Government Response to a technical consultation on transitional arrangements following the repeal of Section 73 of the CDPA 1988 (reception and re-transmission of wireless broadcast by cable)

Section 73 of the CDPA currently provides that the retransmission of the Public Service Broadcasters’ (PSBs) core channels (all BBC Channels, ITV1, and Channel 4 and 5’s core channels) via cable is exempt from copyright fees.

The purpose of the legislation which preceded Section 73 was to facilitate the retransmission of public service (analogue) broadcasts by cables in areas where aerial reception was poor. By the time Section 73 was enacted the purpose was to encourage cable operators and others to invest further in the infrastructure of cable networks and to ensure that public service broadcasts were equally available to all parts of the population including in remote areas.

As set out in the technical consultation document, the Government recognised that the repeal of Section 73 means that right holders will be entitled to monetise the value of underlying rights in cable retransmissions, something the Section 73 exception had previously prevented from happening.

An assumption was made that the Section 73 repeal could have an impact on the way negotiations take place in the market as it could lead to a risk of disputes between PSBs, cable providers and right holders as to the monetary value of the underlying rights.

The majority of respondents stated that the repeal of Section 73 would create new rights and therefore new values for the use of their works. The view was that changes to commercial negotiations were likely to occur in order to appropriately recognise the cable retransmission rights.

A number of respondents explained that recognition by broadcasters and cable service providers of certain clearances of cable retransmissions within the UK might fall within the remit of collective management organisations. It was suggested that this could be a driver for change in the way clearances were secured in future.

Some right holders also considered that the repeal of Section 73 could create a risk of dispute between the cable service provider and/or PSBs with underlying right holders. Some respondents suggested that underlying right holders might choose to license the rights to broadcasters or directly to cable service providers. A point was also raised that underlying right holders might seek an additional fee for the use of their works from a producer and this, in turn, would lead the producer to seek payment from the PSBs.

There is a clear disparity between the views of right holders and licensors, and the views of PSBs and cable providers. The Government believes that this indicates negotiations will need to take place between these parties to understand the potential value of underlying rights. This is not to predetermine the outcome of such negotiations, or any fluctuations in the value of the rights following the abolition of Section 73. The Government merely recognises the difference in view is indicative of the need for discussion and negotiation between those affected.

The concern was in relation to creating inconsistency in the statutory regime for cable retransmissions as Section 73 only refers to copyright in broadcasts and any underlying work, and does not cover performers’ rights in any performance. The majority of respondents felt that the relevant performance rights in agreements with performers will have already been cleared on an individual basis or through collective licensing agreements.

Some respondents felt that authorisation of a communication to the public under the cable retransmission right should take into account performers’ rights (as related rights) and this needed to be treated separately to an individual broadcast for which limited specific consents have been obtained. As with the above conclusion on underlying rights, the value of any related rights in performance should be determined through the course of normal commercial negotiations.

It was suggested that a transition period may be of value in allowing businesses to adapt to any changes in the rights market. The majority of responses supported either no transition period or a very short transition period (up to six months). These respondents felt that a longer transition period would not be necessary given their view that the overall licensing structure would not change as a result of Section 73 being repealed and therefore no adjustments would need to be made in existing and future negotiations.

Some respondents highlighted the ongoing issue of online service providers continuing to rely on the Section 73 exception to permit the streaming of PSB content over the internet without seeking permission from or paying any licence fees to the copyright owners in the broadcast or the underlying copyright owners in the content carried within the broadcast itself. These respondents opposed any form of transition period due to the financial and reputational harm placed on PSBs as a result of the unregulated advertisements used around PSB content by such online service providers. They felt it was important to end this practice as soon as possible.

It was also suggested that a rights clearance mechanism – a mechanism that ensures that rights are cleared prior to onward transmission – may be needed to support Section 73 repeal. The technical consultation considered whether this could take the form of placing an obligation on broadcasters to clear all the rights in a broadcast prior to retransmission thereby forcing negotiations to take place at distinct points in the retransmission chain.

The majority of respondents made it clear that they did not see a role for government to intervene and they were not supportive of this idea. They believed that the current licensing structures and business practices worked well and that the market could adapt to the removal of Section 73 without further regulation. A small number of respondents stated that they would seek retransmission fees directly from cable providers as well as PSBs, suggesting that the market might need to establish at which points in the rights acquisition process liabilities arose. However, there was no suggestion that the market was incapable of dealing with any such changes in the acquisition of rights.

Based on these responses, the Government considers that no compulsory structure for licensing needs to be introduced. The licensing structure already works well and will be able to adapt once Section 73 is repealed.