Before the COPYRIGHT ROYALTY JUDGES Washington, D.C. ) In the Matter of ) ) Docket No. 2012-6 CRB CD 2004-2009 Distribution of the 2004, 2005, 2006 ) (Phase II) 2007, 200S and 2009 ) Cable Royalty Funds ) ) In the Matter of Docket No. 2012-7 CRB SD 1999-2009 Distribution of the 1999-2009 (Phase II) Satellite Royalty Funds WRITTEN DIRECT STATEMENT REGARDING ALLOCATION OF THK MPAA-REPRESENTED PROGRAM SUPPLIERS VOLUMEIOF III 'RITTEN TESTIMONY AND EXHIBITS'RITTEN Gregory O. Olaniran D.C. Bar No. 4557S4 Lucy Holmes Plovnick D.C. Bar No. 4SS752 Alesha M. Dominique D.C. Bar No. 990311 .Mitchell Silberberg dk Knupp LLP goo1S1S msk.cornN Street NW, Sth Floor Washington, DC 20036 (202) 355-7917 (Telephone) (202) 355-7SS7 (Facsimile) [email protected] amd msk.corn Attorneysfor MPAA-Represented Program Suppliers August 22, 2016 Before the COPYRIGHT ROYALTY JUDGES Washington, D.C. In the Matter of Docket No. 2012-6 CRB CD 2004-2009 Distribution of the 2004, 2005, 2006 (Phase II) 2007, 2008 and 2009 Cable Royalty Funds In the Matter of Docket No. 2012-7 CRB SD 1999-2009 Distribution of the 1999-2009 (Phase II) Satellite Royalty Funds WRITTEN DIRECT STATEMENT OF MPAA-REPRESENTED PROGRAM SUPPLIERS The Motion Picture Association of America, Inc. ("MPAA"), on behalf of its member companies and other producers andlor distributors of syndicated movies, series, specials, and non-team sports broadcast by television stations who have agreed to representation by MPAA ("MPAA-represented Program Suppliers"),'n accordance with the May 4 and August 2, 2016 Orders of the Copyright Royalty Judges ("Judges"), hereby submit their Written Direct Statement Regarding Allocation in the captioned matter. MPAA submits this introductory memorandum in order to summarize the evidence it intends to present in this proceeding and to state the Phase II claims of 'ists of MPAA-represented Program Suppliers for each of the royalty years at issue in this consolidated proceeding are included as Appendix A to the designated cable and satellite direct testimonies of Jane Saunders. See MPAA Written Direct Statement Regarding Allocation, Vol. II, Tabs A and B. MPAA-represented Program Suppliers for the 2004, 2005, 2006, 2007, 2008, and 2009 cable royalty funds ("2004-2009 Cable Royalties") and the 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, and 2009 satellite royalty funds ("2000-2009 Satellite Royalties") (collectively, the "Funds"). I. PROCEDURAL HISTORY The Phase I portion of the distribution of the 2004-2009 Cable Royalties was resolved by a confidential settlement among the Phase I Parties following appeal of the Judges'llocation decision regarding the 2004 and 2005 cable royalty funds. The Phase I portion of the distribution of the 2000-2009 Satellite Royalties was resolved by two confidential settlements among the Phase I Parties. Following resolution of the Phase I disputes, MPAA, on behalf of its represented Program Suppliers claimants, endeavored to resolve all disputes among all Program Suppliers in order to avoid the instant proceeding. The Judges already made a final distribution of 1999 satellite royalties for the Program Suppliers category. See 78 Fed. Reg. 50114, 50115 (Aug. 16, 2013) (citing Order, Docket No. 2008-5 CRB SD 1999-2000 (June 19, 2013)). Thus, MPAA-represented Program Suppliers are not seeking a 1999 satellite royalty award in this proceeding. See 75 Fed. Reg. 57063, 57079 (Sept. 17, 2010); Order on Motions for Distribution, Docket Nos. 2007—3 CRB CD 2004-05; 2008& CRB CD 2006; 2009—6 CRB CD 2007; 2010—6 CRB CD 2008; 2011 —7 CRB CD 2009; 2010—2 CRB SD 2004-07; 2010—7 CRB SD 2008; 2011 —8 CRB SD 2009 (February 17, 2012). See Order Granting In Part Phase I Claimants'otion For Partial Distribution Of 1999 Through 2003 Satellite Royalty Funds, Docket Nos. 2008-5 CRB SD 1999-2000 and 2005-2 CRB SD 2001-2003 (December 8, 2008); Order on Motions for Distribution, Docket Nos. 2007— 3 CRB CD 200&05; 2008—4 CRB CD 2006; 2009—6 CRB CD 2007; 2010—6 CRB CD 2008; 2011 —7 CRB CD 2009; 2010—2 CRB SD 2004-07; 2010—7 CRB SD 2008; 2011 —8 CRB SD 2009 (February 17, 2012). Accordingly, MPAA engaged all of the parties who had identified themselves as having claims within the Program Suppliers category in settlement discussions. Before the Judges commenced this proceeding, MPAA reached confidential Phase II settlements with the National Association of Broadcasters, Broadcaster Claimants Group, Home Shopping Network, and USA/IAC, all of whom, but for the settlements, would be participating in this proceeding. As a result of these settlements, all of these parties relinquished any further claims to the Funds. On January 2, 2014, MPAA notified the Judges that despite MPAA's good faith efforts to reach settlements, Phase II controversies remained in the Program Suppliers category among MPAA, David Powell, and Independent Producers Group ("IPG"). On April 18, 2014, the Judges dismissed Mr. Powell's Petitions to Participate in these proceedings, thus, leaving unresolved in the Program