what does it mean designated for assignment in baseball

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What does designated for assignment mean in baseball? Explaining MLB's 'DFA' and contract implications

There are numerous transactions that can happen to an MLB player. They can be optioned down to the minors. They can be traded to another team. They can even just simply be cut.

One of the more unique-to-baseball transaction types is to be designated for assignment. If a big leaguer is underperforming significantly, a team might decide that it is time to hit the DFA button, which can have several different outcomes.

During the course of the MLB season, fans will often see players DFA'd by their teams. It is a particularly common process for players who are a bit more on the experienced side and in the middle of contracts.

Much of the other processes are more self explanatory. Trades and releases are obviously simple. Even options are fairly common knowledge. But what exactly does it mean to be designated for assignment? 

MORE: How to watch 'Friday Night Baseball' on Apple TV+

Here's what you need to know.

What does designated for assignment mean in baseball?

Teams are only allowed to have 40 players on their roster at all times, with 26 of them active in the majors. Sometimes, teams make decisions to add someone to that 40-man roster, which means removing someone else.

In order to take someone off the 40-man roster, they must be designated for assignment. When that happens, a player is taken off the roster immediately and sits in a holding pattern for seven days. During that time frame, the team can trade the player away or place him on waivers.

Another team can claim the player on waivers, but it would require immediately placing that player on their own 40-man roster and taking on the remainder of that contract. Because waiver claims operate in a particular order, teams will sometimes trade for a DFA'd player rather than wait until waivers to make sure no one ahead of them in the order is able to claim that player.

There is always a chance the players go through waivers unclaimed. If that happens, teams have a few different options for what comes next. The team can release them or can outright them to the minors. However, not all DFA'd players have to go to the minors. A player can reject the minor-league assignment and head to free agency if he's been in the majors for at least three years or if he has been outrighted to the minors previously.

Being designated for assignment is different than being optioned to the minors, though sometimes the two can overlap. Players early in their careers have option years, during which they can be sent back to the minors five times per season after MLB promotions. Being optioned to the minors does not mean a player has to be designated for assignment unless he runs out of options. 

If a team claims a player that has been designated for assignment, and that player still has minor league options left, the team can choose to use one to send the player to the minors, so long as he is still on the 40-man roster.

MORE: MLB pitch clock rules, explained

DFA contract implications

There are often talented players that hit waivers that will go unclaimed for one big reason: the contract. 

If a player is claimed on waivers or acquired via trade, the team that added him would be taking on the remainder of the contract as well. Often, part of the reason a team would make the decision to DFA a player is in the hopes another might claim them and take the contract off the books.

However, if the player reaches free agency, he can sign a deal with any other team on a prorated portion of the MLB minimum, which is $720,000. The team that DFA'd would then pay that player the remaining salary owed to him on his original deal minus the prorated MLB minimum paid by the acquiring team.

Edward Sutelan is a content producer at The Sporting News.

• Designate for Assignment (DFA)

When a player's contract is designated for assignment -- often abbreviated "DFA" -- that player is immediately removed from his club's 40-man roster. Within seven days of the transaction (had been 10 days under the 2012-16 Collective Bargaining Agreement), the player can either be traded or placed on outright or unconditional release waivers.

If the player is claimed off waivers by another club, he is immediately added to that team's 40-man roster, at which point he can be optioned to the Minor Leagues (if he has Minor League options remaining) or assigned to his new team's 26-man roster.

If the player clears outright waivers, he may be assigned outright to the Minor Leagues. However, players with more than five years of Major League service time can reject an assignment to the Minor Leagues, and players with more than three years of Major League service time, or who have been previously outrighted, may reject the outright assignment in favor of free agency in lieu of the assignment. If the player clears unconditional release waivers, he is unconditionally released.

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What does 'DFA' mean in baseball? It's not an endearing abbreviation.

Albert Pujols . David Ortiz. Alex Rodriguez. Manny Ramirez. Nelson Cruz. Robinson Cano. Justin Upton.

Ortiz is enshrined in the Baseball Hall of Fame. Pujols is a lock for the Hall. Cruz is a future candidate for Cooperstown. And all were former major league All-Stars.

What do they all have in common?

Each of them have been DFA'd during their major league baseball career.

Ultimately, it means the player is cut from a team. It's one of several transactions that can happen to an MLB player. But it's a more common process for players who are in the latter years of their career and in the middle of a contract.

What does DFA mean in baseball?

Designated for assignment.

It's one of the more unique transaction types in baseball, where unlike being traded, the player is optioned to the minor leagues or simply cut from the roster.

What does being designated for assignment mean?

Teams are allowed to have 40 players on their roster, with 26 of them active on the major league roster. Over the course of the season, teams make roster moves, which sometimes involves cutting a player. In order to take someone off the 40-man roster, they must be designated for assignment.

MLB.com explains the process: "When a player's contract is designated for assignment — often abbreviated "DFA" — that player is immediately removed from his club's 40-man roster. Within seven days of the transaction (had been 10 days under the 2012-16 Collective Bargaining Agreement), the player can either be traded or placed on irrevocable outright waivers."

Can another team claim a DFA'd player?

Yes, any team can pick up a player off waivers. However, if that team claims the player, they would have to add the player to their 40-man roster.

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What is Designated for Assignment (DFA) Mean in Baseball?

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Of all the distinctive terms used in Major League Baseball, “Designated for assignment” must be near the top of the list for the hardest to explain to new fans. When a player is declared this, often stated as “He was DFA’d,” what exactly does it mean?

Designated for assignment refers to a player’s contract, and it means the team will immediately remove that player from its 40-man roster. For MLB fans, it means you will no longer be seeing that player on that team, at least for a decent spell.

Typically MLB teams do this to clear space for another move, or simply to rid a player from the squad entirely.

Once a player is officially DFA’d, a 7-day period begins, where the club must make a decision about the next destination for that player. In other words, it’s a way for baseball teams to put a player in temporary limbo while they try to figure out their roster situation.

During the 7-day period, that player can be sent to one of the team’s minor league affiliates; traded to another team; or placed on waivers, a list of players for other teams to acquire (under certain rules).

Basically, when you see this term attached to a player, that person is being moved off the regular MLB team at least for the time being. Sometimes, though not often, they are returned to their original team.

Baseball Club Options with Players Designated for Assignment

Once a player is DFA’d, the clock starts for the club to pick an option for that player’s immediate future. Those options are:

• Assign the player to one of a minor league team affiliated with the club. (This is not available for all players; see Common Questions at bottom).
• Place the player on the Waiver Wire . This move begins another type of clock ~ where other teams can take the player, under the league’s waiver rules.

2B. If the player on the waiver wire is claimed, his new team must immediately put him on their 40-man roster.

2C. If the player, over a specified period of time, is unclaimed from waivers, he can be assigned to his previous team’s minor league system. Unless: The player has enough service time in the major leagues, or has run out of minor league options (See below), in which case he becomes a free agent who can sign a contract with any team.

• The player could be released from his contract, that is, set entirely free to go play with any other team. In such instances, the club is responsible for paying the player according to the terms of their contract together.

Types of Rosters in Major League Baseball

All this talk assumes fans know what a 40-man roster is ~ and it’s not just the list of players the current MLB team can use for games. That would be the 26-man roster.

Here’s a breakdown of the 2 types of MLB rosters, which are essentially lists of their players who either can be used in games (26-man), or who are in line to play in games in the near future as well (40-man).

26-Man Roster in MLB

The 26-man roster (or 24- or 25-man rosters in seasons past) is for players available to participate in MLB game play. Players not on the 26-man roster, such as those on injured lists, or in the minor leagues, cannot be entered into an MLB game.

So, MLB teams cannot just sign anyone off the street and instantly insert them into a game. Well, maybe not instantaneously, but at least a full day. However, even that would involve some juggling of personnel, as noted in this article.

40-Man Roster in MLB

A club’s 40-man roster is filled by a combination of players on the 26-man roster; along with players on various injured lists (7-, 10-, and 15-day injured lists); on an emergency list for bereavement or a family medical emergency; and some minor league players.

All players on a 26-man roster are also on the 40-man roster. That leaves a club 14 spots to manage all year long ~ and not just during the regular season.

The 40-man roster is important to watch during the offseason , as all those players are protected from other teams “taking” them in what’s called the Rule 5 Draft, held at the end of every year during the MLB’s Winter Meetings.

Notes on the Rule 5 Draft in Major League Baseball

Since 1920, the Rule 5 Draft has given minor league players opportunities with new MLB clubs ~ if their original club did not protect them from this draft by keeping them on the 40-man roster.

The way it works is, clubs with a spot open on their own 40-man roster select players not on 40-man rosters of the other clubs. This ends up like the regular MLB draft, with teams selecting in reverse order of the standings the previous season.

Players are eligible for selection if they are not on their team’s 40-man roster at the time of the draft, and they have either spent 4 seasons in professional baseball after signing at age 19 or older; or spent 5 seasons in pro ball after signing at age 18 or younger.

Even when drafting an eligible player, it’s not over. The new team pays the player’s previous club $100,000, places the player on its 40-man roster, AND then must keep the player on the 26-man roster for the entire next season.

This last requirement makes selecting other team’s unprotected minor league players a true challenge, as they do not yet know if that player will succeed at the major league level. If not, the team pretty much loses a roster spot through season’s end, filled by a player who can hardly contribute.

If the new club takes that player off the 26-man roster, however, it has to offer to return him to his previous team for $50,000.

Perhaps the most famous Rule 5 case was that of Hall of Famer Roberto Clemente, signed by the Brooklyn Dodgers at age 19 and buried on their Montreal, Canada minor league team, where he got all of 155 at bats .

That didn’t fool Branch Rickey, the general manager of the Pittsburgh Pirates, who that winter selected Clemente in the Rule 5 Draft ~ and then had to keep him on the roster that next season even as he struggled as a young foreign player competing at the game’s highest level.

Eventually the Puerto Rican hero came around, and became one of the best outfielders of all time.

Why Does ‘Designated for Assignment’ in Baseball Have to be So Complicated?

This all may seem confusing, but this system of using players in MLB game play, and also having extra players in case of injuries or emergencies, has evolved with the game. It’s a necessary structure that MLB clubs agree to abide by, for a lot of reasons, avoiding mayhem among them.

When a new fan sees these types of terms, usually in the agate type or side notes in sports sections, or sometimes added to the end of game news reports, they should consider just how hard it is to field a professional baseball team on a near-daily basis.

Baseball might look leisurely to play, but in reality the players exert parts of their body quite extensively ~ in some instances beyond what they are capable of naturally. A summary of a baseball player’s body that could force him off the field at any time:

• Arms . This includes shoulders, elbows, wrists, and fingers ~ all essential for baseball players to compete at all. The shoulders and elbows, in particular, are punished by the act of throwing a 5-ounce ball repeatedly over extended periods of time.
• Legs . Baseball is not a game of constant motion like the other major team sports. There is a lot of very instant starting, and quick stopping, which puts a lot of pressure on the tendons, ligaments, and joints of the legs. Knees and ankles give baseball players trouble, due to the starting-stopping, plus a lot of twisting involved in hitting and throwing.
• Core . This includes the abdomen, hips, and upper thighs. Probably more than the other major team sports, baseball is very tough on the middle of the body , mainly due to all the twisting. Batting, in particular, requires a tremendous twist of the torso to get the bat through the hitting zone, which can impact many muscle groups, as well as the spine.
• Back . Baseball players are susceptible to back injuries, mainly due to either overextending, or under-stretching. Often it’s a combination of both.

Add to all that the mental aspect of living life (e.g. having a wife and family) while away from home for weeks at a time, and the constant stress of having to perform well to remain in the game (and make more money). All the games, practices, stress, travel, loneliness, and more, can take a toll on any ballplayer.

In summary, any of these body (and mind) areas can take a baseball player out of service, maybe just for a few days, or a few weeks, or even many months. You can tell how often players get hurt by the MLB’s types of injured lists: the 7-day, 15-day, and 60-day injured list.

Roster Management in Baseball

All this gets us to the people responsible for getting the best players possible on the field during any MLB game. It’s not as simple as sending out the same 9 guys day in and day out. Pitchers in particular cannot pitch every single day, so extra pitchers must be brought along.

Some players might hurt a body part, but not in a major way, so all they need is a bit of rest. In these instances, pro baseball teams need a bench full of replacement players waiting to get in the game.

There’s also some competitive strategy involved. Baseball clubs can make changes to their roster daily, so if they foresee a problem upcoming, they can make roster changes to address it. Examples:

• Lengthy road trips . A club seeing a long stretch of games away from home might carry an extra pitcher just for that period. When they return home, they might send that extra pitcher back to the high minor leagues.
• Opposition strengths and weaknesses. The MLB regular-season schedule can be quirky, and sometimes teams play the same squads, or groups of them (e.g. from the same division), repeatedly over a short period. Maybe a club manager sees a group of upcoming games where every team has a lot of left-handed pitchers. Then, he may choose to swap out left-handed hitters, and add in more righties, just for that period of time.

In other words, the managers (and general managers) of MLB teams are constantly tinkering with their rosters, for a lot of reasons. Terms like DFA exist to add structure to all of this, in an attempt to ensure fairness for all the clubs, and avoid anarchy.

In summary, the designated for assignment system exists so MLB teams can add a newly acquired player onto their roster ~ through a free agent signing, a trade, a waiver wire grab, or to pull a player up from a minor league team; or to address players bouncing between the injured lists.

Whenever a player is getting healthy enough to return, fans usually get quite excited. But understand, for every player returning to play, another is forced to leave.

Common Questions

Question: what is the difference between being designated for assign and being “optioned”.

Answer: Remaining on the 40-man roster, or not. To be optioned means a player on the 40-man roster is moved to an “optional assignment” with one of the club’s minor league affiliates. An “option” is good for an entire season; and players only get so many options before clubs can no longer send them to a minor league team for roster management purposes. With DFA, if a player has an option remaining, that is something the club could choose to do in the 7-day “decision” period.

Q.: Why do teams only get 7 days to decide what to do with DFA’d players?

A.: It’s according to the current Collective Bargaining Agreement (CBA), which is the operating structure of the MLB between clubs and players. This period is adjusted periodically upon agreement of a majority of owners and the players. For instance, in the CBA of 2012-16, the period was 10 days.

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Now that the 2017 World Series is over, Major League Baseball teams are wasting no time in making moves to adjust their rosters for the 2018 season.

Andrew Romine was placed on waivers and claimed by the Seattle Mariners . Jim Adduci cleared waivers and was outrighted to the minor leagues. Alex Presley cleared waivers, was outrighted, and elected free agency. Tyler Collins cleared waivers, was outrighted, and might elect free agency. Kyle Ryan, Myles Jaye , Bryan Holaday , and Efren Navarro were also placed on outright waivers. Eight players, all placed on waivers, with different situations.

Here is how they work.

What are waivers?

Waivers are a way for a major league team to take a player off its 40-man roster in order to send him outright to the minor leagues, or release him and let him become a free agent. A player cannot be removed from the 40-man roster without first clearing waivers, where all 29 other teams have a chance to claim that player, and his existing contract, for a modest waiver fee.

What are MLB options?

An option (optional assignment) allows a club to move a player on its 40-man roster to and from the minor leagues without exposing him to other teams.

Once a player is added to a team’s 40-man roster, his team has three options, or three different seasons in which the club may to send him to the minor leagues without having to clear waivers. A player on the 40-man roster playing in the minors is on optional assignment. There is no limit on the number of times a club may promote and demote a player during one option season.

A player must spend at least 20 days total in the minor leagues during one season (not including rehabilitation assignments) in order to be charged with an option. John Hicks was sent up and down a half dozen times during the 2017 season, but used just one option.

When a player is out of options, he cannot be sent to the minors without first clearing waivers. Also, a player who has accrued at least five years of major league service time may not be optioned to the minors without his consent. Hicks , as well as Bruce Rondon , Drew VerHagen , Matt Boyd and Buck Farmer are now out of options, so they will have to go on waivers if they don’t make the team in the spring.

There are three types of waivers.

Outright waivers

Outright waivers are used when a team wants to send a player to the minors but he is out of options. If the player clears waivers, he may be outrighted to the minor leagues.

However, a player may only be outrighted once during his career without his consent. When a player is outrighted for the second time or more, he may elect to become a free agent either immediately, if during the season, or as soon as the season is over, unless he is added back to the 40-man roster. This is why Tyler Collins can — and probably will — elect free agency.

A player with three years of major league service may also refuse an outright assignment and choose to become a free agent immediately or at the end of the season. Alex Presley, who has over four years of service time in the majors, rejected his outright assignment and chose free agency.

Release waivers

Release waivers are requested when a team wants to give a player his unconditional release.

Special waivers

Special Waivers , also known as revocable waivers or major league waivers, are used only between July 31 and the end of each season. These waivers are required in order to trade a player who is on the 40-man roster to another major league team after the trade deadline. Justin Verlander cleared waivers and was traded to the Houston Astros on August 31 in one of the most famous post-deadline trades ever.

What does it mean for a player to be designated for assignment?

A player may be designated for assignment (DFA) , giving the team 10 days to either trade him, or send him to the minor leagues, provided he clears waivers.

Romine and Presley were eligible for arbitration this offseason, and the Tigers were not prepared to risk going through that process with them. The same fate may await Bruce Rondon or Blaine Hardy, who are also eligible for arbitration this winter. BYB posted the projected salaries for the Tigers’ arbitration eligible players here .

Hardy still has an option year remaining, whereas Presley, Romine, and Rondon are all out of options.

The Tigers have until December 1 to offer a contract to their arbitration-eligible players. If they don’t make an offer, the player is said to be “non-tendered” and becomes a free agent.

Teams have until November 20 to submit their reserve lists of up to 40 players to the MLB office in advance of the Rule 5 draft. The Tigers will be adding some young players to the roster by that date, and will want to keep a spot or two open so that they may make a selection with their first pick in the draft on December 14.

Thursday was the day that players who are eligible for free agency became free agents, but the Tigers had no such players, having traded any would-be free agents during the season. Detroit formally declined their $16 million option on Anibal Sanchez on Thursday, paying him a $5 million buyout and making him a free agent.

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What Does Designate for Assignment (DFA) mean in Baseball?

Two days ago I was watching a TV show with my son. Actually, I was watching the show, and my son was busy with his iPhone. Suddenly, out of nowhere, he asked me, “Dad, What does DFA mean in Baseball?

My son is a teenager. So, it was not a “My father knows everything” type question. I am a baseball coach, and my Son is a die-hard supporter of the ‘Texas Rangers.’ Most probably, he was reading anything on Chris Gimenez. 

Then I realized I hear this question quite often. That prompted me to write an article on this topic. As I operate a blog on baseball, why not answer the question on the blog? That will help many to know this large but important term of baseball.  

Table of Contents

What does Designate for Assignment (DFA) mean in Major League Baseball?

First thing first, what is the full form of DFA? DFA means Designated for Assignment . When a player falls into this term, the team will immediately remove him from the 40-man roster. However, the team can replace that player with another one to fulfill its 40-player roster.

One crucial thing I should mention, DFA does not mean out-and-out release. Out and out release means permanently releasing a player, but if a player is DFAed, he has the chance to come back into the team.  

Suppose you are completely new in this sector and trying to understand the entire scenario. Don’t be ashamed. I know how it feels when you don’t understand a term and google it because you are ashamed to ask someone about that. So, let’s start with the basics: 

What is the 40-man roster? 

40-man Roster – If you don’t know what does 40 man roster means, then let me clear it for you. In the major league service time, every team can sign 40 players. Among these 40 MLB players, 26 players are active. What happens to the rest 14 players? They play in the minor leagues or stay on the injured list. 

What are Waivers? 

In the previous section, you learned about the 40-man roster. So, now you can understand a team does not require all 40 players for the entire major league service time. Here come waivers handy. 

Waivers give a player to play for any team. If a player gets a waiver, he is unconditionally free, and any team can take him in their team. 

So, now you understand both the term ’40-man roster’ and ‘waiver.’ Now, it will be easy for me to clear the concept of DFA. 

As I stated earlier, when a player is regarded as Designated for Assignment or DFA, he is immediately removed from the 40 man roaster. But that doesn’t make him a free agent. This means a DFAed player is not entirely released from the team. 

The team gets seven days to decide on the fate of the DFAed player. The team can trade the player, can place him on irrevocable outright waivers, or make him a free agent. 

In case of a waiver, if the DFAed player clears waivers, he might be sent to the minors. There are two options in the case of waivers. 

The player must provide his consent before sending to the minors if he has been playing MLB for five or more years. If he does not fall into that category, he will be immediately sent to the minors.

Why a player gets DFA while active in the Major League Service? 

So, now you know what does DFA means in baseball. But what makes a player fall into DFA in the middle of a season? There could be many, but here I will tell you the top four reasons a player gets DFA. 

• If the team wants to move in a minor league player into the team. 
• If a player from the injured list recovers. 
• If the team wants to trade a new player or free agent. 
• If a team wants to clear a spot in the 40-man roster by a player recently added to the team via trade or free agency

Options for a Major League Baseball Team with a DFAed Player 

Now, the most important question. What happens to the player who receives DFA? I have stated earlier a player is not immediately released if he has been DFA.

The team gets seven days to make a decision about the player before he is sent to the minor leagues. 

Here are the things a team can do with the DFAed player within the seven days limit: 

• Take back the player to its 40-player roster
• Most common practice – place the player on a waiver. 
• Trade the player 
• Make the player a free agent 
• Send the player to the minor league (There is a player consent condition which I have stated earlier)

Let’s discuss some of the points in brief so that I don’t have to tell the same thing over and over to all. 

Place the player on waivers 

Placing in the waiver is the most common phenomenon for a DFA player. Though a team gets seven days limit to take any decision about the player, if the team wants to claim the waiver, they have to claim that within three days. 

When a team waves a player, any team can claim him. But what happens when more than one team claims that player? In that case, the team (If the team is in the same league) with the lowest record will claim the player. 

If the occurrence happens during the first month of the season, then the previous year’s standing is considered. 

If no team from the same league claims the player and lower league teams claim, then the team with the highest record will claim the player. 

Trade the player

Trading the player with another team is another option for a team when a player is designated for DFA. 

Sometimes teams imply DFA upon a player to lure a team that is not in a good position in the point table and pursues that team to buy that player.  

For example, Rangers implied DFA on Brian Shouse in May 2006 and was traded to the Milwaukee Brewers 4 days later. The rangers didn’t put him in the waiver (remember, three days rule for the waiver?)

Because then 13 more other teams would have claimed for Brian Shouse. And there is another interesting rule called five to ten rules. According to the five to ten rule, if a player has been playing MLB for more than ten years and the last five years for the current team, he can not be traded without consent. 

Release the player

When a DFA player is not traded nor waived, the team has to release him. The player becomes a free agent, and he is free to sign any team in the major league. On an interesting note, he can even sign the team just released him! 

The team that releases him is responsible for the player’s salary, less what he is paid by the team that signs him.

Option a Baseball Player – What does it mean? 

The term “Option” is related to the minor leagues. Let me give you the exact quotation from the baseball glossary

 “An option allows that player to be sent to the Minor Leagues (“optioned”) without first being subjected to waivers.”

If a player is sent to the minor leagues he must clear waiver so that no team can put a waiver claim on that player. 

Here a player is removed from the 26-man roster on which the main team is formed but keeps him in the ultimate 40-man roster. 

If you are a baseball fan, then “sent down to the minors” or “optioned to the minor leagues” should be a familiar term to you. It means the club moves the player to the minors according to the eligibility. 

If a player has 5 or more than 5 years of major league service time, he can be optioned and called back any time. But that is not the case; if the player has less than three years of service. 

If a player with less than three years of service is optioned and sent to the minor leagues, the team can not call him immediately. The team has to wait at least ten days for that player if they want him to play again in the major league.  

This rule is created to prevent constant back and forth major and minor league shuffling of players. 

What Happens When Major League Player is Released?

I talked about this matter in a short scope earlier in this article. But sometimes, I asked this question, the difference between DFA and Release . 

Release completely differs from the term DFA. Release means a player is out of the team, and there is no string attached between the player and the team. 

A Release doesn’t happen in the middle of the season. It often happens in the offseason. It’s because there is a contract issue and that it is better to perform in the offseason. And by the spring training, most teams organize their team and decide which players will be in the roster spot. 

When a team takes a 40-man roster decision, they have to make many decisions. The team management takes the decision on the 40-man roster and decides on the 26-man roster. 

Major DFA incidents in the History of the Major League 

Albert pujols.

The most recent incident of DFA is Albert Pujols which was also very shocking also. When Los Angels declared Alber Pujols designated for assignment in the last season of a 10-year contract .

Albert Pujols was one of the most prolific hitters in the history of the MLB. His highest batting average was .245 in 2016. But since then his form was declining. When he was DFAed, then his average was just .198.   

Though he was one of the greatest players on the team, the team management had to take the tough decision. Angels team president John Carpino said, 

“It never ends the way you want it to. This is baseball, and this is how it happens sometimes.” 

Albert Pujols has won two world series championships and three league MVP awards. He was only the ninth player in the history of MLB to hit 600 career home runs. He was 41 years old when Los Angles took the decision to DFA him. 

Chris Gimenez

Once Texas Rangers catcher Chris Gimenez was DFAed four times in his career. Teams he played for were Seattle mariners, Cleaveland Indians, Oakland Athletic.

He was finally DFAed frim Texas Rangers in 2014, and finally, Minnesota twins DFA him. He played in the minors and became a free agent a number of times. I was personally a fan of Chriz Gimenez, and the number of times teams implied DFA on him was really surprising to me. 

Chris Young

Chirs Young was another player who was DFAed with a great record. In his career, he played for Red Sox, Los Angels, and Yankees. 

Chris Young had a record of 25 base steals and 30 home runs in 2007. He was released after being DFAed from New Tork mates in 2014. The second DFA incident happened in 2017 after he joined Red Sox in 2015. He was declared a free agent in 2017. 

Frequently Asked Questions 

Why is it called designated for assignment.

DFA or Designated for Assignment is a different term used in baseball because here the team has various options. The team can place that player to waiver. In addition, the team can trade or send him to the minor leagues. 

When a player is declared as designated for assignment, the team gets seven days window to make a decision. If they decide to waiver, they get three days to declare that. Otherwise, they can trade, release or send him to the minors. Moreover, if the team thinks they need that player again, they also can call him back to the team. 

What does DFAed mean? 

If a team declares DFA upon a player, we call that player DFAed. It’s just another expression of telling a team has imposed DFA on a player. 

Is there any DFA in Minor Leagues?

No, DFA is a term used in the Major league. If a player DFAed he can be transferred to the minor leagues but there is no DFA in the minor leagues. 

Conclusion 

There are many abbreviations in baseball that baseball followers should know. ERA, Cycles, FPS , WHIP are some of them. DFA is less common among other abbreviations, but it is a vital abbreviation that every baseball fan should know. 

Also, if you are a baseball fan, you should understand what happens to a DFA player. You should know options for both the player and the team. When Albert Pujols was DFAed, many baseball fans were confused about “what will happen now!” as they didn’t know the term. 

As a coach, it’s my duty to make people understand the rules and terminology of baseball. These are the basics. When you follow a game, you should know the game from the inside. 

So, what does DFA mean in baseball? I hope you won’t ask me this question next time you see me. Have a nice day, and I hope your favorite player never faces DFA in baseball.

Hello everyone. My name is  Jason Butler, and I live in California, America. I was a professional AAA Minor League Baseball player.  I lost my chance of playing MLB for injury issues, but I did not lose my love for baseball. I attended the coaching training program and am now working as a coach in a small school in San Diego. 

I always love to share my experience and knowledge if that can help you. Play baseball, and stay fit. 

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Talking Baseball: What exactly does designated for assignment mean?

Like any industry, baseball has its own specific jargon, a technical vocabulary that expands the deeper you dive into the game. spring training brings a lot of these terms to the fore and is thus the perfect time to define them, both broadly and in t.

Like any industry, baseball has its own specific jargon, atechnical vocabulary that expands the deeper you dive into thegame. Spring training brings a lot of these terms to the fore andis thus the perfect time to define them, both broadly and in thecontext of the 2012 Red Sox. Think of it as your primer to thewhole season, one word at a time.

Additions to the list can be suggested by [email protected] [email protected].

•Competition: This is when two or more players have achance to win a particular roster spot. Players can enhance theirchances with impressive statistics during spring training, butstatistics aren't even close to the end-all, be-all given how smallthe sample size is and how volatile the quality of competition canbe. A home run off Justin Verlander in the second inning of anexhibition game matters much more than a home run off a Triple-Apitcher in the eighth inning of that same game.

"We like it for spring training," said Red Sox general managerBen Cherington. "We've had years where we haven't had a ton ofcompetition for the team. Some level of competition is healthy. Itgives Bobby [Valentine] and the staff a chance to evaluate playersin a little bit more legitimate setting. Spring training's not thebest time to evaluate players, but when guys are trying to win ajob, you're seeing a version of them that's closer to the realthing. There's some merit, some benefit to having a team that's notgoing through spring training just getting ready for Opening Day,and going through spring training with a purpose, with something atstake. We'll have that this spring, at at least a few differentspots."

•Designate for assignment (DFA): A player is designated forassignment when he is removed from the 40-man roster to make roomfor a different player. Once a team DFAs a player, it has 10 daysto trade him, release him or place him on waivers. If the playerclears waivers, he can then be outrighted to the minor leagues.

Since the start of 2011, the Red Sox have designated 12 playersfor assignment, including Scott Atchison three times. The Soxtraded Robert Coello and Mike Cameron shortly after designatingthem, while everyone else cleared waivers and - initially, at least- stayed with the organization.

•Disabled List (15-day): A player who is injured can bereplaced by another player if he is placed on the 15-day disabledlist. The replacement must either already be on the 40-man rosteror must be added to the 40-man roster.

•Disabled List (60-day): For players who are expected to beout longer than 60 days, the team can replace them on the 40-manroster temporarily. John Lackey and Daisuke Matsuzaka, both of whomare rehabbing from Tommy John surgery, figure to begin the seasonon the 60-day disabled list. Neither can be placed on the 60-daydisabled list until a day or two before the season starts, however,meaning at least two spots on the 40-man roster figure to open upfor players on minor-league contracts.

•Evaluate: The most commonly-used four-syllable verb eachspring. Baseball consensus is that evaluations are particularlydifficult during spring training given the vast array ofcircumstances surrounding games and at-bats.

Complicating issues even more is the number of spots where theRed Sox need to make smart evaluations. The sheer quantity ofpitchers in the mix for rotation and bullpen spots means Bostoncould be forced to have some of them accumulate innings inminor-league games, further skewing otherwise comparablestatistics.

•Extended Spring Training: Young players who are not readyfor a full-season minor league - usually recent draftees out ofhigh school or Latin American signees under the age of 20 - spendthe first half of the season working out at the Red Sox facility inFort Myers before joining the short-season Single-A Lowell Spinnersin June. Commonly shortened to "extended," as in, "Ryan Kalish willstart the season in 'extended' while he rehabs his shoulder."

[email protected]

Home » Why Do Players Get DFA (Designated for Assignment)?

Why Do Players Get DFA (Designated for Assignment)?

Designated for assignment (DFA) is a term used in baseball to describe a move by a team to remove a player from its active roster. The player is then placed on the team’s reserve list, where they can remain until the team either releases the player or trades them. The term is used by Major League Baseball (MLB) and Minor League Baseball (MiLB). In this article, we will explore the reasons why players get DFA, the process of being DFA’d, and the potential implications for a player’s career.

What Does It Mean to Be Designated for Assignment?

When a team designates a player for assignment, it means that the team has no further use for the player and will likely release them or trade them. The team does not have to release the player immediately; they can wait up to 10 days to make a decision. During this period, the player is not eligible to play in any games.

Why Do Teams Designate Players for Assignment?

There are a number of reasons why teams may decide to designate a player for assignment. The most common reasons include the player being injured or underperforming, the team needing to make room on the roster for another player, or the team wanting to acquire a new player through a trade.

Injuries are a common reason for DFA. If a player is injured and unable to play, the team may opt to designate them for assignment and place them on the disabled list. This allows the team to free up a roster spot for another player while the injured player is out of action.

Underperformance

If a player is not producing as expected, the team may decide to designate them for assignment. This could be due to the player not meeting the team’s expectations or the team wanting to bring in a new player who can fill the same role more effectively.

Roster Considerations

Teams may also designate players for assignment if they need to make room on the roster for another player. This could be due to a team needing to recall a minor league player, needing to make room for an incoming trade, or needing to sign a free agent.

Implications of Being Designated for Assignment

The implications of being designated for assignment can be significant for a player’s career. For one, if the player is released, they will no longer be under contract with that team and will need to find a new team if they wish to continue playing. Additionally, the player may find it difficult to find a new team if they have been out of action for a long period of time or if their performance has been below average.

Process of Being DFA’d

The process of being DFA’d can vary depending on the situation. Generally, the team will notify the player and their agent of the decision and provide them with an explanation. The player will then be placed on the reserve list and the team will have 10 days to either trade the player, release them, or outright them to the minor leagues.

Designated for assignment (DFA) is a term used in baseball to describe a move by a team to remove a player from its active roster. The reasons why players get DFA can vary, but the most common reasons include injury, underperformance, and roster considerations. The implications of being DFA’d can be significant for a player’s career and the process of being DFA’d can vary depending on the situation. Ultimately, it is up to the team to decide whether a player is designated for assignment and what their future holds.

Force out: What happens to players who are designated for assignment?

This has been a big year for one of baseball's most mundane transactions.

From Hanley Ramirez to Matt Harvey, from Phil Hughes to Melky Cabrera, from Adrian Gonzalez to Pedro Alvarez, there may never have been a season with more big names listed in the depths of the newspaper agate pages under those three cruel words: Designated for assignment.

When a team decides to DFA a player, he's taken off the 40-man roster immediately, and the team has seven days - a change this season, as previously it was 10 days - to trade him, send him outright to the minor leagues after he clears waivers, or release him. That is what happens from an official standpoint, but it's easy to forget that there is an actual person whose life is turned upside down when the DFA comes.

Imagine being a professional baseball player, but all of a sudden you have nowhere to play baseball. What do you do?

"It's a complete case-by-case basis," said Angels outfielder Chris Young, who was DFA'd by the Mets in August of 2014, then released before signing with the Yankees and rejuvenating his career.

"I went home, continued to work out and hit, and then I got the phone call from the Yankees. You don't know anything. I didn't know anything. I was just hopeful that another opportunity would come my way, and when it did, try to take advantage of it."

Young makes it sound fairly simple, but just going home and working out to stay in game shape is a challenge. If and when another team comes calling, the opportunity to make an impression can be fleeting.

The best way to prepare for that would be to head to the organization's minor league facility, hit the gym, and get some reps on the field with minor leaguers. When a player is designated for assignment, though, that is not an option - even if the team's plan is for an outright assignment to the minors. During that week, the player is not part of the team, but also not free.

"You're in limbo," said former Cubs infielder Jeff Huson, now a Rockies broadcaster, remembering when he was designated for assignment in 1996 by the Orioles . "You either go home, or you stay in the city for a few days. In my case, I waited around for a few days because I got DFA'd by Baltimore, and I stayed there because I didn't want to go home, because what if it's an East Coast team that claims me? Then I'd have to go all the way back.

"You literally sit there not knowing what your future's gonna hold. It's the worst possible case for a player, because you have no home, and you're trying to stay in shape - where do you go? You maybe go to a high school field? Play some video games and the quarters you have left over, go in the cage? Think about playing in a major-league game, then going to some warehouse and hitting off a machine, or even if you can find somebody to throw to you, they're not going to be as good as what you get in the major leagues.”

At the same time that physical challenge is foisted upon a player, there's also the mental one. It's not just the potential ennui of being without a team, but of having been cut from a 40-man roster. How a player handles that can have a lot to do with what happens next, and seizing that opportunity.

"I never took it as anything bad or looked too far into it when all I could do was just keep working on stuff," said Yankees reliever A.J. Cole, who had a 13.06 ERA when the Nationals designated him for assignment in April, and has posted a 0.69 mark in seven appearances with New York since a trade for cash considerations. "I needed to keep doing what I need to do as a pitcher.

"Everyone says it's always good to get a good start in a different place, and sometimes it is. Right now, it's really helping me, and there's some great guys here that help me out. It's a fun place to play here."

Not every player gets to land with a team as good as this year's Yankees, but there can be positives in other ways. Cubs catcher Chris Gimenez has been DFA'd four times in his career, thrice during the season. His experiences have varied from heading to the minors - "once you decide to accept the assignment, you're champing at the bit to get there" - to being traded to a Cleveland team in 2016 that wound up going to the World Series.

That was Gimenez's third time with Cleveland, having made his debut there in 2009, with stops in Seattle , Tampa Bay , and Texas before returning to Ohio in 2014.

"That was the one that kind of sticks with me," Gimenez said. "In that case, it worked out good, because my wife was basically ready to have our second son. We had two times where we went into the hospital and nothing happened, and that kind of gave me an extra three days. The terrible thing was, we were building our house where we live now, so we were staying with her parents, and our 3-year-old son, at the time, was there. It was a little bit of a crowded spot, and I appreciate her parents letting us stay there, because it wasn't the original plan the way everything happened.

"I ended up spending six days at home - three on the paternity leave, and three after I (was designated for assignment). Then I got the next flight to Texas, and ended up coming home like four days after that anyway - I got traded, was there for a day, then my wife had our son. It was a lot of travel for a few days, but that's alright.

"Every possible way that could've happened to me, it's happened in my career, but that's how it goes, and you can either let it affect you, or just suck it up and go about your business."

Jesse Spector is the sports business columnist for Dealbreaker, a columnist for Rockies Magazine, the host of "Jesse Spector Is..." on Lightning Power Play Radio, and one of the hosts of the Locked On Yankees podcast. He previously was the national baseball and hockey writer for Sporting News, covered the New York Rangers for the Daily News, and worked for SportsTicker, the Associated Press, and the Brooklyn Eagle. He lives in New York.

(Photos courtesy: Getty Images)

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Designated for assignment

A player is designated for assignment when his team wants to replace him on the active roster and he is out of options . The team thus announces its wish to send the player to the minor leagues and places his name on waivers . If the player is claimed, a trade may be worked out between the two teams. If the player is unclaimed, he can either accept the minor league assignment, or opt to become a free agent immediately.

Teams have the right to assign a player whose options have all been used outright to the minors only once during his career. This can only be done if his major league service time does not exceed a certain number of days. If he cannot be outrighted, the "designated for assignment" procedure kicks in. Of course, if a team thinks it has no further use for this player even in its minor league system, it can simply hand him his unconditional release . This results in the player immediately becoming a free agent.

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What does designated for assignment mean in MLB? What to know about Madison Bumgarner

The Arizona Diamondbacks designated pitcher Madison Bumgarner for assignment on Thursday after his latest rough outing on Wednesday.

Bumgarner is 0-3 on the season with a 10.26 ERA in 16.2 innings over four starts. He has given up 25 hits and 19 earned runs, while walking 15 and striking out 10.

What's next for the pitcher and the Arizona Diamondbacks?

Here's a look at the designated for assignment process and what it means for Bumgarner and his MLB team.

What does designated for assignment (DFA) mean in baseball?

The MLB.com glossary explains the process as follows: "When a player's contract is designated for assignment — often abbreviated "DFA" — that player is immediately removed from his club's 40-man roster. Within seven days of the transaction (had been 10 days under the 2012-16 Collective Bargaining Agreement), the player can either be traded or placed on irrevocable outright waivers."

What happens if the player is claimed off waivers by another team?

The glossary explains the process as follows: "If the player is claimed off said waivers by another club, he is immediately added to that team's 40-man roster, at which point he can be optioned to the Minor Leagues (if he has Minor League options remaining) or assigned to his new team's 26-man roster. If the player clears waivers, he may be sent outright to the Minor Leagues or released. Players with more than three years of Major League service time or who have been previously outrighted may reject the outright assignment in favor of free agency. Clubs may utilize this option to clear a spot on the 40-man roster — typically with the intention of adding a newly acquired player (via trade or free agency), a Minor Leaguer or a player being activated from the 60-day injured list."

What are the specifics of Madison Bumgarner's DFA?

The Arizona Republic's Nick Piecoro explained the specifics regarding the situation for Bumgarner and the Diamondbacks in his story detailing the pitcher being designated for assignment on Thursday.

He wrote: "Bumgarner is likely to be placed on waivers soon, if he hasn't been already, and would become a free agent once he clears. He could then sign with another team for a prorated portion of the league minimum ($720,000). He is not likely to be claimed or traded given the amount of money still owed to him by the Diamondbacks."

How much do the Diamondbacks owe Madison Bumgarner?

Bumgarner signed a 5-year, $85 million contract with the Diamondbacks in December of 2019. He is still owed $34 million through next season. In cutting ties with Bumgarner, the Diamondbacks are setting a new club record for dead money, exceeding the $22 million they ate when releasing right-hander Russ Ortiz during the 2006 season.

More on Madison Bumgarner and the Diamondbacks

Madison Bumgarner designated for assignment by Diamondbacks

Why the Diamondbacks did not call up Brandon Pfaadt to replace Madison Bumgarner

With sense of urgency, Diamondbacks move on from struggling Madison Bumgarner

Arizona Diamondbacks fans sound off: Madison Bumgarner must be removed from rotation

Reach Jeremy Cluff at  [email protected] . Follow him on Twitter  @Jeremy_Cluff.

Support local journalism: Subscribe to  azcentral.com  today.

This article originally appeared on Arizona Republic: What does DFA mean in baseball? What's next for Madison Bumgarner

The Designated for Assignment (DFA) Process in Major League Baseball: Implications, Procedures, and Examples

• Uncategorized

What does it mean to be designated for assignment?

To be designated for assignment in baseball means that a player has been removed from his team’s 40-man roster. This move is typically made when a team wants to make room for another player, or if the player’s performance has been disappointing or if he has become injured. Once a player is designated for assignment, the team has 7 days to trade him, release him, or place him on waivers. During this time, other teams have the opportunity to claim the player off waivers and assume his contract. If the player clears waivers, he can be assigned to the team’s minor league system or remain on the 40-man roster. Being designated for assignment can be a difficult and uncertain time for a player, as it often means he is at risk of losing his spot on the team and potentially even his career.

Why do teams designate players for assignment?

Teams designate players for assignment for a variety of reasons. The most common reason is to clear a roster spot for another player, either from their own minor league system or via a trade or free agent signing. Another reason could be due to a player’s poor performance, as a team may want to remove them from the active roster and give another player a chance to contribute. In some cases, a player may be designated for assignment if they become injured and the team needs to free up a roster spot for a healthy player. Finally, a team may designate a player for assignment if they are looking to trade the player and want to remove them from the active roster while negotiations are taking place. Regardless of the reason, being designated for assignment can be a difficult and uncertain time for a player, as their future with the team and in baseball is put into question.

What happens to a player who is designated for assignment?

When a player is designated for assignment, he is immediately removed from the team’s active roster and placed on the 40-man roster’s “designated for assignment” list. The team then has 7 days to make a decision on the player’s future. During this time, the team can trade the player, release him, or place him on waivers. If the player clears waivers, the team can choose to assign him to their minor league system or keep him on the 40-man roster. If another team claims the player off waivers, they assume the player’s contract and roster spot.

For the player who has been designated for assignment, this can be a stressful and uncertain time, as their future with the team and in baseball is up in the air. They may be traded to another team, released and become a free agent, or sent to the minors, where they will need to work their way back up to the majors. The DFA process can have a significant impact on a player’s career and earning potential, as well as their confidence and morale.

The difference between designated for assignment and outright assignment While the terms “designated for assignment” (DFA) and “outright assignment” may seem similar, there is a key difference between the two. DFA is the process by which a player is removed from his team’s 40-man roster and given a 7-day window for the team to trade him, release him, or place him on waivers. If the player is not claimed off waivers, he can be assigned to the minor leagues or kept on the 40-man roster. On the other hand, outright assignment is the process by which a player is removed from both the 25-man and 40-man rosters and sent directly to the minor leagues. There is no 7-day window for a team to make a decision, and the player does not need to clear waivers. In other words, DFA is a more flexible process that allows the team to potentially retain the player or trade him, while outright assignment is a more direct demotion to the minor leagues. The two terms are often used interchangeably, but it’s important to understand the differences between the two. The impact of designated for assignment on a player’s career and future opportunities Being designated for assignment can have a significant impact on a player’s career and future opportunities. If a player is claimed off waivers by another team, he may be given a fresh start and the opportunity to contribute at the major league level. However, if the player clears waivers and is sent to the minors, his future in baseball may be uncertain. DFA can also have financial implications for both the player and the team. If the player is released, he becomes a free agent and can sign with any team, but may not receive the same salary he had with his previous team. Additionally, if a team is unable to trade a player who has been designated for assignment, they may be responsible for paying a portion of the player’s salary. The DFA process can be emotionally challenging for players, as it can be difficult to see their careers and livelihoods put into question. However, some players have been able to bounce back from DFA and use the experience as motivation to improve and succeed at the major league level. Examples of notable players who have been designated for assignment Throughout baseball history, many notable players have been designated for assignment at some point in their careers. One example is David Ortiz, who was designated for assignment by the Minnesota Twins in 2002 before being released and signing with the Boston Red Sox, where he went on to become one of the greatest designated hitters of all time. Another example is Jose Bautista, who was designated for assignment by the Pittsburgh Pirates in 2004 before being picked up by the Toronto Blue Jays and transforming into a two-time MLB home run champion. More recently, Albert Pujols, a three-time MVP and 10-time All-Star, was designated for assignment by the Los Angeles Angels in 2021 before being picked up by the Los Angeles Dodgers. These players’ experiences illustrate that being designated for assignment does not necessarily mean the end of a player’s career, and that they can use the experience as motivation to succeed in the future. The role of waivers in the designated for assignment process Waivers play a crucial role in the DFA process. When a player is designated for assignment, he must be placed on waivers before he can be traded or outright released. Waivers give other teams in the league the opportunity to claim the player and assume his contract and roster spot. The waiver process is designed to promote competitive balance in the league by giving all teams an opportunity to claim players who have been designated for assignment, regardless of their place in the standings. However, the process can also be complex and unpredictable, as teams must weigh the potential benefits of claiming a player against the risks and costs associated with doing so. Waivers can be an especially important factor in the DFA process for players with larger contracts or for teams with limited payroll flexibility. In these cases, a player who clears waivers and is outright released may be more likely to be picked up by another team, as they would not be responsible for assuming the player’s full contract. How a player can appeal a DFA decision While it is rare for a player to successfully appeal a DFA decision, there are a few situations in which a player may have grounds for an appeal. For example, if a team designates a player for assignment due to an injury that was not disclosed or properly diagnosed, the player may be able to appeal the decision and potentially be reinstated on the team’s active roster. In order to appeal a DFA decision, the player must file a grievance with the Major League Baseball Players Association (MLBPA) within 45 days of the transaction. The appeal will then be heard by an independent arbitrator, who will review the evidence presented by both the player and the team before making a final decision. While the appeal process can be time-consuming and expensive, it can provide a player with an opportunity to challenge a DFA decision and potentially continue his career at the major league level. The potential financial implications of designated for assignment for both players and teams Designating a player for assignment can have significant financial implications for both the player and the team. If the player is claimed off waivers, the team may be responsible for paying a portion of the player’s salary or may be relieved of the obligation entirely. If the player clears waivers and is outright released, the team may still be responsible for paying the remainder of the player’s contract, depending on the terms of the agreement. For the player, being designated for assignment can have long-term financial implications as well. If the player is released and becomes a free agent, he may struggle to find a team willing to offer him a similar contract. Additionally, if the player is sent to the minors, he may be paid a lower salary than he was making at the major league level. Overall, the financial impact of DFA can be significant and is an important factor for both players and teams to consider when making decisions about roster moves. The designated for assignment process in relation to the MLB Collective Bargaining Agreement The DFA process is governed by the Major League Baseball Collective Bargaining Agreement (CBA), which outlines the rights and responsibilities of players and teams in relation to roster moves. The CBA includes provisions related to waivers, including the waiver claim process, which gives all teams in the league an opportunity to claim players who have been designated for assignment. The CBA also sets forth procedures for players to file grievances and challenge roster decisions, including DFA decisions, through the MLBPA. The CBA also sets minimum salary and service time requirements for players, which can impact a team’s decision to designate a player for assignment or keep him on the roster. Additionally, the CBA includes provisions related to arbitration, which can be used to resolve disputes between players and teams regarding contracts, salaries, and roster decisions. Overall, the DFA process is an important aspect of the MLB CBA, which governs many aspects of player contracts, salaries, and roster moves. Conclusion Being designated for assignment is a significant event in a player’s career that can have long-lasting implications. While the designated for assignment process is designed to give teams flexibility in managing their rosters, it can also be challenging for players who may be faced with uncertainty about their future. Waivers and financial considerations can also play important roles in the DFA process, and the procedures outlined in the MLB Collective Bargaining Agreement provide a framework for resolving disputes and ensuring fair treatment of players. Ultimately, the DFA process is an important aspect of the MLB landscape that requires careful consideration by teams and players alike. FAQs

1. what happens to a player who is designated for assignment.

A player who is designated for assignment is removed from his team’s 40-man roster and can be placed on waivers or outright released. If the player is not claimed by another team within the designated time frame, he can be sent to the minor leagues or become a free agent.

2. What is the difference between DFA and outright assignment?

DFA refers to the process of designating a player for assignment and placing him on waivers, while outright assignment refers to the process of removing a player from the 40-man roster and sending him to the minor leagues without passing through waivers.

3. How can a player appeal a DFA decision?

days of the transaction, and an independent arbitrator will review the evidence before making a final decision.

4. What are the financial implications of DFA for players and teams?

DFA can have significant financial implications for both players and teams. Teams may be responsible for paying a portion of the player’s salary or may be relieved of the obligation entirely if the player is claimed off waivers. For the player, being designated for assignment can impact his salary and long-term earning potential.

5. What is the role of waivers in the DFA process?

Waivers are used to give all teams in the league an opportunity to claim players who have been designated for assignment. If the player is claimed, the team claiming him assumes the responsibility for his contract. If the player clears waivers, he can be outright released or sent to the minor leagues.

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What does designated for assignment DFA mean in baseball?

Introduction

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In every sport, rules are governing them. Baseball, as a sport, has its own rules and regulations guiding the game. These rules were put in place for players and officials to know what is to be done and what not to do in the game. These rules apply to every part of the game, from the equipment used in playing the game to how scores are counted. These rules help give the game a unified front and allow for a better understanding of the game. Most of the rules were created a long time ago and were later fine-tuned to fit into the modern-day context of the game. Having rules is a beautiful thing, as it helps solves a lot of knotted situations without much stress.

Know more: What is a save in baseball

There are certain terms and terminologies pertaining to different sports, likewise baseball. one of those terms in baseball includes the DFA. The DFA has only one meaning in baseball, which is designated for assignment. Knowing how to keep a score or a scorebook is not the only practice you need to know in baseball. There are certain terminologies you have to master and command before it can be said that you have the full knowledge of baseball. There are so many terminologies used in baseball, with each having different meanings. Terminologies such as balk, battery, bunt, count, cleanup, diamond, error flyball, and groundball, and a full count are common to baseball, and each has its meaning. However, out of all these terminologies, most people don’t understand the DFA; although, unlike the rest, it is not a term used during play, which is why it is not very popular amongst baseball enthusiasts. However, the full meaning of DFA in baseball will be explained to you as you continue reading.

