Today, Congressman Jerrold Nadler (NY-10), the Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet, delivered an opening statement at the hearing on “Compulsory Video Licenses of Title 17.”

The following is the full text of Congressman Nadler’s opening statement (as prepared for delivery):

"Thank you, Mr. Chairman."

"Today we continue our examination of the cable and satellite compulsory licenses contained in the Copyright Act.  Broadly speaking, these licenses permit cable and satellite providers to retransmit copyrighted broadcast content without having to negotiate with creators and content owners to do so. 

"Of the three statutory licenses in Title 17, the satellite distant-into-local license contained in Section 119 is set to sunset on December 31^st of this year, unless reauthorized by Congress.   Among other things, that license allows satellite carriers to provide an out-of-market station to customers who are not served by local television broadcasts.  The other two licenses – Section 111 for cable providers and Section 122 for satellite retransmission of local broadcast programming in local markets – are permanent.      

"Enacted in 1988, when the satellite industry was in its infancy, the Section 119 license was intended to foster competition with the cable industry and also increase service to “unserved households” -- those subscribers who cannot receive an over-the-air signal of a local network.  In 2010, and as was the case on three prior occasions, Congress extended the Section 119 license for another five years as part of the Satellite Television Extension and Localism Act of 2010 (“STELA”).

"STELA includes provisions of the Copyright Act, which fall within this Committee’s jurisdiction, and broadcast signal retransmission consent provisions that fall under the Communications Act and within the jurisdiction of the Energy and Commerce Committee.  Just today, Energy and Commerce marked up a bill reauthorizing the retransmission consent provision of the Communications Act, with some adjustments.  I am interested in the views of our witnesses on how, if at all, the Energy and Commerce bill should impact our potential reauthorization of the Section 119 license.

"In granting cable and satellite providers the statutory right to retransmit copyrighted content at a government-regulated rate, Congress created an exception to the general rule that creators have exclusive rights to their works – including the right to determine when and how to distribute them.  This licensing system replaces the free market, something that we are generally reluctant to do.  And when we did so for cable and satellite providers, these industries were just starting up, and the licenses were intended to encourage growth, foster competition, and enhance customer access.    

"On these fronts, the system has been a tremendous success. It is estimated that nearly 90 % of American households now subscribe to a pay-TV service provided by multichannel video programming distributors – in most cases cable or satellite operators.  And nearly all households have a choice of at least three different providers.  At the same time, broadcast TV continues to lead the way on programming content, with 97 of the top 100 most watched shows in the most recent television season aired on broadcast stations.

"The dramatic change in marketplace dynamics, as well as technological advances that continue to revolutionize ways of distributing video programming content, raise legitimate questions about whether the statutory licensing system in the Copyright Act is still needed.

"This is not a new question.  Ten years ago, we tasked the Copyright Office with reporting on whether the compulsory licensing scheme was still justified.  The Office recommended that Congress move toward abolishing the licenses.  As part of the 2010 reauthorization, we then asked for recommendations on how to phase-out the statutory licensing scheme.  In a August 2011 report, the Copyright Office suggested a range of licensing alternatives, including a sublicensing system through which broadcast stations act as marketplace intermediaries between rights holders and cable and satellite providers.   And at last September’s Subcommittee hearing on “Satellite Television Laws in Title 17” Preston Padden, the Former President of ABC Television Network and Former Executive Vice President of the Walt Disney Company, made an impassioned plea for repeal of the existing statutory licenses.  One common refrain in the calls for repeal is the desire to allow the creators of program content – who may not receive fair compensation under the existing and limited royalty system – to develop marketplace licensing options and negotiate in the open market for the rights to their works.  

"Whether we address the overarching licensing system at this time, however, we must still decide whether to reauthorize the Section 119 distant-into-local satellite license by the end of this year.  The satellite industry estimates that approximately 1.5 million customers, mostly in rural areas, would lose one or more of the four major network channels  if Section 119 were not renewed.  And both the cable and satellite industries seek additional changes as part of this reauthorization process to address blackouts of local channels during retransmission consent disputes.    

"On the other side of this equation, the broadcast industry and others – including the Writer’s Guild of America, the International Brotherhood of Electrical Workers and the Teamsters Union, whose letters will be submitted for the record – have questioned the need to renew this particular license and object to additional changes that are intended to impact retransmission consent negotiations.  Under the Communications Act, retransmission consent rules require cable and satellite providers to negotiate with broadcasters in order to carry their broadcast signals. 

"These are only a few of the broad policy questions that will arise as we continue to consider whether to reauthorize Section 119.  As always, as we do so, our goal must be to ensure a framework within which content providers and distributors (old and new) are appropriately compensated and incentivized in a way that provides a competitive environment for American consumers.  We have an impressive and diverse group of expert witnesses today who have very different views on how this marketplace works, how it has developed since our passage of STELA in 2010, and what should be done going forward.   I look forward to their testimony and to continuing this discussion in the future.

"I yield back the balance of my time.nd what should be done going forward.   I look forward to their testimony and to continuing this discussion in the future."

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