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Transcript and Prepare to Talk to You in the Context of Having Done That 8534 LIBRARY OF CONGRESS COPYRIGHT OFFICE COPYRIGHT ARBITRATION ROYALTY PANEL + + + + + In the matter of: II Docket No. ]] 2ooo-9 Digital Performance Right in II Sound Recording and Ephemeral II Recording II CARP DTRA CARP Hearing Room LM-414 Library of Congress Madison Building 101 Independence Ave, SE Washington, D.C. Thursday September 6, 2001 The above-entitled matter came on for hearing, pursuant to notice, at 9:00 a.m. BEFORE THE HONORABLE ERIC E. VAN LOON Chairman THE HONORABLE JEFFREY S. GULIN Arbitrator THE HONORABLE CURTIS E. von KANN Arbitrator NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8535 APPEARANCES: On Behalf of Clear Channel Communications. Inc., National Reliaious Broadcasters Music License Committee, and Salem Communications Corooration KARYN ABLIN, ESQ. BRUCE G. JOSEPH, ESQ. THOMAS W. KIRBY, ESQ. DINEEN PASHOUKOS WASYLIK, ESQ. Wiley, Rein E Fielding 1776 K Street, N.W. Washington, D.C. 20006 (202) 719-4913 (202) 719-7000 On Behalf of American Federation. of Television and Radio Artists ARTHUR J. LEVINE, ESQ. of: Finnegan, Henderson, Farabow, Garrett 6 Dunner, LLP 1300 I Street, N.W. Washington, D.C. 20005-3315 (202) 408-4032 On Behalf of the Association for Independent Music JACQUES M. RIMOKH, ESQ. BARRY I SLOTNIK I ESQ of: Loeb & Loeb, LLP 345 Park Avenue New York, New York 10154-0037 (212) 407-4900 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8536 APPEARANCES: (Cont ') On Behalf of BET.corn; CBS Broadcastincr. Inc.; Comedv Central; Coollink Broadcast Network; Echo Networks, Inc.; Everstream, Inc.; Incanta. Inc.; Launch Media. Inc.; Listen.corn; Live365.corn; MTVi Grouo, LLC; MusicMatch. Inc.; MvPlav. Inc.; NetRadio Corporation; Radioactive Media Partners, Inc.; RadioWave.corn. Inc.; Entercom Communications Corporation; Soinner Networks, Inc.; Susauehanna Radio Coro.; Univision Online; Westwind Media.corn, Inc.; and Xact Radio Network. LLC ADAM I. COHEN, ESQ. MARK A. JACOBY, ESQ. R. BRUCE RICH, ESQ. FIONA SCHAEFFER, ESQ. KENNETH L. STEINTHAL, ESQ. of: Weil, Gotshal 6 Manges, LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8622 On Behalf of AEI Music Network; DMX Music, Inc. SANDRA M. AlSTARS, ESQ. DAVID R. BERZ, ESQ. of: Weil, Gotshal 6 Manges, LLP 1615 L Street, N.W., Suite 700 Washington, D.C. 20036 (202) 682-7272 On Behalf of the Recordincr Industrv Association of America. Inc. JOHN A. FREEDMAN, ESQ. ROBERT ALAN GARRETT, ESQ. HADRIAN R. KATZ, ESQ. BRAD R. NEWBERG, ESQ. RONALD A. SCHECHTER, ESQ. JULE L. SIGALL, ESQ. CHRISTOPHER WINTERS, ESQ. MICHELE J. WOODS, ESQ. of: Arnold 6 Porter 555 Twelfth Street, N.W. Washington, D.C. 20004 (202) 942-5719 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISIAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8537 APPEARANCES: Cont'd On Behalf of Public Radio: DENISE LEARY, ESQ. of: Public Radio, Inc. 635 Massachusetts Avenue, N.W. Washington, D.C. 20001 (202) 513 — 2049 On Behalf of American Federation of Musicians of the United States and Canada: PATRICIA POLACH, ESQ. Bredhoff & Kaiser, P.L.L.C. 805 15th Street, N.W. Suite 1000 Washington., D.C. 20005 (202) 842 — 2600 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 8538 C-0-N-T-E-N-T-S WITNESS DIRECT CROSS REDIRECT RECROSS Joe D. Davis By Mr. Joseph 8540 8612 8622 By Mr. Winters 8567 Douglas Talley By Ms. Aistars 8628 8680 By Mr. Garrett 8650 EXHIBIT NO. DESCRIPTION MARK RECD RIAA Salem Communications 2000 8574 8578 Annual Report 205-209 DPX Salem Quarterly Earnings 8578 8585 Press Releases 210 DPX Los Angeles Business Journal 8540 Article 14 January 29, 2001 211 DPX Salem Press Release, 8596 8605 WZFS Launch 212 DPX Salem Press Release, 8601 8605 WFSH Launch NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8539 P-R-0-C-E-E-D-I-N-G-S (9:01 a.m.) CHAIRMAN VAN LOON: Good morning, everyone. I hope we'e in shape to proceed and that we'e recovered from last night. Having had a long administrative and procedural discussion at the end of the day, I wouldn't imagine that there are any other procedural issues right now. But just in case, before we begin 10 with the witness, are there anything? MR. GARRETT: There's nothing from our 12 side, Your Honor. 