Dish and Hoak Media reached a multi-year retransmission consent agreement to resume carriage of the broadcaster’s TV stations. The retrans agreement comes after Hoak last week blocked Dish’s ability to transmit 14 stations in six states, including Colorado, North Dakota and Louisiana. Despite the agreement, “the fact remains that Hoak exploited outdated retransmission rules to pull the plug on 14 stations,” the American Television Alliance said. “Until Congress and the FCC reform retransmission consent rules, broadcasters will continue their games of dragging consumers into business negotiations.” Dish said last week that Hoak insisted on a rate increase of more than 200 percent and “that Dish eliminate customer-enabled commercial-skipping technology found on its Hopper Whole-Home DVRs.” Analysts and lawyers have said the ad-skipping DVR could become an issue in retrans deals involving stations and Dish, which is a member of the TV alliance that seeks changes to retrans rules. Hoak had no comment, and other broadcasters have said retrans works.
Comedy Central’s South Park opened the door for fair-use defenses to shut down copyright infringement cases before they saddle defendants with discovery expenses or convince them to settle, in a 7th U.S. Circuit Court of Appeals ruling last week. The case concerned the cartoon’s parody of a popular Internet video, “What What (In the Butt),” in which the South Park character Butters makes a nearly identical viral video. The episode “Canada on Strike” lampoons the juxtaposition of viral videos’ popularity with their typically paltry financial returns through advertising and licensing. Brownmark Films, which owns the copyright in the original video, sued Comedy Central for infringement. The appeals panel unanimously agreed (http://1.usa.gov/MKETbx) with the trial court’s “well-reasoned and delightful” opinion that the Butters parody video was “obvious” fair use, “providing commentary on the ridiculousness of the original video and the viral nature of certain YouTube videos,” and upheld the suit’s dismissal. But the 7th Circuit trod new ground in the panel’s discussion of the role of early dismissal of “weak claims” in fighting against the “chilling effects” of First Amendment-related litigation. “Despite Brownmark’s assertions to the contrary, the only two pieces of evidence needed to decide the question of fair use in this case are the original version of WWITB and the episode at issue,” said the appeals opinion, written by Judge Richard Cudahy and joined by Judges Frank Easterbrook and David Hamilton. Brownmark had mentioned the two videos yet failed to attach them in its complaint, and when Comedy Central attached the videos in its own motion to dismiss for failure to state a claim -- a so-called Rule 12(b)(6) motion -- Brownmark protested that an “unpleaded affirmative defense of fair use is an improper basis for granting a motion to dismiss,” the panel said. But it’s “well settled that in deciding a Rule 12(b)(6) motion, a court may consider” attached documents that the plaintiff had only referred to. The question is whether TV shows and similar works can be “incorporated by reference,” the panel said -- a question answered affirmatively by several lower courts but never decided on appeal. “We think it makes eminently good sense to extend the doctrine to cover such works, especially in light of technological changes that have occasioned widespread production of audio-visual works,” but since the parties didn’t brief it, the 7th Circuit won’t rule on that question. Comedy Central should have filed a motion for summary judgment, the panel said, but the judges downplayed the error, because the network appeared to be concerned that “such a maneuver would open the door to discovery,” the ruling said. “The expense of discovery ... looms over this suit,” with Comedy Central and the Electronic Frontier Foundation, an amicus filer, reminding the appeals court that “infringement suits are often baseless shakedowns,” the panel said. “Ruinous discovery heightens the incentive to settle rather than defend these frivolous suits.” Comedy Central needn’t have worried because a court would have to approve discovery, and “district courts need not, and indeed ought not, allow discovery when it is clear that the case turns on facts already in evidence,” the panel said. Regardless of how Comedy Central’s motion was captioned, Brownmark could have offered its own evidence to defeat the fair-use defense but chose not to, the panel said: Its “broad” discovery request made Brownmark look like a “copyright troll” and would allow “expensive e-discovery of emails or other internal communications.” Brownmark’s only possible claim might be that the South Park parody harmed the market for the original video, but “as the South Park episode aptly points out, there is no ‘Internet money’ for the video itself on YouTube, only advertising dollars that correlate with the number of views the video has had,” the panel said. “It seems to this court that” the parody video’s “likely effect, ironically, would only increase ad revenue."
Universal’s proposed acquisition of EMI creates “an unfair method of competition” that constitutes “an unreasonable restraint on trade,” because it will “substantially lessen competition” and “likely enhance market power,” two consumer groups said Thursday. In a joint “detailed” report filed with the FTC, the Consumer Federation of America and Public Knowledge said the proposed combination creates a highly concentrated market by eliminating one of the only four major record labels. The deal “results in an increase in concentration across every major product market,” including current and catalogue CDs, digital albums and digital singles, that’s “five times the level that the DOJ/FTC identify as cases of concern,” they said. “In simple terms, the post-merger firm would have a strong incentive and increased ability to exercise market power to undermine, delay, and distort new digital distribution business models, in a market that has been a tight oligopoly for over a decade,” said Mark Cooper, CFA’s director of research and co-author of the report. “The FTC must take steps to prevent the severe harm to competition and consumers.” The report rejects Universal’s claims that piracy will prevent the abuse of market power, citing “consumer purchasing behavior, estimates of elasticities of demand by academics, and marketing research conducted by the music industry.” The report says the industry has “chronically and grossly overestimated the role of copyright infringement in the development of digital distribution.” A Universal representative had no comment right away, and we couldn’t reach a representative of EMI.