Know more: How many player on a baseball team

DFA in Baseball

DFA In baseball stands for designated for assignment; this term is used when a player’s contract is designated for assignment. Once this occurs, the player is removed from the roster at once. When you hear the term DFA, some other terminologies accompany it; all these will be explained for better understanding.

• What is DFA in Baseball?: The term DFA as said earlier stands for designated for assignment; this term is used when the player’s contract to his club is designated for assignment. Once this occurs, the player is immediately removed from the forty-man roster of his club; within a week or ten days of this agreement, the player can be placed on irrevocable outright waivers or traded. To better understand this term, one needs to be familiar with the term waiver in baseball.
• What is a waiver?: A waiver is a form of permission granted to other teams in baseball, which allows them to proceed with a player move that will not be allowed normally by the rules of the game.

Checkout: How to hold a baseball bat

• Place player on waiver: After placing a player on DFA, the player can be claimed off waiver by another club. Once this club claims the player, he immediately joins their 40 man roster. At this point, the player can be sent to one of the clubs in the minor league. However, if the player can clear all waivers, he can be sent to the minor leagues or be released. If a player has played for about 3 to 5 years in the major league, the player must give his consent before being assigned to minor leagues. But in some cases, players withhold their consent. In this case, the club can either release the player or keep him on the roster of the major league. In both cases, the player will continue getting his pay under the terms of his agreement with the club.
• Trade the player: once a player is placed on DFA, the player may be traded. Some major team has been known to put their players on designated for assignment to increase the interest on such players, especially among teams not at the top of the waiver list. According to the waiver rule, other teams would have preferences in claiming a player. Also, under the five and ten rule, if a player has ten years experience in the major league, he cannot be traded without his consent.
• Release the player: If a player clears his waivers and is not traded, the players can be released from the team. Once the player is released, he becomes a free agent and can sign a new deal with any of the 30 major league teams with his present team inclusive.

Checkout the meaning of: Designated for Assignment in Basball

The designated for assignment is a terminology used for players that have been dropped from his team roster. Once a player is placed on DFA, the team releases the player or trades the player to another team in the major league. If it is a player with less than three years of experience in the major league, the player can be sent to one of the clubs in the minor league. However, in the case of a player with more than 5 or 10 years of experience in major league baseball, he cannot be traded or sent to the minor league without his consent. And if the player refuses to drop his consent, he is released and becomes a free agent and can end up still signing another contractual agreement with the team that just released him.

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Designated for assignment

Designated for assignment is a contractual term used in Major League Baseball . When a player is designated for assignment, he is immediately removed from the club's 40-man roster . This gives the club 10 days to decide what to do with the player while freeing up a roster spot for another transaction, if needed. After designating a player for assignment, the club must make one of the following contractual moves.

Place the player on waivers [ ]

Typically a player is placed on waivers after being designated for assignment for the purpose of outrighting him to one of the club's minor league teams. However, a player must clear waivers (that is, no other team may place a waiver claim on the player) to be sent to a minor league team. Also, if the player has five or more full years of major league service, he must give consent to be assigned to the minors. If the player withholds consent, the team must either release him or keep him on the major league roster. In either case, the player must continue to be paid under the terms of his contract.

Trade the player [ ]

Once a player is designated for assignment, he may be traded. Some teams have been known to designate players for assignment to increase interest in the player, especially among teams that are not at the top of the list for waivers. For example, in May 2006, Rangers reliever Brian Shouse was designated for assignment, and was traded to the Milwaukee Brewers 4 days later. The Brewers could have waited until Shouse was placed on waivers so they would not have had to give up a player in a trade, but according to the waiver rules , the other 13 AL teams would have preference in claiming him. Also, under the "five and ten rule," if a player has ten years of Major League service, the last five of which with his current team, he cannot be traded without his consent.

Release the player [ ]

If a player is not traded, and clears waivers, he may be released from the team. The player is then a free agent and is able to sign with any of the 30 Major League teams, including the team that just released him. The team that releases him is responsible for the salary the player is owed, less what he is paid by the team that signs him.

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IMPORTANT NOTICE: THIS AGREEMENT IS SUBJECT TO BINDING ARBITRATION AND A WAIVER OF CLASS ACTION RIGHTS AS FURTHER DETAILED IN SECTION 30 BELOW.

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• You will not make offensive comments, use offensive or pornographic material or make potentially defamatory or inflammatory remarks in relation to any ‘chat’ or ’forum’ facilities we provide and you accept that any postings made by you can be passed on to the relevant authorities should we deem this appropriate;
• You will not disguise or interfere in any way with the internet protocol (“IP address”) of the computer or other Device (defined below) you are using to access the Services or otherwise take steps to prevent us from correctly identifying the actual IP address of the Device you are using while accessing the Services; and
• You accept and agree to abide by the rules of the games and sports wagers as set out on the Services, and any rules and terms for any promotions or loyalty programs in which you participate as set out on the Services from time to time.

Account Security

• BIU will take reasonable steps to prevent unauthorized access to your Account information. You are responsible for maintaining the security and confidentiality of your Account. In particular, you agree to keep your username and password strictly confidential. You are responsible for any misuse of your password. Provided that we have been correctly supplied with the Account information requested, we are entitled to assume that offers and payments are made by you. You should change your password on a regular basis and never disclose it to any third party. You undertake to protect your username and password in the same way that you would in respect of your bank cards. Any failure to do so shall be at your sole risk and expense. If a third party accesses your Account, you are solely responsible for that third party’s actions, whether or not that third party’s access was authorized by you, and you hereby indemnify BIU, NMR and GNAC and hold BIU, NMR and GNAC harmless against all costs, claims, expenses, and damages howsoever arising in connection with the use of or access to your Account by any third party. You will not attempt to sell or otherwise transfer the benefit of your Account to any third party, nor will you acquire or attempt to acquire an Account which has been opened in the name of a third party. Subject to the foregoing, BIU will not be liable for any loss that you may incur as a result of misuse of usernames or passwords or from any unauthorized use of your Account, whether fraudulent or otherwise. You agree to indemnify us and hold us harmless against any costs, claims, damages and expenses arising in connection with the use of, or access to, your Account by any third party as a result of your negligence, breach of these Terms, fraud, dishonesty or criminal activities.
• Please contact us as soon as is possible if you have lost or forgotten your Account details. You agree to inform us as soon as is possible (by telephone, where possible) if you believe that your Account information is being misused by a third party so that we may suspend your Account to prevent further abuse.
• To retrieve a forgotten password, you can click on the “Forgot Password” link on the login page. When you click on the link, you will be asked to insert your email address. You will be emailed a link that will direct you to a change password page. Upon changing the password, you will be directly logged in.
• You have the option of enabling strong authentication on the Player Protection Page. When you enable strong authentication, upon login, you will be prompted to answer two security questions in addition to being prompted to enter your password. The Player Protection Page provides account security tools and information, such as a description of what strong authentication is and how a player may enable it. The Player Protection Page describes tools users can employ to limit play and also the process to self-exclude.
• We recommend that you disable any automatic password memory in your browser prior to using the Services. This will help to limit the risk to you of unauthorized use of your Account.
• You are responsible for configuring your client terminal's auto-lock feature to protect the client terminal from unauthorized use.
• BIU reserves the right to refuse to register you as an Account holder, either with or without cause. BIU reserves the right to suspend or terminate your Account at any time, either with or without cause, upon notice (we will use our reasonable efforts to give such notice to you either before or after suspending or terminating your Account). Following termination or suspension of your Account, we will try, in the normal course of events, to comply with any valid contractual obligations made in accordance with these Terms.
• The FanDuel Sportsbook Group and any third parties it contracts with in relation to the provision of the Services will hold, use, and share information with respect to your identity, including, but not limited to, your name, address and payment details, in accordance with our Privacy Policy . We rely on this information in entering into these Terms with you. As set out in more detail in Section 27, you agree to indemnify us and hold us harmless against any costs, claims, damages and expenses arising in connection with any falsehood or inaccuracy contained in the information you provide to us.

Deposits & Withdrawals

In connection with making a deposit, you represent that:

• All money that you deposit in your Account originates from a payment source of which you are the legal owner;
• All money that you deposit in your Account is free from and unconnected to any illegality and, in particular, does not originate from any illegal activity or source; and
• All payments made into your Account are authorized and you will not attempt to reverse a payment made into your Account or take any action which will cause such a payment to be reversed by a third party in order to avoid any legitimate liability.

Deposits to your Account can be made using several different and convenient ways, including:

• ACH (electronic checking or direct deposit): electronic transfer of funds between your bank account and your player Account. Please note you may only have three (3) ACH accounts linked to your player account at any time;
• DEBIT/CREDIT CARDS: Debit/credit cards with a MasterCard/VISA logo can be used to make deposits. Please note you may only have three (3) active Debit/Credit Cards linked to your Account at any time. Additionally, please note that some banks may charge advance processing fees on credit card transactions;
• FANDUEL PREPAID CARD: You can electronically transfer funds from a bank account or Debit/Credit Card to your FanDuel Prepaid Card and then deposit those funds to your Account;
• ONLINE TRANSFER: You can deposit with online transfer if you have a bank account set up with online bill pay at specific banks;
• WIRE TRANSFERS: A direct payment from your checking or savings account into your Account;
• PAYNEARME: Deposit funds into your Account via locations that accept PayNearMe payments; or
• GOLDEN NUGGET CAGE DEPOSIT: Deposit funds into your Account via the Golden Nugget Atlantic City Casino Cashier Cage located at Huron & Brigantine Blvd., Atlantic City, NJ 08401;
• SPORTSBOOK CAGE DEPOSIT: Deposit funds into your Account via the New Meadowlands Racetrack/FanDuel Sportsbook Cage located at 1 Racetrack Drive, East Rutherford, NJ 07073; or
• PAYPAL/VENMO: You can electronically transfer funds from a bank account to your PayPal/Venmo account and then deposit those funds to your Account.

Credit Card Chargeback Fees. Each credit card chargeback transaction that you initiate will be assessed a $5.00 fee, applicable against any available cash balance in your Account at the time such fee is assessed. Any credit card chargeback that you initiate requiring pre-arbitration proceedings will further be assessed a $500.00 fee, applicable against any available cash balance in your Account at the time such fee is assessed.

In connection with making a withdrawal, you represent that:

• All money that you withdraw from your Account is transmitted to a payment source of which you are the legal owner;
• All money that you withdraw from your Account is free from and unconnected to any illegality and, in particular, does not originate from any illegal activity or source; and
• All withdrawals from your Account are authorized and you will not attempt to take any action which will cause such a withdrawal to be reversed by a third party in order to avoid any legitimate liability.

You accept that all transactions may be checked for the detection of money laundering or fraud and that any transactions made by you which BIU deems suspicious may be reported to the appropriate authorities.

Placing Sports Bets

• Customers can only bet up to the amount held within their Account or allowed by their bank or the limit as set out in the House Rules , whichever is the lesser. The minimum and maximum bet per selection is determined exclusively by BIU and is detailed on screen.
• BIU reserves the right to accept or decline the whole or part of any proposed bet.
• Bets placed by debit card or any other means do not become valid until we have received payment or unless, at our discretion, we allow the bet subject to authorization. If payment has not been received before an event commences, then that Bet is automatically void unless we communicate otherwise to you at the time of the attempted placing of the Bet.
• Each Bet will be given an individual number as confirmation of the Bet. Bets will be valid (subject to meeting the criteria for placing a bet laid down in the Terms) if accepted by the FanDuel Sportsbook Bet Server, whether or not the customer receives the bet code. We are not liable for the settlement of any bets where we have not issued a written confirmation of acceptance of the bet or where we are unable to display that bet in the ‘My Account’ pages of the Services. It is the customer’s responsibility to ensure that all of the details of their bets are correct. Once a bet has been confirmed by FanDuel Sportsbook, that bet cannot be cancelled by the customer. If you have any concern as to whether your Bet has been accepted, please log in and go to the ‘My Account’ pages of the Services where details of all live Bets entered into by you will be displayed.
• You must exercise your own judgement in placing a Bet and you hereby confirm that you have not relied on the advice of any BIU employee relating to any Bet.
• You agree to pay us for all Bets that are placed with us using your Account.
• Bets must be made via the Websites or via the Betting Apps.
• Please familiarize yourself with betting and gaming terminology and how the various bets and games are operated. If you have any questions relating to the foregoing, please contact us . BIU cannot accept any responsibility if you place a bet in circumstances where you do not fully understand any of the terms involved or how the bet or game is operated.
• On occasion the prices available across the various Services may not be the same - for example, a price on the FanDuel Sportsbook Website may not be the same as those prices available on other Services. BIU accepts no liability for the fact that a customer could have obtained a different price through some other medium.
• Guaranteed prices and other special offers or promotions are available at the discretion of BIU and can be restricted on an individual Account basis at any time.
• BIU is not responsible for any taxes that may be payable by you whether on any Bets, on any winnings or otherwise.
• With the exception of “Live Betting” events (see Section 10 below for Live Betting rules), Bets are accepted up to the off-time of the event or a pre-determined time, whichever is earlier. However, FanDuel Sportsbook may allow a grace period for some sporting events during which Bets will be accepted but we reserve the right to void any or all Bets should we think there has been a significant development in the event prior to placement or purported placement. FanDuel Sportsbook reserves the right to void any Bet if accepted in error after the betting has closed or where the event was resolved or at a stage where the customer could have an indication of the outcome. In such circumstances, we will normally return your stake.
• FanDuel Sportsbook reserves the right to void any or all Bets made by, any group of people acting in conjunction with each other, or any individual acting alone, in an attempt to defraud FanDuel Sportsbook.
• Not all participants are quoted in every event. However, a price is available for almost all entries or outcomes in any event. If you wish to bet on an unnamed selection, please contact one of our Customer Support agents and we will try to add this selection to the market.
• BIU may, at its sole discretion and without any requirement to give reasons, exclude any customer from the Services generally or from receiving selected promotions (e.g., guaranteed best price; bonuses; free bets; enhanced prices; and money-back specials) and any other promotions and offers introduced by us from time to time.
• In the event of there being a dispute over the time at which a Bet was placed or whether a Bet has been placed, then the time at which it was recorded (if recorded) on the transactional log will govern settlement. If an attempted Bet was not recorded on the transactional log, no Bet shall be deemed to have been placed. You should check your Account balance each time you visit the Services.
• You are not prohibited from entering into the Bet by any term of your contract of employment, these Terms or any rule of a sport governing body or other professional body of which you are a member, which applies to you;
• Where the Bet is placed on the outcome of a race, competition or other event or process or on the likelihood of anything occurring or not occurring (“the event”), you do not know the outcome of the event;
• You are not misusing Inside Information (as defined in Section 8.22) to place a Bet; and
• You are not a Prohibited Sport Pool Participant as defined in N.J.A.C. 13:69N-1.1.
• In the event of any representation made by you in Section 8.17 proving to be false, BIU reserves the right to void Bets, suspend your Account, and we shall not be obliged to pay any winnings which might otherwise have been payable in respect of the Bet.
• Suspend its offering on any event or series of events in any of its markets; and
• by the relevant sports federation or governing body (where applicable); or
• by FanDuel Sportsbook using its reasonable discretion.
• Further, in the case of active event manipulation being confirmed as having taken place on any event or series of events (by the appropriate sports governing bodies or by any other means), FanDuel Sportsbook reserves the right, in its absolute discretion, to suspend any bets placed on such events, either by any individual identified as having misused Inside Information (defined in Section 8.22) or by any other individual who in the reasonable opinion of FanDuel Sportsbook is connected to, acting in conjunction with, or in any way involved with such individual or the event manipulation.
• We reserve the right to refuse or limit any Bets or bonuses (for example by setting minimum and maximum amounts which will be set out in the Sportsbook Rules , or by setting wagering requirements), or change such limits, at our sole discretion for any reason whatsoever without any obligation to provide you with notice.
• “Inside Information” means any information which has not been made public and, if it were made public, would be likely to have a material effect on the relevant market relating to the event.

Suspension or termination

• Are engaging in illegal or fraudulent activity while using our Services;
• Are breaching any term of these Terms, including the House Rules ;
• Are taking unfair advantage over us or any other player or are otherwise acting in an unfair manner (for example, by exploiting a fault, loophole or error in our software, by collusion or by any other means);
• May be having difficulties obtaining credit, have become bankrupt, may not be gaming responsibly, or that you may have self-excluded; or
• We are required to do so by law.
• There is a technological failure; or
• Where in our judgment, acting reasonably, there is a manifest error in the terms of a bet offered to, or placed by, any party.
• If you have a question relating to your Account, it is your responsibility to notify BIU at the earliest opportunity, providing as much information as BIU may require.
• We suspect you have acted in breach of these Terms or any other agreement relevant to your activities on our site, including where we suspect the Account has been linked with fraudulent or ‘suspicious betting’ activity (explained in Section 9 ); and/or
• We have to withhold the funds in your Account by law or to comply with any advice, request or instruction from any governmental, regulatory or enforcement authority.
• If an internal or external investigation reasonably demonstrates that you have acted in breach of these Term, any other agreement relevant to your activities on the Websites or Betting Apps, or that your Account has been linked with fraudulent and/or ‘suspicious betting’ activity, we reserve the right to seize some or all of the funds in your Account. The disposition of any funds obtained by us in this manner will be at our sole and absolute discretion and/or in accordance with any advice, request, or instruction from any governmental, regulatory or law enforcement authority. In addition, if formally requested by law enforcement, gaming regulators, or taxation or other authorities, or in the event that you fail to provide us with sufficient information to identify yourself in accordance with our internal procedures or those procedures imposed on us by the NJDGE and/or other authorities, we may suspend your Account and all functionality relating to the use of your Account (e.g. bet management and withdrawal of funds) and withhold from you any funds in your Account pending the final determination of any criminal or other legal proceedings or investigation to which such a request may relate or until you provide the necessary 'know your client' or 'age verification' information as appropriate.
• For the avoidance of doubt, at no point during any such suspension or termination period will interest accrue to you on any funds in your Account.
• Your Rights to Set Daily Limits and Exclude Yourself. You have the right at any time to set daily limits for your gaming activity or to exclude yourself from playing games or placing sports wagers on the Services. Details of how to set daily limits or to exclude yourself can be found on the NJ Patron Protection page on the Services. Should you choose to exclude yourself, you will be opted out of all bonuses in accordance with the applicable bonus terms & conditions. Any cashable balance in your Account in the amount of one (1) dollar or more will be mailed to you via a check by the 15th day of the calendar month following the calendar month in which you exclude yourself. Should the cashable balance in your account be less than one (1) dollar at the time you exclude yourself, you will automatically forfeit such balance unless you contact Customer Service within seventy-two (72) hours of completing your self-exclusion request to request a check for such balance.
• Your Right to Suspend Your Account for a Period of Time Chosen by You. You have the right at any time to suspend your Account for a period of no less than seventy-two (72) hours. Details of how to suspend your Account can be found on the NJ Patron Protection page on the Services.

Suspicious Betting

• Where there is an inordinate frequency and/or highly unusual pattern of Bets (by comparison with betting norms) placed on the same selection(s) in a short space of time;
• Where there is an inordinate frequency and/or highly unusual pattern of Bets placed on the same selection(s) and where the theoretical probability of said selection(s) winning at the time of bet(s) placement, based on the odds offered on the selection(s) at the time of Bet placement, is largely inconsistent with the theoretical probability of the same selection(s) winning calculated using their starting prices;
• Where the integrity of an event (or events) has been called into question, including, for example, but not limited to where one (or more) of the participants in an event displays exceptional form which we reasonably believe was known to you or someone connected to you at the time of Bet placement but was concealed from the public generally in order to gain an unfair advantage in any bets placed on that event (or those events);
• Where we have reasonable grounds to suspect that a bet or a string of connected Bets were placed robotically, by automated means, or otherwise than through the Account holder placing each bet manually via their Account;
• Where we reasonably believe that you have used unfair external factors or influences connected with the event(s) the subject of any bet(s);
• Where we reasonably suspect that you have opened duplicate Accounts or where we reasonably suspect that second or subsequent Accounts are under common control with your Account with a view to concealing the true worth, nature or pattern of Bets placed by you or on your behalf, even if second or subsequent Accounts are opened under different names;
• Where we otherwise believe, acting reasonably, that you are acting in concert with others or that you are acting other than on your own behalf; or
• Where we reasonably believe that Bets have been placed from a location or Device other than the location or Device which you claim to have used to place a Bet.
• Request such further information from you as may reasonably be required by us to investigate whether the Bet or bets constitute suspicious betting for the purpose of Section 9.1;
• Suspend or withhold payment of any amounts (or any parts thereof) pending the receipt by us of satisfactory evidence from you in order for us to determine (acting reasonably) that a bet does not constitute a suspicious bet as such term is referred to in Section 9.1. For example, but without limitation, where we suspect that a Bet or a string of connected Bets may have been placed robotically or by automated means, we may require you to provide reasonable evidence that each Bet was placed manually by you via your Account. You further acknowledge and accept that we reserve the right, at our sole discretion, to collect and process any information in connection with your betting patterns, personal data, depositing of funds and any other related information and inquiries that will help us to investigate any suspected breach of these Terms;
• Suspend or withhold payment of any amounts (or any parts thereof), usually for no longer than thirty (30) days but where relevant for such longer period of time as may reasonably be required (for example, pending any investigations by BIU, any sports governing body, a gambling regulator, a law enforcement authority or any other third party);
• Void a bet or a string of connected Bets (including for example multiples) prior to the event. Where possible, we shall communicate to you in advance that the Bet(s) has (or have) been voided prior to the (first) event the subject of the bet(s);
• Calculate any winnings based on the starting price of the event(s) the subject of the Bet(s). Where possible, we shall communicate to you in advance that any Bet(s) will be settled at the starting price; or
• Where there is an inordinate frequency and/or unusual pattern of Bets placed on the same selection(s) in a short space of time and where we have reasonable grounds to suspect that the bets are connected Bets, limit the payment of winnings in respect of those Bets (and where necessary with such limitation applied across multiple accounts) to the maximum payout for individual Bets on any particular market or markets as set out in the House Rules .
• Where we have reasonable grounds to believe that you have participated in, or have been connected with, any type of suspicious betting, we shall use our reasonable efforts to investigate such matter, including, but not limited to, through the use of various collusion, suspicious betting, fraud and cheating detection practices which are used in the gambling industry.
• We reserve the right to terminate an Account if we reasonably suspect any of the activities described in Section 9.1 in connection with that Account.
• Where a Bet is deemed to be, or is declared, void by us prior to an event, any sum deducted from your Account with respect to that Bet shall be credited to your Account.
• We reserve the right to seek to recover from you any losses we suffer that are directly or indirectly connected to any of the activities contemplated in Section 9.1. This right is without prejudice to any other rights (including common law rights) that we may have against you, whether under these Terms or otherwise.
• We will not be liable under any circumstances whatsoever for any loss you or any other person may incur as a result of the collusive or other behavior in breach of this Section 9. Further, we reserve the right, but shall not be obliged, to take any other actions in the case of any of the activities contemplated in Section 9.
• In exercising any of our rights under this Section 9, we shall ensure that we exercise such rights in a manner which is fair to you and to our customers generally. If you have any comments or questions in respect of this Section 9, please do not hesitate to contact Customer Service .

Live Betting & Cash Out

• We reserve the right to void any part of any, or all, bets on any Live Betting event that is not completed (i.e., abandoned, postponed);
• Where a blatant or palpable error is made in offers made, prices offered or Bets accepted or in the in transmission of any event on which we have purported to offer Live Betting, bets may be settled at the correct price at the time at which the bet was placed, as determined by FanDuel Sportsbook; or
• Where we have reasonable grounds to believe that a Bet is placed after the outcome of an event is known, we reserve the right to void the Bet.
• Please note that in the case of Live Betting, you may not at any time be able to see or otherwise be provided with the most up-to-date information in relation to the relevant event, including for example (but without limitation), through delayed coverage, a slow connection or equipment, or other system flaws, faults, errors or service interruption. FanDuel Sportsbook shall not be liable for any delay in relaying up-to-date information.
• In addition to the rest of these terms relating to Live Betting (which apply equally to our Cash Out functionality), the rules relating to the Cash Out feature are further described here . Please note in particular that for a variety of reasons (including for example technical issues, human error, suspicions of fraud or other improprieties and/or other issues outside of our control), FanDuel Sportsbook cannot guarantee the availability at all times of the Cash Out functionality, even where the functionality has been advertised in connection with a particular event. Please be aware and accept, therefore, that unless Cash Out is available and successfully exercised in connection with a particular Bet, your initial Bet will, unless otherwise provided in accordance with these Terms, stand as originally placed.
• Certain games involve peer-to-peer events via the Services where you will be playing against other customers. Please note that we cannot control certain actions of those customers, who may be for example undertaking fraudulent activities such as colluding with other third parties or using unfair external factors or influences. If you suspect a third party is colluding, cheating or undertaking a fraudulent activity, please let us know as soon as possible. We will take reasonable steps to prevent such unacceptable behavior. However, we will not be liable for any loss or damage which you may incur as a result of such third party collusion, fraud, cheating or otherwise illegal activity.

Betting Apps

• In addition to the rest of these Terms, and all other terms and conditions that apply (such as rules relating to bonuses or particular games and/or functionalities or any other terms relating to any other Betting App), the following terms and conditions apply to the Betting Apps.
• You accept that using the Betting Apps outside of a WiFi network may result in data charges from your mobile network provider. BIU will not be responsible for any data charges incurred as a result of your using the Betting Apps.

Winnings, Payment and Consent to Paperless Delivery of Tax Documents

• All cleared winnings will be credited to the customer’s Account. Please see Section 7.2 for details on withdrawal methods.
• Results will be as published and confirmed by the relevant governing body or as otherwise generally accepted.
• The maximum payout to any one (1) customer in any twenty-four (24) hour period regardless of size of stake or number of bets are as set out in the House Rules or as specified on the Bet Receipt, whichever is the lesser sum. Currency equivalent maximum payouts will apply for any currency not listed in the House Rules .
• It is strictly the duty of the customer to stay within the limits set out in the House Rules and FanDuel Sportsbook will not under any circumstances pay any amounts in excess of those limits to a customer for any purported winnings exceeding these limits.
• Any questions relating to a bet must be raised no later than six months after the last event in the bet has been settled. We cannot guarantee that we will be able to respond to your question if it is not raised within this time.
• We may use your username and/or first name and/or initials and state and any winnings you may have had for advertising or promotional purposes without additional compensation.
• In accordance with N.J.A.C 13:69D-1.40(s), jackpot wins greater than $40,000 may be subject to withholding should the jackpot winner be in arrears on child support obligations. This regulation requires GN or BIU to access a New Jersey State website to verify the obligation to withhold. Procedures for withholding shall be in compliance with the procedures as set forth by the New Jersey Office of Child Support Services. Notification to the jackpot winner will be made in the event withholdings are applicable.

i. Any sportsbook bet which results in winnings of $600.00 or more where the winnings are at least 300 times the amount of the wager is subject to reporting via Form W-2G. “Winnings” for the purpose of this sub-section are defined as the amount of winnings reduced for the wager amount.

In addition, we are required to withhold taxes on any sportsbook bet that result in winnings of more than $5,000.00 where these winnings are also at least 300 times the amount of the wager. We withhold 24% of the winnings and remit such amount to the Internal Revenue Service (IRS). Where and when applicable, we also withhold the applicable percentage of the winnings and remit such amount to the appropriate State governmental or tax authority.

We also withhold taxes on any bet which results in proceeds of $5,000.00 or more where the winnings are at least 300 times the amount of the wager. We withhold 24% of the proceeds and remit such amount to the Internal Revenue Service (IRS). We also withhold 3% of the proceeds and remit such amount to the State of New Jersey Division of Taxation.

If you are subject to IRS reporting requirements, we will send you Form W2-G summarizing the information for tax purposes by January 31st of the year following the end of the tax year of winning.

FanDuel Casino Website

i. Any bet which results in winnings of $1,200.00 or more from a slot or bingo game, where winnings are not reduced for the wager amount, is subject to reporting via Form W-2G; and

ii. Any bet which results in winnings of $1,500.00 or more from a keno game, where winnings are reduced for the wager amount, is subject to reporting via Form W-2G; and

iii. Any other bet not covered within this sub-section which results in winnings of $600.00 or more where the winnings are at least 300 times the amount of the wager, where winnings are reduced for the wager amount, is subject to reporting via Form W-2G.

iv. In addition, we are required to withhold taxes on any such bets which results in winnings of more than $5,000.00 where the winnings are at least 300 times the amount of the wager. We withhold 24% of the winnings and remit such amount to the Internal Revenue Service (IRS). Where and when applicable, we also withhold the applicable percentage of the winnings and remit such amount to the applicable State governmental or taxing authority.

• We report non-wagering winnings and other cash and reportable non-cash prize payments and awards on Form 1099 to the Internal Revenue Service and appropriate State governmental or tax authorities as required by law.
• If you are subject to IRS reporting or withholding requirements, we will send you Form W-2G(s) or Form 1099 (as applicable) summarizing the required information about your reportable winning(s), prize(s), and/or award(s) for tax purposes by January 31st of the year following the end of the tax year of those winning(s), prize(s), and/or award(s). More details about tax form delivery can be found in Section 13.12.
• You hereby affirmatively consent to receive all your tax-related documents, including any IRS Form 1099 and/or Form W-2G electronically. Tax-related documents will remain available electronically for at least one year after the date the document is first made available to you electronically.
• In addition to consenting to and obtaining electronic copies, you may request additional paper copies of your tax-related documents by contacting Customer Service . Requesting a paper copy of your tax-related documents will not be considered a withdrawal of your consent for paperless delivery. To begin regularly receiving paper copies of your future tax-related documents, you must either: (1) opt into both electronic and paper delivery for future tax-related document on your Account here (link); or (2) formally withdraw consent as described in Section XXXX. If you opt into both electronic and paper delivery for future tax-related documents, electronic copies of those forms will be sent to you by January 31st of the year following the end of the tax year of winning(s), and paper copies of those forms will be mailed to you on or before February 15th of that same year.
• You agree to notify us promptly if your e-mail address or other account information changes by updating your Account information on the Services or contacting Customer Service . For information that is required by law to be sent to you, including Form 1099 and Form W-2G, if we receive an electronic notice that an e-mail is undeliverable due to an incorrect or inoperable e-mail address, we will resend such information via U.S. Postal Service to your address on file.
• You may withdraw your consent to paperless delivery of future tax-related documents by providing written notice by: 1) changing the opt-in setting on your Account here (link); (2) contacting Customer Service (link); or (3) mail to Betfair Interactive US LLC, 123 Town Square Place, PMB #607, Jersey City NJ 07310 (Attn: Legal Department). Opting into both electronic and paper delivery for future tax-related documents does not formally withdraw consent. To withdraw consent by mail, please state in writing that you are withdrawing consent to paperless delivery of tax-related documents and provide your full legal name and US tax identification number on any mailed documents. We may take up to 15 business days after receipt to process your request if withdrawing consent by mail.
• To access your electronic tax-related documents, you need to be able to read Adobe PDF files. To do this, you must have Adobe Acrobat Reader installed on your computer. It can be downloaded for free at http://get.adobe.com/reader/ . You also need to have a computer with Internet access that supports the use of a browser that supports 128-bit encryption, and will need to have JavaScript enabled in your browser. You need hardware as necessary to support this software. In order to keep copies for your records, you will need to have access to a printer or have the ability to download information.
• We reserve the right to stop paperless delivery of your tax-related documents at any time by giving you notice. If we choose to do so, we will send you paper copies of all future tax-related documents via U.S. Postal Service to your address on file.

Errors & Suspected Errors

• FanDuel Sportsbook reserves the right to correct any obvious errors and to void any Bets placed where such errors have occurred.
• In the case of any blatant errors in prices transmitted (including for example where the price being displayed is materially different from those available in the general market and/or the price is clearly incorrect, depending on all of the circumstances), bets will be settled at the correct price at the time of acceptance (or the Starting Price in the case of horse-racing, whichever is the greater). If a bet is accepted by us on an event where offering a price on the event itself (rather than the price) was in error, the bet will be void and your stake will be returned.
• In the event of errors relating to the random number generators used in certain of the Services, FanDuel Casino reserves the right to void all bets on the games affected and your stake will be returned.
• Should funds be credited to a customer’s Account in error, it is the customer’s responsibility to notify us of the error without delay. Any winnings subsequent to the error and prior to the notification to us, whether linked to the error or not, shall be deemed invalid and returned to, or otherwise be reclaimable by, BIU.
• Any monies which are credited to your Account, or paid to you as a result of an error shall be deemed, pending resolution under Section 14.1.1 to be held by you on trust for us and shall be immediately repaid to us when a demand for payment is made by us to you. Where such circumstances exist, if you have funds in your Account we may reclaim these funds from your Account pursuant to Section 18.2. We agree that we shall use reasonable efforts to detect any errors and inform you of any such errors relating to you, your engagement with us, or your Account, as soon as reasonably practicable.
• Immediately cease play; and
• Inform us as soon as reasonably practicable of any such error or suspected error.
• Where you have used funds which have been credited to your Account or awarded to you as a result of an error to place subsequent Bets or play games, we may cancel such Bets and/or withhold any winnings which you may have won with such monies, and if we have paid out on any such Bets or gaming activities, such amounts shall be deemed to be held by you on trust for us and shall be immediately repaid to us when a demand for payment is made by us to you.
• If you are incorrectly awarded any winnings as a result of (a) any human error; or (b) any bug, defect or error in the Software; or (c) the failure of the relevant games product or the Software to operate in accordance with the rules of the relevant game, then FanDuel Casino will not be liable to pay you any such winnings and you agree to refund any such winnings that may have been paid to you as a result of such error or mistake.
• By using our Services, you understand that we reserve the right to change or remove any of these Services at any time.

Chargebacks and Cancellation

• You hereby agree, warrant and represent that no chargebacks or other cancelation of deposits will be made relating to your Account without our consent. In the event of any of the foregoing occurring, you agree to indemnify us and hold us harmless against any costs, claims, damages and expenses arising in connection therewith and to refund and compensate us for any losses we would otherwise incur arising from such actions including any expenses incurred by us in the process of recovering such amounts.
• There is a technological failure;
• We suspect that you are engaging in illegal or fraudulent activity;
• We suspect that you have (or may have) breached any part of these Terms;
• We suspect you are acting in a manner that is detrimental to the conduct of our business or which may result in legal liability for you, us or third parties;
• We suspect that your Account’s usage could represent ‘business usage’ (‘business usage’ includes any use by a betting operator or any use by an individual or organization supplying data or services to a betting operator);
• We suspect that you may be having difficulties obtaining credit;
• We have the right to do so as set out in any of our other policies;
• You are prohibited from entering into a Bet by any term of your contract of employment or any rule of a sport governing body or other professional body which applies to you; or
• You place a bet on any sporting match or event in which you take part;
• In relation to any cancelled or void Bets, we reserve the right to hold any money in your Account relating to these Bets to be paid to us or, if there are insufficient funds in your Account, demand that you pay us the relevant outstanding amount relating to these Bets.

Void Bets & Right of Set-Off

• All previous Bets will be voidable at the option of BIU and any winnings which you have accrued will be forfeited by you and you will return to us on demand any such funds which have been withdrawn from your Account; and
• Subject to Section 17.1 , any stakes for Bets made but for which the event is not yet completed will be returned to you other than in the event of any outstanding chargebacks or any other amounts owed to us at that time.
• BIU may at any time set off any amount on deposit in your Account against any amounts owed by you to FanDuel Casino or FanDuel Sportsbook.
• BIU reserves the right to seek criminal or other sanctions against you if we suspect you have engaged in fraudulent, dishonest or criminal acts and we will disclose such information to the relevant authorities or other relevant third parties (for example, payment service providers) as may be necessary in this regard.
• BIU reserves the right to suspend or terminate any Account it believes to be involved in fraud, money laundering and/or any other form of illegal or suspicious activities and to report such details as it reasonably considers are necessary to relevant authorities.
• You undertake that all money that you deposit in your Account is untainted with any illegality and, in particular, does not originate from any illegal activity or source.

Responsible Gambling

If you or someone you know has a gambling problem and wants help, call 1-800-GAMBLER.

Dormant and Non-Depositing Accounts, Charges and Statements of Account Activity

• Accounts shall be deemed “Dormant” in the event that the account holder does not log in within a twelve (12) month period. Dormant accounts will be opted out of all bonuses in accordance with the applicable bonus terms and conditions. In accordance with applicable regulations, unclaimed balances in Dormant accounts will be forfeited.
• All bonuses and winnings earned from wagering with bonuses will be forfeited from any Account to which a deposit has not been made within sixty (60) days of establishing such Account.
• BIU will not charge you for the deposit and withdrawal of funds to or from your Account in the normal course of events. However, some charges may apply in some cases to reflect the cost incurred by BIU as a result of processing excessive transactions. Please note that if you become eligible to incur additional deposit and withdrawal charges, we will contact you before any charges are incurred.
• You can consult the “Account History” page to review all monetary transactions on your Account for the immediately preceding twenty-four (24) months. You may request and receive a statement of activity related to the last twenty-four (24) months of activity on your Account at any time by visiting the My Account page of the Services. If you require a statement of activity relating to your activity over the past twenty-four (24) months, please contact Customer Service with your request.

Closure of Accounts

• Please contact our Customer Service if you wish to close your Account.
• After your Account has been closed, it will remain closed unless and until you ask for it to be re-opened. However, we may refuse to re-open your Account in certain circumstances (including where a permanent exclusion or self-exclusion has been applied to your Account pursuant to our responsible gambling practices - see Section 18 above).
• Account holders who wish to recover funds held in a closed, locked or excluded Account are also advised to contact Customer Service .
• We are entitled to close your Account at our discretion and without having to disclose any reasons, and where deemed necessary on written notice (or attempted notice) to you using the contact details you have provided. Any balance in your Account will be made available to you, provided that you have complied with these Terms.
• Your sole remedy in the event of termination of your Account by us for any reason shall be the reimbursement of any undisputed Account balance you may then have (and we shall have no further liability to you whatsoever).

Software and Downloads, Location Services and SMS Service Alerts

• Software and Downloads . For certain of our Services, it may be necessary to download or otherwise use certain software, including software provided by third parties. In such circumstances, you may be required to enter into an end user license agreement (“EULA”) in respect of such software. You agree to be bound by the terms of any such agreement. You also agree not to interfere with, modify, decompile, copy, or reverse-engineer any software provided to you as part of the Services except as expressly permitted herein, in the EULA, or as permitted by law.
• Location Services . In this Section 21.2, “Cellular Provider” means AT&T, Sprint, T-Mobile, Verizon or any other cellular provider that you use to access the Services and/or play the games and/or make sports wagers. By accepting the Terms you are providing permission to BIU to obtain your location using your cell phone. It is necessary for BIU to collect this information in order to validate that you are located within the legal gaming area of the State of New Jersey and to allow you to access the Services, play the Games and place sports wagers. You are also consenting to BIU retaining your location data for ten (10) years before deleting it. You also agree to those details being shared with the NJDGE and/or NJRC upon request. The Services use location data. By using the Services, you allow your wireless carrier to share your location with others. There is no representation, warranty or guarantee of accuracy, completeness or timeliness of any location data, product, or service. The Services were not developed by a Cellular Provider. If you use the Services, it may require your Cellular Provider to disclose your customer information, including location information, to BIU or a third party. By providing your consent, you authorize your Cellular Provider to disclose your information to BIU and to third parties in order to enable this application. See our Privacy Policy for more information about how BIU will collect, access, use, and disclose your information. You acknowledge and agree that: (1) your relationship with BIU is separate from your relationship with your Cellular Provider; (2) Your Cellular Provider is not responsible for the Services; and (3) you will hold harmless your Cellular Provider and its subsidiaries, affiliates, officers, employees, agents, successors, and assigns from any judgments, claims, actions, losses, liabilities, or expenses arising from or attributable to the Services or the acts or omissions of BIU.
• To confirm that you opt-in to location data being used to validate your location (“Location Services”), you must provide a valid cell phone number on registration. You will not be able to access the games or sports wagering menus on the Services unless you have opted into location verification. In order to receive this opt-in text message, you must have a supported carrier. If you opt out of Location Services, you will no longer be able to access the Services or the games or sports wagering menus as BIU will no longer be able to verify that you are physically located in the State of New Jersey. For further details regarding location or SMS services, please contact Customer Service .
• If you wish to enable two-factor authentication on your Account in order to log in to the Websites or Betting Apps, you may do so in your Account settings (“Two-Factor Authentication”). When Two Factor Authentication is enabled, BIU will send a randomly generated code via text message to your registered cell phone number each time your Account username and password are correctly entered. You must enter this code on the Websites or Betting Apps in order to successfully access the Services or the games or sports wagering menus. In order to opt in to Two-Factor Authentication you must have a supported carrier. Should you wish to opt-out of Two-Factor Authentication, you can do so at any point by responding “STOP”to the original opt-in text message or by texting “STOP” to the short code.
• Supported carriers for Location Services and Two-Factor Authentication include major US carriers such as AT&T, Sprint, T-Mobile, and Verizon Wireless. Additional carriers such as Boost, Cricket, U.S. Cellular, and Virgin Mobile are also supported where available. Message and data rates may apply; please check with your carrier for further details.

Systems Failure & Hacking and Other Offenses

• BIU shall not be liable for any bet not being placed for any reason or you being disconnected from the Services, including, but not limited to, failure or disconnection of computer, telecommunications services, internet or otherwise, and the balance of your Account will at all times be as is recorded on our server.
• Attempting to gain unauthorized access to any of the Services, the servers on which the Services are hosted or any server, computer or database connected to the Services;
• Using any features which may affect the function or performance of the Services in any way for example (but not limited to) releasing viruses, worms, trojans or similar material that may be malicious or harmful;
• Interfering or tampering with, removing or otherwise altering in any way, any information in any form which is included in or on any of the Services; or
• Attacking the Services via a denial-of-service attack or any other form of attack or interference.
• We reserve the right to pursue you for any loss we suffer as a result of any infringement by you of any of your obligations under this Section 22. Further, please be aware that we may share your details with law enforcement authorities in the case of any criminal, or suspected criminal, activities by you.
• We reasonably believe that you have breached any of these Terms;
• You attempt to manipulate or ascertain information concerning the Software code or are involved in collusion;
• You tamper or attempt to tamper with the Software in any way;
• You are committing any offense, e.g., by attempting to access or accessing the games or sports wagering system from a jurisdiction where playing the games or placing sports wagers is illegal; or
• You publish any actual or potentially defamatory, offensive, racist, harmful or obscene language or material.

User Generated Content

• Certain of the Services may invite or permit you to upload your own content (“User Generated Content”). BIU does not exercise editorial control over, and therefore does not endorse any, User Generated Content, and we shall not be liable in relation to such User Generated Content. You understand and agree that you are solely responsible for your User Generated Content.
• is an original work created by you or you have a license or the express consent of the owner to use the User Generated Content in that manner;
• does not infringe any third party intellectual property rights or privacy rights anywhere in the world;
• does not contain any defamatory or otherwise inappropriate materials or statements;
• does not contain any form of malicious computer code (e.g.,viruses, bugs, trojan horses etc.) which could disable or disrupt any of the Services;
• complies with all applicable laws and regulations; and
• may be used in connection with publicizing and promoting BIU and its Services.
• Any User Generated Content you provide will be considered non-confidential and lawfully provided by you and you are automatically deemed to have granted us an irrevocable, transferable, royalty-free right and license to copy, exhibit, publish, distribute or otherwise use and sub-license that User Generated Content as we see fit, including for commercial purposes. Such uses may include in printed publications, multimedia presentations, on websites or in any other distribution media. You agree that BIU may also use your name, likeness and any other biographical information contained in such User Generated Content as we see fit, including for commercial purposes. In addition, you waive any right to inspect or approve the finished product, including written copy, wherein your likeness or testimonial appears. For the avoidance of doubt, you agree that you will make no monetary or other claim against BIU for its use of your User Generated Content.
• You agree to indemnify and hold us and our subsidiaries, affiliates, officers, directors, agents, employees and service providers (e.g., Facebook) harmless from any liabilities, claims, losses or damages (including reasonable legal fees), however caused, that may arise as a result of or in connection with any User Generated Content.
• If you have any issues with User Generated Content provided by any other customer or if you would like to discuss our use (or non-use) of your User Generated Content, please let us know by contacting us at the details below. We reserve the right (but are not obliged to) to edit or remove User Generated Content.

Your Personal Data

• It is your responsibility to ensure that personal information relating to you is kept up-to-date. We reserve the right to suspend or terminate your Account if we suspect this information to be inaccurate. We will process information about you in accordance with our Privacy Policy .

No Warranty

• The Services and any wagering activities (including the Content and the User Generated Content);
• The functions, features, or any other elements on, or made accessible through, the Services;
• Any products, services, or instructions offered or referenced at or linked through the Services;
• Security associated with the transmission of your wagers, information and User Generated Content transmitted to BIU or via the Services;
• Whether the Services or the servers that make the Services available are free from any harmful components (including viruses, Trojan horses, and other technologies that could adversely impact your Device);
• Whether the information (including any instructions) on the Services is accurate, complete, correct, adequate, useful, timely, or reliable;
• Whether any defects to or errors on the Services will be repaired or corrected;
• Whether your access to the Services will be uninterrupted;
• Whether the Services will be available at any particular time or location; and
• Whether your use of the Services is lawful in any particular jurisdiction.
• EXCEPT FOR ANY SPECIFIC WARRANTIES PROVIDED HEREIN OR IN ADDITIONAL TERMS PROVIDED BY A FANDUEL PARTY, THE FANDUEL PARTIES HEREBY FURTHER DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, TITLE, CUSTOM, TRADE, QUIET ENJOYMENT, SYSTEM INTEGRATION, AND FREEDOM FROM COMPUTER VIRUS.
• YOU HEREBY ACCEPT THAT BY USING THE SERVICES, THERE IS A RISK THAT YOU MAY, AS WELL AS WINNING MONEY, LOSE MONEY. YOU AGREE THAT YOUR USE OF THE SERVICES IS AT YOUR OWN RISK AND THE FANDUEL PARTIES ACCEPT NO RESPONSIBILITY AND SHALL NOT BE LIABLE FOR ANY CONSEQUENCES THAT ARE ALLEGED TO HAVE OCCURRED THROUGH YOUR USE, OR MISUSE, OF THE SERVICES.
• IF AND ONLY TO THE EXTENT THAT SECTION 26.1 DOES NOT APPLY, THE MAXIMUM LIABILITY OF THE FANDUEL PARTIES (AND/OR OUR THIRD PARTY SERVICE PROVIDERS, TO THE EXTENT RELEVANT) TO YOU ARISING OUT OF OR RELATING TO THE SERVICES AND/OR THE TERMS, WHETHER FOR BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE SHALL BE LIMITED TO THE AVERAGE BALANCE HELD IN YOUR ACCOUNT IN THE PREVIOUS SIX (6) MONTHS (OR THE TERM OF THE ACCOUNT IN THE CASE OF ACCOUNTS OPEN FOR LESS THAN SIX (6) MONTHS).
• THE FANDUEL PARTIES (AND/OR OUR THIRD PARTY SERVICE PROVIDERS, TO THE EXTENT RELEVANT) SHALL NOT BE LIABLE TO YOU IN CONTRACT, TORT (INCLUDING NEGLIGENCE), BREACH OF STATUTORY DUTY OR OTHERWISE ARISING FOR LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF BUSINESS, LOSS OF DATA, LOSS OF BUSINESS, LOSS OF BUSINESS INFORMATION, BUSINESS INTERRUPTION, LOSS OF REPUTATION, LOSS OF OPPORTUNITY, OR LOSS OF GOODWILL, OR FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, EVEN IF SUCH DAMAGES ARE FORESEEABLE OR IF WE HAVE BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
• THE FANDUEL PARTIES ARE NOT LIABLE FOR THE FAILURE OF ANY EQUIPMENT OR SOFTWARE, WHEREVER LOCATED OR ADMINISTERED, OR WHETHER UNDER OUR DIRECT CONTROL OR NOT, THAT MAY PREVENT THE OPERATION OF OUR SERVICES, IMPEDE THE PLACING OF ORDERS FOR BETS OR THE ACCEPTANCE OF BETS, OR PREVENT YOU FROM BEING ABLE TO CONTACT US. THE FANDUEL PARTIES WILL NOT BE LIABLE FOR ANY LOSS OF CONTENT OR MATERIAL UPLOADED OR TRANSMITTED THROUGH THE WEBSITE AND YOU CONFIRM THAT THE FANDUEL PARTIES SHALL NOT BE LIABLE TO YOU OR ANY THIRD PARTY FOR ANY MODIFICATION TO, OR SUSPENSION OR DISCONTINUANCE OF, THE SERVICES. THE FANDUEL PARTIES RESERVE THE RIGHT TO CANCEL OR SUSPEND THE SERVICES WITHOUT INCURRING ANY LIABILITY.
• THE FANDUEL PARTIES ARE NOT LIABLE FOR ANY LOSS OR DAMAGE THAT YOU MAY SUFFER BECAUSE OF ANY ACT OF GOD; POWER FAILURE; TRADE OR LABOR DISPUTE; ACT, FAILURE OR OMISSION OF ANY GOVERNMENT OR AUTHORITY; OBSTRUCTION OR FAILURE OF TELECOMMUNICATION SERVICES OR NETWORKS; OR ANY OTHER ACT, OMISSION, DELAY OR FAILURE CAUSED BY A THIRD PARTY OR OTHERWISE OUTSIDE OF OUR CONTROL.
• The foregoing limitations of liability will apply even if any of the foregoing events or circumstances were foreseeable and even if the FanDuel Parties were advised of or should have known of the possibility of such losses or damages, regardless of whether you bring an action based in contract, negligence, strict liability, or tort (including whether caused, in whole or in part, by negligence, acts of god, telecommunications failure, or destruction of the Services).
• In exchange for the right to participate in the Services, you agree to indemnify, defend (at our option) and hold the FanDuel Parties harmless from and against any and all damages, losses, liabilities, claims, costs, investigations, judgments, fines, penalties, settlements, interest, expenses or demands, including, but not limited to, personal injury, death, or damage to or loss of property, that directly or indirectly arise from or are related to: (i) injuries, damages, or losses to persons and property which may be sustained in connection with participation in any wagering transactions, the receipt, ownership, use or misuse of any winnings or while preparing for, participating in and/or traveling to or from any Services related activity, as well as any claims based on publicity rights, defamation, or invasion of privacy; (ii) your User Generated Content; (iii) your use of the Services and your activities in connection with the Services; (iv) your breach or anticipatory breach of these Terms; (v) your violation or anticipatory violation of any laws, rules, regulations, codes, statutes, ordinances, or orders of any governmental or quasi-governmental authorities in connection with your use of the Services, participation in any wagering transactions, and your other activities in connection with the Services; (vi) information or material transmitted through your Device, even if not submitted by you, that infringes, violates, or misappropriates any copyright, trademark, trade secret, trade dress, patent, publicity, privacy, or other right of any person or entity; (vii) any misrepresentation made by you; and (viii) our use of the information that you submit to us (including your User Generated Content) (all of the foregoing, “Claims and Losses”). We may, in our sole and absolute discretion, require any winner to execute a separate release of claims similar to the one listed above in this Section as a condition of being awarded any bet or receiving any pay-out. You will cooperate as fully required by us in the defense of any Claim and Losses. Notwithstanding the foregoing, we retain the exclusive right to settle, compromise, and pay any and all Claims and Losses. We reserve the right to assume the exclusive defense and control of any Claims and Losses. You will not settle any Claims and Losses without, in each instance, the prior written consent of an officer of BIU. We are not responsible for technical, hardware, network connections or incomplete or delayed computer transmissions, regardless of cause.

