Before the COPYRIGHT ROYALTY JUDGES Washington, D.C. ) In the Matter of ) ) Distribution of the ) Docket No. 14-CRB-0010-CD (2010-13) ) 2010, 2011, 2012, and 2013 ) Cable Royalty Funds ) ) WRITTEN DIRECT STATEMENT REGARDING DISTRIBUTION METHODOLOGIES OF THE MPAA-REPRESENTED PROGRAM SUPPLIERS VoLUME I oF II WRITTEN TESTIMONY AND EXHIBITS Gregory O. Olaniran D.C. Bar No. 455784 Lucy Holmes Plovnick D.C. Bar No. 488752 Alesha M. Dominique D.C. Bar No. 990311 Mitchell Silberberg 8r Knupp LLP 1818 N Street NW, 8th Floor Washington, DC 20036 PIXI:lVI D i%. VII.KB (202) 355-7917 (Telephone) (202) 355-7887 (Facsimile) gooNmsk.corn JUN 30 N17 lhp @msk.corn amd msk.corn 1I'A AO KRII I CAPS NCH & PiOA Attorneysfor MPAA-Represented Program Suppliers June 30, 2017 Before the COPYRIGHT ROYALTY JUDGES Washington, D.C. In the Matter of Distribution of the Docket No. 14-CRB-0010-CD (2010-13) 2010, 2011, 2012, and 2013 Cable Royalty Funds WRITTEN DIRECT STATEMENT REGARDING DISTRIBUTION METHODOLOGIES OF MPAA-REPRESENTED PROGRAM SUPPLIERS The Motion Picture Association of America, Inc. ("MPAA"), its member companies and other producers and/or distributors of syndicated series, movies, specials, and non-team sports broadcast by television stations who have agreed to representation by MPAA ("MPAA-represented Program Suppliers"),'n accordance with the procedural schedule set forth in the July 21, 2016 Order Regarding Discovery issued by the Copyright Royalty Judges ("Judges"), hereby submit their Written Direct Statement Regarding Distribution Methodologies ("WDS-D") in the consolidated 2010-2013 Cable Royalty Distribution Proceeding. MPAA is submitting this introductory memorandum in order to summarize the evidence they will present in the distribution phase of this 'ists of MPAA-represented Program Suppliers for each of the cable royalty years at issue in this consolidated proceeding are included as Appendix A to the Written Direct Testimony of Jane Saunders. Introductory Memorandum, MPAA WDS-D, 2010-13 Cable Distribution 1 ~ proceeding, and to state the royalty shares of the Program Suppliers category that MPAA is seeking for the 2010, 2011, 2012, and 2013 cable royalty funds ("2010-13 Funds"). I. PROCEDURAL HISTORY On September 9, 2015, the Judges issued an order formally consolidating royalty distribution proceedings regarding the 2010-13 Funds and sought written submissions from the parties in an effort to clarify the definitions of claims categories for purposes of this proceeding. Thereafter, on November 25, 2015, the Judges adopted eight program categories for the allocation phase ("Agreed Categories") to which the Judges may approve an allocation of royalties for the 2010-13 Funds.'he Agreed Categories are as follows: "Canadian Claimants." All programs broadcast on Canadian television stations, except: (1) live telecasts of Major League Baseball, National Hockey League, and U.S. college team sports, and (2) programs owned by U.S. copyright owners. "Commercial Television Claimants." Programs produced by or for a U.S. commercial television station and broadcast only by that station during the calendar year in question, except those listed in subpart (3) of the Program Suppliers category. "Devotional Claimants." Syndicated programs of a primarily religious theme, but not limited to programs produced by or for religious institutions. See Notice OfParticipants, Notice Of Consolidation, And Order For Preliminary Action To Address Claims Categories at 2 (September 9, 2015). See Notice OfParticipant Groups, Commencement Of Voluntary Negotiation Period (Allocation), And Scheduling Order at Exhibit A (November 25, 2015). WDS-D, 2010-13 Cable Distribution 2 Introductory Memorandum, MPAA ~ "Joint Sports Claimants." Live telecasts of professional and college team sports broadcast by U.S. and Canadian television stations, except programs in the Canadian Claimants category. "Music Claimants." Musical works performed during programs that are in the following categories: Program Suppliers, Joint Sports Claimants, Commercial Television Claimants, Public Television Claimants, Devotional Claimants, Canadian Claimants. "National Public Radio." All non-music programs that are broadcast on NPR Member Stations. "Program Suppliers." Syndicated series, specials, and movies, except those included in the Devotional Claimants category. Syndicated series and specials are defined as including (1) programs licensed to and broadcast by at least one U.S. commercial television station during the calendar year in question, (2) programs produced by or for a broadcast station that are broadcast by two or more U.S. television stations during the calendar year in question, and (3) programs produced by or for a U.S. commercial television station that are comprised