Copyright Fight Looming for Cable, DBS?

This week, the U.S. Copyright Office released a report and recommendations to lawmakers on Capitol Hill concerning statutory copyright licensing terms for carriage of broadcast stations by cable and satellite TV operators.

And, as indications suggested, there could be a fight over the copyright issue when lawmakers begin work on the matter next year.

According to an assessment done by Blair Levin at Stifel Nicolaus, the Copyright Office found that the existing government royalty rate schedule for retransmission of distant broadcast signals is set at "below market" prices and should be phased out in favor of commercial rates. "If adopted, we believe that move could eventually increase the copyright payments of cable and satellite providers to content holders, including media/broadcast conglomerates," Levin said.

The Stifel Nicolaus assessment found that cable operators have paid on average $125 million in annual royalties since their license was implemented in 1978. Satellite TV providers have paid on average almost $50 million in annual royalties since their license was implemented in 1989, stated numbers cited by the firm from the Copyright Office.

When broken out between small dish operators, DIRECTV paid more than $326 million in royalties from the second half of 1997 to the end of 2006. EchoStar/DISH Network paid $158 million during the same period, stated the Stifel Nicolaus assessment.

With the digital TV transition looming, the Copyright Office recommended that Congress set up a temporary license period from 2010 to 2014. That transition period would provide a royalty "lifeline" for carriage of distant and superstation signals while continuing to allow the retransmission of local TV signals via a royalty free status, stated the report.