Intellectual Property Rights

• The Services contain a variety of: (i) materials and other items relating to FanDuel Sportsbook and FanDuel Casino and their products and services, and similar items from our licensors and other third parties, including all layout, information, text, data, files, images, scripts, designs, graphics, button icons, instructions, illustrations, photographs, audio clips, music, sounds, pictures, videos, advertising copy, URLs, technology, software, interactive features, the “look and feel” of the Services, and the compilation, assembly, and arrangement of the materials of the Services and any and all copyrightable material (including source and object code); (ii) trademarks, logos, trade names, service marks, and trade identities of various parties, including those of BIU (collectively, “Trademarks”); and (iii) other forms of intellectual property (all of the foregoing, collectively, “Content”).
• The Services (including past, present, and future versions) and the Content are owned or controlled by BIU and/or our licensors and certain other third parties. All Content included on the Services is used with the permission of BIU, such as text, graphics, logos, icons, images, and audio clips. All right, title and interest in and to the Content available on the Services is the property of BIU or our licensors or certain other third parties and is protected by United States and international copyright, trademark, patent or other intellectual property rights to the fullest extent possible.
• Subject to your strict compliance with these Terms and any Additional Terms, BIU grants you a limited, non-exclusive, revocable, non-assignable, personal, and non-transferable license to: (i) download (temporary storage only), display, view, use, play, and/or print one copy of the Content (excluding source and object code in raw form or otherwise, other than as made available to access and use to enable display and functionality) on a personal computer, mobile phone or other wireless device, or other Internet enabled device (each, a “Device”) for your personal, non-commercial use only, and (ii) to use certain Content that we may from time to time make available on the Services explicitly for you for use as part of or to be incorporated into your User Generated Content (“Betfair Licensed Elements”), but only for such purposes as may be explicitly stated at the time that the Betfair Licensed Elements are made available on the Services; but we and our licensors and certain other third parties, as the case may be, retain ownership of such Betfair Licensed Elements. The foregoing limited license: (i) does not give you any ownership of, or any other intellectual property interest in, any Content, and (ii) may be immediately suspended or terminated for any reason, in BIU’s sole discretion, and without advance notice or liability. In some instances, we may permit you to have greater access to and use of Content and/or Betfair Licensed Elements, subject to certain additional terms. You may not distribute, modify, transmit, reuse, re-post, or use the Content on the Services for public or commercial purposes, including the text, images, audio, and video without BIU’s written permission.
• When using the Services, you must respect the intellectual property and other rights of BIU and others. Your unauthorized use of Content may violate copyright, trademark, privacy, publicity, communications, and other laws, and any such use may result in your personal liability, including potential criminal liability. BIU respects the intellectual property rights of others.
• For the avoidance of any doubt you may use the data available from the Websites and the other Services (including for example odds, both live and historical) only as strictly required for your permitted personal, non-exclusive, non-sublicensable, non-commercial purpose of availing of the Services. Any other use and/or reproduction of the data without prior written consent of BIU is prohibited and will constitute a breach of these Terms. BIU reserves its right to take such action as it considers necessary, including issuing legal proceedings without further notice to you, in relation to any unauthorized use of its data or of the Websites or Services.
• At BIU’s discretion, the Websites or other Services may contain links to third party websites. These links are provided solely as a convenience to you and not as an endorsement by BIU of the contents on such third party websites. BIU is not responsible for the content of linked third party sites and does not make any representations regarding the content or accuracy of materials on such third party sites. LINKS TO ANY SERVICES PROVIDED BY A THIRD PARTY ARE NOT INTENDED FOR TRADING OR INVESTING PURPOSES AND BIU WILL ACCEPT NO LIABILITY FOR ANY DIRECT, CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR ANY OTHER LOSSES OR DAMAGES ARISING OUT OF YOUR ACCESS TO AND USE OF THE INFORMATION PROVIDED. IF YOU DECIDE TO ACCESS LINKED THIRD PARTY WEBSITES, YOU DO SO AT YOUR OWN RISK.
• BIU generally welcomes the hyper-linking to our Websites from other appropriate websites provided such links are to our homepage (and no deeper within the Websites) and provided BIU gives its written consent to the establishment of such links. BIU reserves the absolute right to refuse to consent to such links without giving reasons. Any links to either Website from another website must be presented in such a manner that the viewing of the Website is not impaired by framing or similar techniques that may impair a browser’s experience.
• Damages may not be an adequate remedy for any infringement and that we are entitled to the remedies of injunction, specific performance, an order to deliver up materials which infringe our intellectual property rights and any other statutory or equitable relief and that no proof of special damages is necessary for reliance on such remedies; and
• You shall indemnify us for any liabilities, losses or damages (including reasonable legal fees), however caused, that may arise as a result of or in connection with your non-compliance with this Section.
• On occasion, we may require the ability to transfer, assign or sublicense these Terms to a third party, for example (but without limitation) in the case of our engaging new third party service providers in respect of the Additional Gaming Services or in the case of a merger or acquisition. You hereby consent, and we reserve the right to, transfer, assign or sublicense these Terms, in whole or in part, to any person without requiring any additional consent and without notice, provided that any such assignment will be on the same terms or terms that are no less advantageous to you.
• You may not assign, sublicense or otherwise transfer in any manner whatsoever any of your rights or obligations under these Terms without our prior written consent.
• If any provision of these Terms is held to be invalid, void or unenforceable by reason of any law, rule, administrative order or judicial decision, that provision will be, to the extent strictly necessary, severed from the remaining terms and conditions and that determination shall not affect the validity of the remaining provisions of these Terms. In the case of the severance of any terms, the part deemed invalid or unenforceable shall be amended in a manner consistent with the applicable law to reflect, as closely as possible, the original intent in these Terms.
• Failure by BIU to insist upon strict performance of any of your obligations or to exercise any of the rights or remedies to which we are entitled shall not constitute a waiver of such rights or remedies and shall not relieve you from compliance with such obligations and a waiver by us of any default shall not constitute a waiver of any subsequent default.
• Notices and other communications delivered or mailed to the postal address or to the electronic-mail address provided by you shall, until we have received notice in writing of any different address, be deemed to have been personally delivered once sent whether actually received or not.
• The terms and conditions governing the Additional Gaming Services to the extent that they are relevant to the Additional Gaming Services; and then
• The House Rules ; and then
• These FanDuel Sportsbook and FanDuel Casino Terms & Conditions; and then
• Our Privacy Policy ; and then finally
• Any other of our terms and conditions, rules or policies as they relate to promotions, bonuses, special offers or any other aspect of your use of the Services from time to time.
• These Terms and any documents referred to herein represent the entire agreement between BIU and you and supersede any prior agreement, understanding or arrangement, whether oral or in writing. We each acknowledge that we have not relied on any representation, undertaking or promise given by the other or implied from anything said or written in negotiations between us except as expressly stated in these Terms.
• When you communicate with us electronically, such as via e-mail and text message, you consent to receive communications from us electronically. Please note that we are not obligated to respond to inquiries that we receive. You agree that all agreements, notices, disclosures, and other communications that we provide to you electronically satisfy any legal requirement that such communications be in writing.
• We reserve the right, without any limitation, to: (i) investigate any suspected breaches of the Services’ security or its information technology or other systems or networks; (ii) investigate any suspected breaches of these Terms; (iii) investigate any information obtained by us in connection with reviewing law enforcement databases or complying with criminal laws; (iv) involve and cooperate with law enforcement authorities in investigating any of the foregoing matters; (v) prosecute violators of these Terms; and (vi) discontinue the Services, in whole or in part, or, except as may be expressly set forth in any additional terms, suspend or terminate your access to it, in whole or in part, including any Accounts or registrations, at any time, without notice, for any reason and without any obligation to you or any third party. Any suspension or termination will not affect your obligations to us under these Terms. Upon suspension or termination of your access to the Services, or upon notice from us, all rights granted to you under these Terms will cease immediately, and you agree that you will immediately discontinue use of the Services. The provisions of these Terms, which by their nature should survive your suspension or termination will survive, including the rights and licenses you grant to us in these Terms, as well as the indemnities, releases, disclaimers, and limitations on liability and the provisions regarding jurisdiction, choice of law, no class action, and mandatory arbitration.

Binding Arbitration and Class Action Waiver

PLEASE READ THIS SECTION CAREFULLY - IT MAY SIGNIFICANTLY AFFECT YOUR LEGAL RIGHTS, INCLUDING YOUR RIGHT TO FILE A LAWSUIT IN COURT.

• Our Customer Service Department is available via the web and our App to address any concerns you may have regarding the Service. Our Customer Service Department can resolve most concerns quickly to our players’ satisfaction. Failure to engage in this process could result in the award of fees against you in arbitration. The parties shall use their best efforts through this Customer Service process to settle any dispute, claim, question, or disagreement and engage in good faith negotiations which shall be a condition to either party initiating a lawsuit or arbitration. This requires first sending a written description of the dispute to the other party. For any dispute you initiate, you agree to send the written description of the dispute along with the email address associated with your account to Customer Service, using the link here . For any dispute that FanDuel Sportsbook and FanDuel Casino initiates, we will send our written description of the dispute to the email address associated with your FanDuel Sportsbook and FanDuel Casino account. The written description must be on an individual basis and provide, at minimum, the following information: your name; a description of the nature or basis of the claim or dispute; and the specific relief sought. If the dispute is not resolved within sixty (60) days after receipt of the written description of the dispute, you and FanDuel Sportsbook and FanDuel Casino agree to resolve any remaining dispute through the further dispute resolution provisions below.
• The aforementioned informal dispute resolution process is a prerequisite and condition precedent to commencing any formal dispute resolution proceeding. The parties agree that any applicable statute of limitations period and filing fees or other deadlines will be tolled while the parties engage in this informal dispute resolution process.
• Only after the parties have engaged in a good-faith effort to resolve the dispute in accordance with this Initial Dispute Resolution (Section 30.1), and only if those efforts fail, then either party may initiate binding arbitration, subject to the exceptions in Section 30.5 and the terms set forth below, as the sole means to resolve claims using the procedures set forth in Section 30.6 below. To initiate an arbitration, subject to the requirements described in this Section, you or FanDuel must file a demand for arbitration with National Arbitration and Mediation (“NAM”). After filing a copy of the demand with NAM, you must also email a copy to [email protected] . Merely emailing a demand to FanDuel will not commence an arbitration proceeding. If FanDuel Sportsbook and FanDuel Casino is initiating arbitration, it will serve a copy of the demand to the email address associated with your FanDuel Sportsbook and FanDuel Casino account. You and FanDuel Sportsbook and FanDuel Casino agree that all claims, disputes, or disagreements that may arise out of the interpretation or performance of the Agreement, which includes the Terms of Service (including its formation, performance and breach) or payments by or to FanDuel Sportsbook and FanDuel Casino, or that in any way relate to the provision or use of FanDuel Sportsbook and FanDuel Casino services, your relationship with FanDuel Sportsbook and FanDuel Casino, or any other dispute with FanDuel Sportsbook and FanDuel Casino, shall be resolved exclusively through binding arbitration in accordance with this Section 30 (collectively, the “Arbitration Agreement”). This includes claims that arose, were asserted, or involve facts occurring before the existence of this Arbitration Agreement or any prior agreement as well as claims that may arise after the termination of this Arbitration Agreement, in accordance with the notice and opt-out provisions set forth in Section 30.7. This Arbitration Agreement is governed by the Federal Arbitration Act ("FAA") in all respects and evidences a transaction involving interstate commerce. You and FanDuel Sportsbook and FanDuel Casino expressly agree that the FAA shall exclusively govern the interpretation and enforcement of this Arbitration Agreement. If for whatever reason the rules and procedures of the FAA cannot apply, the state law governing arbitration agreements in the state in which you reside shall apply.
• Except as set forth in Section 30.5, the arbitrator, and not any federal, state or local court or agency, shall have exclusive authority to resolve all disputes arising out of or relating to the interpretation, applicability, enforceability or formation of these Terms, including, but not limited to any claim that all or any part of these Terms are void or voidable, whether a claim is subject to arbitration, and any dispute regarding the payment of administrative or arbitrator fees (including the timing of such payments and remedies for nonpayment). The arbitrator shall be empowered to grant whatever relief would be available in a court under law or in equity. The arbitrator has the right to impose sanctions in accordance with the NAM rules and procedures for any frivolous claims or submissions the arbitrator determines have not been filed in good faith, as well as for a party's failure to comply with this Section.
• The parties understand that, absent this mandatory provision, they would have the right to sue in court and have a jury trial. They further understand that, in some instances, the costs of arbitration could exceed the costs of litigation and the right to discovery may be more limited in arbitration than in court. YOU HEREBY ACKNOWLEDGE AND AGREE THAT YOU AND FANDUEL SPORTSBOOK AND FANDUEL CASINO ARE EACH WAIVING THE RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW.
• Except as set forth in Section 30.4 below, if any provision of this Arbitration Agreement is found by an arbitrator or court of competent jurisdiction to be invalid, the parties nevertheless agree that the arbitrator or court should endeavor to give effect to the parties' intentions as reflected in the provision, and the other provisions thereof remain in full force and effect.
• If you are a resident of the United States, and initiate arbitration, such arbitration will take place in the County where you reside, or if no NAM arbitrator is available in that County, than at the closest NAM arbitration location available in the state. Where FanDuel Sportsbook and FanDuel Casino initiates arbitration, and for residents in Canada (and anywhere else outside the United States), arbitration shall be initiated in the County of New York, State of New York, United States of America, unless you and FanDuel Sportsbook and FanDuel Casino otherwise agree or unless the designated arbitrator determines, based on a written objection, that such venue would be unreasonably burdensome to any party, in which case the arbitrator shall have the discretion to select another venue despite either party’s initial selection. For any arbitration conducted in New York, You and FanDuel Sportsbook and FanDuel Casino agree to submit to the personal jurisdiction of any federal or state court in New York County, New York, in order to compel arbitration, to stay proceedings pending arbitration, or to confirm, modify, vacate or enter judgment on the award entered by the arbitrator; and in connection with any such proceeding, further agree to accept service of process by U.S. mail and hereby waive any and all jurisdictional and venue defenses otherwise available. The parties agree that arbitration may take place exclusively by video, where such arrangements are acceptable to the appointed arbitrator.
• YOU AND FANDUEL SPORTSBOOK AND FANDUEL CASINO ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT ALLOWED BY LAW, EXCEPT AS SET OUT OTHERWISE IN THIS SECTION 30.4 AND SECTION 30.6 BELOW, ANY ARBITRATION SHALL BE CONDUCTED IN AN INDIVIDUAL CAPACITY ONLY AND NOT AS A CLASS OR OTHER CONSOLIDATED ACTION AND THE ARBITRATOR MAY AWARD RELIEF ONLY IN FAVOR OF THE INDIVIDUAL PARTY SEEKING RELIEF AND ONLY TO THE EXTENT NECESSARY TO RESOLVE AN INDIVIDUAL PARTY’S CLAIM, UNLESS FANDUEL SPORTSBOOK AND FANDUEL PROVIDES ITS CONSENT TO CONSOLIDATE IN WRITING.
• If there is a final judicial determination that applicable law precludes enforcement of this Paragraph’s limitations as to a particular remedy, then that remedy (and only that remedy) must be severed from the arbitration and may be sought in court. The parties agree, however, that any adjudication of remedies not subject to arbitration shall be stayed pending the outcome of any arbitrable claims and remedies.
• If there is a final judicial determination that either the Class Arbitration Action and Collective Relief Waiver or the provisions in Section 30.6 are not enforceable as to a particular claim or request for relief, then the parties agree that that particular claim or request for relief may proceed in court but shall be severed and stayed pending arbitration of the remaining claims. This provision does not prevent you or FanDuel Sportsbook and FanDuel Casino from participating in a class-wide settlement of claims.
• Notwithstanding the parties' decision to resolve all disputes through arbitration, either party may bring an action in state or federal court to protect its intellectual property rights (“intellectual property rights” means patents, copyrights, moral rights, trademarks, and trade secrets, but not privacy or publicity rights).
• Either party may also elect to have disputes or claims resolved in a small claims court that are within the scope of that court’s jurisdiction regardless of what forum the filing party initially chose. Either party may also seek a declaratory judgment or other equitable relief in a court of competent jurisdiction regarding whether a party’s claims are time-barred or may be brought in small claims court. Seeking such relief shall not waive a party’s right to arbitration under this agreement, and any filed arbitrations related to any action filed pursuant to this paragraph shall automatically be stayed (and any applicable statute of limitations tolled) pending the outcome of such action.
• The arbitration will be administered by National Arbitration and Mediation and resolved before a single arbitrator. If NAM is not available to arbitrate, the alternative arbitrator for individual arbitrations not meeting the definition set forth in 30.6.7, shall be JAMS ( https://www.jamsadr.com/ ). For 100 or more arbitrations meeting the definition set forth in 30.6.7, the alternative provider shall be ADR Services, Inc. (“ADR Services”) ( https://www.adrservices.com/ ). Except as modified by this "Dispute Resolution" provision, NAM will administer the arbitration in accordance with the NAM Comprehensive Dispute Resolution Rules and Procedures, Fees For Disputes When One of the Parties is a Consumer and the Mass Filing Dispute Resolution Rules and Procedures in effect at the time any demand for arbitration is filed with NAM, excluding any rules or procedures governing or permitting class or representative actions. The applicable NAM rules and procedures are available at www.namadr.com or by emailing National Arbitration and Mediation’s Commercial Dept at [email protected] .
• You are responsible for your own attorneys’ fees unless the arbitration rules and/or applicable law provide otherwise. The parties agree that NAM has discretion to reduce the amount or modify the timing of any administrative or arbitration fees due under NAM’s Rules where it deems appropriate (including as specified in Section 30.6.4, provided that such modification does not increase the costs to you, and you further agree that you waive any objection to such fee modification. The parties also agree that a good-faith challenge by either party to the fees imposed by NAM does not constitute a default, waiver, or breach of this Section 30 while such challenge remains pending before NAM, the arbitrator, and/or a court of competent jurisdiction, and that any and all due dates for those fees shall be tolled during the pendency of such challenge.
• Any arbitration demand or counterclaim asserted by either party must contain sufficient information to provide fair notice to the other party of the asserting party’s identity, the claims being asserted, and the factual allegations on which they are based, and must include proof that the claimant is party to this agreement by registering an account with FanDuel Sportsbook and FanDuel Casino. The arbitrator and/or NAM may require amendment of any demand or counterclaim that does not satisfy these requirements. The arbitrator has the right to impose sanctions for any claims the arbitrator determines to be frivolous or improper (under the standard set forth in Federal Rule of Civil Procedure 11), including for any claim filed on behalf of a claimant who is not party to this agreement.
• The parties agree that NAM has discretion to modify the amount or timing of any administrative or arbitration fees due under NAM’s Rules where it deems appropriate, provided that such modification does not increase the costs to you, and you waive any objection to such fee modification. The parties also agree that a good-faith challenge by either party to the fees imposed by NAM does not constitute a default, waiver, or breach of this Section 30 while such challenge remains pending before NAM the arbitrator, and/or a court of competent jurisdiction.
• If the amount in controversy does not exceed $10,000 and you do not seek injunctive or declaratory relief, then the arbitration will be conducted solely on the basis of documents you and FanDuel Sportsbook and FanDuel Casino submit to the arbitrator, unless the arbitrator determines that a hearing is necessary. If the amount in controversy exceeds $10,000 or seeks declaratory or injunctive relief, either party may request (or the arbitrator may determine) to hold a hearing, which shall be via videoconference or telephone conference unless the parties agree otherwise.
• Subject to the applicable NAM rules and procedures, the parties agree that the arbitrator will have the discretion to allow the filing of dispositive motions if they are likely to efficiently resolve or narrow issues in dispute.
• To increase the efficiency of administration and resolution of arbitrations, in the event 100 or more similar arbitration demands (those asserting the same or substantially similar facts or claims, and seeking the same or substantially similar relief) presented by or with the assistance or coordination of the same law firm(s) or organization(s) are submitted to NAM (or another arbitration provider selected in accordance with Section 30.6.1 if NAM is unavailable) against FanDuel Sportsbook and FanDuel Casino within reasonably close temporal proximity ("Mass Filing"), the parties agree (i) to administer the Mass Filing in batches of 100 demands per batch (to the extent there are fewer than 100 arbitration demands left over after the batching described above, a final batch will consist of the remaining demands) with only one batch filed, processed, and adjudicated at a time; (ii) to designate one arbitrator for each batch; (iii) to accept applicable fees, including any related fee reduction determined by NAM (or another arbitration provider selected in accordance with 15.6(A) if NAM is unavailable) in its discretion; (iv) that no other demands for arbitration that are part of the Mass Filing may be filed, processed, or adjudicated until the prior batch of 100 is filed, processed, and adjudicated; (v) that fees associated with a demand for arbitration included in a Mass Filing, including fees owed by FanDuel Sportsbook and FanDuel Casino and the claimants, shall only be due after your demand for arbitration is included in a set of batch proceedings and that batch is properly designated for filing, processing, and adjudication; and (vi) that the staged process of batched proceedings, with each set including 100 demands, shall continue until each demand (including your demand) is adjudicated or otherwise resolved. Arbitrator selection for each batch shall be conducted to the greatest extent possible in accordance with the applicable NAM rules and procedures for such selection, and the arbitrator will determine the location where the proceedings will be conducted. You agree to cooperate in good faith with FanDuel Sportsbook and FanDuel Casino and the arbitration provider to implement such a “batch approach” or other similar approach to provide for an efficient resolution of claims, including the payment of combined reduced fees, set by NAM in its discretion, for each batch of claims. The parties further agree to cooperate with each other and the arbitration provider or arbitrator to establish any other processes or procedures that the arbitration provider or arbitrator believe will provide for an efficient resolution of claims. Any disagreement between the parties as to whether this provision applies or as to the process or procedure for batching shall be resolved by a procedural arbitrator appointed by NAM. This "Batch Arbitration" provision shall in no way be interpreted as increasing the number of claims necessary to trigger the applicability of NAM’s Mass Filing Supplemental Dispute Resolution Rules and Procedures or authorizing class arbitration of any kind. Unless FanDuel Sportsbook and FanDuel Casino otherwise consents in writing, FanDuel Sportsbook and FanDuel Casino does not agree or consent to class arbitration, private attorney general arbitration, or arbitration involving joint or consolidated claims under any circumstances, except as set forth in Section 30.4 and this section 30.6.7. If your demand for arbitration is included in the Mass Filing, any statute of limitation applicable to your claims will remain tolled until your demand for arbitration is decided, withdrawn, or is settled.
• The arbitrator will render an award within the time frame specified in the applicable NAM rules and procedures. The arbitrator's decision will include the essential findings and conclusions upon which the arbitrator based the award. Judgment on the arbitration award may be entered in any court having jurisdiction thereof. The arbitrator will have the authority to award monetary damages on an individual basis and to grant, on an individual basis, any non-monetary remedy or relief available to an individual to the extent available under applicable law, the arbitral forum's rules, and this Arbitration Agreement. The parties agree that the damages and/or other relief must be consistent with Section 30.4 above and also must be consistent with the terms of the "Limitation of Liability" section of the Agreement as to the types and the amounts of damages or other relief for which a party may be held liable. No arbitration award or decision will have any preclusive effect as to issues or claims in any dispute with anyone who is not a named party to the arbitration. Attorneys' fees will be available to the prevailing party in the arbitration only if authorized under applicable substantive law governing the claims in the arbitration.
• You have the right to opt-out and not be bound by the arbitration and class action waiver provisions set forth above by sending written notice, signed by you, of your decision to opt-out to the following address: FanDuel Inc., Attn: Legal,, 300 Park Avenue South, 14th Floor, New York, NY 10010. The notice must be sent within 30 days of April 9, 2024 or your first use of the Service, whichever is later, otherwise you shall be bound to arbitrate disputes in accordance with the terms of those paragraphs. If you opt-out of these arbitration provisions, FanDuel Sportsbook and FanDuel Casino also will not be bound by them. FanDuel Sportsbook and FanDuel Casino will continue to honor any valid opt outs if you opted out of arbitration in a prior version of the Agreement pursuant to the requirements set forth in that version. If you do not timely opt out of this Arbitration Agreement, such action shall constitute mutual acceptance of the terms of these “Dispute Resolution” provisions by you and FanDuel Sportsbook and FanDuel Casino.
• FanDuel Sportsbook and FanDuel Casino will provide 30 days’ notice of any material changes to this clause. Changes will apply to all claims not yet filed. If you continue to use the site after the 30th day, or you affirmatively accept the changes sooner after having been provided notice, you agree that any unfiled claims are subject to the revised clause.
• If you reject any such changes by opting out of the Arbitration Agreement, you may exercise your right to a trial by jury or judge, as permitted by applicable law, but any prior existing agreement to arbitrate disputes under a prior version of the Arbitration Agreement will not apply to claims not yet filed. If FanDuel Sportsbook and FanDuel Casino changes this “Dispute Resolution” section after the date you first accepted this Agreement (or accepted any subsequent changes to this Agreement), you agree that your continued use of the Product(s) or Services 30 days after such change will be deemed acceptance of those changes. If you do not agree to such change, you may opt out by providing notice as described in Section 30.7.
• For any dispute not subject to arbitration you and FanDuel Sportsbook and FanDuel Casino agree to submit to the personal and exclusive jurisdiction of and venue in the federal and state courts located in New York, NY. You further agree to accept service of process by mail, and hereby waive any and all jurisdictional and venue defenses otherwise available.
• The Terms and the relationship between you and FanDuel Sportsbook and FanDuel Casino shall be governed by the laws of the State of New York without regard to conflict of law provisions.

If, after all reasonable methods to resolve the dispute with us have been exhausted, your dispute is still unresolved and it arises out of your use of the Services while physically located in New Jersey, you can contact the NJDGE by completing an Internet Dispute Form on the NJDGE's website or by contacting the NJDGE at:

Please note that (i) a copy of all disputes received by the NJDGE related to the FanDuel Casino will be forwarded to GNAC, our New Jersey casino license holder, and (ii) a copy of all disputes received by the NJRC or NJDGE related to the FanDuel Sportsbook in New Jersey will be forwarded to NMR, our New Jersey sports wagering license holder.

Terms Applicable to Apple iOS

• To the extent that you are accessing the Betting App through an Apple Device, you acknowledge that these Terms are entered into between you and BIU and, that Apple is not a party to these Terms other than as third-party beneficiary as contemplated below.
• The license granted to you in Section 28 of these Terms is subject to the permitted Usage Rules set forth in the Apple App Store Terms and Conditions (see: http://www.apple.com/legal/itunes/us/terms.html) and any third party terms of agreement applicable to the Betting App.
• You acknowledge that BIU, and not Apple, is responsible for providing the Betting Apps and Content thereof.
• You acknowledge that Apple has no obligation whatsoever to furnish any maintenance or any support services to you with respect to the Betting Apps.
• To the maximum extent permitted by applicable law, Apple will have no other warranty obligation whatsoever with respect to the Betting Apps.
• Notwithstanding anything to the contrary herein, and subject to the terms in these Terms, you acknowledge that, solely as between Apple and BIU, BIU and not Apple is responsible for addressing any claims you may have relating to the Betting Apps, or your possession and/or use thereof, including, but not limited, to: (i) product liability claims, (ii) any claim that the Betting App fails to conform to any applicable legal or regulatory requirement; and (iii) claims arising under consumer protection or similar legislation.
• Further, you agree that if a Betting App, or your possession and use of a Betting App, infringes on a third party’s intellectual property rights, you will not hold Apple responsible for the investigation, defense, settlement and discharge of any such intellectual property infringement claims.
• You acknowledge and agree that Apple, and Apple’s subsidiaries, are third-party beneficiaries of these Terms, and that, upon your acceptance of the terms and conditions of these Terms, Apple will have the right (and will be deemed to have accepted the right) to enforce these Terms against you as a third-party beneficiary thereof.
• When using a Betting App, you agree to comply with any and all third-party terms that are applicable to any platform, website, technology or service that interacts with the Betting App.
• You represent and warrant that: (i) you are not located in a country that is subject to a U.S. Government embargo or that has been designated by the U.S. Government as a “terrorist supporting” country; and (ii) you are not listed on any U.S. Government list of prohibited or restricted parties.

Part B - Specific Terms and Conditions/House Rules for FanDuel Sportsbook

Part a - introduction, use and interpretation.

The FanDuel Sportsbook Rules and Regulations ("Sportsbook House Rules") are part of the FanDuel Sportsbook and FanDuel Casino Terms & Conditions.

The Sportsbook House Rules apply in relation to the markets offered and bets placed on the FanDuel Sportsbook Website and the FanDuel Sportsbook Betting Apps as well as at the FanDuel Sportsbook retail location at New Meadowlands Racetrack.

The Sportsbook House Rules consist of the following:

• This Introduction section (Part A);
• The General Rules (set out in Part B below); and
• The Specific Sports Rules (set out in Part C below - these apply to certain sports).
• The General Rules apply to all bets on the aforementioned products unless stated otherwise in the Specific Sports Rules. If there is any inconsistency between the Specific Sports Rules and the General Rules, the Specific Sports Rules shall prevail. The General Rules will apply in respect of any category of bets or markets not referred to in the Specific Sports Rules (for example, special bets or beach volleyball).

FanDuel Sportsbook reserves the right to amend the Sportsbook House Rules at any time subject to the regulatory approval of the NJDGE. Any such revision will be binding and effective immediately on the posting out to customers of such rule changes and any bets accepted after the rule changes have been posted shall be governed by the new Sportsbook House Rules.

Customer Responsibility

FanDuel Sportsbook customers should make themselves aware of all of the Sportsbook House Rules affecting any market on which they wish to place a bet.

Customer Betting Disputes

Any FanDuel Sportsbook customer who has any concerns or questions regarding the Sportsbook House Rules or regarding the settlement of any FanDuel Sportsbook market should contact FanDuel Sportsbook Customer Service.

If a customer is not satisfied with how a bet or a market has been settled then the customer should provide details of their grievance to FanDuel Sportsbook Customer Service.

When a customer has exhausted the internal FanDuel Sportsbook betting dispute process without a satisfactory outcome, and the customer’s betting dispute is related to betting that took place in New Jersey, the customer can contact the NJDGE by completing an Internet Dispute Form on the NJDGE’s website or contacting the NJDGE at:

Part B - General Rules

Prohibited persons.

The following individuals are prohibited from placing wagers or collecting winnings:

• Persons under the age of 21;
• Persons on any exclusion list;
• Any person making a wager on the account of or for any other person.
• In addition, any person who is an athlete, coach, referee, direct or indirect owner of 10% or greater, or director of a sports governing body or any of its members teams, a player or a referee personnel member, in or on any sports event overseen by that person’s sports governing body, a person who holds a position of authority or influence sufficient to exert influence over the participants in a sporting contest, including, but not limited to, coaches, managers, handlers, athletic trainers or horse trainers, a person with access to certain types of exclusive information on any sports event overseen by that person’s sports governing body, or a person identified by any lists provided by the sports governing body to the NJDGE or the NJRC, may not place a wager on a sports event that is overseen by that person’s sports governing body.

Any employee of a sports governing body, or one of its member teams, who is not a prohibited sports pool participant must register with the NJDGE prior to placing a sports pool wager in New Jersey.

Retail and Kiosk Betting Tickets

• The FanDuel Sportsbook is not responsible for lost, stolen or unreadable tickets.
• Customers should verify that all information on wagering tickets is accurate before leaving the betting window or kiosk. Management is not responsible for errors or omissions made on a ticket once the patron has left the betting window or kiosk. Tickets may not be altered or voided prior to the start of an event, except at the discretion of management and with the approval of both parties.
• Winning tickets may be mailed in for redemption. See the reverse side of the wagering ticket for mail-in collection instructions. The FanDuel Sportsbook is not responsible for tickets that are not mailed-in in compliance with the printed instructions on the reverse side of the wagering ticket.
• Winning tickets expire one (1) year from the time of the event. The time on the tickets is Eastern Time.

Wager Type Calculations

Calculations for wager types are as follows:

• Moneyline payoff: The money line is expressed as a 3-digit number. For example, -120 means a player must bet $120 for every $100 they wish to win, and multiples thereof. Or +150 means a player will win $150 for every $100 bet.
• Point spread payoff: The point spread is expressed as a 3-digit number. For example, -110 means a player must bet $110 for every $100 they wish to win. Or, +225 means a player will win $225 for every $100 bet.
• Parlay payoff - Odds will be calculated based on the prices of the individual selections.
• Teaser payoff - Odds are derived from a fixed payout chart.

Notification of Odds or Line Changes

Customers will be notified of odds or line changes in the following manner:

• Posted odds will be changed automatically on the electronic boards.
• Posted odds will be changed manually on all handwritten boards.
• Posted changes will be updated within 10 minutes on the electronic boards or the handwritten boards.
• Non-posted printed media will be updated on a weekly basis with the date of the last issue.
• The FanDuel Sportsbook will accept wagers on currently posted terms unless otherwise posted or noted on printed media.

Funding of Wagers

Customers may fund wagers at the FanDuel Sportsbook retail locations at New Meadowlands Racetrack and Valley Forge Casino Resort via cash or winning tickets at a betting window or cash at a kiosk.

Customers may fund their FanDuel Sportsbook Account as described in Sections 7 and 8 of Part A - Online Gambling Terms and Conditions.

In-Play Betting

• if the event has a scheduled 'off' time, all bets matched after that scheduled off time will be void; and
• if the event does not have a scheduled 'off' time, FanDuel Sportsbook will use its reasonable efforts to ascertain the time of the actual 'off' and all bets after the time of the 'off' determined by FanDuel Sportsbook will be void.
• FanDuel Sportsbook aims to use its reasonable efforts to suspend in-play markets at the start of and at the end of the event. However, FanDuel Sportsbook does not guarantee that such markets will be suspended at the relevant time.
• FanDuel Sportsbook reserves the right at its absolute discretion to part-suspend or fully suspend outcomes/selections in a market that has been turned in-play.
• FanDuel Sportsbook customers are responsible for managing their in-play bets at all times.
• For the purposes of in-play betting, customers should be aware that transmissions described as “live” by some broadcasters may actually be delayed or pre-recorded. The extent of any delay may vary depending on the set-up through which they are receiving pictures or data. Please also be aware that, for operational reasons, bet requests made in-play may take slightly longer to process.
• If FanDuel Sportsbook accepts a bet on a market for which the outcome has already been determined, then that bet shall be deemed void (and no winnings shall be payable in respect of it) regardless of the bet being a win, lose or push.

FanDuel cannot guarantee the accuracy or timeliness of live scores, time remaining and the status of games displayed on the Websites and the Betting Apps in connection with live betting, which may come from third parties not controlled by FanDuel. We accept no liability for the incorrect display of this information. If you rely on this data to place bets, you do so entirely at your own risk.

Results and Market Settlement

• Where the Specific Sports Rules do not specify how and on what basis a market will be settled, markets will be settled on the official result of the relevant governing body regardless of any subsequent disqualification or amendment to the result.
• whether the market should be reinstated or resettled in light of this new information; or
• whether or not to wait for further information before deciding whether to reinstate or resettle the market. Except where FanDuel Sportsbook has announced that it is waiting for further information, any information that comes into the public domain more than 48 hours after a market has been settled shall not be considered by FanDuel Sportsbook (regardless of whether or not such information may have led to a different result).
• In the event of any uncertainty about any result or potential result, FanDuel Sportsbook reserves the right to suspend settlement of any market for an unlimited period until the uncertainty can be resolved to the reasonable satisfaction of FanDuel Sportsbook. FanDuel Sportsbook reserves the right to void any market if the uncertainty regarding settlement cannot be resolved to FanDuel Sportsbook’s reasonable satisfaction.
• In the event of a withdrawal of a selection after the start of an event due to such selection testing positive for a virus or other disease, all wagers on that selection shall be void.
• All-In Betting - All-In' means that regardless of whether or not a particular competitor or team or member of a team starts or completes the event on which a bet is placed, all bets stand and no refunds will be payable. Clients will be notified if a market is All-In via Blurbs, Market title and/or Selection name.
• In the event a player, team or selection are deemed the winner of a specified Outright market with one winner (e.g. NCAA Men’s Basketball Championship) but were not offered for betting due to state regulations forbidding betting on that player, team or selection then all bets placed on that market will be void. This does not include cashed out bets, which will be settled at the specified cash out offer received by the customer. For markets with multiple winners (e.g. To Make Final Four), if a non-listed player, team or selection wins, then all bets are action.
• Weekly/Daily specials: All relevant games must be played to a natural completion for wagers to stand. In the event one or more game(s) are postponed and/or have a venue change, all wagers in the relevant market will be refunded.
• Regarding player markets. Additional to the rules above, all listed players must be active for wagers to stand. If one or more player(s) listed do not play, all wagers will be refunded.

Resettlements

• the official result is different to the result on which FanDuel Sportsbook initially settled the market; or
• if the whole market is eventually voided (e.g. for an abandoned event).
• FanDuel Sportsbook reserves the right to reverse the settlement of a market if a market is settled in error (for example, a human or technical error).
• If FanDuel Sportsbook resettles a market, this may lead to amendments being made to a customer's balance and/or the deduction of funds from a customer’s Account to reflect changes in market settlement.
• FanDuel Sportsbook will settle markets on the basis that it obtains the relevant information once the outcome has been determined. If this information is not obtained, or if there is an obvious error in the information, the settlement of the bet offer will be based on other public information/ official sources at the reasonable discretion of FanDuel Sportsbook.
• FanDuel Sportsbook may be required by law to seek approval with the relevant regulatory body before making any amendments to a price or bet status.

Non-Runners

• Unless stated otherwise, sports bets are accepted on a “non-runner, no bet” basis. This means that stakes will be refunded on a player, team or other competitor that is withdrawn prior to the start of an event. If you have placed a bet on a sporting event run on a “non-runner, no bet” basis and a player, team or other competitor (on which you did not place your bet) is withdrawn, suspended or disqualified from that event, we may apply relevant deductions to your winnings (based on the price of the player, team or other competitor that is withdrawn referenced in the table below).
• Where specified, certain markets will be offered on an “all-in compete or not” basis. This means that, if a player, team or other competitor is withdrawn from an event (whether he, she or it pulls out of the event, is suspended or disqualified from it or otherwise) before he, she or it has taken part in the event, then any bet placed on that player, team or competitor (as applicable) will be deemed a losing bet.
• If an event is specified as “fixed draw” and a team, player or other competitor is withdrawn, suspended or disqualified from that event, we reserve the right to settle any bets on the subsequent prices once the market has been revised without the withdrawn team/player.
• If a player, team or other competitor has taken any part in a sporting event once it has officially started and then fails to complete that event for any reason, any bet placed on that player, team or other competitor will be deemed live (i.e. bets on that player, team or other competitor will not be voided).

Unexpected Events and Other Changes

To the extent there is any inconsistency between the general rules contained in this Part B, Section 8 and the Specific Sports Rules applying to a specific event, the following general rules will prevail:

• Any reduction in the number of games or matches in a season;
• Any material change in the length of a game or match or when the matches are played;
• A material change to the format or rules of the relevant event(s), series or competitions as determined by the relevant sports body; or
• A change in the location of any match, game or event.

Futures Settlement

• Some markets have different rules and these are listed in the Specific Sports Rules. However, where a market has no rules in the Specific Sports Rules in relation to how and on what basis a futures market will be settled the following shall apply.
• Unless the outcome has unequivocally been determined prior to the interruption of the season - example Team A were prior to the postponement unable to win more than x regular season games, bets on over x games will be settled as a loser and bets on under x wins settled as winners;
• Where the competition format has materially changed after the postponement and any outcome that was prior to the postponement possible is no longer made possible due to the format change - example Team B were mathematically able to make playoffs prior to the postponement however a new playoff format announced after the postponement prevented any opportunity to make playoffs, all bets on Team B to make and miss playoffs will be void.
• Example: 2019/20 NHL Regular season points: Detroit Red Wings Over/Under 74.5 points settled as Under 74.5 as the winning selection. Result fully determined prior to season suspension ( Detroit Red Wings on 39 points prior to suspension. Only 24 points on offer if season was to resume thus result fully determined as Under 74.5).
• Example: 2019/20 NHL Regular season points: Boston Bruins Over/Under 100.5 points. Boston Bruins had recorded 100 points prior to season suspension. Result undetermined if season wasn’t to resume and thus voided.
• Example: 2019/20 Rocket Richard Trophy. Ovechkin/Pastrnak settled as winners and all other selections settled as losers. Both players leading prior to season suspension and ruled as winners and deemed completed as per governing body.
• Bets on markets that don’t reach completion before the interruption but have already been unconditionally determined will be settled as such. For example, if a team is mathematically eliminated from playoffs prior to the interruption then bets on them to miss the playoffs are winners whereas bets on them to make the playoffs or win the Championship are losers.
• Example: Euro 2020 Soccer Tournament was rescheduled to take place in 2021 all bets prior to the postponement remained active unless a customer contacted to void the bet prior to the start of the tournament in 2021.
• Example: There is no announcement from the International Tennis Federation by September 5, 2020 on the rescheduling of the 2020 French Open, all futures bets on the French Open 2020 will be void.

Abandonments, Cancellations, Postponements, Forfeits

• Some markets have different rules and these are listed in the Specific Sports Rules. However, where a market has no rules in the Specific Sports Rules in relation to an abandonment, cancellation and/or postponement the following shall apply.
• In relation to any match, fixture, game, individual event, race or similar : If the event is not completed within 48 hours after the scheduled completion date, then all bets on markets for this event will be void, except for bets on any markets that have been unconditionally determined. All bets on an event that is officially deemed a forfeit will be void.
• In relation to any tournament, competition or similar : If the event is not completed within 24 hours following the scheduled completion date of the event, then any markets relating to the event will be settled in accordance with the official ruling of the relevant governing body, providing such a decision is given within 90 days after the scheduled completion date. If no official ruling is announced in this 90 day period, then bets on any market relating to this event will be void, except for bets on any markets which have been unconditionally determined. If a market is to be voided but has been part-settled as a courtesy to FanDuel Sportsbook customers, then such part-settled bets will be reversed and all bets on the market will be void.
• If there is no further sporting action in any market that does not contain the selection ‘draw’ or ‘tie’, all bets placed after this conclusion of action will be voided (e.g. If the game ends in a draw and the two selections that are named in the market are “Team A” and “Team B” without a “Draw” or “Tie” selection - the bet on either Team A or B will be Voided).
• Major League Soccer Cup = tournament;
• NFL AFC West = tournament;
• Ryder Cup outright = tournament;
• Golf tournament outright = tournament;
• Tennis Tournament outright = tournament;
• Motor Race (e.g. Indianapolis 500) = match;
• NBA Finals = match;
• NBA Championship = tournament.

Change of Venue

• For any team sport: if the scheduled venue is changed after a bet is placed, all bets will be void only if the new venue is a home ground of the original away team (or in the case of international matches, only if the venue changes to a venue in a different country).
• For all categories or markets other than team sports: if the scheduled venue is changed after a bet is placed, all bets will stand.
• If there is a change in the type of scheduled surface (E.g. a field hockey match switching from grass to astro-turf) after a bet is placed, all bets will stand.

Periods of Time

• Some markets have different rules and these are listed in the Specific Sports Rules. However, if not dealt with in the Specific Sports Rules then the following shall apply.
• If the scheduled duration of an event is changed after a bet is placed but before the start of the event, then all bets will be void.
• Some markets refer to the length of time until an occurrence in the event (e.g. time of first goal). If an event happens in stoppage or injury time after any regular time period then it will be deemed to have occurred at the end of the regular time period. For example, if a goal is scored in first half stoppage-time in a soccer match it will be deemed to have occurred on 45 minutes.
• All bets apply to the relevant full ‘regular time’ period including stoppage time. Any extra-time and/or penalty shoot-out is not included.
• References within these Rules and Regulations to a particular number of ‘days’ shall mean the end of the day local time after the expiration of the specified number of days. For example, if a rugby match is scheduled for the 1st of December, then the rule that allows the match to be completed within 48 hours after the scheduled completion date (see Paragraph 3 above) would mean that the deadline for completion of that match would be 11:59:59 p.m. on the 4th of December.

"To Qualify" Markets

• Some sports/markets have different rules and these are listed in the Specific Sports Rules. However, if not dealt with in the Specific Sports Rules then the following shall apply.
• Any 'to qualify' market (e.g., "to reach the final" markets) will be determined by the competitor or team that progresses, whether or not they take part in the next round or event for which they have qualified. Markets will be settled after the qualifying stage and any subsequent disqualification or amendment to the result will not count.
• Returns = (Original Stake * (Number of Expected Winners / Number of Actual Winners)) * Original Odds.
• If a “dead-heat” between two selections is declared on any event, half the stake is applied to the selection at full odds and the other half is lost. If more than two “dead-heats” are declared, the stake is proportioned accordingly.
• There are multiple examples of this in a golf tournament, for example, eleven players finishing in the Top 10 of a golf tournament, with three players tied for 9th place, would result in a deduction in payout. In this example the 3 players tied for 9th are occupying two positions (9th and 10th) therefore your initial stake is reduced by 2/3rds. (2 places divided by 3 players) and your returns are calculated using the original odds.
• ($20 * (2/3)) * +200 = $40.
• If one or more legs of a parlay is affected by a “Dead-Heat” then the original parlay stake is reduced accordingly. For example, if one leg of a three-leg parlay is affected by a dead heat with four players tied for one place, the original parlay stake would be divided by four and the returns calculated using the original parlay odds.
• materially different from those available in the general betting market at the time the bet was made; or
• clearly incorrect given the chance of the event occurring at the time the bet was made including, in either case, because the bet was placed after the start of an event, because the market was not displaying or reflecting in-play status, or because of any other reason, then the FanDuel Sportsbook reserves the right to either (i) correct any obvious errors by settling winning bets at the ‘correct price,’ as reasonably determined by FanDuel Sportsbook, or (ii) void any bet placed where such errors have occurred.
• If FanDuel Sportsbook accepts a bet on a market for which the outcome has already been determined, then that bet shall be deemed void (and no winnings shall be payable in respect of it).
• If FanDuel Sportsbook accepts a bet on a market where the incorrect teams are listed and/or listed in the incorrect order (i.e. Home Team listed as Away) FanDuel Sportsbook reserves the right to void such wagers, regardless of the outcome of the event.

Duplicate Events

• In the event that odds for the same exact game are displayed on the FanDuel Sportsbook more than once (regardless of whether the markets are related and/or displayed odds are different), FanDuel Sportsbook reserves the right to cancel any correlated parlay bets placed on both/multiple events, regardless of whether the markets and/or displayed odds are different.
• Single Bets placed individually on the above markets will be settled in accordance with official results.

Maximum Winnings

• For all events offered, the maximum winning limit per bet (e.g., straight, parlay, SGP, or other) is $1 million US Dollars.
• The maximum winnings limit will apply to any one customer, or group of customers acting together, wagering on the same combination of selections, regardless of whether or not such bets are struck separately, at a range of different prices, on different days and through a number of different accounts. If FanDuel Sportsbook believes that a number of bets have been placed in this way, the total payment of all those bets combined will be limited to one single maximum winnings.
• A parlay bet consists of a number of legs. A leg is defined as one or more chosen selections in any individual event market.
• FanDuel Sportsbook reserves the right in its sole discretion not to accept certain parlay bets or to scale back stakes.
• All parlay bets placed are subject to the Sportsbook Rules that apply to each individual sport that relates to any leg of any parlay bet.
• If any selection in any leg is a non-runner or otherwise void under the Sportsbook Rules (e.g. an abandoned match) then all bets on that individual leg will be void and the parlay bet shall be adjusted accordingly. For example a treble including one void leg will become a double. If that voided leg means that an individual bet within a parlay becomes a single bet, then this single bet will stand. Same Game Parlays (SGP’s) will be settled in the same manner. If a selection within the wager is voided, the wager odds will be re-calculated using the remaining legs.
• Odds Boosts that include parlay bets are subject to the Odds Boost settlement rules set forth in Section 21 below.
• Parlay bets combining different selections within the same event are not accepted when there are related contingencies (i.e. where the outcome of one event is likely to affect the odds on the outcome of another event). The rejection of related contingency bets may happen automatically at the bet placement stage. However, if such a bet is taken in error, FanDuel Sportsbook may settle the individual bet combinations which include two or more of the related contingency selections, as single bets.
• Round Robin wagers cannot include selections from the same event. If selections from the same event are incorrectly wagered upon in a round robin - FanDuel Sportsbook may settle the wager as if only one of the selections from the event was included.
• Two Team Teaser: the entire teaser is voided and the bet will be refunded.
• Any other Teaser: the teaser has action and the teaser payout will be recalculated removing the voided or push legs.
• Cash Out is a feature which is offered on various singles and multiples FanDuel Sportsbook bets. Cash Out allows you to amend your original bet and lock in a profit or a loss by settling your bet (or a portion of your bet) early, without having to wait for the event to finish.
• If you make a Cash Out request, you will be notified whether or not your request has been successful. Your request to Cash Out is not guaranteed to be accepted and may be unsuccessful if, for example, the market suspends, or the odds move before your request has been processed.
• If your Cash Out request is successful, a ‘success’ message will be shown and your bet (or the relevant portion of your bet) will be settled immediately and any winnings returned to your account equal to the amount shown on the Cash Out button. Note that this includes the original stake (or portion of your stake) and the total amount returned to your account will be the amount shown on the Cash Out button. For a full Cash Out, the bet is settled and any subsequent events will have no impact on the amount returned to your account. For a partial Cash Out, part of your bet is settled and any subsequent events will only impact on the portion of your bet which you have not Cashed Out.
• If your Cash Out request is unsuccessful, a message will be shown which gives the reason why and a new Cash Out offer may be offered to you.
• Cash Out requests made in-play may take longer to process because of the in-play bet delay.
• Cash Out is not currently available on all FanDuel Sportsbook markets - a Cash Out icon will be displayed for the markets that support Cash Out. See the Help page for more details on when Cash Out may not be available. FanDuel Sportsbook will not be liable for any losses that may arise from the cash out feature being unavailable for any reason.
• Using Cash Out may mean you will opt out of and no longer be eligible for a particular promotion. See the terms and conditions of the promotion for further details.
• FanDuel Sportsbook reserves the right to reverse the settlement of a Cash Out if the bet or a market is settled in error (for example, a human or technical error). If FanDuel Sportsbook resettles a bet, this may lead to amendments being made to a customer's balance to reflect changes in bet settlement. If an incorrect Cash Out offer is presented to a customer and then accepted due to a technical fault, FanDuel Sportsbook reserves the right to resettle the bet using the correct Cash Out offer.
• FanDuel Sportsbook reserves the right to suspend or disable the Cash Out feature at any time.

