768 COPYRIGHT ARBITRATION ROYALTY PANEL LIBRARY OF CONGRESS HEARING IN THE MATTER OF: SATELLITE RATE ADJUSTMENT DOCKET NO. 96 — 3 CARP-SRA Tuesday, March 18, 1997 CARP Hearing Room LM414 Library of Congress 101 Independence Ave., S.E. Washington, D.C. 20540 The above-entitled matter came on for bearing, pursuant to notice, at 10:00 a.m. BEFORE: THE HONORABLE LEWIS HALL GRIFFITH, Chairperson THE HONORABLE JOHN W. COOLEY THE HONORABLE JEFFREY S. GULIN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 769 APPEARANCES: On behalf of the Joint S orts Claimants: Tbe Office of the Commissioner of Baseball: KATHLEEN A. BEHAN, ESQ. ROBERT ALAN GARRETT, ESQ. GARY GREENSTEIN, ESQ. STEVEN MARKS, ESQ. Arnold K Porter 555 Twelfth Street, N.W. Washington, D.C. 20004-1202 202/942-5444 National Hocke Lea ue PHILIP R. HOCHBERG, ESQ. Verner, Lipfert, Bernbard, McPberson & Hand 901 15th Street, N.W. Washington, D.C. 20005-2301 202/371 — 6244 On Behalf of Ca ital Cities ABC Inc.- NBC Inc.. and CBS Inc. CHARLES D. OSSOLA, ESQ. Lowe, Price, LeBlanc K Becker Suite 300 99 Canal Center Plaza Alexandria, Virginia 22314-5503 703/518 — 5393 On behalf of Ca ital Cities ABC Inc. ROGER GOODSPEED, ESQ. ABC, Inc. 77 West 66th Street New York, New York 10023-6298 212/456 — 7593 MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 770 APPEARANCES: (CONT.) On behalf of Broadcasters Claimants Grou JACQUELINE DAVIS, ESQ. JESSICA HERRERA, ESQ. JOHN STEWART, ESQ. Crowell and Moring 1001 Pennsylvania Ave., N.W. Washington, D.C. 20004 202/624-2500 On behalf of the Public Television Claimants: MICHELE J. WOODS, ESQ. Covington & Burling 1201 Pennsylvania Ave., N.W. P.O. Box 7566 Washington, D.C 20044-7566 202/662-5347 On behalf of National Broadcastin Com an Inc. DIANE ZIPURSKY, ESQ. NBC, Inc. 1299 Pennsylvania Ave., N.W. 11th Floor Washington, D.C. 20004 202/637-4535 MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 771 APPEARANCES: (CONT.) On behalf of The Devotional Claimants: BARRY GOTTFRIED, ESQ. Fisher, Wayland., Cooper, Leder & Zaragoza, LLP 2001 Pennsylvania Avenue, N.W. Suite 400 Washington, D.C. 20006-1851 202/659-3494 JOHN H. MIDLEN, JR., ESQ. Chartered 3238 Prospect Street, N.W. Washington, D.C. 20007-3214 Washington, D.C. 20007-3214 202/333-1500 RICHARD M. CAMPANELLI, ESQ. Gammon & Grange, P.C. Seventh Floor 8280 Greensboro Drive MCLean, Virg3.nla 703/761-5000 On behalf of Pro ram Su liers: DENNIS LANE, ESQ. JOHN M. COLLINS, ESQ. Morrison 6 Hecker, LLP Suite 800 1150 18th Street, N.W. Washington, D.C. 20036-3816 202/785-9100 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 772 APPEARANCES: (CONT.) On behalf of American Societv of Composers. Authors and Publishers (ASCAP): BEVERLY A. WILLETT, ESQ. ANDREW J. SCHAEFFER, ESQ. ASCAP One Lincoln Plaza New York, New York 10023 212/621-6289 212/621-6275 On behalf of Broadcast Music. Inc. (BMI): MICHAEL J. REMINGTON, ESQ. GEORGE GALT, ESQ. Drinker, Biddle & Reath 901 15th Street, N.W. Suite 900 Washington, D.C. 20005 202/842-8800 and JOSEPH J. DiMONA, ESQ. Broadcast Music, Inc. 320 West 57th Street New York, New York 10019 212/830-2533 On behalf of Satellite Broadcastincr & Communications Association: PAUL GLIST, ESQ. JOHN D..SEIVER, ESQ. Cole, Raywid S Braverman, LLP 1919 Pennsylvania Ave., N.W. Washington, D.C. 20006 202/659-9750 NKAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 773 APPEARANCES: (CONT.) On behalf of Prime Time 24: C. TODD HARDY, ESQ. Hardy R Ellison, P.C. 9306 Old Keene Mill Road Suite 100 Burke, VA 22015 On behalf of American Sk Broadcastin CHRIS MEYER, ESQ. MIKE KLIPPER, ESQ. Meyer K Klipper, PLLC Suite 803 918 16th Street, N.W. Washington, D.C. 20006 202/496 — 0830 and CRAIG HOOVER, ESQ. JACQUELINE CLEARY, ESQ. KRISTIN DONOGHUE, ESQ. Hogan E Hartson 555 13th Street, N.W. Washington, D.C. 20004 202/637-5600 On behalf of National Rural Telecommunications Coo erative: JOAN KEISER, ESQ. NRECA 4301 Wilson Boulevard Arlington, VA 703/907-5817 MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 774 APPEARANCES: (CONT ~ ) On behalf of Librar of Con ress: WILLIAM ROBERTS, ESQ. Senior Attorney Office of General Counsel Copyright Office