A report issued Wednesday by the General Accountability Office (GAO) in compliance with the requirements of the 2014 STELA Reauthorization Act concludes that a phase-out of the compulsory copyright license governing the retransmission of broadcast program content on cable and satellite networks “may be feasible” for most participants in the U.S. video distribution marketplace .  The GAO study stipulates, however, that efforts to replace the compulsory copyright licensing regime with a market-based approach “could have implications” for FCC must-carry and “carry-one, carry all” rules which require cable and direct broadcast satellite operators, respectively, to carry local broadcast station signals on request. 

To complete the study, the GAO relied on FCC cable price data from 2010 to 2014, U.S. Copyright Office royalty data from 2014 and interviews with 42 stakeholders in the cable, satellite, broadcast, programming, content licensing and online video industries.  A poll of these stakeholders revealed that 15 support a full or partial phase out of the copyright license while 14 oppose a phase out.  (The remaining stakeholders took no position either way.)  In suggesting a possible phase-out of the compulsory license, the GAO spotlighted market-based methods that online video distributors (OVDs) use to acquire rights to broadcast and other program content, stressing that the content licensed by OVDs “without the benefit of the statutory licenses . . . is similar to the content covered by the statutory licenses.”  As such, the GAO termed it “feasible that, just as broadcast content is licensed for online viewing using market-based negotiations, it can also be licensed for viewing through cable and satellite operators using market-based negotiations and without the statutory licenses.” 

Meanwhile, as the GAO observed that elimination of the compulsory license “would not necessarily” impact retransmission consent or “require a change to the syndicated exclusivity or network non-duplication rules,” the GAO noted that cable and satellite operators “would be required to obtain the rights to retransmit the content embedded on a broadcast station’s signal.”  As it acknowledged satellite, cable, and non-commercial broadcast concerns that elimination of the compulsory license would jeopardize access to programming, the GAO cautioned that must-carry “could become impractical if Congress phased out the statutory license,” adding that cable firms “could find themselves in the paradoxical position of being required to transmit the copyrighted content on a local broadcast television station’s signal for which they may not have the legal right to air.”