Odds Boosts

• Any bets for which we offer Odds Boosts will be settled on the basis of normal time and injury time (i.e. excluding any extra time, penalties or similar) unless otherwise specified in the relevant bet or bet rules
• Unless otherwise stated, bets for which Odds Boosts are offered will be governed by FanDuel Sportsbook’s usual settlement rules.
• We reserve the right to void any bet with an Odds Boost if: (i) the enhanced price was intended to apply to pre-match bets only and (ii) we erroneously accepted the bet, at its enhanced price, after the relevant event started.
• For Odds Boost parlays, if any selection in any leg is a non-runner or otherwise void under the Sportsbook House Rules then the entire Odds Boost bet will be void regardless of the outcome of other selections in the parlay.
• In the event of a clear and obvious wording or pricing error for an enhanced bet, we will (in accordance with our usual settlement rules) aim to settle the bet at the price at which we intended to offer, and/or pursuant to the wording which was clearly intended to relate to, the relevant bet.
• We reserve the right to withdraw any Odds Boosts and edit the respective odds on the enhanced price.
• Unless stated in the Odds Boost, the bets refer to the next official event that the listed team/participant(s) are scheduled to participate in.
• Markets can tend to fluctuate in price quite often which can sometimes lead to the Odds Boost price not representing any enhanced value in comparison to its original markets.

Miscellaneous

• FanDuel Sportsbook reserves the right in its sole discretion not to accept certain Sportsbook bets, or to scale back the stakes (on a per user or aggregate basis).
• All references to time periods in the Sportsbook Rules relate to the time zone in which the event takes place. For example, a reference to the start time of a football game, relates to the local kick-off time.
• All information supplied by FanDuel Sportsbook is done so in good faith. However, FanDuel Sportsbook cannot accept liability for any errors or omissions in respect of any information, such as the posting of prices, runners, times, scores, results or general statistics.
• Any results or scores of which you may be advised by a FanDuel Sportsbook employee or agent (for example during betting in-play) are provided for guidance purposes only.
• Customers are responsible for ensuring that they satisfy themselves that the selection on which they place a bet is their intended selection. For example, in the case of a competitor bearing the same name as another individual not competing in the relevant event, the onus is on the customer to ensure that they know which competitor is being referred to in the relevant market and to ensure that they are placing their bet on their chosen competitor.
• Please be aware that if you place related or corresponding bets on a combination of FanDuel Sportsbook’s platforms (and/ or the betting products of other third parties), it is possible for bets on one product to be voided in accordance with FanDuel Sportsbook’s terms and conditions, while bets on another product may stand. You should note that FanDuel Sportsbook will have no liability to you in the event that one or more of your bets on FanDuel Sportsbook’s products are amended or voided in accordance with FanDuel Sportsbook’s terms and conditions, even if your other related bets stand (and even if you have specifically relied on bets you have placed on one product in order to place related bets on another product).
• FanDuel Sportsbook may, in its sole and absolute discretion, decide to suspend betting on a market at any time (even if such suspension is earlier than anticipated by the Sportsbook Rules). In the interests of maintaining integrity and fairness in the markets, FanDuel Sportsbook may also void certain bets in a market or void a whole market in its entirety.
• FanDuel Sportsbook promotions are available at the discretion of FanDuel Sportsbook and FanDuel Sportsbook reserves the right to restrict the availability of a promotion to any person at its absolute discretion.
• FanDuel Sportsbook reserves the right, at our discretion, to perform any and all reasonable investigations on customers for the purpose of verifying information about customers such as source of funds, background history, and creditworthiness.

Part C - Specific Sports Rules

American football, general rules.

• At least ten minutes of official time must elapse in the fourth quarter for bets to have action.
• If a game starts and then is suspended prior to the above time and is not completed within 24 hours, all bets that are not unequivocally determined will be voided.
• Overtime counts for all markets unless stated otherwise.
• Abandoned or postponed games are void unless played within 48 hours. In the event of a change of venue, all bets will be void. All bets on a game that is officially deemed a forfeit will be void.
• All settlements are based on results and statistics provided by the relevant league’s governing body.
• We reserve the right to suspend any or all betting on a game at any time without notice.
• Point Spread (Handicap) betting: In Point Spread (Handicap) & Total betting, where the index (value) of the market is a whole number, bets are void and will be refunded where the score lands on that number.
• All Outright markets include playoffs where applicable.
• For settlement purposes, the team listed second in the event name is always considered the Home Team. Example: Team A v Team B or Team A @ Team B - Team B is the Home Team.

College Football and CFL Specific Rules

• For offensive player prop markets, the player must play at least one offensive snap for proposition bets to stand.
• For defensive player prop markets, the player must play at least one defensive snap for proposition bets to stand.
• For touchdown scorer market, the player must play at least one snap for bets to stand
• Markets that are revised at half time for the second half of that game include overtime.
• In the event of a tie in the CFL, all money line wagers will be voided.

Overview of Specific Markets

• Prices quoted are for the whole game inclusive of any overtime played.
• As the markets are in-running, we reserve the right to close the market at any time.
• When scores are displayed in running, every effort is made to ensure the accuracy of the score and game time; however, no liability is accepted for incorrect information displayed.
• In the event of an abandoned game, all stakes are returned, unless a result is already determined through the course of play that has taken place.
• For player prop markets, only when a player does not play a snap in that game are the selections voided. All other bets will stand.
• For Kicking Points player proposition markets, if a player is active but does not play a snap, all bets will stand.
• First Completion/Rush Attempt/Reception - If the specified player does not record a completion/rush/reception then bets on that market will be void.
• Longest Completion/Rush/Reception - If the specified player does not record a completion/rush attempt/reception then the “under” selection will be deemed the winner for settlement purposes.
• Tackles + Assists - Includes those recorded on both Defense and Special Teams.
• Player to Record Most X - Betting is All-in. If multiple players tie for the most of a recorded statistic, dead heat rules will apply (see Dead Heat Section).
• Quarter Player Props - Winning selections are determined by statistics acquired by the player in the specific listed quarter. If a player is ejected from the game, or officially deemed unable to return to the game due to injury, bets placed after the player’s last official snap will be void. Otherwise, bets have action, regardless of whether the player takes part in a snap in the listed quarter. Coaching decisions, player rotation, and drive length will not impact bets being deemed to have action.
• Player related drive markets include Player to Catch a Pass on “X” drive, Player Props on “X” drive (yardage attained), Player to Score a TD on ‘X” drive and Play Caller
• Winning selections are determined by statistics accrued by the player in the specific listed drive, not full game statistics.
• There must be at least one offensive snap for bets on player related drive markets to be considered action, otherwise bets will be voided. A Quarterback kneel down will not count as an offensive snap for settlement purposes.
• If a player is ejected from the game, or officially deemed unable to return to the game due to injury, bets placed on the player for any drives after the player’s last official snap will be void. Otherwise, bets are action, regardless of whether the player takes part in a snap on the listed drive. Coaching decisions, player rotations, and drive length will not impact bets being deemed to have action.
• Bets will be settled based on official results provided by the league. For bets to stand, the number of games deemed to be officially resulted must equal the number of games scheduled when the season begins, unless the outcome has already been unequivocally determined. Any forfeited game that is considered an official result will count towards season long bets.
• For season long player prop bets, the nominated player must play at least one snap during the regular season for bets to have action.
• For Comeback Player of the Year, all bets are action, regardless of whether or not the listed player takes the field in the specified season. For other bets on season-long award markets, the selected player must play at least one snap in any game for the specified season in order for bets to have action.
• For the Super Bowl MVP, all bets have action, regardless of if the specified player’s team takes part in the Super Bowl. For teams that make the Super Bowl, players must play at least one snap in the Super Bowl for bets to have action. For example, if Lamar Jackson is playing for the Baltimore Ravens at the start of the Playoffs, and the Ravens are eliminated before the Super Bowl and Lamar Jackson is not named Super Bowl MVP, then bets on Lamar Jackson will be settled as losers. If the Ravens take part in the Super Bowl, and Lamar Jackson does not play a snap in the game and is not named the Super Bowl MVP, wagers on him will be voided.
• Player to Be Named All Pro: Wagers will be settled based of the Associated Press recognitions for the specified season.
• For the purposes of regular season win total markets, games that result in ties are to be treated as losses.
• For Best Record and Worst Record markets, dead heat rules apply if multiple teams tie (see Dead Heat section).
• For Last Winless and Last Undefeated markets, dead heat rules apply if multiple teams tie (see Dead Heat section). Bets are settled based on NFL Scheduling Week.
• The official draft list on nfl.com is used for settlement purposes.
• For “over/under draft position” markets, undrafted players are assigned the draft position that comes after the last drafted player.
• For over/under draft position markets under means the player is chosen with a pick that is less than the designated number and over would be after that designated number, for example a market of ‘Player A over/under draft position 3.5’, if Player A is picked with the second pick of the Draft than under bets would win and over bets lose.
• EDGE is classified as defensive lineman for settlement purposes.
• Notre Dame is classified as independent and not belonging to any conference for settlement purposes.
• For draft exact order markets betting is all-in. Other selections are available by request (see All-in section).
• Unless otherwise specified, all NFL Draft markets are considered all-in (see All-in section).
• For bets based on the specific quarters or halves, the entire period of play must be played unless the result is already determined, except second half markets which do include overtime if played.
• The fourth quarter does not include overtime.
• Overtime counts for match handicap betting.
• Overtime does not count on fourth quarter specific markets.
• In the event of a tie, stakes are refunded. In the event of a tie after overtime, all money line wagers will be refunded. Any event that has already been determined will be settled accordingly. For example, if a game finishes 28-28, total points will be settled at 56.
• For quarter and half betting, the entire period must be played for bets to stand.
• Overtime counts. In the event of a tie following overtime, all stakes are refunded.
• e.g. Weekly Specials, Redzone Specials, Live Parlays, First Touchdown Scorer across 1pm Games, Super Bowl Specials.
• Player needs to play a snap in the game for bets to stand.
• All Specials markets will be settled based on results from the league’s governing body.
• Markets are void if any game involved is postponed, unless unequivocally determined.
• For markets that denote start time, any games included must start within 2 hours of the listed official start time.
• FanDuel will sometimes post markets for games that have not yet been determined and finalized, including potential playoff games and Championship game matchups. If these games do not take place due to one or both teams being eliminated, or the game is not played in that season for any reason, all bets on the event will be void.
• Overtime counts for all total match / team total and prop points markets.
• Overtime does not count for total points on fourth quarter specific markets.
• In the event of total points being exactly the nominated line, all stakes are refunded unless a price for the exact amount is quoted.
• The result is determined by where the first offensive play from scrimmage takes place.
• In the event of the kickoff being returned for a touchdown, bets stand for the first offensive play following the subsequent kickoff.
• In the event of a turnover, the result is determined on where the first offensive play takes place with respect to the receiving team’s yard line.
• “Other” includes turnovers, defensive touchdowns and safeties.
• If the clock runs out, the winning bet is “Other”
• Plays listed as “No Play” on NFL.com do not count for settlement purposes. Bets on plays as “No Play” will be settled on the next completed play that is not listed as “No Play”.
• Sacks are considered a rushing attempt.
• First Downs due to enforced penalty (as per official player by play data provided by relevant league) will count for settlement purposes.
• FanDuel Squares - Any Quarter: Winning selections are based on the last digit of each team’s total game points at the end of every quarter and overtime. Winning selections will only be paid one time at the odds that bets are placed at, regardless of how many times the selection may occur throughout the game at the end of each period. Winning selections are paid in full, dead heating does not apply.
• FanDuel Squares - Final Score: Winning selections are based on the last digit of each team’s score at the end of the game, inclusive of any overtime periods.
• FanDuel Squares - X Quarter and First Half: Winning selections are based on the last digit of each team’s total game score at the end of the listed period, not the total points that are scored in the listed period. For example, if the score at the end of the 3 rd quarter is Jets 17 and Dolphins 10, the winning selection for FanDuel Squares - 3 rd Quarter is Jets 7 - Dolphins 0, no matter how many points each team scored in the 3 rd quarter.
• “Any other” includes turnovers, defensive touchdowns, safeties, and special teams scores that are not field goals. PATs are not field goal attempts.
• Settled based on results from the league’s governing body.
• Settled off the first play from scrimmage of specified drive. If listed as “No Play” on NFL.com (e.g., Enforced Penalty), bets will have action and will be settled off the following play. Kickoff and punt return touchdowns will result in wagers being voided.
• Sacks are considered a rush attempt.
• Kickoffs excluded. Sacks count as a Rushing Attempt. Interceptions are Incomplete Passes.
• Punts and Field Goal Attempts do not count.
• Receptions as determined by the league’s governing body.
• All bets action regardless of if the player takes the field during the drive.
• 2-point conversions are to be considered winning selections.
• Half sacks count as “Yes”
• If a player does not record a catch in the game, bets will still have action.
• The final score of the game or specified period. Quarter and half markets are settled as per our standard settlement practices.
• For grading purposes, only an interception or a fumble counts.
• A punt or 'turnover on downs' does not qualify as a turnover for settlement purposes.
• In the event of an abandoned game, stakes are returned unless a turnover has already taken place.
• In the event of a false start penalty on the first offensive play, bets stand for the next offensive play that takes place without a false start penalty.
• In the event of an abandoned game, bets stand on scores that have taken place already (and overtime counts for these markets).
• Touchdown scorers are offered with the option of others on request. Markets are considered All-In.
• Touchdown Scorer Combo bets are considered all-in. Other selections are available on request (See All-in Section).
• Only when a player does not play a snap in that game are the selections voided.
• For touchdown scorer markets, the winning selection is the player who possesses the ball in the endzone. For example - on a pass TD play, the receiver in the endzone is graded as the winner, not the QB.
• For settlement purposes, “Team Defense” selections do not include Special Teams.
• Method of First Touchdown winner is as stated by official governing bodies website. If no touchdown is scored, then the winning selection is “No TD Scored”.
• This market does not include Conference Championship Games, Bowl Games, or College Football Playoffs.
• This market includes all Conference Championship Games, Bowl Games, & College Football Playoff Games unless otherwise specified.
• Includes both CFB Playoff Games.
• This market is settled on the team with first offensive possession recording 2+ first downs within first 5 plays of that drive. Excludes defensive penalties.
• Where there is a presentation ceremony, markets will be settled on the official result of the relevant governing body at the time of the ceremony, regardless of any subsequent disqualification or amendment to the result. Should markets be settled prior to the official presentation ceremony, FanDuel Sportsbook reserves the right to resettle markets in accordance with the presentation ceremony.
• If there is no presentation ceremony, outcomes will be determined in accordance with the official result of the relevant governing body, regardless of any subsequent disqualification or amendment to the result (except if an amendment is announced within 24 hours of the initial settlement of the relevant market in order to correct an error in reporting the result).
• If a track or field event is abandoned, cancelled or postponed and not completed within 7 days of the scheduled completion date, all bets will be void except for those on markets which have been unconditionally determined.
• Overall winner markets relate to the winner of the overall event and not for individual qualifiers or heats. As 'Any Other Athlete' is NOT quoted, non-featured athletes will be added to this market on request. Once 'Any Other Athlete' is listed, no further athletes will be added.

Australian Rules

• Payouts will be based on the official declared result. Regular season Home and Away matches are settled at 'Normal Time' with no extra time played. In the event of a 'draw' where no draw option is offered the Sportsbook will apply the 'dead heat rule' and all wagers will be paid at half face value of the ticket. For any Finals matches or any other Competition which includes extra time, markets will be settled on the completion of extra time, unless the draw is offered in the market.
• Where the draw option is offered, the bet is decided on the result at the end of normal time (i.e. extra time - an extension of normal time is not included.) For Margin betting, the Draw option is always offered, although in other betting options where the draw option is not offered, The Dead Heat Rule applies. In Quarter by Quarter markets for the purposes of betting the 'Draw at the end of any Quarter' market is one competitor only. Tribets are settled as any team under in the case of a draw when no extra time is played.
• Where a match is postponed from its original scheduled date, if the game is played within 48 hours of its original time, all bets will stand. Otherwise, bets will be void.
• If a game starts but is abandoned and not completed within 24 hours, the following rules will apply. Markets will be settled on the official result if one is determined by the AFL. In the case where no official result is declared, bets unequivocally determined will be settled accordingly, while all other bets will be void
• If the venue of a match is changed from the one advertised, all bets on the match will still have action (provided the match is not also postponed by more than 48 hours)
• For match winners and goal kicking options, statistics used by the AFL website (www.afl.com.au) will be the statistics used for payout purposes. For 1st Goal Scorer (Game/1st Quarter only), if the selected player is not in the starting 22 all wagers on that selection will be refunded. For bets on first goalscorer of the match, goal doesn't need to be scored in 1st quarter. For quarter first goal scorer markets, if no goal in that quarter then bets refunded.
• Premiership/Minor Premiership/Make Grand Final: All In Betting. Any team which has points deducted due to breaches of rules and regulations will be deemed a starter for resulting purposes. Any loss of Awards/Premierships after the completion of the Grand Final will be deemed null and void and all bets will stand.
• Top 4/Top 8: For Betting purposes any team which has points deducted due to breaches of rules and regulations will be deemed a starter for resulting purpose i.e. All In Any decision made by the AFL regarding penalties is final.
• Least Wins (Wooden Spoon): is paid on the team which has the least wins for the season. A draw is considered as half a win. In the event of more than one team having the same number of wins the position will be determined by the worst % as per official AFL Ladder. Points deducted because of breaches of rules and regulations are excluded for resulting purposes. All In. Win Only
• Miss 4/Miss 8: For betting purposes any team which has points deducted due to breaches of rules and regulations will be deemed a starter. If at the time a breach is announced, the loss of points means only one outcome can occur (i.e. Miss the 8 must occur) then all bets on that competitor are void and monies refunded. All decisions made by the AFL regarding penalties are final.
• These rules apply to Major League, all levels of Minor League, NCAA and World Baseball. World Baseball is defined as a league which is governed outside of the United States.
• All wagers are graded based on the official results published by the relevant league’s governing body (e.g. Major League Baseball).
• If a game does not start on the officially scheduled day (local time), as published by the governing body, due to a rain delay or other deferral, all wagers shall be void. If a game that has started is suspended, due to a rain delay or other deferral, and resumes within 48 hours of the originally scheduled start time (local time), then all wagers will stand. If a game starts, is then suspended, and resumes more than 48 hours after the originally scheduled start time (local time), all existing wagers will be void unless they have been determined prior to the game’s suspension.
• If a game is halted and scheduled to resume more than 48 hours after the original scheduled start time (local time), all wagers shall be void unless they have been determined prior to the game’s suspension.
• In the event of a shortened game, results are official after (and, unless otherwise stated, bets shall be settled subject to the completion of) 5 innings of play, or 4.5 innings should the home team be leading at the commencement of the bottom of the 5th innings (the “4.5 Innings Rule”). Once the visiting team has made 15 outs, should a game be called early and the home team is leading, the results of the game will be determined by the score at the time the game is called. Should a game be called early while it is tied or amid an inning in which the visiting team has taken the lead, the game becomes a “suspended game” and is handled according to the rules surrounding suspended games.
• Unless otherwise specified, results will only be official after (and bets shall be settled subject to the completion of) a minimum of 9 innings’ play, or 8.5 innings should the home team be leading at the commencement of the bottom of the 9th inning (the “8.5 Innings Rule”)
• For the purposes of live betting, the 8.5 Innings Rule shall automatically apply unless stated otherwise - e.g., in the section below entitled “Overview of Specific Baseball Markets” (which shall take precedence over this section). If a game is shortened due to a rain delay or other deferral, live betting markets which have been determined will stand (irrespective of the 8.5 Innings Rule or whether an official league result has been confirmed).
• Extra innings, where applicable, count for settlement purposes.
• In the case of a suspended playoff/post-season game, all bets will stand until the game is completed within 90 days of suspension.
• Money Line bets will be settled as per the “4.5 Innings Rule”;
• Bets on markets that are unequivocally determined will stand (example: bets on 1st inning total runs scored will remain settled as determined if the game gets called in the 3rd inning);
• All other markets (including but not limited to Run Line and Total Runs) will be void if not already unequivocally determined, unless a minimum of 7 innings are played, or 6.5 innings should the home team be leading at the commencement of the bottom of the 7th inning.
• The above listed rules will govern settlement of all scheduled 7 inning games, including any that are shortened after first pitch.

Action vs. Listed Pitchers

• When wagering on baseball Money Lines, you may choose to apply one of the following methods to each wager:
• Action: All Money Line wagers are defaulted to “Action” meaning all wagers struck will stand if a pitcher change occurs. Wagers will be honored at the odds at bet placement and settled as normal.
• One Specified Pitcher (Home Listed/Away Listed): A wager on or against one Listed Pitcher, regardless of the other Listed Pitcher. If the Listed Pitcher does not start, the wager is “No Action” and will be refunded.
• Both Specified Pitchers: A wager in which both Listed Pitchers must start the game. If both actual starting pitchers are not the ones listed on the wagering ticket, the wager will be deemed “No Action” and refunded.
• All other game markets are considered “Action” and wagers will remain open regardless of any personnel change.
• Listed Pitchers are not relevant to World Baseball markets and bets on such markets will stand regardless of whether any Listed Pitchers do in fact start. Should a game end in a tie, Money Line wagers will be graded as a push with all other markets settled as per the result.

Player Props

• For all MLB player markets, wagers will be void as per below (unless explicitly stated in market specific rules):
• Pitcher Markets: If the listed pitcher does not start the game.
• Batter Markets (Hits, Runs, etc.): if the listed player does not record a plate appearance.
• To Hit a Home Run & Home Run / Game Winner Parlay: Listed players must record at least 1 plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. Listed pitchers have no bearing on this market.
• Result of Plate Appearance: Listed players must record the relevant plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a player is substituted out of the game between plate appearances, bets on plate appearances that have already occurred will stand. However, bets on future plate appearance markets will be voided. For settlement purposes, hit by pitches (HBPs) will be settled as Walk/HBP. A fielder’s choice, catcher’s interference, or reach on error will all be ruled as an “other outcome.” A pitch must be thrown in the plate appearance for bets to be action. If no pitch is thrown in the plate appearance (i.e., the pitching team elects to intentionally walk the batter before any pitches are thrown) bets on the market will be void. This will not impact other markets affected by the result (i.e., the intentional walk results in an RBI for the batter).
• Plate Appearance Grouped: Listed players must record the relevant plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a player is substituted out of the game between plate appearances, bets on plate appearances that have already occurred will stand. However, bets on future plate appearance markets will be voided. For settlement purposes, hit by pitches (HBPs) will be settled as Walk/HBP. A fielder’s choice, catcher’s interference, or reach on error will all be ruled as an “other outcome.” A pitch must be thrown in the plate appearance for bets to be action. If no pitch is thrown in the plate appearance (i.e., the pitching team elects to intentionally walk the batter before any pitches are thrown) bets on the market will be void. This shall not however impact other markets which are impacted by the result (i.e., the intentional walk results in an RBI for the batter).  
• Batter to Reach Base: Settled on whether the batter will reach base (e.g. has scored or is safely standing on a base at the conclusion of the listed plate appearance). Winning selections include all home runs, and any other outcomes where the listed batter is not ruled out at the conclusion of the play. This includes hits, fielder’s choices, catcher’s interference, and reaches on errors. A pitch must be thrown for bets to action. If no pitch is thrown in the plate appearance, bets on the market will be void. 
• To Hit First Home Run: Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a non-listed player is ruled the winner, bets on listed qualified players are action. If no Home Runs are hit in the game, "No Home Run" will be deemed the winning selection.
• To Hit Next Home Run: Listed position players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. Once a player has recorded a plate appearance, wagers made on that player for all subsequent indices (Player to Hit 3rd Home Run, 4th Home Run, etc.) will stand regardless of the number of plate appearances that player ultimately records in the game. If no “Next Home Run” is hit, “No Xth Home Run” will be deemed the winning selection.
• Player to Record a Hit Markets: Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. Once a player has recorded a plate appearance, bets on all subsequent hits markets (2+ hits, 3+ hits, etc.) will stand regardless of the number of plate appearances that player ultimately records in the game.
• To Record Total Bases: Total Bases are recorded through hits. They do not include walks, HBPs, reach on errors, or fielder's choices.
• Player Total Strikeouts: Listed Pitcher must start for bets to stand. If the opposing Listed Pitcher does not start, then bets will still stand.
• Alternate Strikeouts: Listed Pitcher must start for bets to stand. If the opposing Listed Pitcher does not start, then bets will still stand.
• Pitcher Player Performance Doubles: Listed Pitcher must start for bets to stand. If the opposing Listed Pitcher does not start, then bets will still stand.
• Pitcher Outs: Listed Pitcher must start for bets to stand. If the opposing Listed Pitcher does not start, then bets will still stand.
• Pitcher Saves: Save markets will be action regardless of whether the Listed Pitcher(s) appear in the game or not.
• 1st Inning Strikeouts: A change to the status of either listed pitcher, or to either line-up, will have no bearing on the settlement of this market. For the “Each Starting Pitcher 1+ Strikeouts in the First Inning” market, strikeouts will only count if accrued by the pitchers that begin the game.
• Combined Strikeouts for Game: Both Listed Pitchers must start for bets to stand. Total number of strikeouts accrued within the game.   
• Combined Starting Pitcher Strikeouts for Game: Both Listed Pitchers must start for bets to stand. Total number of strikeouts starting pitchers accrue within the game.   
• Either Pitcher to Record X+ Strikeouts: Both Listed Pitchers must start for bets to stand.  
• Pitcher Earned Runs: Listed Pitcher must start for bets to stand.  
•  Each Team to Record 1+ Strikeouts in X Inning: A change to the status of either listed Pitcher, or to either lineup, will have no bearing on the settlement of this market. These markets refer to the 2nd Inning and beyond, where strikeouts accrued by all pitchers (not just those who begin the game) in the listed inning will count towards settlement.
• Each Team to Record 1+ Hit in X Inning: A change to the status of either listed Pitcher, or to either lineup, will have no bearing on the settlement of this market.
• Quality Start: Occurs when at least 6 innings are pitched allowing three or fewer earned runs. If a singular pitcher is listed in the market, that pitcher must individually accomplish the feat for bets to be winners. If the market lists the team’s name (e.g., Team X to pitch a Quality Start), rather than the name of an individual pitcher (e.g., Pitcher Y to pitch a Quality Start), then multiple pitchers may be used to accomplish the feat.   
• No Hitter: An official no-hit game occurs when a pitcher (or pitchers) allows no hits during the entire course of a game, which consists of at least nine innings (minimum 27 outs) thrown by the pitcher(s). If a singular pitcher is listed in the market, that pitcher must individually accomplish the feat for bets to be winners. If the market lists the team’s name (e.g., Team X to Combine for a No-Hitter), rather than the name of an individual pitcher (e.g., Pitcher Y to Throw a No-Hitter), then multiple pitchers may be used to accomplish the feat.    
• Perfect Game: For a Perfect Game, the pitcher(s) must comply with all requirements of the No-Hitter, but also not allow any baserunners to reach via reach via walk, HBP, uncaught third strikes, catcher’s or fielder’s interference, or fielding errors. If a singular pitcher is listed in the market, that pitcher must individually accomplish the feat for bets to be winners. If the market lists the team’s name (e.g., Team X to Combine for a Perfect Game), rather than the name of an individual pitcher (e.g., Pitcher Y to Throw a Perfect Game), then multiple pitchers may be used to accomplish the feat.    
• No Hits in First X Innings: When a pitcher (or pitchers) allow(s) no hits during the first X Innings of a game. If a singular pitcher is listed in the market, that pitcher must individually accomplish the feat for bets to be winners. If the market lists the team’s name (e.g., Team X to allow No Hits in First X Innings), rather than the name of an individual pitcher (e.g., Pitcher Y to allow No Hits in First X Innings), then multiple pitchers may be used to accomplish the feat.
• Player Performance Parlays: For pitchers, the listed pitcher must start for bets to stand. Bets will stand regardless of a change in status to the opposing listed pitcher. For batters, the listed player must record at least 1 plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. A change to the status of either listed pitcher will have no bearing on the settlement of any batter-specific player parlay.
• Result of First Pitch: Settled based on the first pitch thrown in the listed half inning. A change to the status of either listed pitcher, or to either line-up, will have no bearing on the settlement of this market. For settlement purposes, a reach on error, catcher’s interference, or a foul ball that results in an out will be ruled as an “other outcome.” Batted balls that result in the plate appearance ending (ex. hits/outs) will not be regarded as strikes for the purposes of settlement. If a pitcher or batter violation results in an automatic ball or strike to begin the at-bat, the market will be settled based off the outcome of the violation (e.g. if a pitcher violation results in an automatic ball to start the at-bat, ‘Ball’ will be settled as the winning selection).
• Method of First Hit: Settled based on the method by which the first hit of the game (for either team) occurs. A change to the status of either listed pitcher will have no bearing on the settlement of this market.
• Player to Record First Hit: Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a non-listed player is ruled the winner, bets on listed qualified players are action. If no hits are recorded in the game, “No First Hit” will be deemed the winning selection.   
• Player to Record First RBI: Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a non-listed player is ruled the winner, bets on listed qualified players are action. If no RBIs are recorded in the game, “No RBI” will be deemed the winning selection.    
• Player to Record First Run: Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a non-listed player is ruled the winner, bets on listed qualified players are action.   
• Player to Record First Stolen Base: Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void. If a non-listed player is ruled the winner, bets on listed qualified players are action. If no stolen bases are recorded in the game, “No Stolen Base” will be deemed the winning selection.
• Player to Hit First Home Run of Day: Listed players must be in the starting lineup for bets to have action. Any non-starters will be voided. Settlement will be determined on the time of day in which the first home run is hit, rather than the elapsed time/inning within an individual game.
• Player to Score the Last Run in Extra Innings on Winning Team: All-In Betting. Settled upon the player to score the last run in extra innings on the winning team.
• Player to Record the Last RBI in Extra Inning on Winning Team: All-In Betting. Settled upon the player to record the last RBI in extra innings on the winning team.
• Home Team Comes from Behind in Extra Innings to Win: for bets to be settled as winning wagers, the Home Team must trail from the 10th Inning onward and win the game.
• 3 Up, 3 Down: This occurs when only three batters come to the plate and record official plate appearances during the listed half-inning. It is possible for players to reach base and for a “3 Up, 3 Down” to still occur (e.g., Runner caught stealing, double play, etc.).
• 9 Up 9 Down: This occurs when only nine batters come to the plate and record official plate appearances during the first three innings. It is possible for players to reach base and for a “9 Up, 9 Down” to still occur (e.g., runner caught stealing, double play, etc.). This market relates only to the starting pitcher and that pitcher must individually accomplish the feat for bets to be winners. Listed Pitcher must start for bets to stand.
• Pitch Velocity: Pitch velocity markets will be settled according to official results as published by MLB's Statcast. Should a batter or pitcher violation occur before a pitch is thrown in the plate appearance, wagers will be settled based on the first pitch thrown following the violation. For starting pitcher velocity markets, the listed batter vs. pitcher matchup must occur for wagers to have action. For relief pitcher velocity markets, the listed batter vs. pitcher matchup must occur in the listed inning for wagers to have action.
• Pitches Per Plate Appearance: Automatic balls/strikes that result from pitcher/batter violations will count as pitches for settlement purposes.  A pitch must be thrown in the plate appearance for bets to be action. If no pitch is thrown in the plate appearance (i.e., the pitching team elect to intentionally walk the batter before any pitches are thrown) bets on the market will be void. Should the listed plate appearance not occur, bets on the market will be voided. For bets to have action, a plate appearance must occur to completion (e.g. if the batter is mid plate appearance and a third out occurs to end the inning, the market will only be settled off the pitches that are thrown in the official plate appearance that occurs to begin the next inning).
• Type of Pitch: Settled according to official results as charted and published by mlb.com play by play.   
• Pitch Caller: Settled based on the type and outcome of the first pitch thrown in the listed half-inning. A change to the Listed Pitcher will result in markets to be void. For settlement purposes, a reach on error, catcher’s interference, or a foul ball that results in an out will be ruled as “other outcome”. Batted balls that result in the plate appearance ending (e.g. hits/outs) will not be regarded as strikes for the purposes of settlement. If a pitcher or batter violation results in an automatic ball or strike to begin the at-bat, the market will be void.  
• Batted Ball Exit Velocity: Batted ball exit velocity markets will be settled according to official results as published by MLB's Statcast.
• Distance of Home Run: Distance of home run markets will be settled according to official results as published by MLB's Statcast.
• For Team to Hit the Longest Home Run, if home runs of equal distance occur, all bets will be void.  
• Hit Distance/Distance Ball Travelled: Distance will be settled according to official results as published by MLB’s Statcast.  
• Team with More Runners Left on Base: Settled as number of players left on base at the end of each inning. If teams have the same number of runners left on base, selections will be void.    
• Team Total Sacrifice Flies: Settled upon the number of flyballs hit that allow a runner to score as credited per mlb.com play by play.   
• To Hit for Team Cycle: Team to record a single, double, triple, home run within the same game.   
• Back to Back Home Runs:  Settled upon home runs being hit in consecutive plate appearances.   
• Hits + Runs + RBIs: Combination market settled upon an individual player’s hits + runs + RBIs. Listed players must record at least one plate appearance for bets to stand. If listed players do not record a plate appearance, bets on that player will be void.  
• Half Inning Specials:   
• Team Cycle: Occurs when a team records a single, double, triple, and home run within the listed half-inning.  
• Double Play: Occurs when two outs are recorded on the same defensive play within the listed half-inning.  
• Triple Play: Occurs when three outs are recorded on the same defensive play within the listed half-inning.  
• Walk/HBP: For settlement purposes, hit by pitches (HBPs) will be settled as Walk/HBP. If the only walk recorded in the listed half-inning is a no-pitch intentional walk, selection will be deemed void. Batters to the Plate: Settled upon the number of official plate appearances recorded during the listed half-inning.  
• Bases Loaded: Settled upon runners being on first, second, and third base simultaneously within the listed half-inning.  
• Pitches Thrown: Automatic balls/strikes that result from pitcher/batter violations will count as pitches.  
• Method of First/Next Out: Settled upon mlb.com play by play within the provided selections (Strikeout, Groundout, Flyout/Lineout, Any Other Recorded Out). “Any Other Recorded Out” encompasses all additional ways to record an out not listed as a selection option. Flyouts, Lineouts, and Pop Outs, including batted balls determined to be Infield Fly's, will be deemed the same for settlement purposes. In the case of a walk-off (or any other situation where three outs in an inning do not occur), remaining markets will be void.  
• Method of Last Out: Settled upon mlb.com play by play within the provided selections (Strikeout, Groundout, Flyout/Lineout, Any Other Recorded Out) “Any Other Recorded Out” encompasses all additional ways to record an out not listed as a selection option. Flyouts, Lineouts, and Pop Outs, including batted balls determined to be Infield Fly's, will be deemed the same for settlement purposes.
• Player to Make Next Defensive Out: Settled upon mlb.com play by play as to which fielder is credited with a putout upon the play.

Futures Markets + Other Specials

• MLB Award Markets: If an award is shared by two players (e.g., Cy Young, World Series MVP) dead-heat rules will apply. For bets to have action in the Regular Season MVP and Cy Young Markets, players must record at least one MLB regular season plate appearance and pitchers must face at least one MLB hitter, in a listed league game. All other MLB Awards Markets (including Post-Season Awards) are deemed all-in.
• Regular Season Player Totals (Over/Under): Batters must record at least one MLB regular season plate appearance and pitchers must face at least one MLB hitter during the regular season for bets to have action. Should these requirements not be met, wagers will be voided.
• Regular Season Player Totals (Head-to-Head and Combined): In a market where two players are listed, both batters must record at least one MLB regular season plate appearance and both pitchers must face at least one MLB hitter during the regular season for bets to be action.  
• Regular Season Statistical Leaders: Batters must record at least one MLB plate appearance and pitchers must face at least one MLB hitter during the regular season for bets to be action. Should these requirements not be met, bets will be voided. Dead-heat rules apply if multiple players tie for the league lead.
• Regular Season Win Totals: A team must play at least 98% of games originally scheduled (as of Opening Day of the regular season) for bets to stand, unless the outcome has previously been unequivocally determined. For example, in a shortened 60 game season, at least 59 games must be played for bets to stand (unless previously unequivocally determined). In a 162 game season, 159 games must be played for bets to stand (unless previously unequivocally determined).
• Regular Season Specials: All other regular season specials, unless otherwise stated, will be settled should teams play at least 50% of regular season games originally scheduled (as of Opening Day of the regular season). In the event that less than 50% of regular season games are played (as scheduled on Opening Day of the regular season), all regular season specials bets (unless otherwise stated) will be void regardless of if they have been determined or not. Where a specified player is listed under a market pertaining to a certain league/team, he will be deemed a player in that league/team for the purpose of the result regardless of any inter-league/team trade which may occur.
• For example, if 15 games are scheduled on a given day, and one of the games was postponed/rescheduled to another date due to weather, markets that were unequivocally decided would be settled (e.g., “Will Any Player Hit a Grand Slam” would be settled if a Grand Slam was hit in one of the other games). However, markets affected by the postponement would be voided (e.g., “1+ Home Runs to be Hit in All Games” or “All Teams to Score 2+ Runs").
• Daily Strikeout Specials: For head-to-head strikeout matchups, both listed pitchers must start the game for bets on the matchup to stand. If the two listed pitchers record the same number of strikeouts, bets on the matchup will be voided. For daily specials about which listed pitcher will record the most strikeouts on a given day, bets on any listed pitcher that does not start will be voided, and dead-heat rules will apply if multiple starting pitchers tie for the daily lead.
• Daily Strikeout Leader: Bets on any listed pitcher that does not start will be voided, and dead-heat rules will apply if multiple starting pitchers tie for the daily lead among those listed.
• Regular Season Series Winner: Games must be played within the originally scheduled series dates to be counted towards series settlement. Series bets will be void if affected by postponed/rescheduled games that take place after the originally scheduled series end date unless the outcome has been unequivocally determined prior to the interruption of the series. For series’ scheduled to be an even number of games (e.g. a four game series), either two-way betting or three-way betting (with “Series Tied” as a third possible selection) may be available. If two-way betting is available, bets on that market will be void if the teams split the series. If three-way betting is available, bets on the “Series Tied” option will be ruled as winners if the teams split the series.
• Post Season Statistical Leader Specials: Dead-heat rules apply if multiple players tie for the lead of a statistical category (e.g., “Player to Record Most Hits”, “Player to Record Most Home Runs”, etc.) Batters must record at least one MLB plate appearance and pitchers must face at least one MLB hitter during the listed timeframe for bets to have action. Should these requirements not be met, bets will be voided.
• Live Specials: An official no-hit game occurs when a pitcher (or pitchers) allows no hits during the entire course of a game, which consists of at least nine innings (minimum 27 outs) thrown by the pitcher(s). For a perfect game, the pitcher(s) must comply with all requirements of the no-hitter, but also not allow any baserunners to reach via walk, HBP, uncaught third strikes, catcher’s or fielder’s interference, or fielding errors. No-hitters and perfect games will be settled regardless of the number of pitchers used by the relevant team. For live pitcher specials, all bets will stand if the listed pitcher starts the game. For live batter specials, all bets will stand if the listed player records at least one plate appearance in the game.
• World Series, League and Division Winners markets will all be settled in accordance with the official MLB ruling regardless of season length.
• Best Record/Worst Record: Market is based on which team finishes the regular season with the best or worst winning percentage. In the event that multiple teams tie, dead heat rules apply.  
• Team to Earn X Seed: Market is based on which team earns the listed postseason seed at the completion of the regular season. Official MLB tiebreakers apply; only one winner is possible in each market.  
• Team to Earn First Round Bye: Market is based on whether a team earns a top 2 seed in its league, earning a Bye in the Wild Card Round. There will be two winning selections in each market, for each league.
• Division Exact Finishing Order: Ties between playoff-qualifying teams will be determined in accordance with MLB Playoff tiebreaker rules. For ties between non-playoff qualifying teams, the ties will be broken in the following order: (1) head-to-head record, (2) intra-division record, (3) overall run differential.
• All outright markets include playoffs where applicable.
• Any player statistic (e.g., Home Runs, Total Bases, RBI’s, Runs Scored, etc.) accumulated during a potential Home Run Derby tiebreaker scenario will not be considered for settlement, unless specifically stated otherwise. All game markets will be settled after 9 innings of play, apart from the Moneyline market and those markets that specifically address events in a potential tiebreaker scenario.
• All wagers are graded based on the official results published by mlb.com.
• Wagers relating to home run distances will be resulted according to the figures provided by MLB’s Statcast.
• Player Match Bets: If two contestants are eliminated in the same stage of the competition, bets on which player will advance further will be void.
• First Swing Markets; Settled on the result of the first pitch swung upon by the batter.
• The official draft results on mlb.com will be used for settlement purposes.
• For over/under draft position markets under means the player is chosen with a pick that is less than the designated number and over would be after that designated number, for example a market of ‘Player A over/under draft position 3.5’, if Player A is picked with the second pick of the draft than under bets would win and over bets lose.

Overview of Specific Major League Baseball Markets

• Please note that all below rulings are specific to MLB games scheduled to be 9 innings in length. For rules relating to games scheduled to be 7 innings in length, please reference the section above entitled, “General Rules.”
• Money Line: Money Line markets will be settled as per the 4.5 Innings Rule.
• Run Line Markets: Settled as per the 8.5 Innings Rule.
• Total Runs Markets: Settled as per the 8.5 Innings Rule except for when a result has already been unequivocally determined.
• Double Result: Settled based on the score at the end of the 5th inning plus the final score as per the 8.5 Innings rule.
• Tri-Bet Markets: Settled as per the 8.5 Innings Rule.
• Odd/Even Markets: Settled as per the 8.5 Innings Rule. In the event a result of zero is arrived at, that shall be considered an even number for settlement purposes.
• Winning Margin Markets: Settled as per the 8.5 Innings Rule.
• Team to Score First Markets: Settled on the first run of the game (irrespective of whether or not a full game, or a certain number of innings, have been completed). When packaged in a parlay, the 8.5 Innings Rule applies. Includes extra innings.
• Team to Score Last Markets: Settled as per the 8.5 Innings Rule. Includes extra innings.
• Highest Scoring Half of Game: Inclusive of extra innings, settled as per the 8.5 Innings Rule. For the purposes of this rule, the first “half” of a game shall be deemed to be the first 5 innings and the second “half” shall be deemed to be all other innings which take place during the game (including additional innings). For example, if 11 innings are played, the first “half” of the game shall be deemed to be the first 5 innings and the second “half” of the game shall be deemed to be the last 6 innings.
• Highest Scoring Inning: Settled as per the 8.5 Innings Rule. Dead heat rules apply in the event of a tie. Should the highest scoring inning occur in extra innings, innings 1-9 will be considered losers.
• Inning of First / Last Score: Settled as per the 8.5 Innings Rule (unless, in the case of the first score, the result has already been unequivocally determined). Should the first or last score occur in an extra inning, innings 1-9 will be considered losers.
• Inning / Half Inning Markets: The relevant inning or half inning of the game must be fully completed for bets to stand (unless, in the case of a total runs market, the result has already been unequivocally determined).
• Innings Correct Score: Settled based only on runs scored in that specific inning. For example, if entering the 5th Inning, “Team A” leads “Team B” 3-2 and both teams fail to score a run in the 5th inning, “0-0” would be correctly settled as the winning selection.
• 3 / 5 / 7 Inning Markets: The specified number of innings must be completed for bets to stand (unless the home team holds the lead and the bottom of the inning would not change the result for team specific markets).
• 1st Half Markets: Settled following the completion of 5 Innings. The 4.5 Innings Rule applies for shortened games where the results of markets have already been fully determined. If a game has extra innings, 1st Half Markets will be settled off the 1st 5 innings result.
• Lead After / Race To Markets: Settled based on the score at the end of the specified period or once the required number of runs have been scored (as applicable).
• Team Most Hits Markets: Settled as per the 8.5 Innings Rule. In the case of specific Inning / half Inning markets, the stated period must have been completed for bets to stand unless the result has already been unequivocally determined. 2+ Hits in the First Inning: “Yes” will be settled as the winning selection should the two teams combine to record 2 or more hits in the first inning of play.
• For settlement purposes, the team listed second in the event name is considered to be the home team (even if the game takes place at a neutral venue). Example: “Team A v Team B” or “Team A at Team B”, Team B is the home team.

Overview of Specific NCAA Baseball Markets

• NCAA Baseball Regular Season Win Totals: A team must play at least 95% of games originally scheduled (as of Opening Day of the regular season) for bets to stand, unless the outcome has previously been unequivocally determined. For example, in a shortened 60 game season, at least 58 games must be played for bets to stand (unless previously unequivocally determined). The occurrence of 7 inning games has no bearing on this market. Conference tournament games are not included in the regular season.  
• NCAA Player Awards (e.g. Golden Spikes Award, College World Series Most Outstanding Player): All bets are action. If an award is shared by two players, dead-heat rules will apply.  
• Regular Season Player Totals (Over/Under): Batters must record at least one NCAA regular season plate appearance and pitchers must face at least one NCAA hitter during the regular season for bets to have action. Should these requirements not be met, wagers will be voided. 

Sport Rules - NBA, NCAA and WNBA Basketball

• Wager settlement is based solely on results and statistics provided by the relevant league's governing body (www.nba.com, www.ncaa.com, http://www.wnba.com) and their official data supplier.
• For settlement purposes, the team listed second in the event name is considered the Home Team, even if the game takes place at a neutral venue. Example: “Team A v Team B” or “Team A @ Team B” - Team B is the Home Team.
• Should play be suspended in any NBA game and subsequently not fully completed (48 minutes played) within 24 hours of the original scheduled start time, all wagers will be void unless the outcome of a specific market/selection has already been pre-determined. If the event is not completed within 24 hours and/or not completed at all, but the governing body declares a winner, wagers will still remain voided unless pre-determined.
• Should play be suspended in any Men’s or Women’s NCAA game and subsequently not fully completed (40 minutes played) within 24 hours of the original scheduled start time, all wagers will be void unless the outcome of a specific market/selection has already been pre-determined. If the event is not completed within 24 hours and/or not completed at all, but the governing body declares a winner, wagers will still remain voided unless pre-determined.
• In the event that a game does not begin on the scheduled start date and is postponed (using time-zone of the original scheduled venue), all wagers will be void.
• Should a game’s scheduled venue be changed, all wagers placed prior to the notification of the change will be void.
• The void rule applies for all markets where a draw/tie price is not offered.
• Overtime counts for all markets unless otherwise stated.
• For overtime specific markets (e.g. markets specific to just the overtime period), unless otherwise stated markets will be settled of the 1st overtime period only.
• All outright markets, unless otherwise stated, include playoffs. Any official governing organization tie-breaks where applicable are included in settlement.
• Where a season or tournament is unexpectedly shortened all futures markets/bets will be settled in accordance with the official ruling of the relevant governing body so long as the ruling is made within 90 days after the scheduled completion date; or unless the outcome has unequivocally been determined prior to the interruption of the season.

Overview of Specific Markets - NBA, NCAA and WNBA Basketball

• Quarter/Half Markets: The entire period of play must be completed for bets to stand.
• Quarter Markets: Resulted on score for relevant quarter - overtime does not count.
• Second Half Markets: Resulted on score for second half, inclusive of overtime.
• Double Result (Halftime/Fulltime): Resulted on score at half time and full time.
• Home team/Away team total points: Resulted on score at the end of the game, inclusive of overtime.
• ‘Race To x’ Markets: Resulted on the team to achieve the specified total in the specified period first. A ‘neither’ selection is offered.
• Highest Scoring Half: For settlement purposes, the second half is inclusive of overtime.
• Series Markets: A series must come to a natural conclusion for bets to stand.
• Last point market: is settled on last point in regulation time.
• Margin Markets: Resulted on final score, inclusive of overtime.
• Tri-Bet Markets: Resulted on final score, inclusive of overtime.
• Team Threes Made: Resulted on how many 3 Point Field Goals each team makes. This market does not include overtime.
• In-Season Tournament Markets: All Group Winner markets are resulted upon the team that wins their group and advances to the Knockout Round - Wild Card Teams are not included. The In-Season Tournament Winner will be resulted on which team received the NBA Cup Trophy.
• Regular Season Wins (NBA): For wagers to be action, teams must complete 80 scheduled regular season games. As per the NBA’s In-Season Tournament rules, all Group Play and Knockout Round games played within the In-Season Tournament will contribute to a teams’ regular season Win/Loss record, however, the In-Season Tournament Final (Championship Match) outcome will be excluded from the participating teams’ regular season Win/Loss record. Should a team not complete the required number of games, all wagers on regular season win markets will be void, unless the result is already pre-determined, prior to an interruption or shortening of the season.
• Regular Season Wins (NCAA): A team must play at least 90% of originally scheduled games for bets to stand, unless the outcome has previously been unequivocally determined. Pre-season, exhibition, and post-season games (including conference and post-season tournaments) do not count towards a team's regular season win total.
• Conference Regular Season Winner (NCAA): If an unquoted selection wins, all bets will be void. If multiple teams are deemed co-regular season champions, bets will be settled based on the team who is awarded the top conference seed.
• Conference Regular Season Exact Finishing Order (NCAA): If teams are tied in the regular season standings, bets will be settled based on conference tournament seeding.
• Team Match Bets: Resulted on team with the most season wins or which has advanced furthest for tournament/playoff team match bets.
• Stage of Elimination (NCAA): For the tournament-winning team, all bets will be void.
• Team to Advance Furthest (NCAA)- Match Bets: If both teams are eliminated in the same round, bets on the market will be void.
• Tournament Head-to-Head Wins (NCAA): If both selections accrue the same number of wins, bets on the market will be void.
• Team to Go Undefeated (NCAA): Unless otherwise stated, this refers to the entire regular season and all post-season play.
• Team Seeding (NCAA): For over/under markets on team seeding, under refers to a seed that is less than the designated number and over refers to a seed greater than that designated number. For example, for a market of “Team A’s tournament seed over/under 3.5”, if Team A receives a 2 seed, then under bets would win and over bets lose.
• Team to Make the NCAA Tournament: Teams must be included in the final 68-team field to be deemed winners.
• Wire to Wire: These markets are offered for a given team to be leading a game at the end of each quarter of that game. Provided the selected team leads at the end of each quarter, the relevant bet will be successful even if, during any such quarter, the selected team temporarily ceases to lead the scoring. ‘Any Other Selection’ will be deemed the winner if either team does not lead the game after each quarter.
• To Make/Miss the Playoffs (NBA): Settled on the teams that make the final top 8 in each Conference, after the conclusion of any play-in games or tiebreakers. If the number of teams that make the postseason changes during the season, bets will be void.
• To Make the Play-In Tournament (NBA): Settled on the teams that have the 7th through 10th highest winning percentages in each conference and take part in the NBA’s official Play-In Tournament. As per the NBA’s In-Season Tournament rules, all Group Play and Knockout Round games played within the In-Season Tournament will contribute to a teams’ regular season Win/Loss record, however, the In-Season Tournament Final (Championship match) outcome will be excluded from the participating teams’ regular season Win/Loss record. Should the playoff format be changed during the season, all bets will be void.
• Most Regular Season Wins/Losses (NBA): For wagers to be action, all teams must complete 80 scheduled regular season games. As per the NBA’s In-Season Tournament rules, all Group Play and Knockout Round games played within the In-Season Tournament will contribute to a teams’ regular season Win/Loss record, however, the In-Season Tournament Final (Championship match) outcome will be excluded from the participating teams’ regular season Win/Loss record. Should a team not complete the required number of games, all wagers on regular season win markets will be void. In the case two or more teams tie, dead heat rules apply.
• NBA Regular Season Specials: Should a team not complete the required number of games to constitute a full and official season as defined by the NBA, all outstanding wagers on regular season special markets will be void.
• Draft Props: The official NBA Draft website will be used for settlement purposes (a player’s position, school, height, etc.).
• Draft Position: For over/under type markets, if a player is undrafted, the “Over” will be deemed the winner.
• Number X Overall Pick: Bets will be settled according to the official draft position as the pick is made, irrespective of any trades made following the announcement of the pick.
• 2 or More 3 Point FGs Made in the First 3 Minutes (“3x2”): All markers referring to a set time period (such as “First 3 minutes”) will be settled according to the official nba.com/ncaa.com play-by-play data to determine the timing of any relevant events or recorded statistics.
• Player Award Markets: All bets are action unless the award is not assigned to any individual. Dead Heat Rules Apply.
• NCAA Player Futures (e.g. John R. Wooden Award Winner, Tournament Most Outstanding Player): All bets are action.