13 MR. STEINTHAL: Nothing, Your Honor. 14 CHAIRMAN VAN LOON: Excellent. 15 In that event, we'd like to welcome our first witness this morning. Good morning. Please 17 come up and assume tbe witness chair here. This 18 microphone is what will be picking things up for your 19 testimony, so if you can avoid putting paper on top of 20 it, that makes John's job a lot easier. 21 Welcome, and we appreciate your being 22 bere. And let me ask you to raise your right hand to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8540 be sworn in at this time. WHEREUPON, JOE D. DAVIS was called as a witness and, having been first duly sworn, assumed the witness stand, was examined and testified as follows: DIRECT EXAMINATION BY MR. JOSEPH: Q Good morning, Mr. Davis. Would you please 10 state your full name for the record, and spell your last name for the Court Reporter? 12 Joe, middle initial D, Davis, D-A-V-I-S. 13 Q And what is your current employment and position, Mr. Davis? 15 I am Senior Vice President for Operations, Salem Communications Corporation. Q How long have you held that position? 18 This particular position just since September of 2000. 20 Q What position did you hold before you were 21 Senior Vice President for Operations? 22 I was a Regional Operations Vice President MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8541 in charge of I believe five markets. Q And how long did you hold that position? Since mid-'97. Q How long in total have you been with Salem Communications? I joined Salem in August of 1989. I think that would be about 12 years. Q If we'e subtracting correctly, that sounds about right. 10 Can you tell us briefly, or tell the Panel briefly, what your job responsibilities are as -- in 12 your current position of Senior Vice President for 13 Operations? 14 Well, I still maintain primary 15 responsibility for a number of major markets in the 16 east, including Boston, New York, Atlanta, Tampa, 17 Pittsburgh, and Cleveland. But I also have the 18 responsibility for coordinating the work of all of the 19 operations vice presidents, and it gives me some 20 oversight of all the stations that are owned and 21 operated by Salem throughout the United States. CHAIRMAN VAN LOON: Are you physically MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8542 located in tbe northeast or where? THE WITNESS: I'm located in New Jersey. BY MR. JOSEPH: Q So instead of having to fly across country we had a train ride to get bere. Right. And what is your involvement in the internet operation of Salem's radio stations? You stated correctly it is with Salem 10 radio stations, not with. our internet company, which is a subsidiary. I often am involved in the decision 12 on the content of a website or whether or not to 13 stream or bow to use web resources to supplement or complement the use of the radio station itself. 15 Q And what is the purpose of your testimony bere today? 17 My testimony today is oriented towards 18 describing how certain stations use music. By 19 "certain stations," I'm referring primarily to 20 religious-oriented radio stations, and similar 21 stations that are program-oriented. and use music far 22 less as a part of their total programming elements NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.corn 8543 than a typical general market radio station. And also to ask that fairness be extended to these stations in the deliberations of this committee. Q And in the setting of the fee and the structure of the fee? And that the fee structure represent that limited use of music by these stations as opposed to the music-intensive stations. MR. JOSEPH: At this point, I'd offer the 10 witness for voir dire. MR. WINTERS: We'l reserve for cross. 12 MR. JOSEPH: Okay. 13 BY MR. JOSEPH: Mr. Davis, could you tell the Panel a 15 little bit about the history of Salem Communications? 16 Salem Communications started in the late 17 '60s when two brothers-in-law, Edward Astinger and 18 Stuart Epperson, merged their radio holdings, and I 19 don't remember, four or five stations were involved, 20 and it became Salem Communications. 21 It grew moderately, as stations did in 22 those days before deregulation and clustering. And NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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