Suppliers category only the Phase II controversy between MPAA and IPG. The Judges formally consolidated the proceedings regarding the Funds on August 29, 2014, following which they conducted a Preliminary Hearing regarding claims issues in December 2014. The hearing resulted in the issuance of the Judges'emorandum Opinion And Ruling On Validity And Categorization Of Claims on March 13, 2015 (the "Preliminary Hearing Order"). Thereafter, the Judges directed the parties to incorporate the Preliminary Hearing Order rulings in their Written Rebuttal Statements filed on March 27, 2015, and held a hearing regarding allocation issues in April 2015. On May 4, 2016, the Judges issued their Order reopening the record, setting aside all previously- USA Broadcasting Productions, Inc., InterActive Corp. (formerly USA Interactive) and Studios USA are collectively referred to herein as "USA/IAC." submitted testimony and evidence concerning allocation, and directing the parties to submit or designate testimony as a part of new Written Direct Statements regarding allocation. This filing is submitted by MPAA in compliance with the May 4 Order. H. MPAA'S ALLOCATION METHODOLOGY In each of the past Phase II proceedings involving the Program Suppliers category, MPAA-represented claimants received the overwhelmingly largest share of the royalties attributable to the Program Suppliers category. Most of these Phase II proceedings involved multiple Program Suppliers claimants. The awards to MPAA-represented claimants were well-justified: first, MPAA-represented claimants outnumbered other claimants within the Program Suppliers category; second, MPAA-represented claimants owned more titles than any other Program Suppliers claimant; third, MPAA-represented claimants'rograms constituted, by far, the largest volume of programs (i.e., minutes of claimants'rograms program air time) available to subscribers; andfourth, MPAA-represented claimants'rograms had more viewing than those of any other claimants. Moreover, MPAA- represented claimants'rograms, which cover the entire spectrum of program genres, belonged to small mom-and-pops as well as to large motion picture studios who supply the predominant share of programs on television. The foregoing elements also characterize the claims of MPAA-represented claimants for this Phase II proceeding. MPAA Phase ll awards by cable royalty year were 96.3% in 1979 (49 Fed. Reg. 20048 (May 11, 1984)), 96.9% in 1980 (48 Fed. Reg. 9552 (Mar. 7, 1983)), 96.9% in 1981 (49 Fed. Reg. 7845 (Mar. 2, 1984)), 97.5% in 1982 (49 Fed. Reg. 37653 (Sept. 24, 1984)), 98.2% in 1983 (51 Fed. Reg. 12792 (Apr. 15, 1986)), 98.475% in 1984 (52 Fed. Reg. 8408 (Mar. 17, 1987)), 99.175% in 1985 (53 Fed. Reg. 7132 (Mar. 4, 1988)), 98.5% in 1986 (54 Fed. Reg. 16148 (Apr. 21, 1989)), 99.788% in 1997 (66 Fed. Reg. 66433 (Dec. 26, 2001), subsequently vacated, 69 Fed. Reg. 23821 (Apr. 30, 2004)); 98.84% in 2000, 99.69% in 2001, 99.64% in 2002, and 99.77% in 2003 (78 Fed. Reg. 64984 (Oct. 30, 2013)). For the purpose of the allocation of the 2004-2009 Cable Royalties and the 2000- 2009 Satellite Royalties, MPAA continues to believe that the relative market value standard applies. To that end, MPAA will offer a simple, direct and statistically sound methodological approach to the allocation of the royalties between MPAA's and IPG's claimants: the best available measures of relative market value are (1) volume of programming available to distant subscribers, (2) viewing of such programs, and (3) the effect, if any, of such programs on subscriber growth. Taking these factors into account, MPAA-represented claimants should receive between 99.28% and 99.60% of the 2004- 2009 Cable Royalties, and between 99.54% and 99.87% of the 2000-2009 Satellite Royalties. HI. DIRECT TESTIMONY SUBMITTED BY MPAA-REPRESENTED PROGRAM SUPPLIERS Program Suppliers will present the following witnesses, each of whom will sponsor his or her testimony and accompanying appendices and/or attachments: Jonda K. Martin is the President and Owner of Cable Data Corporation ("CDC"), which collects and computerizes the data contained in the cable operator statements of account ("SOAs") on file with the Copyright Office. Ms. Martin will provide an overview of CDC's operations and data collection methodologies. She will also describe data reports that CDC generated and provided to MPAA and Dr. Jeffrey Gray, MPAA's economist witness, and a county analysis that she performed and provided to Nielsen in connection with distant viewing studies they provided for this proceeding. Paul B. Lindstrom is a Senior Vice President with Nielsen, where he is responsible for research design and analysis as part of the Nielsen Media Analytics group. Mr. Lindstrom will provide information about the Nielsen viewing data that MPAA is relying on in this proceeding, including his role in designing the additional custom analyses of viewing to distant cable and satellite households that MPAA commissioned from Nielsen for 2008 and 2009.