Player Props - NBA, NCAA and WNBA Basketball

• First Basket Markets: Resulted on the first score of the game, inclusive of free throws, as per official NBA/NCAA box score. Should a player listed not start the game, all bets on the player selected will be void (otherwise betting is all-in). In the event of a tie at the end of the first quarter, First Basket / First Quarter Double bets are resulted as a loss.
• The First Team Basket: Scorer will be resulted on the first scorer from each team; Should a player listed not start the game, all bets on the player selected will be void (otherwise betting is all-in).
• Player Performance Markets: All bets stand once a player takes the court, irrespective of game time played. All totals are inclusive of overtime. Should a player not take any part, all bets will be void.
• Player Performance Markets offered in-play/during half time: Bets on this market refer to the quoted statistic recorded by a named player for the whole game (including overtime). If a player doesn’t see any game time, then all bets on that player will be void.
• Player Related Quick Duration Markets: These markets include Floor General, Method of Basket, Quarter Props and quarter Prop Parlay. A Player must take the court (for any duration of time) within the specified interval for bets to have action. For Floor General, both players must take the court (for any duration of time) within the specified interval for bets to have action.
• Player Match Bets: Bets on this market refer to the quoted statistic recorded by a named player by the end of a match (including overtime). If one of the players doesn’t see any game time, then all bets on that market will be void.
• Method of First Basket: All Rules relating to “First Basket Markets” apply. The market will be settled according to the official nba.com/ncaa.com play by play description.
• Method of Basket Markets: “Player X - Other” selections encompass all two-point field goals which are not designated as a layup or dunk in official NBA play-by-play data.
• Slam Dunk Markets: Any market referencing slam dunks will be settled according to nba.com/ncaa.com play-by-play classification of all scoring plays.
• Game Props: Player most points/rebounds/assists/etc.: Bets placed on this market will be settled on the player who makes the most of the relevant quoted statistic. In case two or more players tie, dead heat rules apply. Should a player listed not take part in the game, all bets on the player selected will be void. Otherwise, all bets are action. Bets are All-In, meaning should a player not listed in the market make the most of the relevant quoted statistic, then all bets shall be settled as a loss.
• Daily Props: Player most points/rebounds/assists/etc.: Bets placed on this market will be settled on the player who makes the most of the relevant quoted statistic. In case two or more players tie, dead heat rules apply. All games scheduled for that date must be completed for bets to stand. Should a player listed not take part in the game, all bets on the player selected will be void otherwise all bets are action. Bets will be settled on the basis of listed players only.
• Daily Team Props: Highest/Lowest Scoring Team or Game: All games scheduled for that date must be completed for bets to stand. In case two or more teams tie, dead heat rules apply.
• Playoff Series Props: Player most points/rebounds/assists/etc., player match bets and player props: A series must come to a natural conclusion for bets to stand. Overtime counts for settlement purposes. In case two or more players tie, dead heat rules apply. A Player listed must take part in at least one game in the series for bets to be action. If a player does not take the court during at least one game, all bets on the player selected will be void (and in the case of a 2-player matchbet, all bets on the market will be void)
• Playoff Series Props: Player most points/rebounds/assists/etc., player match bets and player props: A series must come to a natural conclusion for bets to stand. Overtime counts for settlement purposes. In case two or more players tie, dead heat rules apply. A Player listed must take part in at least one game in the series for bets to be action. If a player does not take the court during at least one game, all bets on the player selected will be void (and in the case of a 2-player matchbet, all bets on the market will be void).
• Regular Season Props (NBA): Player most points/rebounds/assists/etc. or highest points/rebounds/assists/etc. average: Bets placed on this market will be settled on the player who makes the most of the relevant quoted statistic at the end of the competition excluding statistics recorded in the In-Season Tournament Final (Championship Game) or the postseason playoffs, unless otherwise stated. In case two or more players tie, dead heat rules apply. For NBA Regular Season League Leaders, a player must play 70% of their team’s games (58 in 82-game season) or remained the leader, had a player participated in the required number of games with their category total at seasons end, as defined by the NBA (i.e., The league leader may be settled as the player who would have led the league in category had he played the required category total). For example, if Player A played 56 games and scored 1,590 points (1590/56 = 28.4 ppg.), Player A could still qualify for the league lead if his average with the same point total (1,590) over 58 games was higher than any other player (1590/58 = 27.4 ppg.). Bets are All-In.

Sport Rules - Euro/Other Basketball

• The rules in this section (and sections 5.4, 5.5 and 5.6) apply to FIBA tournaments, European, Australian, Central American, South American, African, Asian Basketball Competitions, as well as The Basketball Tournament, Big3 Basketball & any other basketball.
• Bets will be settled according to the result declared by the relevant governing body at the end of the match (including any overtime played). In the absence of consistent, independent evidence or in the presence of significant conflicting evidence, bets will be settled based on our own statistics.
• Should play be suspended in any game and subsequently not fully completed within 48 hours of the original scheduled start time, all wagers will be void unless the outcome of a specific market or selection has already been pre-determined. If the event is not completed within 48 hours and/or not completed at all, but the governing body declares a winner, wagers will still remain voided unless pre-determined.
• Should a match be abandoned, all markets will be voided unless the outcome has been unequivocally decided.
• In the event that a game does not begin on the scheduled start date and is postponed (using time-zone of the original scheduled venue) all wagers will be void unless the game is played within 48 hours.
• In the event that a match finishes in a tie and overtime isn’t played, Match betting and Normal Time Match Betting (2 way) will be settled as void. Will there be Overtime markets will be settled as Yes.
• In the event that a match does not finish in a tie, but overtime is played for qualification purposes, such as in a two leg (home-and-away) total points series, the markets will be settled according to Section 5.5 ‘Overview of Specific Markets - Euro/Other Basketball’, as stated, below.
• All outright markets, unless otherwise stated, include playoffs and any official governing organization tie-breaks where applicable.

Overview of Specific Markets - Euro/Other Basketball

• Match betting, total points, point spread (handicap) betting & odd/even: Resulted on score at the end of the game, inclusive of overtime.
• Quarter/Half Markets: The entire period/half of play must be completed for bets to stand.
• Second Half Markets: Resulted on score for second half - overtime does not count.
• Highest Scoring Markets: These markets are settled at the conclusion of regular time. Overtime does not count. In case two or more quarters/halves have an equal highest score, it is considered a Dead-heat, and the market will declare the tied quarters/halves as winners. If the match is abandoned before the conclusion of regular time, the market will be deemed void.
• Will there be overtime?: Market will be settled as yes if, at the end of regular time, the match finishes in a draw, regardless of whether or not overtime is played.
• Double Result (Halftime/Fulltime): Resulted on score at half time and full time, (exclusive of overtime).
• Race To x’ Markets: Resulted on the team to achieve the specified total in the specified period first. A ‘neither’ selection is offered. Overtime doesn’t count for these markets.
• Last point market: Is settled on last point at the end of the game, inclusive of overtime.

Player Props - Euro/Other Basketball

• First Basket Markets: Resulted on the first score of the game, inclusive of free throws, as per official box score provided by the relevant leagues governing body. Should a player listed not start the game, all bets on the player selected will be void (otherwise betting is all-in). In the event of a tie at the end of the first quarter, First Basket / First Quarter Double bets are resulted as a loss.
• The First Team Basket: Scorer will be resulted on the first scorer from each team; should a player listed not start the game, all bets on the player selected will be void (otherwise betting is all-in). Bets will result by the play by play information provided from the relevant leagues governing body.
• Player Performance Markets: All bets stand once a player takes the court, irrespective of game time played. All totals are inclusive of overtime. If one of the players doesn’t see any game time, then all bets on that market will be void.
• Player Performance Markets offered in-play/during half time: Bets on this market refer to the quoted statistic recorded by a named player for the whole match (including overtime). If a player doesn’t see any game time, then all bets on that player will be void.
• Player index rating markets: Bets will be settled according to the result declared by the relevant governing body at the end of the match (including any overtime played). http://www.euroleague.net/, http://www.fiba.com/, http://www.fibaeurope.com/, http://www.acb.com/. If one of the players doesn’t see any game time, then all bets on that market will be void.
• Team: Player most points/rebounds/assists: Bets placed on this market will be settled on the player who makes the most of the relevant quoted statistic. In case two or more players tie dead heat rules apply.
• Competition: Player most points/rebounds/assists: Bets placed on this market will be settled on the player who makes the most of the relevant quoted statistic at the end of the competition excluding playoffs, unless otherwise stated. In case two or more players tie dead heat rules apply. Rule 4 deduction won’t apply.
• Series Points, Rebounds, Assists, Steals and Blocks match bet: A series must come to a natural conclusion for bets to stand. Overtime counts for settlement purposes. In case two or more players tie, dead heat rules apply.

Boxing and Mixed Martial Arts

• Results will be based on the official result at ringside with the exception of a technical draw (the rules for which are set out in the “Technical Decision / Draw” section below).
• Results are not official for betting purposes until verified by officials at the fighting venue. If for some reason official verification does not occur at the fighting venue, then (and only then) will reference will be made to www.boxrec.com for settlement purposes. Should an official or unofficial sanctioning body overturn a fight decision based on an appeal, suspension, lawsuit, drug testing result or any other fighter sanction, this will not be recognized for betting purposes.
• Should a contest be postponed, bets will stand if the rescheduled event occurs within 48 hours. Otherwise, all bets in relation to the contest will be void.
• In the event of a 'no contest' being declared, all bets will be made void, with the exception of selections where the outcome has already been unequivocally determined.
• Should there be a substitution for one of the boxers, bets on the original contest will be void, except in a tournament based competition where the equivalent of a Tattersalls Rule 4 deduction may apply (see Prize Fighter below)
• Should there be a change in the manner in which a contest is advertised (e.g. a contest changes from a title fight to a non-title fight) bets will stand.
• Match Betting markets where no draw selection is offered will be made void if the match ends in a draw.
• In fights where the scheduled number of rounds changes, all bets will stand unless the result would be automatically determined by the change in the number of rounds (in which case, such bets will be voided). For example, if a fight gets changed from a 12 to a 10 round fight, bets on rounds 11 and 12 will be void.
• All fights timed for December 31st are potential unconfirmed fights, if the fight doesn't take place by this date then all bets will be void.
• This market is defined as betting on the round/rounds in which the result of the fight will be determined, it is not betting on named fighters to win the round/rounds on the judge’s scorecards.
• If a boxer withdraws during the period between rounds, the fight is deemed to have ended in the previous round.
• The bell will signal the end of a round and the bell being sounded again will signal the start of the next round. Therefore, a boxer who withdraws after the bell is sounded to signal the start of the next round will be deemed to have lost in that round, even if there's no competitive action in that round.
• Where a boxer fails to answer the bell for the next round, his opponent shall be deemed to have won the contest in the previous round.
• Subject to the following rule, should, for any reason, the scheduled number of rounds be changed before the commencement of the contest, all round by round bets will stand.
• Notwithstanding the above rule, should, for any reason, the scheduled number of rounds be decreased before the commencement of the contest, all round by round bets on the dropped rounds will be void. Bets on all the remaining rounds will stand.
• Where a contest finishes before the completion of the scheduled number of rounds and, for any reason, the winner is decided by the judges' scorecards (technical decision/technical draw) then all round bets will be deemed losers.
• If the contest goes to the scorecards, then all round bets will be deemed losers.
• Where a contest finishes before the scheduled number of rounds due to an accidental injury and the winner is not determined by the judges’ scorecards, all bets will be void.
• For “Total Rounds” settlement purposes, 1 minute and 30 seconds will represent half a round. For example, for a bet on “Over 10.5 rounds” to be a winner, the fight must last beyond 1 minute and 30 seconds in round 11. If the number of rounds for a fight is changed after this market has been set then all bets on this market will be void.
• For “Will the Fight Go the Distance” (or similarly titled) markets, should the scheduled number of rounds change, this market will be made void. In the event of a technical decision, for settlement purposes, the fight will have been deemed NOT to have gone the distance (i.e. the scheduled number of rounds).
• A knockout (KO) occurs when the boxer does not stand up after a ten count. Technical knockouts (TKO) occur when a boxer is knocked down three times within the same round and the fight is stopped or where the referee steps in to stop the fight when it is decided that a fighter cannot safely continue. If a fighter fails to answer a bell for the next round then this will also be deemed a TKO. For betting purposes, KO/TKO options also include disqualification and retirement.
• If a fight is scheduled for more than four rounds and, after four rounds, an accidental foul occurs which causes an injury (further to which the referee stops the fight), the fight will be deemed to have resulted in a technical decision in favor of the boxer who is ahead on the scorecards at the time the fight is stopped (and all markets on the fight will stand).
• If the accidental injury / technical decision occurs during the first 4 rounds, all bets will be made void UNLESS the result of the relevant market has already been unequivocally determined or if the judges’ scorecards are used to determine an official winner at ringside.
• If an intentional foul causes an injury and the injury results in the fight being stopped in a later round: (i) the injured boxer will be deemed to have won by technical decision if he is ahead on the scorecards and (ii) the fight will result in a 'technical draw' if the injured boxer is behind or even on the score cards (and, for settlement purposes, the result of the fight will be deemed to be a draw).
• For betting purposes, betting on rounds or a group of rounds is for a fighter to win by KO, TKO, disqualification or due to the other fighter retiring during that round or group of rounds. In the event of a technical decision before the end of the fight, all round bets will be deemed to be losers.
• For settlement purposes, a knockdown is defined as a fighter being KO'd or receiving a mandatory eight count (anything deemed a slip by the referee will not count).
• Match bets will be settled on the result announced in the ring. If any result is announced incorrectly at ringside but is subsequently corrected then bets will be settled based on the corrected winner.
• Outright bets will be settled based on the winning boxer who lifts the trophy. If a substitute is introduced during the tournament, all outright bets will stand and an outright price will be quoted for the new boxer. All outright bets on boxers who withdraw during the tournament due to injury or cuts (having fought on the card) will be deemed to be losing bets.
• Outright bets will be void on any named boxer who does not start the tournament. This rule does not apply to the reserve fighters.
• “Either reserve” (or similar) may be listed as a selection for any Prizefighter tournaments. These selections are priced on a compete or not basis and, accordingly, all bets on these selections will stand whether or not a reserve fighter competes.
• The equivalent of a Tattersall’s rule 4 deduction may be applied to any outright bet where a named fighter is withdrawn before the start of the tournament (and an additional contender added).
• All Markets below will be resulted against data received from CompuBox at the point of settlement.
• Total Punches Thrown
• Total Punches Landed
• Total Jabs Thrown
• Total Jabs Landed
• Total Power Punches Thrown
• Total Power Punches Landed
• Total Body Punches Landed
• Most Punches Thrown
• Most Punches Landed
• Most Power Punches Landed
• Most Jabs Landed
• Most Body Punches Landed
• Any other markets/selections composed of punches, jabs or power punches.
• In the event of a tie on a market where a draw selection is not offered, bets will be void.
• In the event of a tie on a leg within a selection (e.g. Most Punches, Jabs & Power Punches & both fighters throw x Jabs), bets on that selection will be settled as losers.
• Thrown Punches: A Thrown Punch is any punch attempt at the scoring area of an opponent. Scoring area consists of the head and torso.
• Jab: Straight punch with the fighter’s lead hand.
• Power Punch: Any non-jab punch such as uppercuts, crosses and hooks.
• Landed Punches - A Landed Punch is a punch that lands inside the scoring area. A landed punch can be a deflected punch as well as a direct hit, providing that ultimately it connects to the scoring area.
• Head/Body Punch Landed: Jabs and Power Punches categorized based on where in the scoring area the punch landed.

Mixed Martial Arts

• Unless otherwise stated below, bets will be settled on the official result announced in the octagon. Subsequent appeals/amendments do not affect settlement (unless the amendment was made due to human error when announcing the result).
• In the event of a 'no contest' being declared, all bets will be made void, except for selections where the outcome has already been unequivocally determined.
• Should there be a substitution for one of the fighters, bets on the original contest will be void.
• If a fight is changed from 3 rounds to 5 rounds or from 5 rounds to 3 rounds, Match Betting bets will stand but all other markets will be voided.
• All fights timed for December 31st are potential unconfirmed fights, and if the fight doesn't take place by this date then all bets will be void.
• Unless otherwise specified, a Decision victory does not count towards a winning selection on bets including ‘Round 3’ (3 Round Fight) or ‘Round 5’ (5 Round Fight).
• In relation to UFC, markets based on a given fighter or the fight to achieve a certain statistic, including but not limited to: (i) a given fighter to achieve a certain number of significant strikes, (ii) a given fighter to achieve a certain number of submission attempts (iii) a given fighter to achieve a certain number of knockdowns/takedowns; all bets will be settled based upon data from UFCstats.com.
• Prices are offered for each fighter to win the fight and, in the event of a draw, all bets will be void and stakes returned (for these purposes, draws will include fights which end in a 'majority draw').
• referee stoppage while either fighter is, or both fighters are, standing;
• referee stoppage while either fighter is, or both fighters are, on the canvas;
• stoppage by doctor;
• stoppage by a fighter’s corner/team; and
• a fighter retires due to injury.
• referee stoppage due to tap-out;
• referee stoppage due to technical submission; and
• a fighter’s verbal submission (including a verbal submission which is made due to strikes).
• For the purposes of this market, a win by points includes unanimous decision, technical decision, majority decision and split decision
• For the purposes of this market “Draw” includes majority Draw
• In the event of a disqualification or a ‘no contest’ being declared on the night, this market will be void, regardless of any amendments to the result thereafter.
• For exact method of victory markets: you are wagering on which fighter and the exact way the fighter will win. (e.g., Fighter A to Win by TKO/KO via Kick, Fighter A to Win by Submission via Rear Naked Choke). This will be settled according to UFCstats.com, this will not be settled based off what the announcer says in the Octagon.
• If a fighter withdraws in the period between rounds, the fight will be deemed to have ended in the previous round for the purpose of “Round Betting” settlement.
• For “Total Rounds” settlement purposes, 2 minutes and 30 seconds will represent half a round (if the round lasts for 5 minutes). For example, for a bet on “Over 1.5 rounds” to be a winner, the fight must last beyond 2 minutes and 30 seconds in round 2. If the number of rounds in a fight is changed after “Total Rounds” markets have been set, then all bets on these markets will be void.
• Should the scheduled number of rounds be changed before the fight, all “Round Betting“ bets will be made void.
• Dead Heat rules will apply if three or more of the named fighters are awarded Performance of the Night or if two or more of the named fights are awarded Fight of the Night.
• This market is settled on the official times which are made available on www.ufc.com and the winner shall be settled according to whichever fight finishes in the least amount of time.
• Our dead heat rules apply if two fights finish after the same amount of time.
• Any fighter who wins before the fight goes its scheduled distance is declared the winner. If the fight goes to a decision, then the cumulative scores of all the judges will be used to determine the winner. If the fight is declared a ‘no contest’, this market will be void.
• The winning selection will be determined based on the round in which the fight ends and the method of victory. Bets on this market will be deemed losing bets if the fight ends in a decision.
• Referee must signal the start of the specified round in order for winning settlement of ‘Yes’ selection.
• Market is settled on whether or not all scheduled rounds in the fight will be completed. If the fight is stopped before the end of the last scheduled round and a Technical Decision is declared, the “no” selection will be the winning selection and bets on the “yes” selection will be losses.
• The 1st minute of a round is from 00:00 to 00:59;
• The 2nd minute of a round is from 01:00 to 01:59;
• The 3rd minute of a round is from 02:00 to 02:59;
• The 4th minute of a round is from 03:00 to 03:59; and
• The 5th minute of a round is from 04:00 to 05:00.
• The first 30 seconds of a round are from 00:00 to 00:29 and the last 30 seconds of a round from 04:30-05:00.
• If the fighter retires in the corner between rounds the last minute of the previous round will be paid as a winner.
• For the Gone in 60 Seconds market, you are wagering on whether the fight will end in the first 59 seconds of Round 1. The official time supplied by the governing body will be used to settle this market.
• For Knockdown and Takedown markets, all wagers will be settled based upon data from UFCstats.com
• If a match is cancelled before any play has taken place, then all bets will be void, unless the match is replayed within 48 hours of its advertised start time (in which case the bets will stand).
• Or, if there is an official reserve day in place for the match, then all bets will stand and will be resulted based on the events that transpire (including as continued or commenced on the reserve day if needed) in accordance with our relevant rules for all respective markets.
• If a match venue is changed then bets already placed will stand providing the home team is still designated as such. If the home and away team for a listed match are reversed then bets placed based on the original listing will be void.
• All tournament and match markets will be settled on the basis of the official tournament results/match scorecards which are included on the ICC’s official website. If there is no result available, then the website www.cricinfo.com will be used for settlement purposes.
• A batsman that retires from an innings will not be considered as a wicket for settlement purposes.
• The term "innings reaching its natural conclusion" refers to an innings which has not been closed due to external factors such as rain or bad light. A team being bowled out or declaring is considered to constitute the natural conclusion of an innings.
• For all markets, in any instance where the minimum required overs has not been reached but the innings has reached its natural conclusion, bets will stand.
• The term First Class matches refers to a match of three or more days duration between two sides of eleven players - this includes Test Matches.
• When the full number of scheduled matches is not played then we reserve the right to void any speciality markets which relate to the series as a whole. If a series for which we did not offer a price for the draw ends in a draw, then bets on the series result will be void.
• E.g., India to Score 'X' Runs
• This market is separate to team total runs and will be settled on the total runs scored by the respective team regardless of any reduction in overs.
• In matches where we offer betting on the Team Total Runs for both teams then all bets placed on the second innings runs will stand regardless of the score achieved by the side batting first.
• All in play or not (i.e., if a player does not take part in the series, bets placed on that player will stand).
• If two or more players score the same number of runs, then dead heat rules will apply.
• All in play or not (i.e., if a player does not take part in the series/tournament, bets placed on that player will stand).
• If two or more players take the same number of wickets, dead heat rules will apply.
• Description: How many runs will the named batter score?
• Rules: If the batter finishes the innings not out at the end of an innings, their score will be the final result. If a batter does not bat, the bet will be void.
• If a batter retires hurt, but returns later, the total runs scored by that batter in the innings will count. If the batter does not return later, the final result will be as it stood when the batter retired.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in either innings due to external factors, including bad weather, unless settlement has been determined, or goes on to be determined. Result will be considered determined if the line at which the bet was placed is passed, or the batter is dismissed.
• In drawn First Class matches, bets will be void if fewer than 200 overs are bowled, unless settlement of the bet has already been determined.
• For pre-match bets, only the batter’s first innings will count.
• Runs scored in a super over do not count.
• This market will be settled on the outcome of the first completed delivery, excluding any deliveries declared as dead ball.
• In limited overs cricket this market will be resulted on the first ball of the match regardless of any reductions in overs providing it is bowled.
• Description: How many runs will the batting team have scored when the next wicket falls?
• Rules: If the partnership is ended by the end of an innings, bets will settle at the final score.
• For settlement purposes, a batter retiring hurt does not count as a wicket.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in either innings due to external factors, unless settlement has already been determined, or goes on to be determined. Result will be considered determined if the line at which the bet was placed is passed, or the wicket in question falls.
• In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined.
• Markets will be settled regardless of whether the player reaches the crease providing they are included in the starting eleven.
• If not included in the eleven, then bets on these selections will be void.
• This refers to individual players to score 50 / 100 or more runs (as applicable).
• Bets on this market will be settled regardless of whether the player reaches the crease providing they are in the starting eleven.
• Any players not listed in the starting eleven will have all bets on them void.
• If the match is tied and goes to a super over, this market will be settled as a tie. If either team's innings in a limited overs match is reduced by more than 10% due to external factors, then bets on this market will be void.
• Bets on this market will stand regardless of whether the player reaches the crease, as long as they are included in the starting eleven. Bets places on any player not named in the starting eleven are void. For the avoidance of doubt, a player running six does not count for this market.
• This market will be settled if, during a match, a player hits a "six" and also takes a wicket. Players named in the starting eleven that do not bat/bowl are deemed to have taken part and bets on any such players will be settled as losing bets.
• Bets placed on any player who is not named in the starting eleven will be void.
• Should the innings be shortened for any reason other than it reaching its natural conclusion then all unequivocally decided bets will be settled while all others shall be void.
• If either team's innings in a limited overs match is reduced due to external factors, then bets on this market will be void.
• For Limited overs matches, should the winner already be unequivocally decided even if the innings were to be played out to its natural conclusion, the market will be settled as normal despite any reduction.
• This market will be settled based on the total number of runs scored at the fall of the fourth wicket.
• If the fourth wicket doesn't fall, the market will be settled based on whatever score the team has achieved at the end of the innings.
• In a 2-innings match (i.e., test match or county championship), the top team runscorer part of this market applies to the first innings only (unless otherwise stated).
• Test Matches: 50 overs
• County Championship: 50 overs
• 50 over match: 25 overs
• 40 over match: 20 overs
• 20 over match: 10 overs
• However, in all cases, bets will stand if the innings reaches its natural conclusion in fewer overs than the above requirement. Bets placed on any player not named in the starting eleven will be void.
• Players named in the starting eleven that do not bat are deemed to have taken part and bets on any such players will be settled as losing bets.
• For Limited overs matches - Should the winner already be unequivocally decided even if the innings were to be played out to its natural conclusion, the market will be settled as normal despite any reduction.
• In a 2-innings match (i.e., test match or county championship), this market applies to the first innings only (unless otherwise stated).
• All in play or not (i.e., if a player does not take part in the tournament, bets placed on that player will stand).
• This market will be settled based on whether there will be a result declared on this limited overs match or whether the match will be abandoned/declared a no result.
• For the avoidance of doubt, an official result declared other than that the match is abandoned or declared a no result will mean "yes" is the winning selection in this market.
• If the match is abandoned or declared a no result this will mean "no" is the winning selection in this market.
• Please be aware that this market will carry over onto any reserve day and will be settled on the official result of the match. If a match is postponed or abandoned for any reason other than weather (which may include but is not limited to: dangerous or unplayable wicket or outfield; pitch vandalism; strike or boycott; crowd protests/violence; floodlight failure; stadium damage; acts of terrorism; and acts of God), FanDuel Sportsbook reserves the right to void all bets on this market.
• This market is based on how many runs will be scored in the match across both teams innings combined.
• Extras and penalty runs will be included for settlement purposes.
• Twenty20 Matches - 16 overs.
• One Day Matches - 40 overs.
• This market will be settled on the direction of the first boundary that comes off the bat (given as runs to the batsman).
• This market includes both fours and sixes.
• For the settlement of specials market selections, a wicket will not be deemed to have occurred if a batsman retires from play.
• If any player who is part of a specials market selection does not take part in the relevant event, the whole bet will be void.
• Where we have made an obvious or manifest pricing or descriptive (i.e., wording) error in respect of a specials selection, we reserve the right to cancel and subsequently to offer the bet at the correct price or pursuant to a different description.
• For specials bets relating to series betting, when the full number of scheduled matches within the relevant series is not played for any reason, we reserve the right to void any markets which relate to the series as a whole.
• If a team's innings in a test match or county championship match lasts less than sixty overs for any "external" reason (i.e., other than in circumstances where the innings has reached its natural conclusion) then specials bets relating to that team's innings will be void.
• For limited overs matches, specials bets involving the number of runs to be scored will be settled based on the final number of runs achieved by each side (including any extras or penalty runs awarded during the match). Should there be a reduction in the scheduled number of overs to take place during an innings, any Specials Markets bets in respect of the match will stand if the reduction amounts to no more than 20% of the total number of overs that were scheduled in respect of that innings at the time the Specials Markets bet was placed. Should the reduction in overs be greater than 20% then all Specials Markets bets in respect of that match shall be void (irrespective of the total number of runs achieved by either team) unless the bet in question had been unequivocally determined at the time of the curtailed completion of the match (i.e. such that, at the time of the curtailed completion, the outcome of the bet could not have been different had the additional scheduled overs been played).
• Description: Who will win the match?
• All match betting will be settled in accordance with official competition rules. In matches affected by adverse weather, bets will be settled according to the official result.
• If there is no official result, all bets will be void.
• In the case of a tie, if the official competition rules do not determine a winner, then dead­ heat rules will apply. In competitions where a bowl off or super over determines a winner, bets will be settled on the official result.
• In First Class Matches, if the official result is a tie, bets will be settled as a dead-heat between both teams. Bets on the draw will be settled as losers.
• If a match is abandoned due to external factors, then bets will be void unless a winner is declared based on the official competition rules.
• If a match is cancelled, then all bets will be void if it is not replayed or restarted within 48 hours of its advertised start time.
• Description: Will the match result be either of the three options given?
• A tie will be settled as a dead heat.
• All match betting will be settled in accordance with official competition rules. If there is no official result, all bets will be void.
• Description: Who will win the match given that all bets will be void if the match is a draw?
• All match betting will be settled in accordance with official competition rules.
• Description: Will the match be tied?
• All bets will be settled according to the official result.
• If the match is abandoned or there is no official result, all bets will be void.
• For First Class matches a tie is when the side batting second is bowled out for a second time with scores level.
• Description: Which team will hit the most fours?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80%of the overs scheduled to be bowled in either innings due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction.
• Only fours scored from the bat (off any delivery- legal or not) will count towards the total fours. Overthrows, all run fours and extras do not count.
• Fours scored in a super over do not count.
• In First Class games, only first innings fours will count.
• Description: Which team will hit the most sixes?
• In drawn First Class matches, bets will be void if fewer than 200overs have been bowled, unless settlement of the bet has already been determined.
• Only sixes scored from the bat (off any delivery- legal or not) will count towards the total sixes. Overthrows and extras do not count. Sixes scored in a super over do not count.
• In First Class games, only first innings sixes will count.
• Description: Which team will have the most extras added to their batting score?
• All wide deliveries, no balls, byes, leg byes and penalty runs in the match count towards the final result. If there are runs off the bat as well as extras from the same delivery, the runs off the bat do not count towards the final total.
• Extras in a super over do not count.
• In First Class games, only first innings extras will count.
• Description: Which team will concede the most run outs in the match?
• A run out "conceded" means that a member of that team will be run out while batting.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80%of the scheduled overs in either innings due to external factors, including bad weather, unless settlement has already been determined before the reduction.
• Run Outs in a super over do not count.
• In First Class games, only first innings run outs will count.
• Description: Which team will score the most runs before losing their first wicket?
• If the batting team reaches the end of their allotted overs, reaches their target or declares before the first wicket falls, the result will be the total amassed.
• In limited overs matches, bets will be void if the innings has been reduced due to external factors, including bad weather, unless settlement has already been determined before the reduction.
• In First Class matches the market refers only to each team's first innings.
• Description: How many fours will be in hit in the match?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80%of the overs scheduled to be bowled due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction. In drawn First Class matches, bets will be void if fewer than 200overs have been bowled, unless settlement of the bet has already been determined.
• Description: How many sixes will be hit in the match?
• Only sixes scored from the bat (off any delivery- legal or not) will count towards the total fours. Overthrows and extras do not count.
• Sixes scored in a super over do not count.
• Description: How many extras will be scored in the match?
• Description: How many run outs will there be in the match?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80%of the scheduled overs in either innings due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction. In drawn First Class matches, bets will be void if fewer than 200overs have been bowled, unless settlement of the bet has already been determined.
• Run outs in a super over do not count.
• Description: Which batter will score the most runs in the match?
• The result of this market is determined on the batter with the highest individual score in the match.
• In limited overs matches, bets will be void if it has not been possible to complete at least 50% of the overs scheduled to be bowled in either innings at the time the bet was placed due to external factors, including bad weather.
• Top batters bets for First Class matches apply only to the first innings of each team, and will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined. If a player was named at the toss, but later is removed as a concussion sub, that player will still be counted, as will the replacement player.
• If a batter does not bat, but was named in the starting XI, bets on that batter will stand. If a batter is substituted in after the in-play market has been offered, the original market will be removed and settled as normal even if the substitute scores the highest individual score. A new market with updated selections may be offered.
• When two or more players score the same number of runs, dead-heat rules will apply.
• Description: Which bowler will take the most wickets in the match?
• The result of this market is determined on the bowler with the most wickets in the match.
• In limited overs matches, bets will be void if it has not been possible to complete at least
• 50% of the overs scheduled to be bowled in either innings at the time the bet was placed due to external factors, including bad weather.
• Top bowler bets for First Class matches apply only to the first innings of each team, and will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined. If a player was named at the toss, but later is removed as a concussion sub, that player will still be counted, as will the replacement player.
• If a bowler does not bowl, but was named in the starting XI, bets on that bowler will stand.
• If a bowler is substituted in after the in-play market has been offered, the original market will be removed and settled as normal even if the substitute takes the most wickets. A new market with updated selections may be offered.
• If two or more bowlers have taken the same number of wickets, the bowler who has conceded the fewest runs will be the winner. If there are two or more bowlers with the same wickets taken and runs conceded, dead heat rules will apply. Wickets taken in a super over don't count.
• If no bowlers take a wicket in an innings then all bets will be void.
• Description: Who will be named player of the match?
• Bets will be settled on the officially declared player of the match. Dead-heat rules apply.
• If no player of the match is officially declared, then all bets will be void.
• All players who played in the match will be settled, including substitutes.
• Description: How many runs will be scored off the specified delivery?
• The result will be determined by the number of runs added to the team total, off the specified delivery.
• For settlement purposes, all illegal balls count as deliveries. For example, if on over starts with a wide, then the first delivery will be settled as 1 and, although there has not been a legal ball bowled, the next ball will be deemed as delivery 2 for that over.
• If a delivery leads to free hit or a free hit is to be re-bowled because of an illegal delivery, the runs scored off the additional delivery do not count.
• All runs, whether off the bat or not are included. For example, a wide with three extra runs token equates to 4 runs in total off that delivery.
• For the Hundred, an over will consist of 5 legal deliveries, so a full innings will be made up of 20 overs. For example, if there are no illegal deliveries, the 5th ball bowled in the innings will be displayed as "X runs off S'" delivery, 1st over" and the 6th ball bowled in the innings will be displayed as "X runs off 1st delivery, 2" over". If there is an illegal delivery in the first five balls bowled, the 6th ball bowled in the innings will be displayed as "X runs off 6th delivery, 1st over". All other rules remain the same as other formats.
• Description: Exactly how many runs will be scored off the specified delivery?
• As "Runs off Delivery".
• Description: How many runs will be scored in the specified over?
• The specified over must be completed for bets to stand unless settlement has already been determined. If an innings ends during an over then that over will be deemed to be complete unless the innings is ended due to external factors, including bad weather, in which case all bets will be void, unless settlement has already been determined.
• If the over does not commence for any reason, all bets will be void. Extras and penalty runs in the particular over count towards settlement.
• For the Hundred, an over will consist of 5 legal deliveries, so a full innings will be made up of 20 overs. All other rules remain the same as other formats.
• Description: Will there be a boundary scored in the specified over?
• Rules as "Runs in Over".
• Only boundaries scored from the bat (off any delivery- legal or not) will count as a boundary. Overthrows, all run fours and extras do not count as boundaries.
• Description: Will a wicket fall in the specified over?
• For settlement purposes, any wicket will count, including run outs. A batter retiring hurt does not count as a wicket. If a batter is timed out or retired out then the wicket is deemed to have taken place on the previous ball. Retired hurt does not count as a dismissal.
• The specified over must be completed for bets to stand unless settlement has already been determined. If an innings ends during an over then that over will be deemed to be complete unless the innings is ended due to external factors, including bad weather, in which case all bets will be void, unless settlement has already been determined.  
• If the over does not commence for any reason, all bets will be void. Extras and penalty runs in the particular over count towards settlement. 
• Description: Will the number of runs scored in the specified over be odd or even?
• Zero will be deemed to be an even number.
• Description: How many runs will be scored in the specified number of overs?
• If the specified number of overs are not complete the bet will be void, unless the team is all out, declares, reaches their target or settlement of the bet has already been determined.
• In limited overs matches, bets will be void if the total innings is reduced at any stage to less than 80% of the stated maximum overs at the time the bet was placed, unless settlement of the bet was already determined before the reduction.
• For the Hundred, an over will consist of 5 legal deliveries, so a full innings will be made up of 20 overs. All other rules remain the same as other limited overs formats.
• Description: How many wickets will fall in the specified number of overs?
• In limited overs matches, bets will be void if the total innings is reduced at any stage to less than 80% of the stated maximum overs at the time the bet was placed, unless settlement of the bet was already determined.
• For settlement purposes, if a batter is timed out or retired out then the wicket is deemed to have taken place on the previous ball. Retired hurt does not count as a dismissal.
• Description: How many runs will be scored in the specified session?
• The result is determined by the total number of runs scored in the specified session, regardless of which team has scored them.
• If fewer than 20 overs are bowled in a session, bets will be void unless settlement has already been determined.
• Description: How many runs will a team score in a specified innings?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to have been bowled at the time the bet was placed due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction. Bets placed on a future innings will remain valid regardless of the runs scored in any current or previous innings.
• In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined. Bets will also be void in drawn first class matches, if less than 60 overs have been bowled in an incomplete innings, unless settlement of the bet has already been determined. If a team declares, that innings will be considered complete for the purposes of settlement.
• Description: How many wickets will the batting team lose in the current innings?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to have been bowled at the time the bet was placed due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction.
• Retired hurt does not count as a dismissal.
• Description: How many fours will the batting team hit in their current innings?
• Rules as Most Fours.
• Description: How many sixes will the batting team hit in their current innings?
• Rules as Most Sixes.
• Description: How many extras will be added to the named team's batting innings?
• Rules as Most Extras.
• Description: How many run outs will be conceded in the innings?
• Rules same as Most Extras.
• Description: Will the total innings runs be odd or even?
• Rules: If the innings is abandoned, forfeited or there is no official result, all bets will be void.
• Description: Which batter will score the most runs for the named team?
• The result of this market is determined on the batter with the highest individual score in a team's innings.
• In limited overs matches, bets will be void if it has not been possible to complete at least 50%of the overs scheduled to have been bowled at the time the bet was placed due to external factors, including bad weather.
• When two or more players score the same number of runs, in the innings dead-heat rules will apply.
• Description: Which bowler will take the most wickets for the named team?
• Rules: The result of this market is determined on the bowler with the highest individual number of wickets in an individual innings.
• Top bowler bets for First Class matches apply only to the first innings of each team and will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined. If a player was named at the toss, but later is removed as a concussion sub, that player will still be counted, as will the replacement player.
• If a bowler does not bowl, but was named in the starting XI, bets on that bowler will stand. If a bowler is substituted in after the in-play market has been offered, the original market will be removed and settled as normal even if the substitute takes the most wickets. A new market with updated selections may be offered.
• Should no further wickets be taken in the innings then bets on this market will be void.
• For settlement purposes, a batsman retiring hurt/retiring out does not count as a wicket. In this instance bets will be settled on the next wicket to fall post this.
• Where ‘caught and bowled’ is not offered as a selection, the wicket will be resulted as ‘caught’.
• Description: Which batter in the current partnership will score the most runs in this innings?
• Rules: Bets will settle based on the official scores for the specified batters in the innings, as detailed in the "Batter Runs" section above.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in either innings due to external factors, including bad weather, after the bet is placed unless settlement has already been determined.
• Description: Which of the named players will score the most runs?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80%of the scheduled overs in either innings due to external factors, including bad weather, unless settlement has been determined.
• Both players must be named in the starting XI, or appear as a substitute. If either does not, then subsequently bats, all bets are still settled.
• Description: Which of the named players will take the most wickets?
• Rules: In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in either innings due to external factors, including bad weather, unless settlement has been determined.
• Both players must be named in the starting XI, or appear as a substitute. If either does not, then subsequently bowls, all bets are still settled.
• Wickets taken in a super over do not count.
• Description: Which batter will reach the specified number of runs first?
• All bets stand, regardless of any curtailment.
• If neither batter reaches the specified number of runs the markets will be settled as 'Neither'.
• Rules: In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to have been bowled in both innings at the time the bet was placed due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction.
• In drawn First Class matches, bets will be void if fewer than 100 overs have been bowled in either team’s first innings, unless settlement of the bet has already been determined. Only runs scored in the first innings count If a team declares that innings will be considered complete for the purposes of settlement.
• Description: Which team will score the most runs in the first over of their innings?
• The first over must be completed for bets to stand unless settlement has already been determined. If, during the first over, the innings is ended due to external factors, including bad weather, all bets will be void, unless settlement has already been determined before the reduction.
• In First Class matches the market refers only to each team's first innings. Extras and penalty runs in the particular over count towards settlement.
• Description: How many runs will be scored in the highest scoring over of the match?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to be bowled due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction. In drawn First Class matches, bets will be void if fewer than 200overs have been bowled, unless settlement of the bet has already been determined.
• All runs, including extras, count towards settlement. Super overs do not count.
• Description: How many runs will be scored off the highest scoring over of the current innings?
• Rules: The same as “Maximum Over in Match”.
• Description: Will the last ball of the innings be a boundary?
• In limited overs matches, bets will be void if there is any reduction in the number of overs scheduled to have been bowled at the time the bet was placed due to external factors, including bad weather.
• Description: How many runs exactly will the team batting in the final innings score?
• Bets will be settled according to the official result.
• Description: Which batter will be not out upon completion of the innings?
• Rules: If there are two or more batters who are not out upon completion of the innings, the winner for the purpose of settlement will be the last batter to face a delivery (legal or not).
• Players will not be deemed to have been not out if they were no longer at the crease having retired hurt or did not bat. If more than 11 players bat, the market will be void.
• In limited overs matches, bets will be void if, subsequent to placing the bet, the innings has been reduced in any way due to external factors, including bad weather.
• All players who played in the innings will be settled, including substitutes.
• Description: Which batter will be the next to be dismissed?
• If either batter retires hurt or the batters at the crease are different from those quoted, the bets placed on both batters will be declared void.
• If no more wickets fall, all bets will be void.
• Description: Which of the named players will score the most points in the player performance scoring system?
• Points are scored as follows: 1 point per run, 20points per wicket, 10 points per catch, 25 points per stumping.
• Both players must be named in the starting XI, or appear as a substitute. If either player does not, then subsequently bats or bowls, then all bets are still settled.
• Points scored in a super over do not count.
• Description: Which of the named wicket keepers score more points in the player performance scoring system?
• Points are scored as above (see All Rounder MatchBet).
• Both named players must start the match as a wicket keeper, or appear as a substitute, but if their playing role changes for any reason all bets will still be settled in accordance with scoring system above.
• The result will be determined by the number of runs added to the team total, off the specified delivery. If the free hit is re-bowled because of an illegal delivery, the runs scored off the second free hit do not count.
• Extras and penalty runs will count towards settlement.
• For example, if a wide is bowled on the free hit delivery specified, the result will be 1. Then another free hit market may be offered.
• Description: Which batter will hit the next six?
• If neither batter scores a six after the bet is offered, then the market will be settled as 'Neither'.
• Overthrows and extras do not count.
• Description: Which bowler will take the next wicket in this innings?
• If none of the named bowlers take a wicket the market will be settled as 'None of the above'.
• Run outs, timed out, retired out and any other method of dismissal not awarded to a particular bowler will be settled as 'None of the above'.
• Description: In which over of the named team's innings will the match be completed?
• All bets will be void if there is no official result.
• In limited overs matches, all bets will be void if, subsequent to placing the bet, the maximum overs possible are reduced in any way.
• Description: Will both of the named batters be dismissed in the specified method?
• Rules as "Either Batter Method of Dismissal".
• Description: How many runs will be scored off each of the specified deliveries?
• Rules as "Runs off Delivery" except the specified number of runs must be scored off both named deliveries.
• Description: Will a wicket fall in the specified delivery?
• The specified delivery must be completed for bets to stand. For settlement purposes, any wicket will count, including run outs. A batter retiring hurt does not count as a wicket. If a batter is timed out or retired out then the wicket is deemed to have taken place on the previous ball.
• Description: Will both batters score the specified number of runs in the over?
• If the over does not commence for any reason, all bets will be void.
• Runs must be scored off the bat to count towards settlement.
• Bets will settle regardless of whether or not either of the specified batters are dismissed or retired hurt before the over commences.
• Description: Will both batters score a boundary in the over?
• Rules as "Both Batters to Score 'X' Runs in Over".
• Both fours and sixes count as boundaries. Only fours or sixes scored from the bat (off any delivery- legal or not) will count. Overthrows, all run fours and extras do not count.
• Description: Will both a four and a six be scored in the over?
• Only fours or sixes scored from the bat (off any delivery- legal or not) will count. Overthrows, all run fours and extras do not count.
• Description: Will the named batter, and the named bowler, reach their specified milestones?
• For batter - same as "Batter Runs". In first class games, only runs scored in the first innings will count. If a batter is not in the starting XI, or substituted in, bets will be void.
• For bowler - if a bowler does not bowl, they will be deemed to have taken O wickets. If a bowler is not in the starting XI, or substituted in, bets will be void. In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in the relevant innings due to external factors, including bad weather, unless settlement has been determined.
• In drawn First Class matches, bets will be void if fewer than 200overs have been bowled, unless the player's bowling innings is complete. The result will be considered determined if the lines at which the bet was placed are passed.
• In First Class games, only first innings wickets will count and runs. Wickets and runs scored in a super over do not count.
• Description: Will both the batters reach their specified milestones?
• Rules as "Combined Batter Runs".
• A player being sent off is viewed as retired out, so will be settled as a wicket.
• When a player leaves the field as a substitute, this will not count as a wicket. If the player does not return later, the final result will be as it stood when the player left the field. When a player enters the match as a substitute, for settlement purposes both they and the player replaced will be looked upon as to have played a full part in the match.
• Penalty runs added to a team's total after the start of the other team's innings will not count towards settlement of markets in the previous innings.
• Description: Who will win the toss?
• If no toss takes place, all bets will be void.
• Description: Who will win the toss, and then who will win the game?
• Rules: The same as above rules “Toss Winner”.
• Match Winner same as “Match Result” rules.
• Description: How many runs will be scored in the first over of the match?
• The first over must be completed for bets to stand unless settlement has already been determined. If an innings ends during an over then that over will be deemed to be complete unless the innings is ended due to external factors, including bad weather, in which case all bets will be void, unless settlement has already been determined. In First Class matches the market refers only to each team's first innings.
• Extras and penalty runs in the particular over count towards settlement.
• Description: How many runs will the batting team have scored when the first wicket falls?
• In limited overs matches, bets will be void if the innings has been reduced due to external factors, including bad weather, if it has not been possible to complete at least 80% of the overs scheduled to be bowled in the innings, unless settlement has already been decided.
• Description: How will the first batter be out?
• Rules: Retired hurt will not count as the first wicket. If the first batter retires out, all bets will be void. If the specified wicket does not fall, all bets will be void.
• Caught and bowled is included in fielder catch.
• Description: How many ducks will be scored in total in the match?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to be bowled due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction. In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined.
• A duck is classed as someone being dismissed for zero runs. Retired hurt does not count as a dismissal.
• Ducks in a super over do not count.
• Description: How many wides will be scored in total in the match?
• Rules: In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to be bowled due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction.
• Any runs resulting from a wide delivery, except penalty runs, will count towards the final total.
• Wides in a super over do not count.
• Description: How many extras will be scored in total in the match?
• Description: How many wickets will fall in the match?
• Wickets in a super over do not count.
• Description: Which team will contain the top batter in the match?
• Same rules apply as Match Top Batter, with dead heat rules applying if the runs scored by the top batter on both teams is the same, unless the tie is offered.
• Description: Which team will contain the top bowler in the match?
• Same rules apply as Match Top Bowler, with dead heat rules applying if the wickets taken by the top bowler on both teams is the same.
• Description: What will be the run deficit between first innings in a First Class match?
• Both first innings must be completed. Dead heat rules apply in the case of a tie. In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined.
• Description: Will there be a fifty/hundred scored in the match?
• Any score of 50 and above counts as a fifty. Similar for hundred.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to be bowled due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction.
• Description: Will there be a fifty/hundred scored in the first innings of the match?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the overs scheduled to be bowled in the first innings due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction.
• In drawn First Class matches, the innings must be completed, or over 200 overs, unless settlement of the bet has already been determined before the reduction.
• In First Class matches, this market refers to just the first innings of the match, not both teams' first innings.
• Description: What will be the highest score by a batter in the match?
• Dead heat rules apply.
• Description: How many runs will the number eleven batsmen score in the match?
• Rules: In limited overs matches, bets will be void If it has not been possible to complete at least 80% of the overs scheduled to be bowled due to external factors, including bad weather, unless settlement of the bet has already been determined before the reduction. In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled. The number 11 is taken to be the last man to come out to bat in the innings, regardless of previously stated batting order. If more than 11 players bat, the market will be void unless this is due to concussion substitutions.
• If the innings is completed without the number 11 coming to the crease, that batter will be deemed to have scored 0.
• Description: Which team will score the most runs in the first over of their first innings?
• Rules: The same as Runs in First Over.
• Description: Which team will score the most runs in the first specified number of overs of their first innings?
• Rules: The same as Runs in Groups of Overs.
• Description: Which team's wicket keeper will take more catches?
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in either innings due to external factors, including bad weather, unless settlement has been determined before the reduction.
• If a team changes their wicket keeper mid innings, the catches taken by the replacement will count towards settlement.
• In First Class games, only first innings catches will count.
• Catches taken in a super over do not count.
• Description: Which team will take more catches? Including fielders and wicket keeper.
• Description: Which team will take more stumpings?
• In First Class games, only first innings stumpings will count.
• Stumpings taken in a super over do not count.
• In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless settlement of the bet has already been determined. In First Class games, only first innings run outs will count.
• Description: How many runs will Team A score off the first over of their first innings?
• Rules: The same as “Runs in First Over”
• Description: How many runs will Team A score in the first specified number of overs?
• Rules: The same as “Runs in Groups of Overs”
• Description: How many runs will Team A score before their first wicket falls?
• Rules: The same as “Runs in First Partnership”
• Description: How will the first batter In Team A be out?
• Rules: The same as “Method of First Dismissal”
• Description: How many fours -will Team A score?
• Rules: The same as Match Fours, with the 80% of required overs only applying to Team A's innings.
• In First Class matches where the result will solely be based on the first innings of each team.
• Description: How many sixes will Team A score?
• Rules: The same as “Match Sixes”, with the 80% of required overs only applying to Team A's innings.
• Description: How many of Team A will be run out?
• Rules: The same as “Match Run Outs”, with the 80% of required overs only applying to Team A's innings.
• Description: How many runs will be scored in the highest scoring over of Team A's innings?
• Rules: The same as “Maximum Over in Match”, with the 80% of required overs only applying to Team A's innings.
• Description: How many of Team A will score a duck in their innings?
• Rules: The same as “Match Ducks”, with the 80% of required overs only applying to Team A's innings.
• Description: How many wides will there be when Team A are batting?
• Rules: The Same as “Match Wides”, with the 80% of required overs only applying to when Team A are batting.
• Description: How many extras will there be when Team A are batting?
• Rules: The same as “Match Extras”, with the 80% of required overs only applying to when Team A are batting.
• Description: How many wickets will wickets will fall when Team A are batting?
• Rules: The same as Match Wickets, with the full overs required only applying to when Team A are bowling.
• Description: Which batter will score the most runs for Team A?
• The result of this market is determined on the batter with the highest individual score in Team A's first innings.
• Otherwise, same as “Match Top Batter”, with the 50% of required overs only applying in Team A's innings.
• Description: Which bowler will take the most wickets for Team A?
• Rules: The result of this market is determined on the bowler with the most wickets when Team A are bowling in the first innings. If two or more bowlers have taken the same number of wickets, the bowler who has conceded the fewest runs will be the winner. If there are two or more bowlers with the same wickets taken and runs conceded, dead heat rules will apply.
• Otherwise, same as Match Top Bowler, with the 50% of required overs only applying when Team A are bowling.
• Description: How many wickets will the named bowler take?
• If a bowler does not bowl, he will be deemed to have taken 0 wickets. If a bowler is not in the starting XI or substituted in, bets will be void.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in the relevant innings due to external factors, including bad weather, unless settlement has been determined. Result will be considered determined if the line at which the bet was placed is passed.
• In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless the player's bowling innings is complete.
• In First Class games, only first innings wickets will count.
• Wickets scored in a super over do not count.
• Description: How many points will the named player score in the player performance scoring system?
• Points are scored as in All-Rounder v All-Rounder Head to Heads.
• If the player does not bat or bowl, but is in the starting eleven, all bets will still be settled. If the player is not in the starting eleven bets will be void.
• In limited overs matches, bets will be void if it has not been possible to complete at least 80% of the scheduled overs in either innings due to external factors, including bad weather, unless settlement has been determined. Result will be considered determined if the line at which the bet was placed is passed.
• In drawn First Class matches, bets will be void if fewer than 200 overs have been bowled, unless both first Innings have been completed.
• In First Class games, only first innings points will count.
• Where there is a presentation ceremony, markets will be settled on the official result of the relevant governing body at the time of the ceremony, regardless of any subsequent disqualification or amendment to the result.
• For ‘To Win A Stage’ markets, if the named rider fails to start the race all bets on that rider will be void. If the named rider is involved in a dead heat for first place in any stage, this will count as a stage win.
• For overall ‘Head to Head’ markets, if both riders retire during the same stage then this market will be settled as a dead heat. If either rider fails to start the race all bets will be void. If both riders fail to start a subsequent stage for any reason the winner is the rider with the highest position after the previous stage. Dead heat rules apply.
• For stage ‘Head to Head’ markets, if both riders fail to finish the stage this market will be void. Any other non runners will not affect this market. At least one rider must finish the stage for bets to stand.
• Riders must start event/stage for bets to stand. Stakes will be refunded on riders withdrawn prior to the start of event/stage.
• Head to Head match-ups will be settled based on the cyclist achieving the highest placing in the specified event/stage.
• All bets will be deemed valid providing the event, or relative stage to which bet refers to, takes place within the same year, unless other arrangements have been agreed to.
• Bets on performances in a particular stage stand regardless of any route modifications which the organizers might deem necessary to apply during a stage. Exception to this is where a stage which has a particular profile (i.e.: Mountain Stage) is changed by the organizers, prior to start of stage, into a stage which has a different predominant profile (i.e.: Time Trial or Sprint Stage). In such case bets which have been placed prior to the announcement of the change in stage profile will be declared void.
• In the event a match starts but is not completed, the player that progresses to the next round (or is declared the winner in a final) is settled as the winner in match betting markets only. Other markets (e.g. “set winner” markets) will be voided unless the market result has been unconditionally determined.
• If a match is not completed for any reason then bets on 'any correct score' or 'next leg/game/set' market will be void unless the market has been unconditionally determined.
• If a match is not completed for any reason then bets on any point spread (handicap) market will be void unless the market has been unconditionally determined.
• For parlays involving highest checkout, most 180s and win/loss of match, each of the three aspects of the bet must have been won outright for the bet to be deemed successful (and settled as a winning bet). For the avoidance of doubt, the bet will be deemed unsuccessful (and settled as a losing bet) if: (i) the selected player’s highest checkout is the same as his/her opponent, (ii) the selected player scores the same number of 180s as his/her opponent and/or (iii) the match is tied.
• If a match is postponed and does not take place within 48 hours, bets for this match will be declared void.
• If the offered number of legs or sets is altered, any event already determined (e.g. “first set winner”) will be settled. Match betting markets will also be settled under the condition that the match was decided by competitive play. All other bets will be declared void.
• Futures bets will be voided if the selection does not take part at any stage of the event. When returning stakes on futures with non-players, FanDuel Sportsbook reserves the right to deduct the equivalent of prices referenced in Section B, Rule 7.3 above.
• Individual Player Averages: All bets void if the match is not completed
• For Darts Daily Specials, all scheduled matches must take place, otherwise all bets are void.
• Where the e-sports match involves Maps, e-Sports matches can be played best of 1,2,3 or 5 Maps depending on the e-Sport and tournament with the winner of the match (Moneyline) winning more Maps. A Draw will occur if each team win an equal number of Maps.
• Official Results: all e-Sports bets will be settled in accordance with the official results of the match/tournament/race (as applicable) (following any extension of normal time where required unless otherwise specified) as declared by the official organizer, administrator or governing body as officially published on the website for the applicable organizer, administrator or governing body. All decisions of relevant e-Sports officials stand.
• Errors: FanDuel makes every effort to ensure that no errors are made in listing e-Sports player and team names. All bets will stand where it is reasonably practicable that the misspelled player/team name refers to the correct player/team. If there is an obvious error, FanDuel reserves the right to void wagers.
• Map Changes: In the event of a change in the number of Maps (for those e-Sports involving Maps) to be played, all bets will be void except for match bets (provided that an official result is declared) and first Map bets. Please note that e-sports events will have differing match formats. It is solely the customer’s responsibility to understand the formatting of a match before placing a bet. FanDuel Sportsbook will not be liable for any erroneous bets made under the assumption that a match would use a certain format.
• Retirements & Disqualifications: If an e-Sports race, tournament, match or Map is not completed due to retirements or disqualifications, all bets will be void except those bets on completed e-Sports matches (as applicable) or Maps which will stand. All bets will stand on a completed e-Sports race, tournament or match where there has been any retirements or disqualifications.
• All bets will stand on a retired or disqualified player except where the e-Sports race, tournament, match or Map is not completed.
• Abandonment, Postponement & Cancellation:
• a) 24 hours of the initial scheduled time for traditional e-sports (such as games involving Maps, real-time strategy (RTS), first-person shooter (FPS), multiplayer online battle arena (MOBA), and battle royale games;
• b) 48 hours of the initial scheduled time, for sports-based e-sports (such as e-soccer).
• c) If the e-Sports race, tournament, or match is cancelled or commences after this the periods set out above, all bets will be void.
• In the event that an e-Sports race, tournament or match is abandoned or not completed, all bets will be voided unless the outcome has been unequivocally decided.
• FanDuel Sportsbook may, in its absolute discretion, void any bets placed after the earlier of the official start time of the e-Sports race, tournament or (as published on the relevant official website) or the actual start time if started early. This Rule does not apply to live betting.
• Player & Team Changes: If an e-Sport team name changes (usually, but not limited to, sponsorship changes) but the roster or team members remain the same, all bets will stand. If a player (i.e. not a team event) withdraws prior to the start of their first race or match, all bets on that player will be void. If there is a replacement player or ‘stand in’ for any team in an e-Sport race, tournament or match, all bets will stand.
• Connectivity: if a race, match or Map is officially determined to be a draw due to a connectivity or technical issue (or similar reason), all live bets on the respective race, match or map will be void.
• If a race, match or Map is stopped and restarted from the beginning with the approval or the relevant administrator or official due to connectivity or technical issues which are not player related, then all undecided markets will be void.
• If a race, match or Map is replayed, all live betting on the original race, match or Map will be voided
• Match Betting: If a draw occurs, bets are void. Dead Heat Rules Do Not Apply.
• Handicap Betting: A Handicap in e-Sports can be Maps or other counting measures related to the match.
• Tournament Match Betting: in a match involving only two teams/players, both teams/players must start the match in the tournament for bets to stand. If both players progress to the same round of tournament, all bets will be void.
• First Kill/Blood Markets: Bets will be settled based on the Team that is able to achieve the first kill in the respective Map.
• First Inhibitor: Bets will be settled based on which team destroys the first inhibitor in the relevant map.
• First Dragon: Bets will be settled based on which team kills the first dragon in the relevant Map. If no Dragon is killed in the relevant map, this market will be voided.
• First Baron: Bets will be settled based on which team kills the first baron in the relevant Map. If no Baron is killed in the relevant Map, this market will be voided and all bets cancelled.
• Total Inhibitors Destroyed: Bets will be settled based on the total number of separate inhibitors destroyed. Where the same inhibitor is destroyed more than once, it will only be counted once toward the total number of inhibitors destroyed.
• 2-Way Most Kills: Bets will be settled based on which team records the most kills in the relevant Map. If teams are tied on the same number of kills then this market will be voided.
• First Aegis Market - Bets will be settled based on which team picks up the 1 st Aegis of the respective Map. If the Aegis is not picked up at all in a Map, this market will be voided and all bets cancelled.
• E-Basketball:
• All settlement includes overtime if played.
• All game markets are settled based on the official score at the end of regulation time, unless otherwise stated. This includes any added injury or stoppage time but does not include extra-time, time allocated for a penalty shootout or golden goal.
• If the venue of a match is other than is indicated on our website, the bet will stand provided the match has not been switched to the opponent's ground, in which case the match will be declared void.
• Post-match inquiries into match results and subsequent changes or disqualification will be ignored for settlement purposes and will be settled on that day’s match result.
• Extra time not included (unless otherwise stated). Markets settled on the 60/70 minute result.
• Any match abandoned before completion will be declared void unless an official result is declared by the governing body. All other markets will be deemed void unless their result is already determined.
• Player points. This market will be settled on the total score (Goals plus points) scored by the named player. The player must start for bets to stand.
• Average points. League/Championship. This market will be settled based on the average score obtained by the named player over the course of the entire league or championship campaign (including semi-final and final). The named player must start a minimum of 3 league game for bets to stand.
• Footballer/Hurler of the Year. This market will be settled based on the results of the official All star award ceremony.
• Match Betting: All bets will be settled on 60/70 minutes play respectively at the prices advertised. The term 60/70 minutes play refers to the period of play which included time added by the match officials for stoppages, but not scheduled extra time.
• Any match that is abandoned before completion of the match (i.e. 70 mins.) will be void unless an official result is declared by those teams' governing body within 24 hours of postponement, in which case that official result will govern win-draw-win market settlement. All other markets will be void unless their result is already decided. When an abandoned match(es) reduces the client's bet to below the permitted minimum for a list the bet will stand, with the void match(es) treated as non-runners for settling purposes. This ruling does not apply to bets involving first goalscorer which will stand provided a goal has been scored prior to abandonment. Bets on last goalscorer will be void in the event of abandonment. Total Points bets and goal bets will be voided unless the bet is already deemed a winner/loser before the match is abandoned.
• If a match is postponed, all bets on that match will be voided unless it is rescheduled to take place within 72 hours of its originally scheduled start time. For the purpose of this rule, the scheduled start time of a match shall be that which is declared by the GAA Central Council, the individual provincial councils and/or the individual county boards which determine the applicable competition fixtures. In the event of any conflict or inconsistency between the start times declared by any of the foregoing, the order of priority shall be (in descending order): (i) the GAA Central Council then (ii) the individual provincial councils then (iii) the individual county boards.
• In the event of a dispute over the award of a goal for first/last goalscorer or scorer special purposes, settlement will be in accordance with the result given by GAA within 48 hours of the final whistle. Any subsequent changes to the result will be ignored for settlement purposes.
• Bets taken on First Goalscorer/First Team Goalscorer will be void if that player does not take part in the game or if he gets substituted on after the 1st goal is scored. This includes singles and each way bets.
• Bets on last Goalscorer will be void if that player does not take part in the game.
• Bets on Anytime Goalscorer will be void if the player does not take part in the game. Bets will stand if the player takes part in the game.
• Own goals do not count for all markets; in the 1st/last goalscorer markets if an own goal is scored the winner will be settled on the next goalscorer.
• All bets on total points markets will be settled on the normal time result (including injury time) unless otherwise stated. The market result is determined by the point’s total of the game including goals. For example Dublin 1-17 Mayo 1-17 the points total equals 40pts (1 Goal = 3 Points).
• Extra time does not count.
• Bets will be settled on selected player’s total score including goals unless otherwise stated.
• Bets will be voided if the player does not start the game.
• If the player starts but gets injured or is substituted the bets will stand.
• Placed balls count unless otherwise stated.
• In the event of a tie in the Scoring match bets the market will be settled as a push.
• All Star markets are singles only and will be settled on the official GAA/GPA team of the year 15. If your selection is nominated or wins an All Star in a different position than what is displayed on the website the bet will stand.
• Footballer/Young Footballer/Hurler/Young Hurler of the Year markets will be settled on the official GAA/GPA award’s winners. Straight bets only.
• Top Championship Scorer market will be settled on the player who scores the most through the All Ireland Championship including qualifier and provincial series matches. All in, play or not.
• Tournament bets will only be settled if 36 holes have been completed, and an official result has been declared. Should 36 holes not be completed then all bets on that event will be void except markets that have already been decided i.e. 'first round 3-balls, ‘First Round Leader’ etc.
• Outcomes will be determined in accordance with the official result of the relevant governing body, regardless of any subsequent disqualification or amendment to the result (except if an amendment is announced within 24 hours of the initial settlement of the relevant market in order to correct an error in reporting the result).
• A tie/draw option is offered.
• The position is decided by an official playoff.
• Upon a tie in the Tournament Match Betting market, stakes will be refunded.
• Half the stake is lost -$50
• The other half wins and is paid at the same odds. So $50 wins at +200
• Two thirds of the stake is lost -$66.66
• The remaining third $33.33 wins at +200
• If a player does not start a tournament then all bets on that player will be void.
• A player must complete at least one stroke in a market for bets to stand. If a player withdraws before completing a stroke, they will be considered as having not played and all bets on the player will be voided.
• If a tournament is shortened and FanDuel Sportsbook settles the tournament markets then all bets matched after the last completed round will be void.
• If a Tournament/Round is restarted from the beginning, all bets placed after the official off time will be void, except on markets which have been unconditionally determined, which will stand. Bets on 2 or 3 balls will only be void if matched after the tee time of the relevant 2 or 3 ball.
• In the event of a postponed event, bets will stand provided the tournament takes place in the same calendar year.
• For all “lie related” markets (e.g. Closest to the Pin, Number of Greens in Regulation, etc.) - the lie will be determined using league official data.
• For all markets related to a single shot, bets will be voided if that shot does not take place.