for Compulsory Licenses 101 Independence Ave., S.E. Washington, D.C. 20540 202/707-8380 ALSO PRESENT: Tanya Sandros, Administration, CARP Vivian Rogue-Balboa, Administration, CARP Christine Walsh, Paralegal, Cole, Raywid 6 Braverman Jerry Parker, Witness Edwin S. Desser, Witness James Trautman, Witness Andy Paul, Senior Vice President, SBCA Tyra Fischbeck, Director of Business Affairs, Prime Time 24 David Hummel, Witness Marsha Kessler, Witness MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 775 C-0-N-T-E-N-T-S Witness Direct Cross Redirect Recross William H. Qraff By Mr. Stewart 784 907 By Mr. Seiver 791 862 905 918 By Mr. Garrett 885 VOIR DIRE BY MR STEWART ON PAGE 781 David Hummel By Mr. Gottfried 927 By Mr. Seiver 937 Marsha Kessler By Mr. Lane 974 1036 By Mr. Seiver E-X-H-I-B-I-T-S Exhibit No. Description Mark Read. Advance Listing 833 12-X Comparagraph 852 13-X List of Satellite TV C-band Channels 954 14-X Decision Issued 04-27-95 by the Copyright Arbitration Royalty Panel 1011 15-X Valente transcript from the 1991-92 SRA procedings 1021 MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 776 P-R-0-C-E-E-D-I-N-G-S (10: 00 a.m. ) CHAIRMAN GRIFFITH: Ladies and gentlemen, good morning. Judge Cooley would like a moment to discuss the scheduling with you, please. JUDGE COOLEY: I just wonder, is everybody here? MR. GARRETT: Michele isn't here, so I 10 don't know how we can talk about the schedule. JUDGE COOLEY: Does she intend to be here? 12 MR. GARRETT: Yes. 13 JUDGE COOLEY: Okay. Then we'l wait to talk about the schedule, then. 15 CHAIRMAN GRIFFITH: Okay. Pine. Why 16 don't we do that, then. Yes. Okay. 17 Who is the first witness today'? 18 MR. STEWART: Mr. Graff. CHAIRMAN GRIFFITH: Mr. Graff will be. 20 All right. Are we ready to proceed? 21 MR. STEWART: Yes. 22 CHAIRMAN GRIFFITH: All right. Let the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234-4433 777 record reflect the Court Reporter has been previously sworn and remains under oath. Mr. Stewart? MR. STEWART: Mr. Chairman, I have a brief opening statement. CHAIRMAN GRIFFITH: Please. Okay. MR. STEWART: I would use the opportunity of my day in the front of the room to introduce myself again. I am John Stewart of the firm of Crowell and. 10 Moring, L.L.P., and I'm here on behalf of the Broadcaster Claimants Group. Here with me today, and you'e seen her in the hearing, is my colleague Jessica Herrera. First of all, what is the Broadcaster Claimants Group? Nell, it's the group of the stations 16 that -- the commercial stations that are actually 17 carried by the Satellite Carriers. It includes both 18 superstations -- that is, independent stations -- and 19 network affiliates. 20 Why are we here? Because the stations are 21 copyright owners. They create their own programs, and 22 they also combine those programs with others that they MEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 (202) 234~33 778 acquire from other sources, into the broadcast station signals that are selected and retransmitted by the Satellite Carriers here. And the broadcasters will receive a share of the royalties that you set in this proceeding. I want to just harken back to something that Mr. Garrett said in his opening statement, and that is that the compulsory aspect of the compulsory license here is asymmetrical. It applies to us. It 10 requires us, as well as all other copyright owners, to sell our programs. It's not compulsory on the 12 Satellite Carriers. They can select a station or 13 choose not carry it if they reach that conclusion. And presumably, the basis on which they 15 select stations and decide to carry them is that they 16 are profitable. They make a determination that they 17 can sell them to their subscribers, either on their 18 own or as part of a package, any way that's profitable 19 to them. So it's their selection, and that's a 20 marketplace determination. By and large, the 21 Satellite Carriers sell channels of programming, not 22 individual programs. NKAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 200054701 (202) 234-4433 779 Now, our evidence today will consist of the testimony and exhibits of Mr.