part.
Have broadcasters been fighting hard to keep syndex and nondupe?
The broadcast industry has been on a losing trajectory on these issues for a
decade, and unless we change our strategy we are going to glide into oblivion.
Can you give our readers a sense of your history with these rules? As we recall
you helped get syndex reinstated by the FCC in the late 1980s when you headed
the Association of Independent Television Stations (INTV).
Right. When Charlie Ferris was chairman of the FCC, he was buddies with Ted
Turner, who had his superstation [WTBS]. And Ferris had enough guts to pick on
independent stations by repealing syndex, but he did not have enough guts to
pick on the network affiliates. FCC Chairman Dennis Patrick had the wisdom to
restore syndex. He also led an FCC decision that called for the repeal of the
compulsory copyright license. And that decision was the commission’s last word
on the subject. So, right now, the FCC is on record in favor of repealing the
compulsory copyright license.
It is that compulsory license that makes broadcasters second-class citizens and
holds us back from being paid fairly for the value of our content.
You are arguing for getting rid of syndex and nondupe, too.
If you get rid of the compulsory license. Because if you get rid of the
compulsory license you also don’t need retrans. Think about it. Cable channels
get paid vastly more than us and they don’t have retrans.
How does that happen. It happens because they have full copyright rights. They
are first-class copyright citizens and broadcasters are second-class copyright
citizens. The broadcast industry should have been storming the Hill for the
last decade trying to get rid of the compulsory license.
But they haven’t. Perhaps it is because you also link it to getting rid of
retrans, which sounds like heresy.
It is hard. Because it is going to require broadcasters to think differently
and embrace a world different from the world they have known. But if they
don’t, they’re going to die.
Should the FCC’s unanimous decision to eliminate the sports blackout rules,
which also backstopped contractual exclusivity, been a signal the FCC would
take aim at exclusivity rules?
Yes. But the fact that the cable people got in the satellite bill a mandate for
the FCC to weaken retrans was the clearest sign I’ve seen. Our team was only
playing defense. And the Redskins will tell you if you never have your offense
on the field, you can’t win a game.
But won’t this make life a lot more complicated for everybody?
Not at all.
Why not?
When a syndicator or program owner sells a show to USA Network, they give USA
the right to telecast the show and the right to sublicense the copyright to
cable and satellite systems.
When they sell a show to broadcasters, they would use the same kind of form
that gives it two licenses, the license to broadcast the show and the license
to sublicense it to cable and satellite operators in their market. Very simple.
It happens every day for over 500 cable networks and I don’t understand why it
would not work equally as well for broadcasters.
But, to go back to the proceeding at the FCC now. It would be absolutely
unthinkable to repeal syndex and network nondupe unless the compulsory license
also goes away. The compulsory license and syndex and nondupe are ham and eggs.
You can’t have one without the other.
But that sounds like you are arguing for nothing to happen because Congress has
to get rid of the compulsory license and Congress legislating that is a long
shot, and even longer in an election year.
I am not saying it will be repealed this year, but until the industry starts
championing it, it will never happen.
It sounds like NAB is starting to raise the compulsory license issue? Do you
think they get it?
Yes.