Outright Winner

• In the event of a play-off the result of the play-off will determine the winner of the tournament.
• When more than one player shares the same lowest score in a tournament and there is no play-off, bets are settled by the normal dead heat method. See Section 12.1 above for dead heat example.
• Any players who withdraw after completing at least one stroke are considered as players and are therefore losers, unless the player takes no more part in the tournament after the bet is placed.

Players must complete at least one stroke for bets to stand.

• In 2/3 ball betting the winner will be the player in the pairing or group with the lowest score over 18 holes.
• Should a player in the 2/3 ball not tee-off all bets in that 2/3 ball are void. However should a player retire during the round after completing a stroke, he will be deemed to have played.
• If a player posts a score but is later disqualified, all bets will be settled on the score that the player initially signs for that round. Signing of the card is deemed as the weigh-in and subsequent disqualification or amendment of result will be ignored for settlement purposes.
• Odds for a tie are offered in 2 ball betting, therefore in the event of a tie bets on both players are losers and bets on the tie are winners. Dead heat rules apply in the event of a tie in 3 ball betting. See Section 12.1 for dead heat example.
• Any tournament that applies the stableford scoring system, the highest point scorer during the round will be deemed the winner.
• Should all players fail to complete the round then all bets will be void.
• In 'mythical 2 ball' betting the player/group with the lowest score over 18 holes is the winner.
• Should a player in the 2 ball not tee-off all bets in that 2 ball are void. However, if a player starts his round but withdraws or is disqualified during any part of the round he is deemed to be a loser.
• If a player posts a score but is later disqualified, all bets will be settled on the score that the player initially posts for that round.
• If odds for a tie are offered in mythical 2 ball betting and in the event of a subsequent tie, then bets on both players/groups are losers and bets on the tie are winners.

End of Round Leader

• If 2 or more players tie for the lead after the round, dead heat rules will apply. See Section 12.1 above for dead heat example.
• Settlement is based on a player leading after the selected Round (ties included) and winning the tournament.
• All 72 holes must be completed. In the event of a reduction in the number of Rounds/Holes played all bets will be made void.
• Settlement is based on a player leading after Rounds 1, 2 and 3 (ties included) and winning the Tournament.

Top X Finish (Top 5/10/20/etc.)

• Two fifths of the bet has won (19th & 20th) and three fifths have lost (21st, 22nd and 23rd);
• Thus three fifths of the stake is lost (-$60); and
• Two fifths of the stake win and is paid at the same odds, thus $40 wins at +150.
• Finishing position is decided by result posted by the governing body of that tournament (i.e. PGA Tour, DP World Tour).
• If a player is disqualified, retires injured or withdraws they will be deemed to have finished last.
• Should 36 holes (or 54 holes in the case of a 3 Round cut) not be completed then all bets on this market will be void.

Top Player Betting (e.g. Top US Player, Top European Player) & Tournament Group Betting

• In Top Player betting, the winner will be the player with the highest placing at the end of the tournament.
• If all listed players in a given market miss the cut, the player with the lowest score at the cut will be deemed the winner.
• In the event of a tie, dead heat rules apply. (See Section 12.1 for dead heat example)

Tournament Match Betting

• In Tournament match betting the winner will be the player with the highest placing at the end of the tournament.
• If both players miss the cut, then the one with the lowest score will be deemed the winner.
• If a player withdraws or is disqualified after making the cut, when his opponent has already missed the cut, the disqualified or withdrawn player is deemed the winner.
• If a player withdraws or is disqualified before the cut is made the other player is deemed the winner.
• In the event of a tie in tournament match betting, stakes are refunded

Tournament Group Betting

In Tournament group betting the winner will be the player with the highest placing at the end of the tournament. Players missing the cut will be eliminated. If all listed players miss the cut the player with the lowest score at the cut will be deemed the winner.

In the event of a tie in tournament groups, dead heat rules apply.

In the event of a listed player being withdrawn prior to the first round, then the market will be void.

To Make/Miss the Cut

• Players who are disqualified or withdraw before they complete 36 holes (or 54 holes in the case of a 3 Round cut) are deemed to have missed the cut.
• Players who are disqualified or withdraw after the cut will be deemed to have made the cut.
• If there is more than one cut in a tournament, settlement will be based on whether the player has made or missed the first cut.
• Bets on players to make/miss the cut will be settled on the official result posted on the tour sites.

Matchplay Markets

• If the tournament allows for sudden death or playoff hole(s), then the market will be settled on the result of the sudden death or playoff hole(s); or
• If the tournament allows for halved matches, then the market will be settled as a “half”; or
• If the tournament allows for halved matches, and there is no half/tie/draw option offered, then stakes on the match betting will be refunded.
• For team matchplay events, bets on the winner of any singles match will be void if that match does not reach its natural conclusion. A match will be deemed not to have reached its natural conclusion if, for example, the applicable players agree to a half because the overall team contest has already been determined.

Strokeplay Hole-by-Hole Markets (i.e. performance of a named player on a given hole)

• Should a hole not be completed for any reason all bets on that hole will be void unless the market has been unconditionally determined.
• Markets are settled on completion of the hole and any subsequent penalties or disqualification will not be taken into account.

Matchplay Hole-by-Hole Markets (i.e. performance of players against each other on a given hole)

• Any player or team withdrawing or being disqualified having played a stroke on that hole will be settled as a loser providing at least one other player completes that hole.
• If any player or team does not play a stroke on a hole all bets will be void.

Big X v. The Field

• If any of the players quoted as part of the Big “X” are non runners, bets will be void on this market.

Total Majors Won/To Win a Major

• Players must play all four majors for bets to stand.

“To Qualify” Markets

• In any 'To Qualify' market for any tournament the winners are the number of golfers that qualify for the tournament, whether they compete in the tournament or not. Markets will be settled after the qualifying stage and any subsequent disqualification or amendment to results will not count.

Victory Margin Markets

• ‘Victory Margin’ markets will be settled on the official tournament result NOT including any playoff.

Straight/Dual Forecast

For Straight Forecasts, players must come 1st and 2nd in the specified order, and in Dual Forecasts players must come 1st or 2nd in either order. Dead-heat rules may apply.

Both players must tee off for bets to stand, otherwise bets will be made void on that selection.

In the event of a tie for 2nd place, Dead-heat rules will apply, i.e. a 4 way tie for 2nd place will mean the bet will be settled at ¼ of the original stake.

Hole in One Markets

Should the tournament be reduced to 36 holes or less then all bets on this market will be void, unless the market has been unconditionally determined.

If the original card of the course is adjusted in any manner that affects the initial overall par of the course, then bets on hole in one related markets will be void.

In a specified player to make a hole in one market, said player must tee off for bets to stand.

Closest/Distance to the Pin

Bets are on the ball closest to the pin/hole in regulation shots for the hole being played (1 shot for a par 3, 2 shots for a par 4 etc.).

For group betting, if no player hits the green in regulation then the ‘No Green’ selection will be deemed the winner. If there is not a ‘No Green’ selection offered and no player hits the green in regulation, then all bets will be void.

For individual player pin markets (e.g. Tee shot to finish within “X” Feet of the pin) the ball must be on the green to qualify.

Longest Drive Markets

• For group betting, if no ball finishes on the fairway or green, then the 'No Fairway' selection will be deemed the winner. If there is not a 'No Fairway' selection offered and no player's drive finishes in the fairway or on the green then all bets will be void.

Putting Markets

Putts are counted as all shots after the 1st shot where the lie is green (even if subsequent lie is not green)

To Make Putt markets will be void if putt not hit.

Player Performance Bets (Bogey Free/Birdie or Better/etc.)

Any Eagles or better will count for the birdies, and any Double Bogeys or worse will count for the bogeys.

Any change of Hole par during the round, then all bets are void.

The selected player must complete the nominal 18 holes for bets to stand. Any withdrawal or disqualification during the round, then bets will be made void on that player.

Bets are on the stipulated round only. Playoffs do not count as part of the bet.

For any “OddsBoost” which involve a player to win a tournament, if that player shares the same lowest score in the tournament as another player and there is no play-off, the relevant part of the “Special” will be settled according to our normal dead heat rules.

In the event of a play-off, the result of the play-off will determine the winner of the tournament. Even if three or more contestants take part in a play-off, such a play-off has, for the purposes of any “OddsBoost”, the sole purpose of determining the winner of the tournament (meaning that the relative finishing positions, within the tournament, of unsuccessful play-off contestants is not affected by their placing in the play-off).

Any players who withdraw from a tournament after completing a stroke are considered as having played in the tournament and, therefore, any “OddsBoost” bets placed on those players will be deemed to be losing bets.

For any “OddsBoost” which involve a player that has withdrawn before they have completed a stroke, the bet in question will be voided in its entirety.

Any “OddsBoost” involving a player to finish in the top 5/10/15/20 (or similar) will (unless otherwise stated) be deemed successful if the player finishes in a tie for the last named place. For example, if a “OddsBoost” bet is placed on a player to finish in the top 10 and the player finishes in tied 10th position, the “OddsBoost” bet will be settled as a winning bet.

Tourney Specials Bets

The rules in this sub-section apply specifically to the settlement of any golf bets which are placed via Tourney Specials tab in Golf. All other settlement rules which are included in this "Golf Rules" section or elsewhere on this website (including in FanDuel Sportsbook's Rules and Regulations) will also apply to the settlement of Specials bets unless they contradict, or conflict with, those included in this sub-section (in which case, the rules in this sub-section shall take precedence).

For any Specials bets which involve a player to win a tournament, if that player shares the same lowest score in the tournament as another player and there is no play-off, the relevant part of the Special bet will be settled according to our normal dead heat rules.

In the event of a play-off, the result of the play-off will determine the winner of the tournament. Even if three or more contestants take part in a play-off, such a play-off has, for the purposes of any Specials bets, the sole purpose of determining the winner of the tournament (meaning that the relative finishing positions, within the tournament, of unsuccessful play-off contestants is not affected by their placing in the play-off).

Any players who withdraw from a tournament after completing a stroke are considered as having played in the tournament and, therefore, any Specials bets placed on those players will be deemed to be losing bets.

For any Specials bets which involve a player that has withdrawn before they have completed at least one stroke, the bet in question will be voided in its entirety.

Where an obvious pricing error has occurred, we reserve the right to cancel any Specials bets placed at the incorrect price (and, in such circumstances, we will offer the Special bet to be re-placed at the correct price).

Any Special bets involving a player to finish in the top 5/10/15/20 (or similar) will (unless otherwise stated) be deemed successful if the player finishes in a tie for the last named place. For example, if a Special bet is placed on player to finish in the top 10 and the player finishes in tied 10th position, the Special bet will be settled as a winning bet.

For any obvious wording errors, we reserve the right to cancel any Special bets placed on that selection (and, in such circumstances, we will offer the Special bet to be re-placed with the correct wording).

• Settled on 60 minutes play unless stated otherwise. Extra time does not count.
• If 60 minutes is not completed then all bets will be void, except those that have been unconditionally determined. If an official result is declared all bets will stand.
• In case of a match being postponed it will be voided unless it takes place within 48 hours of the initial scheduled start time.
• The name/heading of a competition amounts to evidence of what a bet refers to. For example, if you placed a bet on “Norway vs Brazil” under the competition name/heading U20 World Cup, the bet would have applied to the match between Norway and Brazil which was part of the U20 World Cup.
• All bets referring to aggregated Tournament Totals will be settled based on official statistics by the governing association. Unless otherwise stated, cumulative amounts of such bets will include eventual prolongations (e.g. Extra Time) but not Penalty Shoot Outs.
• Settlement of player related bets in a specific match will be based on the result after the end of the 2nd half (Regular Time), unless otherwise stated. Extra time does not count.

Field Hockey

• Overtime does not count unless stated otherwise.
• If 70 minutes is not completed then all bets will be void, except those that have been unconditionally determined. If an official result is declared all bets will stand.
• Should a match be abandoned all markets will be void unless the outcome of that market has been unequivocally decided.
• In the case of a match being postponed all bets will be void unless the match takes place within 36 hours of the initial scheduled starting time. Affected Parlays will be recalculated excluding that event or leg.

US Ice Hockey (General)

• These rules apply for NHL, any NHL sanctioned events, AHL, NCAA, PWHL, ECHL and other North American Ice Hockey Leagues
• All settlements are based on results and statistics provided by the relevant league’s governing body (www.nhl.com, www.ncaa.com).
• Games must go 55 minutes for bets to stand. In the event a game is suspended prior to the 55th minute of play and will not resume within 24 hours bets will be void unless the result of a market has been unequivocally determined during the normal course of play.
• All markets will be settled inclusive of overtime (including any subsequent shootout) unless explicitly stated to be settled on 60 Minutes or Regulation Time.
• In the event of a shootout, the winning team will be credited with one goal. This counts for all markets where applicable.
• Where a season or tournament is unexpectedly shortened, all futures markets/wagers will be settled in accordance with the official ruling of the relevant governing body so long as the ruling is made within 90 days after the scheduled completion date; or unless the outcome has unequivocally been determined prior to the interruption of the season.

Overview of Specific Game Markets (US Ice Hockey)

• Money Line/Puck Line/Total Goals/Alternates - Includes overtime and any subsequent shootout for settlement purposes. In the event of the total being the exact index quoted, bets will result in a push.
• 60 Minute Markets - Where indicated 60 minute markets exclude overtime and shootout goals. If game goes to overtime, the “tie” selection will be the winner.
• Total Goals (Flat Line) - Settled on the total goals scored during a game. If the result is equal to the quoted index, bets will be voided.
• Period Markets - Settled on the exact score of the specified period. For settlement purposes the 3rd period does not include any overtime played.
• 1st/2nd/3rd Period Money Line - Settled on the final score of the listed period only. If the score is a tie, bets will be voided.
• Highest Scoring Period/Team Highest Scoring Period - Settled on which period has the most goals scored. This market has a “Tie” selection and in the event of 2 or more periods having an equal number of goals scored, the “Tie” is the winning selection. For settlement purposes - the 3rd period does not include OT or Shoot-outs.
• Total Goals Odd/Even - Settled on whether the final number of goals scored is an odd or even number. For settlement purposes 0 goals is considered even. This market does not include OT or Shoot-out for settlement purposes.
• 60 Min Team to Score 1st/Last Goal - Markets settled by which team scores the listed goal in the game. If the game has 0 goals scored in regulation, the “None” selection will be deemed the winner.
• Period X Team to Score 1st/Last Goal - Markets settled by which team scores the listed goal in respective period. If the period has 0 goals scored, the “None” selection will be deemed the winner. 3rd Period does not include OT or Shoot-Outs.
• Goal Scored in first 5/10 Minutes of Quoted Period - For settlement purposes the First 5 minutes of a hockey period are 00:00 - 04:59 of elapsed time and 10 minutes are 00:00 - 09:59 of elapsed time
• Any of the originally scheduled games do not begin on the scheduled start date and are postponed (using time-zone of the original schedule venue);
• Any of the listed games does not fully complete the necessary 55 minutes required to have action; or
• The quoted number of games does not equal the actual number of games played.
• In the event that multiple games have the same number of goals scored, the dead heat rule will apply (See Dead Heats - Part A).
• All markets are subject to their respective pre-match rules for the purposes of Live Betting.

Overview of Specific Futures Markets (US Ice Hockey)

• Team Regular Season Futures - For wagers to have action, teams must complete 80 scheduled regular season games. Should a team not complete the required number of games, all wagers on that respective team’s regular season points/wins will be void, unless the result is already pre-determined.
• Worst Regular Season Record - Settled on the basis of which team finishes in last place, per the governing bodies’ final standings.
• Player Award/Player Regular Season Markets - Player must appear in 1 (one) game across the regular season for the specific player wager to have action for regular season awards. A player must appear in a game in the postseason for the specific player wager to have action for postseason awards. In the event a quoted player retires or does not play in the quoted season, then that respective players bets are to be voided. For awards that are reliant on statistics, Dead-Heat rules will apply if there are one or more ties (See Dead Heat Rules).
• Playoff Series Props (Player Most Goals/Points/Assists/etc.) - A series must come to a natural conclusion for bets to stand. Overtime counts for settlement purposes. In the event two or more players tie, dead heat rules apply (See Dead Heat Rules). A player listed must take part in at least one game in the series for bets to have action. If a player does not take the ice during at least one game, all bets on the player selected will be void (and in the case of a 2-player head-to-head market, all bets on the market will be voided).
• The official draft results on nhl.com will be used for settlement purposes including, but not limited to: player draft position, playing position, development league, school, height, etc.
• For “over/under draft position’ markets, undrafted players are assigned the draft position that comes after the last drafted player.
• For “over/under draft position” markets, the “under” means the player is chosen with a pick that is less than the designated number and “over” would mean the player is chosen with a pick that is more than the designated number. For example, in a market of “Player X - Over/Under 3.5” if Player X is picked with the second pick of the draft, then the “Under” selection would be the winner.

Overview of Player Prop Markets (US Ice Hockey)

• Players must receive time on ice per the governing body box score to be considered as action. If a player does not receive any time on the ice, then all bets on the player will be void.
• All proposition markets are graded on the inclusion of regulation and overtime, unless otherwise explicitly stated that markets are for a specified period or 60 minutes. Player Shootout attempts/stats do not contribute unless market specifically states shootouts.
• First/Last Goalscorer - Market settled based on which player scores the first or last goal in a game. In the event that a game is scoreless in regulation and is scoreless in the overtime period, then “No Goalscorer” will be the winning selection.
• Xth Goal Scorer Markets - All bets are action for players with any time on the ice. Bets will be void if quoted index goal is not scored in Regulation or Overtime.
• Overtime specific Markets: Any wager made on markets explicitly stated for overtime in games that do not reach overtime are void. A player must take the ice in overtime for bets to have action.

European Ice Hockey and IIHF International Competitions

• In case of a match being postponed, it will be voided unless it takes place within 48 hours of the initial scheduled starting time.
• Bets will be settled according to the result declared by the relevant governing body at the end of the match. In the absence of consistent, independent evidence or in the presence of significant conflicting evidence, bets will be settled based on our own statistics.
• All markets will be settled with the result at the end of regular time (60 minutes) unless otherwise stated.

Overview of Specific Markets (European Ice Hockey and IIHF International Competitions)

• 2-Way Match Betting/Moneyline will be settled on result after overtime (including any subsequent shootout).
• Period Markets - Settled on the exact score of the specified period. For settlement purposes the, 3rd period does not include any overtime played.
• Double Result - Settled on the score of the game at the end of the 1st and 3rd periods.
• Race to xth Goal - The winner will be the team to achieve the number of specified goals first. Should neither team reach the target, pre-match bets will void. Does not include Over-time or Shootout.

Player Props (European Ice Hockey and IIHF International Competitions)

• Players must appear on the ice during play for bets to stand. Only goals scored in regulation or overtime count for settlement purposes. Shootout goals do not apply.
• Overtime counts for all player proposition markets. Only goals scored in regulation or overtime count for settlement purposes. Shootout goals do not apply.
• Xth Goal Scorer Markets: In the event an unquoted selections wins, all bets still have action.
• Jai Alai bets on the full game (Moneyline, Spread, Total) are considered official only once the game is completed without either player withdrawing due to injury, incapacity, or disqualification.  
• Time or period based markets will have action as soon as the result has been officially determined, regardless of the match being suspended afterwards. For example, a wager on a player to win a specific set will be settled once that set is final.  
• When a game is postponed or suspended before it starts, and it is officially determined the game will not be played within 48 hours of the originally scheduled start time, otherwise, all bets have no action and stakes will be refunded.  
• When a game is in progress and is delayed or postponed before any official announcement, the game must be resumed and completed within 48 hours of the originally scheduled start time, all bets have no action and stakes will be refunded.  
• Team to Win the Match: Team to Win the Match will use the final score of the match, bets will stand if one of the players retires or forfeits for any reason.
• All bets on matches where a player or pairing retires or is disqualified prior to the first set will be voided. Doubles matches in which one player of a pairing is replaced by another player prior to the first set will also be voided.
• If a game is postponed and is not played within 48 hours of the official start time (local time) then all bets will be voided.
• If a game that has started is suspended due to a rain delay or other deferral and resumes within 48 hours of the originally scheduled start time (local time), then all wagers will stand. If the game is delayed beyond 48 hours of the originally scheduled start time, then all bets on the market for the game will be void. Except for bets on any markets that have been unconditionally determined. If an official result is declared by the relevant governing body, all bets will stand.
• In the event of a venue change, all bets on the impacted game will be voided.
• Premier Lacrosse League games are considered complete after 48 minutes of regulation gameplay unless the score is tied at the end of regulation.
• National Lacrosse League & NCAA Lacrosse games are considered complete after 60 minutes of regulation gameplay unless the score is tied at the end of regulation.
• In the event of a tie at the end of regulation, the game is considered complete upon the first goal in overtime.
• Second half markets include overtime.
• Fourth quarter markets do not include overtime.
• All Outright markets are All-in (see Section 7.1).
• For markets that specify number of goals - a goal shot from behind the two-point line counts as one goal.
• For player proposition markets, if the selected player does not take the field, wagers placed on the player will be voided.
• For season long player proposition bets, the nominated player must participate in at least one game during the regular season for bets to stand.

Motorsports (which may include, amongst others, NASCAR, Indy Car, Formula One, Superbikes and Speedway)

Motorsports - general rules.

• The start of the race is the signal to commence the warm up lap. If a driver is not on the grid or ready to start from the pit lane when the signal is given we will void all bets on the selection.
• If a race is abandoned and no presentation position or official result is declared all bets on that race will be void except for bets on any markets which have been unconditionally determined.
• Bets will be settled on the result at the time of the podium presentation regardless of any subsequent disqualifications.
• If the scheduled venue is changed after a bet is placed, all bets will be void.
• On "head-to-head" bets (i.e. match bets) the driver/rider/car (in team races) who finishes ahead or completes the greatest number of laps is deemed to be the winner. Both drivers must start.
• If both drivers retire on the same lap, then wagers will be settled on the official result of the relevant governing body.
• In Speedway, bets will be void if all scheduled heats or races of a meeting or match are not completed except on markets which have been unconditionally determined.
• In any case where there is no podium presentation, but the market states that settlement of the relevant market will be based on the result at the time of the podium presentation, then the market will be settled on the official result of the relevant governing body regardless of any subsequent disqualification or amendment to the result (except if an amendment is announced within 24 hours of the initial settlement of the relevant market in order to correct an error in reporting the result).
• On Safety Car “Yes/No” markets, a virtual safety car will not count as a Safety Car.

NASCAR/IndyCar

• The Field includes any driver who is not listed.
• Any drivers who do not qualify for the race will be deemed no action.
• The race must be run within 72 hours of the scheduled start time for bets to stand.
• The podium presentation will count as the result and any subsequent inquiries will not affect settlement of bets.
• IndyCar results will be settled on official classification at the time of the podium presentation, with subsequent disqualifications disregarded.
• All drivers within the match-up must start or the market will be void. The driver who finished ahead or completes the greater number of laps will be deemed the winner. The official results of the relevant governing body will be used to determine the finishing order.
• Both drivers must start the race (e.g. cross the start line) for bets to be action. If any driver is replaced before the start of the race then all match-ups will be void.
• Race props will be settled on official IndyCar & NASCAR results (e.g. cautions, caution laps, lead changes, number of leaders, winning car etc.). If a race is shortened and no official results are posted then all bets will be deemed no action.
• All prop futures are deemed action when drivers qualify for at least 26 regular season races. Outright Drivers Championship will be deemed as action when driver has qualified for at least 26 regular season races. Unless there is a special exception made by NASCAR to qualify a driver for the playoffs, bets on drivers who do not qualify for at least 26 regular season races will be void. 
• All F1 race bets are settled on the official FIA classification at the time of the podium, with subsequent disqualifications disregarded.
• F1 Sprint Weekends: Unless otherwise stated, all F1 Grand Prix markets will be settled on results of the main weekend race. Sprint Race markets will be explicitly called out. Sprint Race wins will not count towards overall season race wins special markets unless stated otherwise in market description.
• All Drivers who complete 90% of the race laps are deemed as classified finishers in line with the official FIA Classification. However, all drivers are given a ranking, and for the purpose of match and positional betting, this rank shall apply.
• In the event a selection does not complete the designated number of laps to be deemed a classified finisher, for match, and positional betting - the winner will be determined by the number of laps completed. Should both selections complete same number of laps, wagers will be voided.
• For Group Betting, the winner is the driver achieving the highest placing at the time of the podium presentation. If all drivers in the group fail to be classified, then the driver completing the most laps will be deemed the winner. If all drivers in the group fail to be classified and two or more drivers retired on the same lap then dead-heat rules will apply.
• In the event of a driver switching race teams during race week, or a driver not originally listed entering the field, all bets taken prior to these changes being factored into the betting will be re-settled at the correct price taking into account the team/car change. This is inclusive of all markets offered for F1 and FanDuel Sportsbook’s decision is final in this regard.
• All qualifying wagers are action once a driver starts qualifying. Drivers must start qualifying for action on qualifying wagers. Subsequent penalties or demotions will not affect the grading of wagers.
• Qualifying Match Betting: The winner will be deemed to be the driver who sets the fastest qualifying time during the final qualifying session between the two drivers quoted. If either driver fails to begin a qualifying lap, then all bets on that match will be void. Any subsequent grid penalties or disqualifications shall be ignored for betting purposes. If Q3 does not take place, then bets will be settled if the grid is formed based on times from Q1 or Q2. All bets will be void if the grid is formed for the main race or for Sprint Qualifying (where such format is used) based on any other criteria.
• The Start of the race is deemed to be the signal to start the warmup lap. All drivers are action from this point on.
• For match and positional betting, all drivers within the specified market must start the race (see above) for bets to be action. If any driver is replaced before the start of the race then all match-ups will be void.
• Race Props will be settled on official Formula One results.
• For “first retirement markets” the following rules shall apply. All bets placed on drivers who do not start the formation lap will be deemed void. The first retirement will be settled on the number lap on which the driver retired. If 2 or more drivers retire on the same lap, then dead heat rules will apply regardless of the time that the drivers retired.
• Leader after the first lap, for Settlement purposes the winner is deemed to the driver leading the race as they cross the start/finish line after one classified lap (warm up lap not included). In the event of one lap not being fully completed all bets will be void. If the race starts under the Safety car, all bets will be void.
• Bets on the Formula One Championship and Constructors Championship will be settled in line with the official FIA results immediately following the podium presentation of the final race of the season, with subsequent disqualifications disregarded. The drivers and constructors championship titles are awarded to the driver and constructor who score the most points over the course of the season. In the case of a dead heat for a championship place, then the driver or constructor with the higher number of superior race results will be awarded the place.
• Overtime counts for the settlement of Match Betting, Point Spread (Handicap) Betting, Total Goals, Home Team Total and Away Team Total Goals.
• Dead Heat rule will apply for Match Betting if no overtime is played. All other markets will be settled according to the result at the end of regular time.
• In the event of a match not taking place or is cancelled or the starting but not being completed all bets are void and wagers will be refunded.

Olympics - General Rules

• The final medal table declared by the governing body will be used to settle all bets. Any subsequent changes will not be taken into consideration.
• For the Olympic Games all events will be settled on the official IOC results at the time of the medal/podium ceremony only. Subsequent disqualifications or amendments will not be counted for settlement purposes.
• In the event of a team/participant not competing in an event for any reason we reserve the right to apply a deduction in returns relevant to the price of the scratched selection per Section B, Rule 7.3 above.
• Unless otherwise explicitly stated in the market or the sports specific rules below; all bets will be settled according to the rules for the relevant sport and/or the relevant general rule.
• Dead Heat Rules apply.
• If an event is postponed, bets will stand as long as the event takes place within 48 hours of the initial scheduled time. If the event is cancelled or takes place after this period, bets will be voided.

Olympics - Specific Sport Rules

• Olympic Basketball - Matches are played under FIBA rules. Therefore all bets will be settled according to ‘European Basketball Rules’.
• Olympic Field Hockey - Match betting will be settled based on the result at the end of 60 minutes. In the event of a two-way match betting/to qualify market being offered, then this will be settled on whichever team progresses.
• Olympic Rugby 7s - all bets will be settled according to rugby 7s rules within the ‘Rugby Union and Rugby League’ section.
• If a crew or individual starts a race but does not complete it then they will be deemed a loser providing at least one other crew or individual completes the race. If no crew or individual completes a race then all bets will be void.
• If a regatta is cancelled for any reason, all bets will be void, except those on markets which have been unconditionally determined.

Rugby Union and Rugby League

Rugby union rules.

• Unless otherwise stated, all rugby union bets are settled on 80 minutes’ play plus any injury time.
• For Rugby 7s tournaments, all bets are settled on the result at the end of Normal/Regular time (except halftime, first half, overtime and penalty shootout markets).
• If a match is postponed, bets will stand until 48 hours from the original kick off time, after which time they will be void.
• If the venue is changed from the one advertised, all bets on that match are void.
• Any parlay bet reduced by an abandoned, postponed or re-arranged match will stand on the remaining selections.
• If a match starts but is abandoned before its completion, all bets will be void unless an official result is declared by the applicable governing body. Where an official result has been declared by the official governing body, that official result will govern match and point spread (handicap) market settlement but all other markets will be void unless their result has already been determined at the point of abandonment (i.e. at the point of abandonment, it would not have been possible for the outcome of the bet to change had the match continued to its natural conclusion). By way of example, if 37 points have been scored at the time a match is abandoned: (i) a bet placed on 35 points or more to be scored would be settled as a winning bet, (ii) a bet placed on 30-35 points to be scored would be settled as a losing bet and (iii) a bet placed on 40-45 points to be scored would be void. In such circumstances, bets on last tryscorer / team to score last / team to score last try / last scoring play would all be void.
• Outright Bets: all bets placed on outright markets will be settled on official tournament results. For betting purposes, any team which has points deducted due to breaches of rules and regulations will be deemed a starter. If, at the time a deduction of points is announced, the loss of points means that only one eventuality can occur then all bets on that competitor are void and monies will be returned. Any bets placed after a points deduction may have prices adjusted accordingly.
• All outright markets which state “Regular Season” (or similar) are deemed to mean the official standings of teams after all matches of the predetermined season are played and before any playoff matches have commenced.
• Tournament Tries/Points: Bets will apply to all playing time, including any extra time in any match where an official result is declared.
• To Miss Top 2 / Top 4 / Top 8: For betting purposes, any team which has points deducted due to breaches of rules and regulations will be deemed a starter. If, at the time a deduction of points is announced, the loss of points means that only one eventuality can occur, then all bets on that competitor are void.
• Tryscorers: All bets will be refunded if they were placed on players not included in the official match day 22 or 23 (depending on the competition). If a substitute is not on the field before the first try is scored then bets on that player will be void in the ‘First Tryscorer’, ‘First Team Tryscorer’ and ‘First Tryscorer Insurebet’ markets. If a substitute comes on at any stage during the game, they will be considered ‘All In’ for all other tryscorer markets. If they do not take any part in the game, they will be void in all tryscorer markets.
• First/Last Tryscorer: In the event of a penalty try being the first / last try scored, we will pay out on the penalty try option if offered. If the penalty try option is not offered, we will pay out, for “First Try” markets, on the next tryscorer following the penalty try (where the first try is a penalty try) and, for “Last Try” markets, on the tryscorer immediately preceding the penalty try (where the last try is a penalty try). For 'Xth try scorer’ markets, if the penalty try option is not offered, we will void any bets placed on the Xth try to be scored by a particular player if that try is in fact a penalty try. If there is no try scored after the penalty try then “First Try” and “Last Try” markets will be void.
• First Tryscorer Insurebet: If the player fails to score the first try but does score a try in the match then the bet stake will be returned. If a substitute is not on the field before the first try is scored then bets on that player will be void.
• Position to Score First Try: In the event of a penalty try being the first try scored, we will pay out on the position of the next tryscorer for “Position to Score First Try” markets. For ‘Position to score xth Try’ markets, in the event of a penalty try, we will pay out on the position which scores the next try (e.g. if the first try scored in a match is a penalty try and the second try is scored by a ‘forward’, then a ‘forward’ will be deemed to have scored both the first and second tries). If there is no try scored after the penalty try then this market will be void.
• To win in Extra Time: If there is no winner following extra time, dead heat rules will apply to bets on this market.
• Tryscorer Matchbets / Kicker Matchbets / To Score the Most Points Matchbets: Both players must be in the starting 15 for bets to stand. If there is no ‘Tie’ or ‘Draw’ selection offered and the result is a tie then all bets will be void.
• Best Kicking Percentage Matchbets / Kicker Matchbets / To Score the Most Points Matchbets: Bets will be void if both players do not attempt at least 1 placed kick at goal.
• Player Total Points / Perfect Kicking record: Bets will be void if the selected player does not attempt at least 1 placed kick at goal.
• Top Tryscorer / Top Team Tryscorer / Top Points Scorer: dead heat rules apply.
• Regular Season Team Matchbets: dead heat rules apply.
• Head to Head: Any extra time will be counted for settlement purposes. In the result of a draw where no extra time is played, this market will be settled according to dead heat rules.
• Man of the Match: for Rugby World Cup Man of the Match markets, the market will be settled based on the official 'Man of the Match' as determined by the Rugby World Cup official site. If the Rugby World Cup official site fails to declare an official Man of the Match for any reason, all bets will be void.