The House Communications Subcommittee plans to hold two hearings, one on video competition and another on FCC oversight, Chairman Greg Walden, R-Ore., said Thursday. The subcommittee on June 27 examines how technology has changed consumer access to video content. The witnesses for the hearing have not been announced. The subcommittee will also hold an oversight hearing on July 10 with all five FCC commissioners to examine the commission’s regulatory process and current proceedings, among other topics. The timing and location of the hearings was not announced.
Public interest groups opposed to Verizon Wireless’s buy of AWS licenses from SpectrumCo and Cox, and associated business agreements, met with FCC officials Tuesday on the transactions. “During the meeting the representatives of the public interest groups expressed our unified opposition to the transactions in this proceeding as proposed,” they said in a filing at the FCC (http://xrl.us/bnbsuc). “We discussed how Verizon’s claims of need for additional spectrum are vastly overstated, particularly its need for additional spectrum in the markets where it already holds AWS spectrum. We discussed how Verizon’s attitude towards Wi-Fi offloading differs from its industry counterparts, and noted the differences in how Verizon sells ‘buckets’ of data versus its competitors. We argued that Verizon’s seemingly counter-intuitive stance on the benefits of Wi-Fi offloading is driven by its preferred business model, one that seeks to maximize revenues at the expense of efficient spectrum use and consumer welfare.” Representatives of Consumers Union, Free Press, the New America Foundation’s Open Technology Institute and Public Knowledge attended the meetings. “These organizations seem to believe that by repeating these baseless claims enough times they will somehow become less inaccurate,” a Verizon spokesman said in response. “Verizon Wireless has documented on the record and on multiple occasions during this review process its efficient use of spectrum, and has made a strong case that its purchase of unused spectrum to meet the needs of consumers is in the public interest."
The chairman and ranking member of the House Intelligence Committee said they remained concerned with what they see as a national security threat posed by two Chinese telecommunications companies, Huawei and ZTE. Committee Chair Mike Rogers, R-Mich., and Ranking Member Dutch Ruppersberger, D-Md., asked in separate letters Wednesday (http://xrl.us/bnbsth) that executives from Huawei and ZTE answer more than a dozen detailed questions about the companies’ corporate and financial connections with the Chinese government. The committee has been investigating the extent to which these companies provide the Chinese government an opportunity for increased foreign espionage, threaten critical infrastructure, and further the opportunity for Chinese economic espionage (CD Nov 18 p5). Rogers and Ruppersberger asked Huawei and ZTE executives specific questions about their companies’ interactions with Chinese government officials; the funding they receive from Chinese agencies; the information they share with the Chinese government; their cybersecurity practices; and their business relationships with Iran, among other queries. Huawei welcomes the opportunity to “further enhance” the committee’s understanding of the facts, “after which we look forward to re-focused attention to addressing the true threats to critical infrastructure from the global information and communications technology supply chain,” Vice President Bill Plummer said. “Huawei shares concerns related to network security,” he said. “We support universal and industry-wide solutions to effectively address cyber threats and vulnerabilities.” ZTE didn’t comment.
Comcast contends it faces enough video competition in Bordentown and several other New Jersey communities from DirecTV and Dish Network to warrant FCC orders releasing it from local regulation. Petitions for Bordentown (http://xrl.us/bnbstb), Mullica and Weymouth (http://xrl.us/bnbss9) and some other areas of the state were posted Wednesday in docket 12-1.
Time Warner Cable wants the FCC to exempt it from regulation in another 18 Wisconsin local franchise areas, adding to the 14 LFAs for which it asked the Media Bureau to grant effective competition orders (CD June 14 p13). In Menomonee Falls, Waukesha and 16 other LFAs, the cable operator contends it faces sufficient video competition from AT&T because that incumbent LEC sells the U-Verse pay-TV service there. Time Warner Cable’s petition was posted Wednesday in docket 12-1 (http://xrl.us/bnbssk).
The FCC International Bureau accepted a request from Harris Corp. to construct and operate a C-band satellite. Harris plans to use the satellite “in connection with a critical project for the Federal Aviation Administration,” the application said.
The FCC plans a public meeting to review a draft report on market-entry barriers into the communications industry as well as U.S. information, the agency said in a public notice (http://xrl.us/bnbsh9). The research was prepared by scholars from the University of Southern California’s Annenberg School of Communication and Journalism. The meeting is 9:30 a.m. on June 26 in the Commission Meeting Room. Participants can submit written comments on the executive summary of the draft available on the FCC website prior to the discussion (http://xrl.us/bnbsih).