predominantly of syndicated elements, such as music videos, cartoons, "PM Magazine," and locally-hosted movies. "Public Television Claimants." All programs broadcast on U.S. noncommercial educational television stations. The Judges further recognized that the Agreed Categories are intended to be "mutually exclusive," such that every program eligible to receive cable statutory license royalties in this proceeding falls within only one of the Agreed Categories. MPAA seeks, on behalf of its represented claimants, a share of the 2010-13 Funds that will be allocated to the Program Suppliers category in this proceeding. Additionally, "See id. at Exhibit A. See id. WDS-D, 2010-13 Cable Distribution 3 Introductory Memorandum, MPAA ~ by agreement, MPAA seeks a share of the 2010-13 Funds that, under MPAA's methodology discussed below, will be allocated to National Association of Broadcasters. On June 30, 2017, MPAA and NAB filed a Joint Notice of Transfer And Acceptance ("Notice") with the Judges. The Notice informed the Judges of NAB's transfer, and MPAA's acceptance, of NAB's claims within the Program Suppliers category, thus authorizing MPAA to assert claims for royalties for those transferred NAB claims. Accordingly, the two parties who are currently asserting entitlement to royalties allocated to the Program Suppliers'ategory are MPAA and Multigroup Claimants ("MC"). In this WDS-D, MPAA will set forth its testimony and evidence in support of distribution awards within the Program Suppliers category as between MPAA and MC. On March 14, 2016, the Judges issued an order establishing a preliminary discovery period designed to resolve claims validity and categorization issues among the participants. The Judges later revised this preliminary discovery schedule on July 21, 2016. Following the period established by the Judges for preliminary disclosure and discovery regarding claims and categorization, MPAA filed its Motion For Disallowance Of Claims Made By MC ("MPAA Motion") on October 11, 2016. The MPAA Motion sought disallowance of all of MC's Program Suppliers category royalty claims in this On March 29, 2016, MC and Spanish Language Producers ("SLP") filed a Joint Notice Of Settlement Of Controversy stating that "any SLP claims have been transferred to and will be prosecuted by MC and such parties have reached a confidential agreement that completely resolves the claims of represented claimants within the Program Suppliers, Sports, and Devotional categories." See MC and SLP Joint Notice Of Settlement Of Controversy at 1 (March 29, 2016). See Order For Further Proceedings at 1-3 and Exhibit A (March 14, 2016). "See Order Regarding Discover at Exhibit A (July 21, 2016). Introductory Memorandum, MPAA WDS-D, 2010-13 Cable Distribution 4 ~ proceeding, and their related titles. See, e.g., MPAA Motion at Appendix A (summarizing the multiple bases for dismissal of MC's claimants). As of the date of the filing of this WDS-D, the Judges have not yet issued an order ruling on either the MPAA Motion, similar motions for dismissal and disallowance of MC claims filed by the Settling Devotional Claimants ("SDC") and the Joint Sports Claimants ("JSC"), or motions for disallowance of claims filed by MC. Because these motions remain pending, and because MPAA has yet to request or receive discovery of underlying documents related to the WDS-Ds that will be submitted by the other participants in this proceeding„MPAA reserves the right to amend its WDS-D and the royalty shares sought herein. II. SUMMARY OF MPAA CASE The Judges must distribute royalties that cable system operators ("CSOs") paid to the Copyright Office for the privilege of distantly retransmitting broadcast stations pursuant to the statutory license set forth in Section 111 of the Copyright Act for the years 2010, 2011, 2012, and 2013. The standard that the Judges and their predecessors have used for distributing Section 111 royalties in past proceedings is the "the relative marketplace value of the distant broadcast signal programming retransmitted by cable systems" during the royalty years at issue.'PAA agrees that the Judges should distribute the 2010-13 Funds based on the relative market value standard. "See 37 C.F.R. $ 351.6. 'ee 75 Fed. Reg. 57063, 57065 (September 17, 2010). Introductory Memorandum, MPAA WDS-D, 2010-13 Cable Distribution 5 ~ MPAA has long maintained that the relative market value of distantly retransmitted programming is most clearly expressed through measurements of distant viewing because viewing is consumption. It is axiomatic that consumers subscribe to a cable system to watch the programming made available via their subscriptions. The more programming a subscriber watches, the happier the subscriber is, and the more likely he or she will continue