Rugby League Rules

• Unless otherwise stated, all rugby league bets are settled on 80 minutes’ play plus any injury time.
• All bets on NRL matches will be settled on the official declared result including any extra time, except ‘Match Betting, ‘Point Spread (Handicap) Betting, 'Will There Be Extra Time?', 'Highest Scoring Half' and 'Half With Most Tries' markets (which will be settled on the basis of 80 minutes’ play plus any injury time). In Point Spread (Handicap)/Line and Totals betting where the value selected is a whole number (e.g. 6.0), and the result lands on that number, then all wagers related to that line number will be refunded, and any such bet will be deemed an excluded leg for the purpose of any applicable parlay, which will be recalculated excluding that leg. The same rules apply for State of Origin and any other Australian Rugby League match where extra time is played.
• If the result of an NRL match after extra time is a draw, then the Dead Heat Rule will apply to all bets where a winner has not been officially declared. All winning margin bets, including Dozen Winning Margins, will be deemed unsuccessful bets as neither team has won the match.
• If a match is postponed, bets will stand until 48 hours from the original kick off (local time of match), after which time they will be void.
• If the venue is changed from the one advertised, all bets on that match will still have action (unless it is also postponed to over 48 hours from scheduled kick off)
• NRL & Super League Outright / Regular Season Outright / Top 2 / 4 / 8 Finish: All In Betting. Any Team which has points deducted due to breaches of rules and regulations will be deemed a starter for resulting purposes. Any loss of titles after the completion of the Grand Final will be deemed null and void and all bets will stand. All outright markets which state “Regular Season” (or similar) are deemed to mean the official standings of teams after all matches of the predetermined season are played and before any playoff matches have commenced.
• NRL & Super League Wooden Spoon: This market is settled on the team which has the least wins for the season. A draw is considered as half a win. In the event of more than one team having the same number of wins, the outcome will be determined by the worst 'for and against' points total. Points deducted because of breaches of rules and regulations are excluded for resulting purposes. All In. Win Only.
• To Miss Top 2 / 4 / 8: For betting purposes, any team which has points deducted due to breaches of rules and regulations will be deemed a starter. If, at the time a deduction of points is announced, the loss of points means that only one eventuality can occur, then all bets on that competitor will be void.
• Tournament Tries/Points: Bets will apply to all playing time (including any extra time) in any match where an official result is declared.
• Tryscorers: All bets will be refunded if they were placed on players not included in the official match day 17. All players that are named in the match day 17 will be considered ‘All In’ for all tryscorer markets (including "First Tryscorer" and "First Team Tryscorer" markets).
• First/Last Tryscorer: In the event of a penalty try being the first / last try scored, we will pay out on the penalty try option if offered. If the penalty try option is not offered we pay on the next tryscorer for first try or preceding tryscorer for last try. For xth try betting if the penalty try option is not offered we pay on the next tryscorer i.e. if the second try scored in a match is a penalty try and the third try is scored by Paul Smith, then Paul Smith will be deemed the winner for the second and third tries. If there is no try scored after the penalty try then this market will be void.
• First 2nd Half Tryscorer: If a player is included in his team's matchday 17-man squad, all bets on that player will stand regardless of whether the player is on the field for the first 2nd half try or not.
• Tryscorer Matchbets / Kicker Matchbets / To Score the Most Points Matchbets: Both players must be in the starting 13 for bets to stand. If there is no ‘Tie’ or ‘Draw’ Selection offered and the result is a tie then all bets will be void.
• Best Kicking Percentage Matchbets / Kicker Matchbets: Bets will be void if both players do not attempt at least 1 placed kick at goal.
• Player Total Points / Perfect Kicking record: Bets will be void if a player does not attempt at least 1 placed kick at goal.
• Statistics/Supercoach Markets: All bets on players not in the starting 13 will be void. All statistic bets will be paid at the completion of each round in accordance with official NRL statistics. Supercoach markets will be paid at the completion of each round in accordance with the Daily Telegraph (Australia) results.
• Top Tryscorer / Top Points Scorer: dead heat rules apply.
• In the event of a match starting but not being completed, the player progressing to the next round will be deemed the winner (or in the final the player declared the winner).
• If a player fails to start a tournament or match all bets on that player or individual match will be void.
• If a match is not completed for any reason then bets on 'any correct score' or 'next frame' market will be void.
• If a match is not completed for any reason, bets on any point spread (handicap) market will be void unless the market has been unconditionally determined.
• First Color Potted The first color legally potted scoring its own value (i.e. not taken as a free ball) will be considered the winner, irrespective of whether there are any subsequent re-racks.
• Next Frame - First Player to Pot a Ball The first player potting a ball legally will be considered the winner, irrespective of whether there are any subsequent re-racks.
• Point Spread (Handicap)/Total Rack betting - If the statutory number of racks are not completed, then all bets will be void. In the event of a match starting but not being completed, bets will be void unless the outcome is already determined.
• Match betting - In the event of a match starting but not being completed then player progressing to next round, or the player awarded the victory (points) in a team competition, will be deemed the winner for settlement purposes.
• To win next Rack betting - In the event of the specified rack not being played or not being completed, bets will be void.
• Next Rack (Golden Break/Balls Potted off Break) - In the event of the specified rack not being played, bets will be void. Only legally potted balls will count for settlement purposes.
• Top Points Scorer/Top Team Points Scorer - Dead Heat rules will apply.
• Markets for this sport may not currently be offered in all jurisdictions.
• Outright markets are offered on a Non-runner no-bet basis. Future wagers on any player who takes part in a qualifying tournament but fails to qualify for the main tournament will be classed as losers.
• Next Frame Total Points - In the event of a re-rack, only points scored in the completed frame will count towards settlement.
• In the event of a player being awarded a frame due to non-appearance of opposing player, to win 1st frame, to win xth frame and all related markets to that frame will be settled as void. Frame betting, handicap betting, total frames, race to three frames & 1st 4 & 6 frames outright/correct score will be settled as normal.
• Next Four frames outright and correct score, Next Session outright/correct score. If Four Frames/Next Session are not completed due to the match result having been determined before this point, then bets will be deemed void unless already determined as a losing bet. If all frames are not completed due to time constraints, bets will be settled when play resumes and settlement point is reached.
• Session outright/correct score: If a session is reduced in length due to time constraints, bets will be settled on completion of the original intended number of frames in that session.
• Stage of Elimination: Player must play one shot in the tournament for bets to stand.
• Official match sheets will be used for settlement purposes.
• For soccer betting, the team listed first is the Home Team, unless the game takes place in a neutral venue. For settlement purposes, the first team listed will still be considered the Home Team in this case.
• All general soccer bets will be settled in accordance with official league data.
• Shots/Shots on Goal Markets
• Assists Markets
• Tackles Markets
• Offside/Foul Markets
• Cross Markets
• Pass Markets
• Goalkeeper Save Markets
• FanDuel Sportsbook reserves the right to settle the above markets in accordance with the definitions if there are disputes on official league data.
• All bets on soccer are automatically settled on the basis of 90 minutes play unless otherwise stated for that particular market. 90 minutes play includes time added on by referee for stoppages. The only exceptions are for matches that are played for a lesser duration (e.g. 60, 70 or 80) as agreed by the laws of the competition in which they are competing or agreed by both sides prior to kick-off. In such cases, if the match is played in the traditional format of two halves, all bets will be settled at the end of the agreed game length which includes time added on by the referee for stoppages whether the game length is advertised by FanDuel Sportsbook or not. If the game is played in an unusual format (e.g. 3 or 4 periods) then all half-time markets will be voided but all other markets will be settled on the basis of the score at the end of the match (including any time added on by the referee for stoppages).
• Where a bet is accepted on a match where no prices are on offer then that selection will be treated as a non-runner, but the remainder of any parlay bet will stand provided there are not fewer than the stipulated minimum number of matches in the bet.
• Settlement will be at the price prevailing at the time the bet was placed and confirmed. Dates and kick-off times of matches shown on our website are for guidance purposes only. Bets will be accepted up until the advertised kick-off time.
• If a parlay is reduced by non-runners the bet will stand with the reduced number of legs.
• FanDuel Sportsbook reserves the right to void or stand any bet inadvertently accepted after the betting has closed or where the event was resolved or at a stage where the customer could have any indication of the outcome.
• There is a small possibility that we will inadvertently offer soccer bets in respect of which it is impossible for the outcome to occur (for example, we continue to offer bets on a player to be the first goal scorer in a match after that player has been substituted). While we have implemented systems which aim to prevent this from occurring, in the small number of circumstances where it does, we will void the bets in question (and return the relevant stakes to customers accordingly).
• For head to head markets where there is a draw/tie option offered. If the market ends in a tie, bets on all other selections will be losers.
• To the extent that a video assistant referee (“VAR”) is consulted, the event which led to the referral will, for the purposes of these rules, be deemed to have occurred at the actual time of its occurrence (rather than the time on which the relevant referral, or decision, was made).
• Where we have settled a bet and, due to a subsequent VAR decision, it becomes apparent that such settlement was inaccurate, we reserve the right to reverse such settlement (provided that the VAR decision occurred prior to the conclusion of the match or other timeframe relating to the bet).
• Bets which are placed between the occurrence of an incident which leads to a VAR review and the related VAR decision will be deemed void unless: (i) the VAR review (and subsequent decision) did not ultimately alter the decision made by the on-field officials or (ii) the VAR review (and subsequent decision) altered the decision made by the on-field officials but did not have any material influence on the bet(s) in question. All bets which were not materially influenced by the VAR review (and subsequent decision) will stand.
• In order to eliminate any doubt, we will consider the VAR as having been used if this is understood from the referee's gestures (e.g. hand gestures or stopping the match to review the incident themselves) and/or VAR usage is confirmed by the match report issued by the official governing body who is ultimately responsible for oversight of the applicable match. In cases where it is unclear whether the VAR has been used due to missing TV coverage and/or conflicting reports, FanDuel Sportsbook will settle the bets based on the information acquired from feed providers and generally reputable online sources (acting reasonably).
• If a match is postponed, all undetermined bets will be voided as long as the match does not start before 23:59 local time (or if FanDuel Sportsbook believes that a match will not have started by such time) on its scheduled date.
• Fixtures that are rearranged before the scheduled kick off date will not be regarded as postponements and all bets will stand, as long as the rescheduled date is within 72 hours of the original kick off time.
• If the venue of a match is other than what is indicated on our website, the bet will stand provided the match has not been switched to the opponent's ground, in which case the match will be declared void. Notwithstanding this rule, in major international tournaments (e.g. World Cup, European Championships), all venues will be deemed neutral. If the scheduled venue of a match is changed, including if the venue changes to a new venue in a different country, all bets will stand.
• If a match starts but is later abandoned, all undetermined bets will be voided as long as the match is not played to a finish before midnight local time on its scheduled date.
• In relation to soccer markets that are scheduled to be turned in-play, FanDuel Sportsbook aims to use its reasonable endeavors to turn such markets in-play at kick-off and to suspend such markets on the occurrence of a Material Event (see definition of "Material Event" below). However, FanDuel Sportsbook does not guarantee that markets will be suspended and turned in-play at kick-off.
• If a market is scheduled to be turned in-play but FanDuel Sportsbook fails to suspend the market at kick-off and the market is not turned in-play at any time during the match, all bets placed after the scheduled time of the kick-off will be void UNLESS it can be established that the bet was actually placed before the actual time of kick-off.
• If a market is scheduled to be turned in-play but FanDuel Sportsbook fails to suspend the market at kick-off, but the market is turned in-play at a later time during the match, all bets placed after the scheduled time of the kick-off will stand. However, the price may be adjusted by FanDuel Sportsbook and the bets may be settled in accordance with the correct price at the time on which the relevant bet was placed (such price to be determined by FanDuel Sportsbook, acting reasonably).
• For the purpose of this rule, a "Material Event" shall mean a goal being scored, a penalty being awarded, a player being sent off, or a VAR decision.
• “Normal Time” refers to the full length of a game (usually 90 mins, including time added on by the referee for stoppages) and excludes any extra time or penalty shootout.
• Offside is awarded to the player deemed to be in an offside position where a free kick is awarded. If two or more players are in an offside position when the pass is played, the player considered to be most active and trying to play the ball is given offside.
• With respect to "Tackles", a tackle is defined as where a player connects with the ball in a ground challenge where he successfully takes the ball away from the player in possession.
• The tackled player must clearly be in possession of the ball before the tackle is made.
• A tackle won is deemed to be where the tackler or one of his team-mates regains possession as a result of the challenge, or that the ball goes out of play and is "safe".
• A tackle lost is where a tackle is made but the ball goes to an opposition player.
• Both are deemed as successful tackles, however the outcome of the tackle (won or lost) is different based on where the ball goes after the tackle.
• It is not a tackle, when a player cuts out a pass by any means.
• Missed Tackles is where a player attempts to challenge for the ball and does not make it - it is calculated by adding fouls with an attempted tackle qualifier to the number of times a player is beaten by a dribble (challenge lost).
• Clearance is a defensive action where a player kicks the ball away from his own goal with no intended recipient.
• Interception is where a player reads an opponent’s pass and intercepts the ball by moving into the line of the intended pass.
• Blocked pass is where a player tries to cut out an opposition pass by any means. Similar to an interception except there is much less reading of the pass.
• Block is where a player blocks a shot on target from an opposing player.
• Assists can be defined as the final touch (pass, pass-cum-shot or any other touch) leading to the recipient of the ball scoring a goal. If the final touch (as defined in bold, above) is deflected by an opposition player, the initiator is only given a goal assist if the receiving player was likely to receive the ball without the deflection having taken place. Own goals, directly taken free kicks, direct corner goals and penalties do not get an assist awarded.
• Cards are collected as yellow, second yellow or red card. Where possible, cards are cross checked against official (referee) reports to match the official statistics, unless these are clearly incorrect.
• Crosses can be defined as any Intentional played ball from a wide position intending to reach a teammate in a specific area in front of the goal.
• A Shot is defined as any goal attempt.
• A Shot on target is defined as any goal attempt that a) goes into the net regardless of intent - for Goals only b) is a clear attempt to score that would have gone into the goal but for being saved by goalkeeper or is stopped by a player who is the last man with the goalkeeper having no chance of preventing the goal (last line block). Shots directly hitting the frame of the goal are not counted as shots on target unless the ball goes in and is awarded as a goal. Shots blocked by another player, who is not the last man, are not counted as shots on target.
• A foul is defined as any infringement that is penalized as foul play by the referee. For a foul to be awarded, play must be stopped and a free kick must be given. If the referee plays advantage and later distributes a yellow card once the ball goes out of play this will not count towards a foul as a free kick was never awarded. Offsides do not count as fouls.
• A pass is defined as any intentional played ball from one player to another. Passes include open play passes, goal kicks, corners and free kicks played as pass - but exclude crosses, keeper throws and throw-ins. All Player Passes bets are settled on the basis of 90 minutes’ play (plus injury time) unless otherwise stated. For any Player Passes markets, all bets placed on players that are not part of the starting 11 will be void.
• Body Part - Hands/Feet/Body
• Save Type - Caught/Collected/Parried Safe/Parried Danger Area/Fingertip
• Goalkeeper Position - Diving/Standing/Reaching/Stopping
• Own goals do not count for settlement of first/last goalscorer bets. If any goal is an own goal, the result of the following goalscorer market will count for the settlement of the original one - e.g. second goal of the game is an own goal. The scorer of the third goal will be settled as the winner for both the second goalscorer and third goalscorer markets. If the last goal of the game is an own goal, then the second last goal of the game will be considered the winner for the Last Goalscorer market.
• Bets taken on first goalscorer will be void if that player does not take part in the game or if they come on after the first goal is scored.
• Every effort is made to quote first/last player to score odds for all possible players. However, odds for other players are available on request and will count as winners if they score the first/last goal even if they are not named in our lists.
• Bets on last goalscorer will be void if that player does not take part in the game or does not come on as a substitute. In the event of a dispute over the award of a goal for first/last goalscorer or scorer special purposes, settlement will be in accordance with the result given by governing body of that league within 24 hours of the final whistle. Any subsequent changes to the result will be ignored for settlement purposes.
• A player will be considered to be a runner and bets will stand should the player play any part in the match.
• Goals scored in normal time only count for this market. Goals scored in extra time or in a penalty shoot-out do not count.
• To Score 2 or More
• To Score A Hat-trick
• First Team Goalscorer
• To Score And Win
• To Score First Or Second
• To Score First and Second
• To Score in First Half
• To Score in Second Half
• To Score in Both Halves
• To Score and be Carded
• First Scorer and Anytime Carded
• First Scorer and First Carded
• To Score in First 20 Minutes
• To Score in Last 20 Minutes

Insurebet First Goalscorer

Price offered is for the player to score the first goal of the match. If the player fails to score the first goal of the match but does score a goal in the match then the bet stake is returned.

• As determined by FanDuel’s settlement guidelines, an assist is defined by the final touch (pass, pass-come-shot or any other touch) leading to the recipient of the ball scoring a goal.
• If the final touch (as defined above) is deflected by an opposition player, the initiator is only given an assist if the receiving player was the likely intended destination of the touch before the deflection.
• If a shot on goal is blocked by an opposition player, is saved by a goalkeeper, or hits the woodwork, and a goal is scored directly from the rebound, then an assist is awarded, unless the resulting goal is scored by the same player who had the initial shot, in which case no assist is awarded.
• If a player shoots or passes the ball and forces an opposing player to put the ball in their own net (Own Goal), then an assist is awarded to the attacking player.
• For a penalty or a free-kick, the player winning the penalty or free-kick (by being fouled or causing a handball) is awarded an assist if a goal is directly scored, but not if they take it themselves, in which case no assist is awarded.
• Bets taken on first assist will be void if that player does not take part in the game or if he comes on after the first goal is scored (and where an assist is awarded for that goal).
• For the first assist market only, if a player enters the field of play after the first goal is scored (and where an assist is awarded for that goal), the bet will be voided. If a player is sent off or substituted before the first goal is scored (and where an assist is awarded for that goal) bets on that selection are deemed as losers.
• For the purpose of deciding results on spread betting, the actual score of the match (Team A v Team B) is adjusted for the spread. If Team A or Team B are selected, then the spread adjustment applies to the goals scored by that team. If the draw is selected then the spread adjustment applies to Team A.
• Team A (-1)
• 7/2 Draw (-1) 3/1
• Team B (+1) 8/15
• If Team A win by 2 or more goals then all bets on Team A (-1) will be winners. Bets on the Draw (-1) and Team B (+1) will be losers. (e.g., Team A win 2-0 so becomes Team A 1-0 after the -1 adjustment so Team A are the spread winners.)
• If Team A win by exactly 1 goal, then all bets on Draw (-1) will be winners. Bets on Team A (-1) and Team B (+1) will be losers (e.g., Team A 1-0 becomes 0-0 after the -1 adjustment to the home team so it’s a spread draw)
• If the match ends in a draw or Team B win by any number of goals, then all bets on Team B (+1) will be winners. Bets on Draw(-1) and Team A (-1) will be losers. (e.g., Team A 1-1 Team B becomes Team A 1-2 Team B after the +1 adjustment to Team B so Team B are the spread winners).
• A 2-way money line market where bets are void if the game ends in a tie after normal time.
• A double chance bet allows you to cover two of the three possible outcomes in a soccer game with one bet.
• Home team and draw - Your bet is a winner if the home team wins or ties the game.
• Away team and draw - Your bet is a winner if the away team wins or ties the game.
• Home team and away team - Your bet is a winner if the home team or the away team wins the game.
• Normal 90 minute betting rules apply.
• First player to score/correct score double.
• To win you must successfully forecast both the player who will score the first goal in a selected match and also the correct score after 90 minutes play.
• If a player is selected who comes on after the first goal has been scored or does not take part in the match, the bet will be settled as a correct score single.
• In the event of a match being abandoned, bets will be void unless a goal has been scored prior to abandonment, when bets will be settled as singles on the selected first goalscorer at the appropriate odds.
• In the eventuality of all goals in the match being own goals, all bets will be settled as correct score singles at the correct score odds only.
• Player to score/match result doubles.
• To win you must successfully forecast both a player to score in a selected match and also the match result after normal time.
• If a player is selected who takes no part in the match then all bets will be void regardless of the match result.
• In the event of a match being abandoned, all bets will be void.
• Bets on time of the first/last goal, time of first corner, time of first booking and interval bets will be settled as the time shown by the major TV station broadcasting the match.
• For time of first corner market, the time that the corner is taken will count.
• For time of first booking market, the time that the player is shown the card will count.
• In the event of a dispute, the decision of the official league data will be final.
• The 1st minute is defined as between 00:00 & 00:59 and so on for every other minute of the game.
• What will happen in the next minute. Settlement rules for these markets are below:
• Settlement in all cases will use the time of the event supplied to us by our data provider.
• If none of the stated outcomes occur during the stated period, all bets will be settled as losing bets.
• For the ‘goal’ selection, a goal will be deemed to have been scored the moment the ball completely crosses the goal-line within the confines of the goal posts, provided that the referee ultimately awards the goal. For example, if the ball completely crosses the goal-line but the goal is not awarded because, for example a foul occurred before the ball crossed the line or because the referee did not believe that the ball did cross the line, then a goal will not be deemed to have been scored. Own goals scored will count towards settlement of this market.
• For the ‘free kick’ selection, a free-kick will be deemed to have been awarded the moment the referee and or assistant referee signal any of the following: A direct free-kick following a foul, an indirect free-kick following a foul or offside offense but not a penalty kick, corner or drop ball.
• Direct Free Kick for Goals / Shots - direct free kick shots are any attempts created directly from the free kick itself.
• For the ‘corner’ selection, a corner will be deemed to have been awarded the moment the referee and or assistant referee signal for the award of a corner.
• For the ‘goal kick’ selection, a goal kick is awarded and timed according to when it was indicated by the referee and/or assistant referees. A kick out from the hands of the goalkeeper or a free kick taken by the goalkeeper is not a goal-kick.
• For the ‘throw in’ selection, a throw in will be deemed to have been awarded the moment the referee and or assistant referee signal the award of the throw in.
• "Goal Scored X - Y" markets are defined as betting on whether there will be a goal scored by one of the teams within the time period X - Y (inclusive) of the event’s match clock. Only goals scored within that timeframe will count for settlement.
• "Corner Awarded X - Y" markets are defined as betting on whether there will be a corner awarded to one of the teams within the time period X - Y (inclusive) of the event’s match clock. Only corners taken within that timeframe will count for settlement.
• "Card Shown X - Y" markets are defined as betting on whether there will be a yellow or red card shown to a player within the time period X - Y (inclusive) of the event’s match clock. Only cards shown within that timeframe will count for settlement.
• These are known as special spreads.
• Bets on number of goals include own goals.
• Bookings of managers, coaches, or players who are yet to participate in the game (i.e., substitutes) do not count.
• In the event of an abandoned match all bets on special spreads will be void unless the maximum quote has been obtained. For example, should a customer back 12 or more corners in a match and that match is abandoned when 13 corners have already been taken then that bet is a winner with all other bets on corners losers.
• Bets on 'number of corners' refers to corners taken and not corners awarded.
• Bets on number of corners refers to number of corners taken and not corners awarded.
• For time of corner markets, the time that the corner is actually taken will count and not the time it was awarded.
• For "Odd or Even" corner markets, 0 is counted as an even number.
• Multi Corners refers to number of 1st half corners multiplied by number of 2nd half corners.
• Team Multi Corners refers to number of 1st half team corners multiplied by number of 2nd half team corners.
• Markets for "Race to X Corners" will be settled on whatever team reaches "X" corners first. E.g. Race to 3 Corners will be settled on the first team to take 3 corners in the match.
• Players will be considered to be a runner and bets will stand should he play any part in the match.
• Only bookings in normal time (90 mins play) count.
• Any bookings made during half time will count; however, bookings made after the final whistle do not count.
• Bookings of players yet to participate in the game (i.e., substitutes) do not count.
• For Over/Under Total Card markets, the maximum number of cards awarded to one player is two. Yellow Card = 1. Red Card = 1. Yellow Card + Yellow Card (Sending Off) = 2 Cards.
• Bets on 'card index' are settled as follows: Yellow card = 10 points; Red card = 25 points.
• If a player is shown a yellow card and subsequently sent off this counts as 35 points.
• Maximum booking points a single player can receive in one match is 35 points.
• Bookings will only count for players taking part in the match. Bookings of managers, coaches or off the field of play will not count.
• Any bookings made during half-time will count, however bookings made after the final whistle do not count.
• Restrictions apply as to what special spread selections can be combined with in parlay bets.
• For first booking if more than one player being booked in the same incident the first player to be shown a card by the match referee shall be deemed the winner.
• Both yellow and red cards count for this market.
• Booking times will be settled on the match time when the yellow or red card is shown and not when the foul or offense took place. Bookings during half-time (before the 2nd half kicks off) will be counted as cards awarded in the 1st half for settlement purposes with regards to all relevant markets.
• Card Index Match Bet refers to which team gets the most Card Index points during the match.
• For any bets placed on the total number of cards to be awarded (e.g., in total, to a team or to a single player / group of players), a player who has been shown two yellow cards (and is therefore ultimately shown a red card) or a player who is shown a yellow card followed by a straight red card will, for settlement purposes, be deemed in each case to have been shown two (rather than three) cards. For the avoidance of a doubt, the award of a straight red card will, for settlement purposes, be deemed to amount to the award of a single card.
• For any bets involving a given player to achieve a number of shots on target, the final determination of the number of shots on target will be made by FanDuel Sportsbook, using the definitions below. A shot on target is defined as any goal attempt that:
• Is a clear attempt to score that would have gone into the net but for being saved by the goalkeeper or is stopped by a player who is the last-man with the goalkeeper having no chance of preventing the goal (last line block).
• Shots directly hitting the frame of the goal are not counted as shots on target, unless the ball goes in and is awarded as a goal.
• Shots blocked by another player, who is not the last-man, are not counted as shots on target.
• All shots on target bets are settled on the basis of 90 minutes’ play (plus injury time) unless otherwise stated.
• For any player shots/shots on target bets, all bets placed on players that do not take part in the match will be void. Players will be deemed a participant should they enter the game at any point in 90 minutes play plus injury time.
• For combined shots on target markets, the bet will be void if any player named in the selection plays no part in the match, regardless of the overall outcome.
• You are betting on a nominated player to achieve the stated stipulation in both the first half and second half.
• If the nominated player achieves the stated stipulation in the selection, then the selection will be settled as a winner (e.g. if the selection Is Harry Kane to have 1 or more assists in each half and he has an assist in the first half and an assist in the second half, this would be settled as a winner).
• If the nominated player plays no part in the first half of the match, or indeed any part of the match, then the selection is void (e.g. if the selection is Harry Kane to score 1 or more goals in both halves and Harry Kane is a substitute, but comes on during or after half time, or plays no part whatsoever, the selection would be void).
• If the nominated player plays any part of the first half, and fails to achieve the stated first half stipulation, then the selection is a loser regardless of the duration of their participation in either the first or second half (e.g. if the selection is Harry Kane to have 1 or more shots on target in each half, and he starts the match/comes on during the first half and fails to register a shot on target during the first half, this selection will be a loser regardless of his participation in the second half).
• If the nominated player plays any part of the first half, and does achieve the stated stipulation but is subsequently withdrawn before or during half time and plays no part in the second half, then this selection will be void (e.g. if the selection is Harry Kane to score 1 or more goals in each half & assist 1 or more goals in each half, and he scores AND assists in the first half but is withdrawn before or during half time i.e. plays no part in the second half, then the selection is void. In this instance however, if he scored but didn’t assist in the first half, the selection would be a loser, as it marries up with the point above).
• Extra time markets refer only to the 30 minute period of extra time plus any time added by the referee for stoppages. For settlement purposes, this is essentially treated as a new game, and stats (goals, corners etc.) start at zero here. Goals scored in Penalty shootout do not count for settlement purposes.
• Refers only to Penalties scored in Normal Time. Penalties scored in extra time or penalty shootouts do not count here.
• Refers to results of penalty shootout only. Penalties scored in normal time or extra time do not count here.
• Refers to team finishing in top X positions of league table in regular season play, excluding any subsequent playoff matches.
• Refers to trophies won by a specific team in a given season. Must win all listed trophies in selection to win.
• If a team is relegated from a league because, at the end of a season, it has finished within the relegation positions which are relevant to that league, bets on that team to be relegated will be settled as winning bets. If a team is otherwise disqualified, thrown out or removed from a league (i.e. in circumstances other than those where it has finished the season within the relevant relegation positions): (i) if such team is disqualified, thrown out or removed from the league before the relevant season has started, all bets on the affected market will be void (and a new market will subsequently be loaded) and (ii) if such team is disqualified, thrown out or removed from the league after the relevant season has started (or a determination is made by the applicable governing body, during the season, that the team will be thrown out or removed from the league following the season’s conclusion), all bets on the affected team will be void. For the avoidance of doubt, if a points deduction is imposed on a team such that it finishes the season within the relegation places which are relevant to the applicable league, bets on that team to be relegated will be settled as winning bets.
• Stage of Elimination refers to the round of the tournament at which a team is eliminated. E.g. if a team is defeated in the quarter final, the “Quarter Final” selection would be the winner.
• An Asian handicap is a market where a handicap is applied to the match in order to make the prices more equal.
• The favorite in a match will have a negative handicap represented with a (-) symbol and will have to win by more goals than the handicap in order to be a winner.
• The outsider in the match will receive a positive handicap represented with a (+) symbol which will be added to the final score.
• The handicap will be added to one side only.
• Half-time Asian handicap markets will be settled on the half-time result.
• The handicap is applied to the final result of the match and the team with the most goals after the handicap has been applied will be the winner. If the number of goals for each team are level after the handicap has been applied, it will result in a push with the stake being returned.
• If Team A win by three or more goals then all bets on Team A will be winners and bets on Team B will be losers.
• If Team A win by exactly two goals then all bets on the market will be pushed and the bet stake returned on both sides
• If Team A win by exactly one goal, the match ends in a draw or Team B win the match then all bets on Team B will be winners and bets on Team A will be losers.
• The handicap is applied to the final result of the match and the team with the most goals after the handicap has been applied will be the winner.
• If Team A win by two or more goals then all bets on Team A will be winners and bets on Team B will be losers.
• A split ball handicap is where the level of favoritism is between a half ball and a whole ball. In this case, your stake is being split equally between the whole ball and half ball handicaps.
• If you place a $100 bet on Team A -1.0 & -1.5 then your bet is split into two $50 bets. The first bet is on the Whole Ball Handicap (Team A -1.0) and the second bet is on the Half Ball Handicap (Team A -1.5)
• If Team A Win by exactly one goal then the stake on Team A -1.0 will be refunded and the stake on Team A -1.5 will be a loser. The stake on Team B +1.0 will be refunded and the stake on Team B +1.5 will be a winner.
• If the match ends in a draw or Team B win the match then all bets on Team B will be winners and bets on Team A will be losers.
• Which player will score the most goals in the tournament.
• Should players tie on the same number of goals, dead heat rules will apply.
• Goals scored in a Penalty Shootout are NOT included in final goal totals.
• The Golden Boot award is given to the player who has scored most goals. If more than one player is tied at this stage, ties are broken by another criteria and will be settled in line as per official governing body rules on the award. Goals scored in a Penalty Shootout are NOT included in final goal totals.
• Which player will score the most goals in the tournament & which team will win the tournament outright, should players tie on the same number of goals, dead heat rules will apply.
• Which two teams will play each other in the Final of the tournament.
• Which teams will finish 1st & 2nd in the tournament - in the exact order.
• Team to reach the stated round of the tournament.
• Which team will lose the final and finish in 2nd place.
• Either of 2 named teams to win the tournament.
• Which group will produce the winner of the tournament.
• Which confederation will the winning team represent, i.e. UEFA, CONCACAF, etc.
• Team to reach the stated round of the tournament but fail to qualify for the following round of the tournament.
• Team to score the most goals in the tournament.
• Team to score the fewest goals in the tournament.
• Which player will official governing body announce as the best player of the tournament.
• Which player will official governing body announce as the best young player of the tournament.
• Which player will score the most goals for their stated team in the tournament.
• Which team will win/finish top of the stated group.
• Team to qualify from the group and progress to the next round of the tournament.
• Which team will finish second/runner up of the stated group.
• Which team will finish in third place of the stated group.
• Which team will finish in bottom/last place of the stated group.
• Which teams will finish 1st & 2nd in the group - in the exact order.
• Which teams will finish 1st & 2nd in the group - in any order.
• Which teams will finish in 1st, 2nd, 3rd & 4th place in the exact order.
• The rules in this sub-section apply specifically to the settlement of any soccer bets which are placed via Pre-Match Combo markets. All other settlement rules which are included in this "Soccer Rules" section or elsewhere on this website (including in FanDuel Sportsbook’s Rules and Regulations) will also apply to the settlement of Pre-Match Combo bets unless they contradict, or conflict with, those included in this sub-section (in which case, the rules in this sub-section shall take precedence).
• All Pre-Match Combo bets are settled on the basis of 90 minutes’ play (plus injury time) unless otherwise stated on our website or below. Extra time and penalties will not count, except when the phrases 'To Qualify', 'Lift The Trophy' or 'Win The Tie' are quoted. For all parlay bets which involve one or more bets including such phrases, the remaining bets (i.e. which do not include such phrases) will be settled on the basis of 90 minutes’ play (plus injury time) unless stated otherwise.
• If any player who forms part of a Pre-Match Combo bet does not take any part in the relevant match (or does not fulfil the conditions of the bet), then the whole Pre-Match Combo bet shall be voided. This will apply in all cases regardless if any/all of the remaining components win or lose.
• Any dubious goals will be awarded according to the final determination of the Press Association.
• Own goals do not count towards any player totals. If an own goal is scored by a player on Team A, the goal will be added to Team B’s total goals as per normal rules.
• For Pre-Match Combo bets which have been placed on the method of the first (or any other) goal (e.g. header, shot from outside the penalty area etc.), any own goals will be disregarded (i.e. for the purposes of such any such bets, own goals will be deemed not to have occurred). For example, if you have placed a Pre-Match Combo bet on the first goal to be scored via a header, your bet will be successful if: (i) the first goal was an own goal which came off a player’s knee and (ii) the second goal was an ordinary goal scored via a header.
• Any Pre-Match Combo bets involving woodwork to be hit require that the ball hits the frame of the goal. Any shot that hits the frame multiple times (e.g. bar and left post) only count as hitting the woodwork once. Hit woodwork is always collected for the attacking team (and the player, who performed the last action), even when the ball hits the frame coming from a defensive back pass.
• For Pre-Match Combo bets on a player NOT to score or NOT to be carded, the player in question MUST start the match or the applicable bet(s) shall be voided.
• Any Pre-Match Combo Bets on the last goalscorer of a match will be void if that match is abandoned.
• For Pre-Match Combo bets involving goal kicks, only goal kicks which are actually taken will count towards the cumulative goal kick count (i.e. any goal kicks which are awarded but not taken will not count).
• For Pre-Match Combo bets involving two or more occurrences, those occurrences must take place at separate times for the Pre-Match Combo bet to be successful. For example, a Pre-Match Combo bet on a header to be scored and a goal to be scored from outside the penalty area will only be successful if a goal is scored via a header and separate goal is scored from outside the penalty area.
• Any Pre-Match Combo bets involving free-kick goals must be scored directly from a free-kick. For the avoidance of doubt, a goal will be deemed to have been scored directly from a free kick if the individual who takes the free kick is awarded the applicable goal (even if the ball touched another player before it crossed the goal line). Penalties do not count as free kicks.
• For any bets involving a penalty to be scored and/or missed (including Pre-Match Combo bets), if there is a retake of the first penalty, we will settle this market on the result of the retaken penalty. This may include several retakes until the sequence is finished.
• For any Pre-Match Combo bets involving a given player to achieve a number of shots on target, the final determination of the number of shots on target will be made by FanDuel Sportsbook, using official data (where applicable) and the definitions within the terminology section.
• Any Pre-Match Combo bets involving total passes, total player passes or total possession will be determined in accordance with the final determination of the official website of the relevant competition’s governing body.
• Pass shall mean any intentional played ball from one player to another. Passes include open play passes, goal kicks, corners and free kicks played as pass - but exclude crosses, keeper throws and throw-ins.
• For any Pre-Match Combo bets involving players to be carded, only cards awarded once the player is active in the match will count. Any cards shown after the final whistle will not count.
• For any Pre-Match Combo bets involving booking points: a yellow card will be worth 10 points and a red card will be worth 25 points. However, if a player receives two yellow cards and is consequently shown a red card, the player will receive a total of 35 booking points for the relevant game. Extra-time does not count nor do cards shown after the final whistle count towards the total. Only cards shown to players currently on the field of play will count. Cards shown to managers or substitutes will not count towards any total.
• For any Pre-Match Combo bets placed on the total number of cards to be awarded (e.g., in total, to a team or to a single player / group of players), a player who has been shown two yellow cards (and is therefore ultimately shown a red card) will be deemed, for settlement purposes, to have been shown two (rather than three) cards.
• For any Pre-Match Combo bets involving corners, only corners that are actually taken will count. If a corner is re-taken, it will only count as one corner.
• For any Pre-Match Combo bets relating to any competition long specials, in the event of one or more matches not being played, any selections that require an event (goal, corner, etc.) to occur in each match will be settled at a reduced price in line with the actual number of matches that were played.
• For any Pre-Match Combo bets relating to any specials involving players who play no part in the competition, these will be void.
• Where an obvious pricing error has occurred, we reserve the right to cancel any Pre-Match Combo bets placed at the incorrect price (and, in such circumstances, we will offer the Pre-Match Combo bet to be re-placed at the correct price).
• For any obvious wording errors, we reserve the right to cancel any Pre-Match Combo bets placed on that selection (and, in such circumstances, we will offer the Pre-Match Combo bet to be re-placed with the correct wording).
• Any Pre-Match Combo Bets requiring 2 teams to score in each half or to score 2+ or 3+ goals require each named team to score 2+, 3+ or in each half as appropriate.
• A Tournament will be deemed to have commenced when the first heat starts.  
• Tournament Withdrawals: For tournament betting, all bets will be voided on any surfers withdrawn prior to the start of an event. Bets will stand on any surfers withdrawn once the event has commenced.  
• Heat Withdrawals: For 2 board/3 board/4 board and any other heat betting - if any or all surfers are withdrawn and do not start the heat, then all bets on that heat will be voided.   
• Change of Venue: If there Is a change of venue (other than the back-up venue used by the World Surf League for each event) or the event is delayed by more than 10 or more days, then all bets will be made void and refunded.  
• Abandoned Events: Tournament cancellation will result in all wagers being voided.  
• Official Results; Wagers are settled on official results provided by the World Surf League or relative official governing body .
• If there is no presentation ceremony, outcomes will be determined in accordance with the official result of the relevant governing body, regardless of any subsequent disqualification or amendment to the result.
• Overall winner markets relate to the winner of the overall event and not for individual qualifiers or heats. If there is a presentation ceremony, markets will be settled on the official result of the relevant governing body at the time of the ceremony, regardless of any subsequent disqualification or amendment to the result. However, as a customer courtesy we may choose to settle prior to official publication of results.

Table Tennis

• In the event of a table tennis game not taking place or begins and does not finish, bets on the game which have not already been unconditionally determined are declared void.
• In the event a game is not decided competitively, for example a player is given a walkover, bets on this game are declared void.
• If a player or team withdraw prior to the start of an event, stakes will be refunded. Payouts on events where participants have withdrawn are subject to deductions to reflect the reduced number of participants.
• Bets are declared void in the event of a stated player being replaced.
• Official score sheets are used for the settlement of all bets. Where it is found that the official score sheet is clearly incorrect, FanDuel Sportsbook may use its own recorded statistics for settlement purposes.
• Players who are awarded at the podium are declared the event winner for settlement purposes. Any subsequent disqualifications will not overturn the original settlement.
• If a player or pairing retires or is disqualified in an ATP/WTA/Challenger Tour/Grand Slam/Davis Cup/BJK Cup/ATP Cup Match: (i) all match bets (i.e. bets placed on the winner of a given match) will be voided if the retirement/disqualification occurs prior to the conclusion of the first set and (ii) if the retirement/disqualification occurs following the conclusion of the first set, the player or pairing progressing to the next round (or winning the tournament in the case of a final) will, for the purpose of any match bets, be deemed the winner but match bets placed on the retiring player or pairing will be voided (and stakes in respect of those bets refunded accordingly). Bets on all other tournaments or matches (such as ITF or exhibition matches) and bets on other markets (i.e. other than match betting markets) will be voided where a player or pairing retires or is disqualified (regardless of whether the retirement occurs during or following the first set) unless, in the case of bets on other markets (excluding Total Game Markets), the outcome of the bet had been unequivocally determined prior to the time of the retirement/disqualification (in which case, the bet shall stand and shall be settled accordingly). For the purpose of Total Games related markets, should a player retire or be disqualified, bets will settle as Win/Loss based off the minimum possible games should the match have been played to conclusion (e.g., A player retires with the score 6-4, 3-2. Total Games would be settled off the minimum amount of games left i.e., 6-4, 6-2).
• All tennis bets (including any specials or statistics-based bets) will be settled in accordance with the official website of each tournament's governing body. Please note that some tennis matches will have differing match formats (i.e. 4 Game Sets, Championship Tie Break etc.). It is solely the customer’s responsibility to understand the formatting of a match before placing a bet. FanDuel Sportsbook will not be liable for any erroneous bets made under the assumption that a match would use a certain format.
• In the case of any settlement disputes, FanDuel Sportsbook’s decision is final.
• In the event of a change in the number of sets (or games per set) to be played, bets for match betting markets and “To Win First Set” markets will stand (save where the number of sets is reduced to one from a higher number of sets, in which case such markets will be voided). All other markets will be void. Where the format of the final set is changed (e.g. the number of games to be played in that set is changed) but the number of sets to be played remains the same, bets for match betting markets will stand.
• In the event of a tennis event not taking place or if a player is given a walkover, bets on the event are deemed void (in this context, “event” refers to a single match-up between players, rather than the tournament itself).
• a change in court type (indoor to outdoor or vice versa)
• a change of playing surface (either before or during a match)
• a change of venue
• a change to the scheduling which affects the time or date of a match.
• Where a player, pairing or team does not participate in a tournament (i.e. they are withdrawn prior to the start of their first match), all bets (including outright, quarter or special bets) involving that player, pairing or team will be voided and stakes will be refunded accordingly.
• A tournament must be completed in full for all markets relating to the outcome to stand. This includes: Name The Finalists, To Reach/Not to Reach Xth Round, Big Guns, Stage of Elimination or any tournament specials. For the Stage of Elimination and Not to Reach the Final markets, a player must play at least one point during the tournament for bets to stand.
• Total Games/Point Spread (Handicap) related markets: For the purposes of such markets, a tie-break is counted as one game. Forfeited points or games will count for final settlement purposes. For the purpose of Total Games related markets, should a player retire or be disqualified, bets will settle as Win/Loss based off the minimum possible games should the match have been played too conclusion (e.g., A player retires with the score 6-4, 3-2. Total Games would be settled off the minimum amount of games left i.e., 6-4, 6-2 in a 3 set match or 6-4, 6-2, 6-0 in a 5 set match).
• If a match is decided by a Champions tie-break then the Champions tie-break will be considered to be the third set.
• Where, for a match involving a champions’ tie break, we erroneously accept bets on the winner of a specified game in the final set, on the total number of games in such set or on handicap markets relating to such set (or similar), the bets in question will be void.
• For the purpose of bets taken relating to Total Games market or Game Handicaps market for the match, the champions tie-break will be considered to be one game.
• A Champions tie-break will not count towards any 'Will there be a Tie-Break' markets and will not be treated as a tie-break for any markets involving the occurrence of a number of tie-breaks.
• Game or Point related markets: If the wrong player has been set as the server for any individual game (Current or Next Game) then all markets relating to the outcome of that specific game will be void, regardless of the result. In the event of a game not being completed, all bets on the game will be void with the exception of Game to Deuce if the result has already been determined.
• Games / Alternative Games / Exact Games Won Margin: These markets are resulted on the absolute difference in total games won by player A and total games won by player B. For example, if Player A wins 17 games and Player B wins 19 games during the match, the market will be settled based on the absolute difference (which is 2).
• ITF matches will be settled on the basis of data from Sportradar and the tournament website of the ITF (and, in the event of any discrepancy, the data of the tournament website of the ITF will take precedence); and
• ATP and WTA matches will be settled on the basis of data from IMG and the tournament websites of ATP/WTA (and, in the event of any discrepancy, the data of the tournament websites of the ATP/WTA, as applicable, will take precedence).
• Where a handicap is attributed to an entire market (e.g. the market is entitled “To Win - 1.5 sets)” and there is no handicap attributed to any individual selection within that market, the relevant handicap will be applied to each first named selection. For example, if a market is entitled “To Win - 1.5 sets” and one of the selections within the market is “Federer V Nadal”, if the final score of the match is “Federer 3 sets, Nadal 2 sets”, that selection will be settled as if it the final score had been “Federer 1.5 sets, Nadal 2 sets” (i.e. any bets on Federer will be settled as losing bets and any bets on Nadal will be settled as winning bets). Unless otherwise stated in the name/heading of a market or selection, totals/handicaps apply to the overall match (rather than to sets or games).
• Due to possible delays or inaccuracies, the FanDuel LIVE scoreboard may not be reflective of actual LIVE scores and therefore should not be solely relied upon in determining whether to place a bet or not.
• In the event of a match starting but not being completed then all markets will be void, unless an official result is declared, in which case all bets will stand.
• The name/heading of a competition amounts to evidence of what a bet refers to. For example, if you place a bet on “Italy vs Brazil” under the competition name/heading U20 World Cup, the bet will apply to the match between Italy and Brazil which is part of the U20 World Cup.
• In case of a match being cancelled or postponed to after midnight (local time) on the scheduled start date, all bets will be voided.
• All markets will be settled with the final result by volleyball rules. The only exceptions are for matches that are agreed by the laws of the competition in which they are competing or agreed by both sides prior to kick-off. In such cases, all bets will be settled at the end of the agreed rules.

Winter Sports (which may include, amongst others, Alpine Skiing, Biathlon, Cross-Country Skiing and Ski-Jumping)

• Participants must pass the starting line/gate in order for bets to stand otherwise bets will be voided and stakes returned.
• If an event is abandoned, postponed or cancelled, all bets will be void unless the event is completed at the same venue within 48 hours of the official scheduled completion date; or a result is 'called' by the relevant governing body.
• FanDuel Sportsbook General Rules will apply for 'match bets'. However in respect of "Nordic Combined" if all competitors involved in the match bet do not start both sections of the event (ski jumping and cross country) then bets will be void.

Part C - Specific Terms and Conditions for FanDuel Casino

Your use of the “Casino” portion of the Services and/or your playing any game thereon (each a “Game”) means that you accept these additional terms and conditions (these “terms”) which are legally binding and made part of the Terms. Further, you acknowledge and agree to be bound by any additional rules which appear within a Game, including within a Game’s “Help” or “Game Info” tabs (“Rules”), including rules relating to minimum/maximum bets, maximum payouts, jackpots, disconnections, system malfunctions and automatic resolution features. The Rules may also contain instructions on how to play and the return-to-player (“RTP”). Please familiarize yourself with these terms and the Rules before you use the Casino or play a Game. You understand that you may lose money when playing the Games and accept that you are fully responsible for any such loss. You accept that under no circumstances will any amounts lost by you be recoverable from us or our vendors, licensors, suppliers, or GNAC.

Random Number Generator

You fully accept and agree that random number generator (“RNG”) software will determine all outcomes of Games on the Casino. In the event of a discrepancy between the results displayed on your Device and a Game’s records on our server, our records shall be regarded as definitive.

In the event of systems or communications errors relating to the generation of any result, bet settlement or any other element of a Game, we will not be liable to you as a result of any such errors and we reserve the right to void all related bets and plays on the Game in question.

Disconnection, Misuse and Malfunction

• We, our affiliates, agents and licensors accept no responsibility and will not be liable for any loss resulting from delays or interruptions to play due to failure, breakdown, malfunction, interruption of or disconnection from the games server or any other causes over which we or they have no control.
• Misuse or system malfunction voids all bets, plays and pays.
• If a player becomes disconnected while involved in a game where no player input is required to complete the game, the game shall produce the final outcome as determined by the RNG software and the game outcome will be reflected in the game history available to the customer. 
• upon subsequent activation, return the customer to the game state immediately prior to the interruption and allow the customer to complete the game;   
• be cancelled after 30 days, resulting in either the forfeiture of the customer’s wager or the return of funds to the customer in accordance with FanDuel’s internal procedures; or  
• depending on the specific game’s rules, make a selection on behalf of the customer in order to complete the game.  
• If a player becomes disconnected while involved in a multiple patron game where the result is affected by the time to respond to a game event, such as poker or blackjack, the game shall make a selection on behalf of the customer in order to complete the game.  
• If a player becomes disconnected because Location Services has, at the outset of a playing session, verified the customer’s physical presence in an approved state, but, at a later point in the playing session fails to successfully verify the customer’s continued presence in an approved state, the game in progress at the time of the subsequent failed location verification shall produce its final outcome and then the customer’s playing session shall be terminated.  
• Game rules for individual games can be found in the Rules within the Betting Apps and on the applicable Website.

Compliance with Laws

The Casino and Games thereon may only be used for lawful purposes and in a lawful manner. You agree to comply with all applicable laws, statutes and regulations regarding Games and any bets placed on or via Games or the Casino. We reserve the right to cooperate with law enforcement and other regulatory authorities, in investigating claims of illegal activity on the Casino.

• Where applicable, maximum payouts will be indicated to you in the Rules or elsewhere on the Services.
• Promotions and tournaments on the Casino will have their own individual terms and conditions which will govern your participation in the relevant promotion/tournament. Where you are credited with an amount to your Account pursuant to a promotional campaign or competition, unless specified to the contrary within the terms of such promotion or competition, the credited funds may only be used as bonus funds to play Games and cannot be withdrawn as cash. We reserve the right to reclaim bonus amounts credited to your Account if you attempt to withdraw them from your Account. By accepting any prize (including a jackpot) and/or winnings as part of a promotion on the Casino, you agree that you will not unreasonably withhold your consent to the use of your name (without compensation) for advertising and promotional purposes.
• We may, at our sole discretion and without any requirement to give reasons, exclude any customer from our services generally and/or from receiving selected promotions and offers introduced by us from time to time.
• We reserve the right to refuse or limit any bets or bonuses (for example by setting minimum and maximum amounts which will be set out in Rules, or by setting wagering requirements), or change such limits, at our sole discretion for any reason whatsoever without any obligation to provide you with notice.
• We reserve the right to suspend, discontinue, modify, remove or add to the Casino and/or any Game at our discretion with immediate effect and without any obligation to provide you with notice and we will not be liable as a result of any such action.
• You shall not interfere, interrupt, attempt to interrupt or attempt to manipulate the operations of the Services or the Casino or the normal play of any of Games thereon. In particular, you will not use or attempt to use any artificial intelligence or player assistance software but will play personally via the interfaces provided by us only. If you become aware that the Casino or any Game contains any error, you must inform our Customer Service and you agree not to take advantage of any such error. We reserve the right to recover any advantage that you may gain from any error, as well as all costs and expenses in making such recovery.
• Your Account is personal to you. You shall not allow others to use your Account or to accept any prize or participate in any Game. Any person found to have violated this clause will be liable for all losses on the Account but will not be entitled to collect any winnings. It is your responsibility to keep your password private and secure and you are solely responsible for the security of your Account information and password. You are responsible for any unauthorized use of your Account and/or password. In the event that a third party places a bet or is thought to have placed a bet from your Account, such bet shall be valid and liability for losses on your Account will lie with you, whether or not you were aware the third party misappropriated your Account and password information. You agree to notify us immediately if there is any change to your Account information.
• You will not post any unlawful, obscene, abusive, defamatory, threatening or other offensive material on the Services.
• We reserve the right to moderate any chat on the Casino and remove postings, including those which promote competing services and those which are untrue, derogatory or critical of us, the Services, the Casino and/or a Game. In addition, you agree to observe and abide by any specific chat rules that we may post on any chat facility from time-to-time.
• You understand that you risk losing money while using the Casino and playing Games and that you use the Casino and play Games at your sole risk.
• Excluding the payment of valid bets, in no event shall we be liable to you: (i) with respect to any and all claims arising from or related to these Terms or the Services, howsoever arising under contract, tort, negligence, breach of statutory duty or in any other cause of action, for damages exceeding the average balance held in your account in the previous six (6) months (or the term of the account in the case of accounts open for less than six (6) months; or (ii) for any consequential, indirect, incidental or special damage or loss of any kind whatsoever; or loss of business, profits, revenue, reputation, goodwill, contracts, anticipated savings or opportunities; or loss or damage arising from loss, damage or corruption of any data, even if such losses are foreseeable or if we have been notified of the possibility of same.
• If any part of these Casino Terms and Conditions shall be deemed unlawful, void or for any reason unenforceable, then that provision shall be deemed to be severable from these Casino Terms and Conditions and shall not affect the validity and enforceability of any of the remaining provisions of these Casino Terms and Conditions.
• These Casino Terms and Conditions, together with the Online Gambling Terms and Conditions and the Rules (as applicable) contain the entire agreement between you and us relating to the Casino and the Games thereon.

Inactive Accounts

Accounts shall be deemed “Dormant” in the event that the Account holder does not log in within a 12-month period. Dormant Accounts will be opted out of all bonuses in accordance with the applicable bonus terms. In accordance with applicable regulations, unclaimed balances in Dormant Accounts will be forfeited.

