In November 1971 as a law clerk at TV broadcast company Metromedia, I was privileged to sit at the edge of a meeting where the presidents of the National Association of Broadcasters, the National Cable Television Association and the Motion Picture Association of America finalized the historic “Consensus Agreement” that ushered in the modern age of cable TV.  

The Supreme Court had twice ruled that cable retransmission of broadcast television programs was not a “performance” under the then extant 1908 Copyright Act.  With cable untenably sitting outside the marketplace for negotiated programming rights, the Federal Communications Commission had barred the importation of distant signals into the top 100 TV markets.  The White House, Congress and the FCC all leaned heavily on the three industry trade groups to reach a compromise that would break the impasse and enable cable television to penetrate major urban areas.

The “Consensus Agreement” had three main elements.  First, the Copyright Act would be amended to make cable retransmission of programs a “performance”.  Second, the nascent cable industry was granted a statutory compulsory copyright license to retransmit broadcast shows.  By statute, cable (and later satellite) gets to exploit all the programs on every local TV station for free – an enormous subsidy.  Third, the FCC retained its network non-duplication rule and added a syndicated exclusivity rule to ensure the program rights that cable received from Congress did not trump (small t) the program rights for which broadcasters paid in market transactions.

ADVERTISEMENT

Compulsory licenses are an extraordinary exception to, and departure from, normal copyright principles.  Under a compulsory license a program creator is compelled by the government to license its program to a government-favored party at government-set rates.  Pursuant to International Copyright Treaties and Conventions, compulsory licenses are to be used only as a last resort in instances of market failure.

While I believe that, for many reasons, repealing the compulsory license is warranted, the one unthinkable course of action would be to break apart the carefully balanced 1971 “Consensus Agreement” – to eliminate the FCC’s Syndicated Exclusivity and Network Non-Duplication Rules before Congress acts to repeal the distant signal compulsory license.  Some argue that those Rules may be unnecessary because broadcasters could seek to enforce their negotiated rights in court.  But, litigation is a slow process and cannot timely redress the damage caused by the government wading into the marketplace for television program rights.  The compulsory license and the FCC Rules embodied in the “Consensus Agreement” are “ham and eggs” – can’t have one without the other.  The extraordinary subsidy of the cable/satellite statutory compulsory license – for so long as it exists - compels retention of the associated FCC Rules.  Allowing an outdated government subsidy of some favored industry to trump the rights negotiated by others in the marketplace is just not the American way.

Padden had a 38-year career in the media business holding the following positions: assistant general counsel, Metromedia; president, The Association of Independent Television Stations; president, Network Distribution, Fox Broadcasting Company; chairman and CEO, American Sky Broadcasting (merged into Dish Network); president, ABC Television Network; and executive vice-president, Government Relations, The Walt Disney Company.