Part D - Specific Terms and Conditions for FanDuel Casino Live Dealer

Your use of the “Live Dealer” portion of the Services and/or your playing any game thereon (each a “Game”) means that you accept these additional terms and conditions (these “terms”) which are legally binding and made part of the Terms. Further, you acknowledge and agree to be bound by any additional rules which appear within a Game, including within a Game’s “Help” or “Game Info” tabs (“Rules”), including rules relating to minimum/maximum bets, maximum payouts, jackpots, disconnections and system malfunctions. The Rules may also contain instructions on how to play and the return-to-player (“RTP”). Please familiarize yourself with these terms and the Rules before you use the Casino or play a Game. You understand that you may lose money when playing the Games and accept that you are fully responsible for any such loss. You accept that under no circumstances will any amounts lost by you be recoverable from us or our vendors, licensors, suppliers, or GNAC.

Where applicable, the Rules for each Game will provide you with details of the types of bets which can be made, details in respect of minimum or maximum bets and any restrictions which apply to bets, for example, wagering requirements and/or the restrictions in respect of the time frame in which a bet must be placed.

Minimum Deposits and Maximum Deposits

Where applicable, the game rules for each Game will provide you with details in respect of minimum deposits. Please note that maximum account deposits apply, as will be indicated to you where relevant.

Maximum Payouts

Where applicable, the game rules for each Game will provide you with details in respect of maximum payouts.

Confirmation of Bets

Where applicable, the Rules for each Game will provide you with details in respect of bet confirmations.

Disconnection

Live dealer table games.

Due to FanDuel Casino Live Dealer games offering real-time wagering alongside other patrons, if a patron is disconnected during any active game round, the bets accepted by the Live Dealer system will be in play and the dealer will continue with the round as normal. There is no functionality for any FanDuel Casino Live Dealer games to wait for a disconnected patron to return to a table before continuing. If a patron is disconnected from a game round while betting time remains, any bets placed will be rejected and the bets will be returned to the patron. Please read each table game’s Rules before playing to determine the specific patron disconnection rules.

Live Dealer Blackjack

The following provisions apply if you suffer a disconnection from the network game server during game play.

• In most Live Dealer games*, if a patron is disconnected from an active game round after a bet is placed and the hand has been dealt, but player input is required, and the hand total is 11 and under, Auto Hit will be applied until the hand total is 12 and over.   
• In most Live Dealer games*, if a patron is disconnected from an active game round after a bet is placed and the hand has been dealt, but player input is required, and the hand total is 12 and over, an Auto Stand will be applied.     
• Some Live Dealer games* will proceed with an Auto Stand regardless of the cards showing, complete the round and payout according to the cards on the table. 

*Note: Please read each table game’s Rules before playing to determine the specific patron disconnection rules.

The outcome of the round can be validated in the Live Dealer Blackjack game history or by contacting Customer Service. 

• Live Dealer Baccarat

If a patron is disconnected from an active game round after a bet is placed, the Dealer will continue and complete the round. If the round ends before the patron was able to return to the table, the Live Dealer system will complete the round and payout according to the cards on the table. The outcome of the round can be validated in the Live Dealer Baccarat game history or by contacting Customer Service .

Live Dealer Roulette

If a patron is disconnected from an active game round after a bet is placed, the Dealer will continue and complete the round as normal. If the ball drops onto a number before the patron was able to return, the system will complete the round and payout according to the bets placed on the table. The outcome of the round can be validated in the Live Dealer Roulette game history or by contacting Customer Service .

Three Card Poker

If a patron is disconnected from an active game round after a bet is placed, the patron will have an allotted amount of time to make a decision. If decision time expires and the patron has not yet made a decision to Call or Fold, the hand will Auto Fold, and the patron will lose all bets placed (i.e., initial bets, call bets, and/or raise bets, as applicable). The outcome of the round can be validated in the Live Dealer Three Card Poker game history or by contacting Customer Service .

Live Dealer Texas Hold'em

If a patron is disconnected from an active game round after a bet is placed, the patron will have an allotted amount of time to make a decision. If decision time expires and the patron has not yet made a decision to Call or Fold, the hand will Auto Fold, and the patron will lose all bets placed (i.e., initial bets, call bets, and/or raise bets, as applicable). The outcome of the round can be validated in the Live Dealer Ultimate Texas Hold’em game history or by contacting Customer Service .

Live Dealer Craps

If a patron is disconnected from an active game round after a bet is placed, the Dealer will continue and complete the round as normal. If a 7 is rolled before the patron was able to return, the system will complete the round and payout according to the bets placed on the table. The outcome of the round can be validated in the Live Dealer Craps game history or by contacting Customer Service .

In the event of systems, communications or human errors relating to the generation of any result, bet settlement or any other element of a game, we will not be liable to you as a result of any such errors and we reserve the right to withhold payment and to declare all bets or plays in question void. If we discover the error after payment has been made, you shall indemnify and shall be liable to pay us, on demand, the relevant amount paid by us to you as a result of the error (and any costs sustained or incurred by us in recovering the relevant amount from you.

Misuse or abuse of a Game voids all bets, plays, and payouts.

Part E - Master Offer and Promotions Terms

These “Master Offer and Promotions Terms” (“Master Promotional Terms”) apply to all FanDuel Sportsbook and FanDuel Casino promotions (each, a “Promotion”). Each promotion may have additional terms and/or rules of participation (“Promotion Terms”), which will be posted or otherwise made available to you at or near the place of the Promotion announcement. The Promotion Term for each Promotion in which you participate will be deemed incorporated into and form a part of these Standard Promotional Terms. In the event of any discrepancy or conflict between these Master Promotional Terms and any Promotion Terms, then the specific Promotion Terms shall govern and prevail. The Promotion Terms for each Promotion in which you participate will be deemed incorporated into and form a part of these Master Promotional Terms. It is your responsibility to read the Promotion Terms to determine whether or not your participation, registration, or entry in the Promotion will be valid or restricted, and to determine your participation requirements.

• Eligibility: Each Promotion is open only to individuals who at the time and date of entry are: (i) not an Excluded Person (as such term is defined in Section 4.1 in Part A - General Terms and Conditions); (ii) Account (as such term is defined in Section 4.3 in Part A - General Terms and Conditions) holders; (iii) physically located in the State of New Jersey; (iv) are twenty-one (21) years of age or older; and (v) meet any eligibility requirements specifically set forth in the Promotion Terms. Employees, officers and directors of BIU, its parent company, and each of their respective affiliates, subsidiaries, advertising and promotion agencies, retailers, distributors, and each of such employees’, officers’ and directors’ immediate family members and/or those living in the same household (whether legally related or not) of each are not eligible to participate in any Promotion or receive the advertised Bonus (defined below). Additionally, BIU reserves the right to refuse or otherwise restrict your eligibility to participate in any Promotion for any reason, in our sole discretion, including based on your wagering patterns or wagering history or if you failed to take advantage of any previous Promotions in good faith. Void where prohibited by law. If BIU becomes aware of a participant who, in the course of participating in a Promotion, has become able to guarantee wins and/or profits with no or only minimal risk, and/or benefits from a Promotion by participating through more than one (1) Account, and/or displays irregular or unusual playing or betting patterns which BIU deems to be abusive, BIU may elect to do any one or more of the following: (i) close the customer’s Account(s); (ii) invalidate the transactions or game play which was in contravention of this term; and/or (iii) withhold the customer’s Bonus, including winnings from such transactions or game play.
• How to Qualify: To qualify for a Promotion, during the offer period set forth in the Promotion Terms (the “ Promotion Period ”), eligible individuals must visit your Account and follow the instructions in the Promotion Terms on how to participate. All Promotions are limited to one (1) entry per person. To ensure that the Promotion is limited to one (1) entry per person, we reserve the right to only permit one (1) customer to participate from each household address, IP address, email address, telephone number, same payment account (e.g., debit or credit card, etc.) or shared computer (e.g., public library or workplace).
• Multiple Accounts: Multiple entries in any Promotion will not be accepted; neither will entries made in breach of these Master Promotional Terms or the specific Promotion Terms. BIU reserves the right to exclude any participant from Promotions if BIU believes that a participant has tried to enter a Promotion by using more than one username, Account or is otherwise engaging in any fraudulent or illegal activity (including participation that would be in breach of the law in New Jersey), whether or not that participant would or might have won any Bonus but for such activity. Where multiple entries/Accounts have been used, BIU reserves the right to cancel these Accounts and withhold payment of the Bonus or any other Promotion benefits.

Bonuses may be awarded as site credit, bonus bets/free bets, or enhanced pricing tokens. If you receive a bonus in site credit, for any wager you place using site credit you will receive as withdrawable cash both the winnings and the stake of such wager. If you receive a bonus in bonus bets/free bets, for any wager you place using bonus bets/free bets you will receive as withdrawable cash only the winnings of such wager (you will not receive the stake). For any Bonuses awarded in the form of a physical prize, prizes are non-transferable, with no cash redemptions, equivalents or substitutions, except at BIU’s sole and absolute discretion. All prize details not specified in these Master Promotional Terms will be determined in BIU’s sole and absolute discretion. Prize details and availability are subject to change and prize provider’s rules and restrictions, and in the event that BIU is unable to provide the winner with his or her prize(s), BIU may elect to provide winners with the approximate value of such item in cash or award an alternate prize of comparable or greater value. All prize(s) are awarded “AS IS” and without warranty of any kind, express or implied (including, without limitation, any implied warranty of merchantability or fitness for a particular purpose). The approximate retail value (“ ARV ”) of a prize is based on available information provided to BIU and the value of any prize awarded to a winner may be reported for tax purposes as required by law. Unclaimed prizes will be forfeited. Prizes, if legitimately claimed, will be awarded. The BIU Parties (defined below) are not responsible for and will not replace any lost, mutilated or stolen prize(s) or any prize that is undeliverable or does not reach the winner because of an incorrect or changed address. If a winner does not accept or use the entire prize, the unaccepted or unused part of the prize will be forfeited and the BIU Parties will have no further obligation with respect to that prize or portion of the prize. No more than the stated prizes will be awarded. The BIU Parties are not responsible for and winner will not receive the difference, in any, between the actual value of the prizes at the time of award and the stated ARV in these Official Rules or in any Promotion-related correspondence or material.

• Administration: The BIU Parties expressly reserve the right to amend, suspend or terminate any Promotion at any time without prior notice or consent. Administration of a Promotion is at the sole discretion of the BIU Parties. Any questions relating to eligibility, these Master Promotional Terms and Conditions or any other questions concerning a Promotion will be resolved at the sole discretion of the BIU Parties and their decisions will be final and binding with respect thereto. No groups, clubs, corporations, companies, partnerships, or organizations may participate in any Promotion or reproduce or distribute any portion of these Master Promotional Terms to their members.
• Publicity Release: Subject to applicable law, participants irrevocably grant the BIU Parties and each of their licensees, and its and their successors, assigns and sub-licensees, the right and permission to use their name, voice, likeness and/or biographical material for advertising, promotional and/or publicity purposes in connection with the Promotion, in all forms of media and by all manners (now and hereafter known), and on and in connection with related products, services, advertising and promotional materials (now known or hereafter developed), worldwide, in perpetuity, without any obligation, notice or consideration except for the awarding of the Bonus to the recipients.
• Tampering with Any Promotion: The BIU Parties are not responsible for the actions of entrants in connection with the Promotion, including entrants’ attempts to circumvent these Master Promotional Terms or otherwise interfere with the administration, security, fairness, integrity or proper conduct of a Promotion. Persons found tampering with or abusing any aspect of a Promotion, or whom BIU believes to be causing malfunction, error, disruption or damage may be disqualified. Additionally, any attempt to cheat a Promotion, as determined at the sole and absolute discretion of BIU, may result in immediate disqualification of the participant, as well as other possible consequences, including disqualification from any and all existing and future Promotions. ANY ATTEMPT BY A PERSON TO DAMAGE ANY WEBSITE (INCLUDING ANY MOBILE APP) OR UNDERMINE THE LEGITIMATE OPERATION OF A PROMOTION MAY BE A VIOLATION OF CRIMINAL AND CIVIL LAWS AND SHOULD SUCH AN ATTEMPT BE MADE, BIU RESERVES THE RIGHT TO SEEK ALL LEGAL AND EQUITABLE REMEDIES FROM AND AGAINST ANY SUCH PERSON TO THE FULLEST EXTENT PERMITTED BY LAW. BIU reserves the right, at its sole and absolute discretion, to disqualify (or terminate the Bonus of) any individual who is found to be, or suspected of, acting in violation of these Master Promotional Terms, or to be acting in an unsportsmanlike, obscene, immoral or disruptive manner, or with the intent to annoy, abuse, threaten or harass any other person.
• Suspension / Modification / Termination: In the event BIU is prevented from continuing with a Promotion by any event beyond its control, including, but not limited to, fire, flood, epidemic, earthquake, explosion, labor dispute or strike, act of God or public enemy, communications or equipment failure, utility or service interruptions, riot or civil disturbance, terrorist threat or activity, war (declared or undeclared), interference with a Promotion by any party, or any federal, state, local or provincial government law, order, or regulation, order of any court or jurisdiction, or other cause not reasonably within BIU’s control (each a “ Force Majeure ” event or occurrence), BIU shall have the right to modify, suspend or terminate the Promotion or Bonus. BIU additionally reserves the right, in their sole and absolute discretion: (a) to modify, suspend or terminate the Promotion should causes beyond BIU’s control corrupt or interfere with the administration, integrity, operation, security or proper play of the Promotion; or (b) to disqualify any participant found to be, or suspected of: (i) tampering with the entry process or the operation of the Promotion; (ii) acting in violation of these Master Promotional Terms; or (iii) acting in an un-sportsmanlike manner.
• Release and Waiver of Liability: By participating and/or redeeming any Promotion Bonus, in addition to the indemnities set forth in Section 27 of Part A - General Terms and Conditions, participants agree to release, defend, indemnify and hold harmless BIU, the FanDuel Sportsbook Group, Boyd, GNAC, and NMR and each of their respective parent corporations, subsidiaries, advertising and promotion agencies, affiliates, directors, officers, employees, representatives and agents (collectively, the “ BIU Parties ”). from and against any and all liability claims or actions of any kind whatsoever (however named or described) for injuries, death, damages or losses to persons and property which may be sustained in connection with: (i) your participation in a Promotion; (ii) the receipt, use or misuse of the Bonus; and (iii) while preparing for, participating in, and/or traveling to any Promotion-related activity, including those damages caused by the BIU Parties’ own negligence. The BIU Parties expressly disclaim any responsibility or liability for injury or loss to any person or property relating to the delivery and/or subsequent use or misuse of a Bonus. The BIU Parties are not responsible for any incorrect or inaccurate information, including errors or typos in these Master Promotional Terms, the Promotion Terms or any Promotion-related communication or materials, whether caused by the BIU Casino Parties or participants, printing errors or by any of the equipment or programming associated with or utilized in the Promotion.
• Miscellaneous: The following Sections from Part A - General Terms and Conditions are expressly incorporated into these Master Promotional Terms and are applicable to all Promotions: Errors & Suspected Errors, Fraud, No Warranty, Liability, Indemnity, General and Disputes and Governing Law. Any disputes relating to Promotions will be resolved in accordance with the BIU Dispute Resolution Policy, set forth in Part A - General Terms and Conditions. No waiver of any of the provisions of these Master Promotional Terms and Conditions shall be deemed or shall constitute a waiver of any other provisions hereof, nor shall waiver constitute a continuing waiver unless otherwise expressly provided. If any provision of these Master Promotional Terms is found to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be severed from the remainder of these Master Promotional Terms, which will otherwise remain in full force and effect. The Promotion Terms and these Mater Promotional Terms may be changed, amended or terminated by BIU, at any time and without notice.

Part F - Privacy Policy

Welcome! This privacy policy (“Privacy Policy”) governs your use of the website www.casino.fanduel.com (including both mobile and online versions), the website sportsbook.fanduel.com (including both mobile and online versions) (the “ Websites ”), the FanDuel Casino mobile apps and the FanDuel Sportsbook mobile apps (the “ Betting Apps ”), and your use of any interactive features, services, widgets, plug-ins, applications, content, downloads and/or other online services that we own and control and that post a link to this Privacy Policy (collectively with the Websites and the Betting Apps, the “ Services ”), which are made available by Betfair Interactive US LLC ( “BIU”, “FanDuel Sportsbook”, “FanDuel Casino”, “we”, “our”, or “us” ). This Privacy Policy does not apply to data we receive from third parties, unless we combine such data with Personal Information (defined below) that we have ourselves collected under this Privacy Policy. This Privacy Policy does not apply to our data collection activities offline or otherwise outside of our Services (unless otherwise stated below), and does not govern the data practices of third parties that may interact with our Services.

To the extent we provide you notice on our Services of different or additional privacy policies or practices (e.g., at the point of our collection), those additional terms shall govern such data collection and use.

In addition, please review the Services’ Terms and Conditions , which governs your use of the Services. By using our Services you consent to our Privacy Policy and Terms and Conditions and our collection, use and sharing of your information and data, and other activities, as described below. If you do not agree to the terms of this Privacy Policy, please do not provide us with any Personal Information and do not use this Services.

Linkable Table of Contents

It is important that you read and understand the entire Privacy Policy before using the Services. To ease review, each section below contains a brief introductory summary and a link to the full explanation. Click on the headings and the “More” buttons to be taken to the full explanation. Any capitalized terms that appear in but are not otherwise defined in the introduction have the meanings given to them elsewhere in the Privacy Policy.

What Information Do the Services Collect?

Information you provide to us, information collected and stored as you access and use the services, location-based information, information third parties provide about you, interactions with third-party services, information you provide about a third party, do not track disclosures, how do we use the information collected, how and when do we share information with third parties, when you request information from or provide information to third parties, third parties providing services on our behalf, to protect the rights of biu and others, affiliates and business transfer, what about information i disclose publicly or to others, user content and public information, name and likeness, ads and information about you, does third-party content, links to third-party sites and/or third-party apps appear on the services, how do i change my information and communications preferences, what about data retention, what should parents know about children, what about security, your rights and choices, notice to california residents, what about changes to the privacy policy, how can you contact us, your rights and responsibilities, information on vendors and other third party entities, the full detailed privacy policy.

On the Services, we may ask you to provide us, or our service providers, with certain categories of information, such as: (1) personally identifiable information, which is information that identifies you personally, such as your first and last name, title, e-mail address, mailing address, telephone numbers, social security number, birth date, debit card or bank account information (“ Personal Information ”); and (2) demographic information, such as information about your gender (“ Demographic Information ”). To comply with legal, contractual, and other obligations, you may be required to provide certain information to us in order to utilize the Services, such as first name, last name, title, email address, birth date, telephone number, permanent address, social security number, passport information, driving license information, other identification documents, source of funds, tax-related information, and location-based information (described below). For compliance reasons and identity verification obligations, provision of this information, when requested, may be a mandatory condition of using some or all of the Services. We may collect this information through various forms and in various places on the Services, including if you register for an account, through “contact us” forms, or when you otherwise interact with the Services. If you contact us, by email, text message, phone call, or otherwise, in addition to any Personal Information we may receive, we may record and store the contents of those communications ourselves or using a third-party vendor. We may use the contents of these communications for training or other purposes and to satisfy our legal, auditing, and other obligations, or for any reason set forth in this Privacy Policy. Your communications with us might include requests, questions, and/or issues regarding your use of the Services or other topics you might raise. If we combine Demographic Information with the Personal Information we collect directly from you on the Services, we will treat the combined data as Personal Information under this Privacy Policy.

In addition to any Personal Information or other information that you choose to submit to us via our Services, we and our third-party service providers may use a variety of technologies that automatically (or passively) store or collect certain information whenever you visit or interact with the Services (“ Usage Information ”). This Usage Information may be stored or accessed using a variety of technologies that may be downloaded to your personal computer, browser, laptop, tablet, mobile phone or other device (a “ Device ”) whenever you visit or interact with our Services. When your Device contacts our web servers (for example, when you visit this Services or view an HTML e-mail), our web servers automatically collect Usage Information. We also may determine the applicable technology available in order to serve you the most appropriate version of a web page, e-mail, advertising or promotional announcement or similar service. To the extent we associate Usage Information with your Personal Information we collect directly from you on the Services, we will treat it as Personal Information.

This Usage Information may include:

• your IP address, UDID or other unique identifier (“Device Identifier”). A Device Identifier is a number that is automatically assigned to your Device used to access the Services, and our computers identify your Device by its Device Identifier;
• your Device functionality (including browser type, operating system, hardware, mobile network information);
• the areas within our Services that you visit and your activities there, including remembering you and your preferences;
• your Device location;
• your Device characteristics; and
• certain other Device data, including the time of day, referrer data that identifies the web page visited prior and subsequent to visiting our Services among other information.
• We may use various methods and technologies to store or collect Usage Information (“Tracking Technologies”). Tracking Technologies may set, change, alter or modify settings or configurations on your Device. A few of the Tracking Technologies used on the Services, include, without limitation, the following (and subsequent technology and methods later developed):
• Browser Cookies. Like many websites, we use browser “cookies”. Cookies are a website’s way of remembering who you are. A cookie is a small text file that is stored on your computer’s hard drive or stored temporarily in your computer’s memory. There are two kinds of cookies: those that are “session” oriented and those that are “persistent”. Session cookies delete from your computer when you close your browser. Persistent cookies retain information for later use tomorrow, next week, next month, or whenever they are set to expire. We use cookies to help us to identify account holders and to optimize their experience on our Services. Also, we will use cookies to monitor and maintain information about your use of the Services. Most web browsers accept cookies automatically. You can delete cookies manually or set your browser to automatically delete cookies on a pre-determined schedule. If you decline to accept cookies, you may not be able to take advantage of or participate in certain features of the Services and when you revisit our Services your ability to limit cookies is subject to your browser settings and limitations. Regular cookies may generally be disabled or removed by tools that are available as part of most commercial browsers, and in some but not all instances can be blocked in the future by selecting certain settings. Each browser you use will need to be set separately and different browsers offer different functionality and options in this regard.
• Flash Cookies. Our Services enable the use of the Adobe Flash Player. Adobe’s Flash Player is a commonly used software use by websites that offer video and other interactive content. By default, your use of the Adobe Flash Player generates “flash cookies” (also known as “persistent identification elements” or “local shared objects”). Adobe provides a short disclosure about Flash Cookies in its End User License Agreement, stating: “Use of the web players, specifically the Flash Player, will enable the software to store certain user settings as a local shared object on our computer. These settings are not associated with you, but allow you to configure certain settings within the Flash Player.” The Adobe Flash Player (and similar applications) use flash cookies to remember user settings, preferences and usage similar to the browser cookies referenced above, but flash cookies can store more information than browser cookies and are managed through a different interface than the one provided by your web browser. You can control the degree to which you accept flash cookies by accessing your Adobe Flash Player management tools directly through the settings manager for Adobe Flash, located at http://www.macromedia.com/support/documentation/en/flashplayer/help/settings_manager.html. If you do not allow flash cookies to take any disc space on your computer, you may not be able to take advantage of or participate in certain features on the Services. Users with a computer running the Windows operating system can view flash cookie files in this folder: \Documents and Settings\[username]\Application Data\Macromedia\Flash Player. Users with a computer running the Apple operating system can view flash cookie files in this folder: /users/[username]/Library/Preferences/macromedia/Flash Player. Flash cookies, or LSO files are stored typically with an “.SOL” extension. Although the Adobe Flash Player is a commonly used software used by websites that offer video content and/or games, it is not the only technology being used in the ever-shifting online and mobile content environment. HTML5 is an increasingly popular web standard used for presenting content, especially content delivered to mobile devices. HTML is the mark-up language used for the World Wide Web. Almost all web pages you visit on the internet are based around HTML code. HTML5 is simply the fifth and latest iteration of this mark-up language that allows for more interactive web pages. One of the real benefits of HTML5 is its potential to standardize the highly fragmented rich-media universe. Some HTML5 code may allow your response to advertising and other activities to be monitored across websites and such information to be stored on your computer or mobile device.
• Web Beacons. Our web pages, online services and e-mail messages may contain a small graphic image called a web beacon, which is sometimes also called a “clear gif”, that allows us to monitor and collect certain limited information about our users, such as the type of browser requesting the web beacon, the IP address of the computer that the web beacon is sent to and the time the web beacon was viewed. Web beacons can be very small or invisible to the user, but, in general, any electronic image viewed as part of a web page or e-mail, including HTML based content, can act as a web beacon. We may use web beacons to count visitors to our web pages or to monitor how our users navigate our Services, and we may include web beacons in e-mail messages in order to count how many of the messages we sent were actually opened or acted upon. We use web beacons to compile aggregate statistics about our Services and our marketing campaigns.
• Embedded Scripts. An embedded script is programming code that is designed to collect information about your interactions with the Services, such as the links you click on. The code is temporarily downloaded onto your Device from our web server or a third party service provider, is active only while you are connected to the Services, and is deactivated or deleted thereafter.
• Browser Fingerprinting. Collection and analysis of information from your Device, such as, without limitation, your operating system, plug-ins, system fonts and other data, for purposes of identification.
• ETag, or entity tag. A feature of the cache in browsers. It is an opaque identifier assigned by a web server to a specific version of a resource found at a URL. If the resource content at that URL ever changes, a new and different ETag is assigned. Used in this manner ETags are a form of Device Identifier. ETag tracking may generate unique tracking values even where the consumer blocks HTTP, Flash, and/or HTML5 cookies.
• Recognition Technologies. Technologies, including application of statistical probability to data sets, which attempt to recognize or make assumptions about users and devices (e.g., that a user of multiple devices is the same user).

We may use Tracking Technologies for a variety of purposes, including:

• Strictly Necessary. We may use cookies or other Tracking Technologies that we consider are strictly necessary to allow you to use and access our Services, including cookies required to prevent fraudulent activity, improve security or allow you to make use of Services’ functionality.
• Performance Related. We may use cookies or other Tracking Technologies that are useful in order to assess the performance of the Services, including as part of our analytic practices or otherwise to improve the content, ads, products or services offered through the Services.
• Functionality Related. We may use cookies or other Tracking Technologies that are required to offer you enhanced functionality when accessing the Services, including identifying you when you use our Services or keeping track of your specified preferences.
• Targeting Related. We may use Tracking Technologies to deliver content, including ads relevant to your interests on our Services and thirdparty services based on how you interact with our advertisements and/or content. This includes using Tracking Technologies to understand the usefulness to you of the content and ads that have been delivered to you.

There may be other Tracking Technologies now and later devised and used by us in connection with the Services. Further, third parties may use Tracking Technologies in connection with our Services, which may include the collection of information about your online activities over time and across third-party websites or online services as well as across your Devices. We may not control those Tracking Technologies and we are not responsible for them. However, you consent to potentially encountering third-party Tracking Technologies in connection with use of our Services and accept that our statements under this Privacy Policy do not apply to the Tracking Technologies or practices of such third parties.

You will not be able to use wagering services or place bets with us without location data being turned on. Our Services use precise location-based services (e.g., location collected through GPS technology), in order to locate you so we may verify your location, process payments, perform analytics, deliver you relevant content and ads based on your location, share your location with our vendors as part of the location-based services we offer, and for purposes of legal and regulatory compliance. We also collect non-precise geolocation data (i.e., the city and state in which your device is located based on its IP address). This non-precise geolocation data allows us to customize your experience, give you access to content that varies based on your general location, and serve you ads that are relevant to you. For instance, if your IP address is associated with Baltimore, Maryland, we are able to direct you to the services, landing pages, and offers specific to individuals located in Maryland. Both precise and non-precise geolocation may be disclosed to third party entities pursuant to Section 3(c) below.

We may receive information about you from your friends and others that use the Services. Additionally, we may, from time to time, supplement the information we collect directly from you on our Services with outside records from third parties for various purposes, including to enhance our ability to serve you, to tailor our content to you and to offer you opportunities that may be of interest to you. You authorize your wireless carrier to use or disclose information about your account and your wireless device, if available, to us or our service provider for the duration of your business relationship, solely to help us identify you or your wireless device and to prevent fraud. To the extent we combine information we receive from third-party sources with Personal Information we collect on the Services, it will be treated as Personal Information and we will apply this Privacy Policy to such combined information, unless we have disclosed otherwise. In no other circumstances do our statements under this Privacy Policy apply to information we receive about you from third parties, even if they have used our technology to collect it and share it with us.

The Service may include functionality that allows certain kinds of interactions between the Services and a third-party website or application. The use of this functionality may involve the third-party operator providing certain information, including Personal Information, to us. For example, we may provide third-party sites’ interfaces or links on the Services to facilitate your sending a communication from the Services such as facilitating emails, tweets or Facebook postings. These third parties may share information with us and they may also retain any information used or provided in any such communications or other activities and these third parties’ practices are not subject to our Privacy Policy. We may not control or have access to your communications through these third parties. Further, when you use third-party sites or services, you are using their services and not our services and they, not we, are responsible for their practices. You should review the applicable third-party privacy policies before using such third-party tools on our Services.

You may send someone else a communication from the Services, such as sending an invitation to a friend. If so, the information you provide (names, email addresses, etc.) is used to facilitate the communication and is not used by us for any other marketing purpose unless we obtain consent from that person or we explicitly say otherwise. Please be aware that when you use any send-to-a-friend functionality on our Services, your contact information, name or username and message may be included in the communication sent to your addressee(s). Some of these tools may be third-party tools subject to third-party privacy policies.

Various third parties are developing or have developed signals or other mechanisms for the expression of consumer choice regarding the collection of information about an individual consumer’s online activities over time and across third-party websites or online services (e.g., browser do not track signals). Currently, we do not monitor or take any action with respect to these signals or other mechanisms.

We may use your Personal Information, Demographic Information or Usage Information that is subject to this Privacy Policy:

• to provide you with information such as to send you electronic newsletters, personal text messages (as set forth in the SMS Messages section of our Terms and Conditions), or to provide you with special offers or promotional and marketing materials on behalf of us or third parties, including to let you know about new products, services or upcoming contests, promotions or events;
• to protect and administer your Services account;
• to process and track the results of your gambling and other transactions you enter into using the Services;
• to verify your identity, including your accounts on the Services;
• manage risk, or to detect, prevent, and/or remediate fraud or other potentially prohibited or illegal activities;
• manage and protect our information technology infrastructure;
• to provide the Services, including the gaming opportunities available on the Services;
• to improve the Services, marketing endeavors or our offerings;
• to customize your experience on the Services or to serve you specific content or ads that are relevant to you, including using your location information to display advertisements for businesses in your close vicinity;
• to provide customer support, including to resolve disputes, collect fees and troubleshoot problems;
• to contact you with regard to your use of the Services and, in our discretion, changes to the Services and/or Services’ policies;
• to identify your product and Services preferences so that you can be informed of new or additional products, services and promotions;
• to enable you to participate in a variety of the Services’ features;
• to improve the overall experience at the Services;
• to comply with our legal and regulatory obligations;
• for internal business purposes; and
• for purposes disclosed at the time you provide your information or as otherwise set forth in this Privacy Policy.

We may share non-Personal Information, including Usage Information, such as aggregated user statistics, with third parties. Further, we may share your Device Identifiers with third parties along with data related to you and your activities. Also, we may share your Personal Information with third parties with whom we have marketing or other relationships for the third parties’ direct marketing purposes. Additionally, in our continuous effort to provide services that we believe you may find useful or of value, we may make your Personal Information available to third parties to better facilitate your requests, provide more personalized services and communicate separately with you. If we use a vendor to facilitate or assist in communication with you, the vendor will receive your Personal Information (such as your name, email, or telephone number) and may record and store the content of your communications with us; however, we do not disclose mobile phone numbers to unaffiliated third parties for their marketing purposes without your consent. We may also share the information we have collected about you, including Personal Information, as disclosed at the time you provide your information and as described below or otherwise in this Privacy Policy. BIU may additionally disclose your information under the following circumstances and conditions:

You may be presented with an option on our Services to receive certain information and/or marketing offers directly from third parties or to have us send certain information to third parties or give them access to it. If you choose to do so, your Personal Information and other information may be disclosed to such third parties and all information you disclose will be subject to the third-party privacy policies and practices of such third parties. In addition, third parties may store, collect or otherwise have access to your information when you interact with their Tracking Technologies, content, tools, apps or ads on our Service or link to them from our Service. This may include using third-party tools such as Facebook, Twitter, Pinterest or other third-party posting or content sharing tools and by so interacting you consent to such third party practices. We are not responsible for the privacy policies and practices of such third parties and, therefore, you should review such third-party privacy policies and practices of such third parties prior to requesting information from or otherwise interacting with them.

We may use third-party vendors to perform certain services on behalf of us or the Services, such as: (i) to assist us in Services operations; (ii) to facilitate communications with you and/or provide customer support; (iii) to manage a database of customer information; (iv) to host the Services; (v) to design and/or operate the Services’ features; (vi) to track the Services’ activities and analytics; (vii) to enable us to send you special offers or perform other administrative services; (viii) to process payments and deliver prizes; and (ix) other services designed to assist us in maximizing our business potential. For example, from time to time, we will use the information we collect to coordinate data entry and payments with the company that provides you with handicapping information, to coordinate marketing/rewards programs with partner racetracks, and to offer other enhancements to the Services. We may provide these vendors with access to user information, including Device Identifiers and Personal Information, to carry out the services they are performing for you or for us. For instance, our SMS messaging services are powered by Zoom. To provide us with such service, Zoom will receive your phone number and may receive and maintain copies of your SMS or text communications with us. Third-party analytics and other service providers may also set and access their own Tracking Technologies on your Device and they may otherwise collect or have access to information about you, potentially including Personal Information, about you. We are not responsible for those third party technologies or activities arising out of them. However, some may offer you certain choices regarding their practices, and information we have been informed of regarding such choices is available here . We are not responsible for the effectiveness of or compliance with any third parties’ opt-out options.

We may access, use, preserve, transfer and disclose any of your information (including, the content of your communications with us, Device Identifiers and Personal Information, including precise geolocation data and other potentially sensitive Personal Information) to third parties: (i) to satisfy any applicable law, regulation, subpoenas, governmental requests or legal process if in our good faith opinion such is required or permitted by law; (ii) to protect and/or defend the Services’, its integrity, and our Terms and Conditions or other policies applicable to the Services, including investigation, determination, or validation of potential violations thereof; (iii) to protect the safety, rights, property, integrity, or security of the Services or any third party; and/or (iv) to detect, prevent or otherwise address fraud, security or technical issues. Such potential disclosures include disclosing Personal Information and Device Identifiers to gaming regulators, leagues, associations, governing bodies, sports teams, colleges or oversight agencies or boards (or their designated vendors) in relation to the enforcement of our Terms and Conditions and their rules governing authorized betting, including in connection with identifying or overseeing their athletes, employees, personnel, or members. We may also use IP address or other Device Identifiers to identify individuals, either acting alone or in cooperation with third parties such as copyright owners, internet service providers, wireless service providers and/or law enforcement agencies. Such identifying information may be disclosed pursuant to this Section.

Such disclosures may be carried out without notice to you. In circumstances where we inadvertently obtain information that appears to pertain to the commission of a crime or where we reasonably believe that an emergency involving immediate danger of death or serious physical injury to any person exists, BIU may voluntarily disclose the record or the contents of your communications or other information about you to law enforcement agencies and governmental entities without providing you advance notice. Upon receipt of an applicable search warrant or administrative, grand jury or trial subpoena, BIU may be required to disclose to the government or law enforcement agencies, without advance notice to you, the content of your communications and other records relating to your electronic communications, as well as the following records: your name and address; records of your online communication (including session times and duration); how long you have subscribed to our service(s) (including start date) and the type(s) of service(s) utilized; your telephone number or other subscriber account identifying number(s), including any Internet or network address(es) assigned to you by our network; and the means and source of your payment(s) (including any debit card or bank account number).

We may share your information, including your Device Identifiers and Personal Information, Demographic Information and Usage Information with our parent, subsidiaries and affiliates, including for their marketing or other purposes. We also reserve the right to disclose and transfer all such information: (i) to a subsequent owner, co-owner or operator of the Services or applicable database; or (ii) in connection with a merger, consolidation, restructuring, the sale of substantially all of our interests and/or assets or other corporate change, including, during the course of any due diligence process.

The Services may permit you to submit ideas, photographs, video, audio recordings, computer graphics, pictures, data, information about your location, questions, comments, suggestions or other content, including Personal Information (collectively, “ User Content ”). We or others may store, display, reproduce, publish, distribute or otherwise use User Content online or offline in any media or format (currently existing or hereafter developed) and may or may not attribute it to you. Others may have access to this User Content and may have the ability to share it with third parties. Please think carefully before deciding what information you share, including Personal Information, in connection with your User Content. Please note that BIU does not control who will have access to the information that you choose to make public, and cannot ensure that parties who have access to such publicly available information will respect your privacy or keep it secure. We are not responsible for the privacy or security of any information that you make publicly available on the Services or what others do with information you share with them on the Services. We are not responsible for the accuracy, use or misuse of any User Content that you disclose or receive from third parties through the Services.

We may also publish your name, voice, likeness and other Personal Information that is part of your User Content, and we may use the content, or any portion of the content, for advertising, marketing, publicity and promotional activities. For full terms and conditions regarding User Content you submit to the Services, please review our Services’ Terms and Conditions .

We and third parties such as network advertisers and ad exchanges may serve advertisements on the Services or across the Internet and may use third party analytics service providers to evaluate and provide us and/or third parties with information about the use of these ads on third party sites and viewing of ads and of our content. Network advertisers are third parties that display advertisements, which may be based on your activities across the Internet and mobile media (“ Behavioral Ads ”). Behavioral Ads enable us to target advertisements to you for products and services in which we believe you might be interested. If you object to receiving Behavioral Ads from us on third party sites, you can learn more about your ability to limit Behavioral Ads below.

Our third party ad network and exchange providers, the advertisers and/or traffic measurement services may themselves set and access their own Tracking Technologies on your Device and track certain behavioral Usage Information via a Device Identifier. These third party Tracking Technologies may be set to, among other things: (a) help deliver advertisements to you that you might be interested in; (b) prevent you from seeing the same advertisements; and (c) understand the usefulness of the advertisements that have been delivered to you. You acknowledge and agree that associated technology may access and use your Device and may set or change settings on your Device in connection with the associated operations. Note that any images (or any other parts of content) served by third parties in association with third-party ads or other content may serve as web beacons, which enable third parties to carry out the previously described activities.

Third-party Tracking Technologies are not controlled by us, even if they use our technology to help store or collect data. Statements regarding our practices do not apply to the methods for collecting information used by these third parties or the use of the information that such third parties collect. We do however work with third parties to make efforts to have you provided with information on their practices and any available opportunity to exercise choice. The relevant third party’s terms of service, privacy policy, permissions, notices and choices should be reviewed regarding their collection, storage and sharing practices. We make no representations regarding the policies or practices of third party advertisers or advertising networks or exchanges or related third parties.

We may use third-party advertising companies to target advertisements to you on our Services, across the web, on your mobile Device and on any of your other Devices, based on the information we have collected from and about you, as well as information relating to your and other users’ visits to this and other websites and online services. To do so, these companies may place or recognize a unique cookie on your browser (including through the use of pixel tags) or recognize an identifier associated with your mobile device. These companies may also use these Tracking Technologies, along with personal information they or we collect on the different devices you use, to recognize you across the Devices you use, such as a mobile device and a laptop or other computer. Some third parties may offer you certain choices regarding their practices, and information we have been informed of regarding such choices is available here .

Further, while sites use a variety of companies to serve advertisements, you may wish to visit https://thenai.org/opt-out/, which provides information regarding this practice by Network Advertising Initiative (“ NAI ”) members, and your choices regarding having this information used by these companies, including the “opt-out” procedures of NAI members, including through the Network Advertising Initiative's Consumer Opt-Out link . Opting out of one or more NAI members only means that those NAI members no longer will be allowed under their own rules to deliver Behavioral Ads to you, but does not mean you will no longer receive any targeted content and/or ads. Also, if your browsers are configured to reject cookies when you visit this opt-out page, or you subsequently erase your cookies, use a different Device or change web browsers, your NAI opt-out may not, or may no longer, be effective.

You may also opt-out of receiving Behavioral Ads on participating sites and services by visiting the Digital Advertising Alliance (“ DAA ”) website at http://www.aboutads.info/choices. To opt out of Google Analytics display advertising or customize Google display networking ads, visit the Google Ads Setting page . For Mobile applications, you can use the " DAA App Opt-Out Tool " and the NAI App Opt-Out Tool ". Similar limitations may apply to the DAA opt-out. We are not responsible for effectiveness of or compliance with any third parties’ opt-out options or programs.

Please note that these opt-outs apply per browser and per device, so you will have to opt out for each device — and each browser on each device — through which you access our Services.

When you are on the Services you may be directed to other sites and apps that are operated and controlled by third parties that we do not control such as merchants who directly sell products and services to you. We are not responsible for the data collection and privacy practices employed by any of these third parties or their sites or apps and they may be tracking you across multiple online services and may be sharing the results of that tracking with us and/or others. These third parties may have their own terms of service, privacy policies or other policies and ask you to agree to the same. For example, if you “click” on a link, the “click” may take you off the Services onto a different location. These other online services may associate their Tracking Technologies with you, independently collect information about you, including Personal Information, and may or may not have their own published privacy policies. We are not responsible for these third-party privacy policies or the practices of third-party owners. Be sure to review any available policies before submitting any personally identifiable information to a third-party online service or otherwise interacting with it and exercise caution in connection with these services. We also encourage you to note when you leave our Services and to review the third-party privacy policies of all third-party locations and exercise caution in connection with them.

You are responsible for maintaining the accuracy of the information you submit to us, such as your contact information provided as part of registration. The Services may allow you to review, correct or update Personal Information you have provided through the Services’ registration forms or otherwise by updating your account, and you may provide registration updates and changes by contacting us by email at: [email protected] . If so, we will make good faith efforts to make requested changes in our then active databases as soon as reasonably practicable (but we may retain prior information as business records). Please note that it is not always possible to completely remove or delete all of your information from our databases and that residual data may remain on backup media or for other reasons. When you edit your Personal Information or change your preferences on the Services, information that you remove may persist internally for BIU’s administrative purposes. You may cancel or modify the email marketing communications you receive from us by following the instructions contained within our promotional emails. This will not affect subsequent subscriptions and if your opt-out is limited to certain types of emails the opt-out will be so limited. Please note that we reserve the right to send you certain communications relating to your account or use of our Services, such as administrative and Service announcements, and the SMS Service Alerts set out in our Terms and Conditions. These transactional account messages may be unaffected if you choose to opt-out from receiving our marketing communications.

If you have any questions about the Privacy Policy or practices described in it, you should contact us in the following ways: Postal Mail: Betfair Interactive US LLC, 123 Town Square Place, PMB #607, Jersey City, NJ 07310 (Attn: Privacy Officer); Email: [email protected] .

For non-privacy inquiries or support needs, please visit this page .

BIU is committed to only retaining Personal Information, and the contents of our communications with you, for a period of time that is necessary to provide our services to our users and for a period of time thereafter as needed to 1) to comply with our legal, regulatory, recordkeeping, and auditing obligations, 2) resolve disputes, 3) enforce our agreements and facilitate collections, and 4) prevent fraud or criminal activity. After the Personal Information is no longer needed for these purposes, we will delete or de-identify the Personal Information. The Personal Information that you have provided us is maintained in our management information system and billing systems, and is updated as new information is added. Accounting and billing records are retained for ten (10) years for tax and accounting purposes or until the relevant income tax years for which the document was created have been closed for income tax purposes and/or all appeals have been exhausted. Records may remain on file for the purposes listed above even after you have terminated your account on our Services.

We understand the importance of protecting children’s privacy in the interactive world. We are a general audience service and do not use the Services to knowingly collect personal information from children under the age of thirteen (13) that requires parental notice and consent under the Children’s Online Privacy Protection Act (“COPPA”) without such parental consent. If you are under twenty-one (21) years of age, you are not permitted to use the Service and should not send any information about yourself to us through the Service.

In the event that we become aware that we have collected personal information from anyone under the age of twenty-one (21), we will dispose of that information in accordance with COPPA and other applicable laws and regulations. If you are a parent or guardian and you believe that your child under the age of thirteen (13) has provided us with personal information without COPPA-required consent, please contact us at: [email protected] .

We endeavor to take commercially reasonable technical, physical, and organizational measures to help protect and secure your Personal Information and prevent unauthorized/unnecessary disclosures. However, no data transmission over the Internet, mobile networks, wireless transmission or electronic storage of information can be guaranteed to be 100% secure. Please note that we cannot ensure the security of any information you transmit to us, and you use our Service and provide us with your information at your own risk. We utilize the industry standard, Secure Socket Layer (SSL)-capable web browsers support encryption technology that helps prevent unauthorized users from viewing or manipulating your Personal Information as it travels over the Internet.

BIU will process your personal information in accordance with this Privacy Policy, and as part of that BIU provides you with certain choices about how we process your personal information. These choices are set out below.

We may occasionally send display media to you, in a targeted way, whether through web or mobile browsers or mobile applications. You may opt out of many third parties that support and send this type of targeting advertising by going to www.aboutads.info, and you may learn more about this type of advertising in the Section titled “Ads and Information About You.” You may opt out of tracking for mobile advertising through the settings on most smartphones, and you may learn more about these settings through those mobile device platforms, i.e., Google ( here ) and Apple ( here ). (Please note that these companies may change either the way these settings operate, the content or the availability of these pages.)

We may occasionally send you push notifications to your mobile device. You can turn off certain push notifications in the account settings of your mobile app. You can also turn off push notifications specific to our Services in the settings on your iOS device, or through the application manager in your Android device.

Rights Regarding Your Information . Depending on your jurisdiction, you may have the right, in accordance with applicable data protection laws, to make requests related to your “personal information” or “personal data” (as such terms are defined under applicable law, and collectively referred to herein as “personal information”). Specifically, you may have the right to ask us to:

• Inform you about the categories of personal information we collect or disclose about you; the categories of sources of such information; the business or commercial purpose for collecting your personal information; and the categories of third parties with whom we disclose personal information.
• Provide you access to and/or a copy of certain personal information we hold about you. Note that you may be able to access certain of this information by logging into your account.
• Correct or update personal information we hold about you.
• Delete certain personal information we have about you.
• Provide you with information about the financial incentives that we offer you, if any.
• Restrict or object to certain uses of your personal information.
• Opt you out of the processing of your personal information for direct marketing or purposes of profiling in furtherance of decisions that produce legal or similarly significant effects, if applicable.

Please note that certain information may be exempt from such requests under applicable law. For example, we need certain information in order to provide the Services to you. You may also have the right to opt out of “sales” of your information and “sharing/processing of your information for targeted advertising” as described below.

If you are a California resident, please see Section 12 below for more information about our privacy practices and your rights.

As provided in applicable law, you also have the right to not be discriminated against for exercising your rights. Please note that certain information may be exempt from such requests under applicable law. For example, we need to retain certain information in order to provide our services to you. We also need to take reasonable steps to verify your identity before responding to a request, which may include, at a minimum, depending on the sensitivity of the information you are requesting and the type of request you are making, verifying your name and email address. If we are unable to verify your identity, we may be unable to respond to your requests.

To exercise any of these rights, please visit this link: PRIVACY REQUEST FORM . You can also contact us at +1 (855) 734-7720.

You may be able to designate an authorized agent to make requests on your behalf. In order for an authorized agent to be verified, you must provide the authorized agent with signed, written permission to make such requests or a power of attorney. We may also follow up with you to verify your identity before processing the authorized agent’s request as permitted by applicable law.

Depending on applicable law, you may have the right to appeal our decision to deny your request, if applicable. We will provide information about how to exercise that right in our response denying the request. You also have the right to lodge a complaint with a supervisory authority. However, we respectfully invite you to allow us to try to resolve the matter directly. We will attempt to answer your questions and satisfy your concerns in a timely and complete manner.

Notice of Right to Opt Out of Sales of Personal Information and Processing/Sharing of Personal Information for Targeted Advertising Purposes . Depending on your jurisdiction, you may also have the right to opt out of “sales” of your information and “sharing/processing of your information for targeted advertising."

• We may disclose information to unaffiliated third parties we collaborate with or that provide offers that we think may be of value to you. We may also provide information to third-party advertising providers for targeted advertising purposes or use advertising analytics partners to assist us in analyzing use of our services and our user/customer base. Under applicable law, the disclosure of your personal information to these third parties to assist us in providing these services may be considered a “sale” of personal information or the processing/sharing of personal information for targeted advertising purposes.
• If you would like to opt out of the disclosure of your personal information for purposes that could be considered “sales” for those third parties’ own commercial purposes, or “sharing” or processing for purposes of targeted advertising, please visit the following link, which is also available in the footer of our Services: "Your Privacy Choices" and follow the instructions to submit a request. You must make this choice on each site/app on each browser/device you use to access the Services. You must also renew this choice if you clear your cookies or your browser is set to do that. Submitting the form will also result in the opt out of the use of your email address and other personal information related to that email address for targeted advertising purposes.
• Depending on your jurisdiction, you may be permitted to designate an authorized agent to submit such requests on your behalf. Please note that we do not knowingly sell the personal information of minors under 16 years of age without legally-required affirmative authorization. Please note that we do not knowingly sell the personal information of minors under 16 years of age.
• Please note that if you have a legally-recognized browser-based opt out preference signal turned on via your device browser, we recognize such preference in accordance with applicable law.

Additional Information for Nevada Residents . Under Nevada law, certain Nevada consumers may opt out of the sale of “covered information” for monetary consideration to a person for that person to license or sell such information to additional persons. “Covered information” includes first and last name, address, email address, phone number, Social Security Number, or an identifier that allows a specific person to be contacted either physically or online.

We do not engage in such activity; however, if you are a Nevada resident who has purchased services from us, you may submit a request to opt out of any potential future sales under Nevada law by contacting [email protected] . Please note we will take reasonable steps to verify your identity and the authenticity of the request. Once verified, we will maintain your request in the event our practices change.

Additional Information for Massachusetts Residents . If you are a Massachusetts resident, Massachusetts law and regulations requires us to provide you with some additional information regarding how we collect, use, and share your personal information. Much of this information is provided throughout this Privacy Policy - for instance, the information you may be required to provide to us, the existence of a legal or contractual obligation to provide such information, and the consequences of not providing that information are identified in Section 1; the conditions under which you information may be disclosed are identified in Section 3; information about our data retention is identified in Section 8; and information about our data security practices is identified in Section 10; contact information for relevant vendors who provide goods or services directly related to sports wagering in Section 16.

Relevant Massachusetts law or regulations require companies to tell you about the purposes and legal basis for collecting and processing your information. You can review the purposes for our collection and processing as detailed above in Section 1 and Section 2 and we rely on the following legal bases:

• to perform our obligations pursuant to a contract (or pending contract) with you - for example, we will process your information to comply with our Terms of Use to enter into a contract with you, and to honor our commitments in any contracts that we have with you.
• for our legitimate interests or the legitimate interests of others - for example, we will process your information to: operate our business and our Services; identify and fix any issues with our Services; provide customer service; secure the Services; learn more about how our users use the Services; perform internal analytics; improve the Services and users’ experiences; conduct marketing; provide you with certain information about new products, special offers or other information that we think you may find interesting; make and receive payments and process transactions; comply with legal requirements and defend our legal rights; prevent fraud; conduct compliance and risk management activities; provide and manage access to our systems; engage in a business change (e.g., sale, merger);, and to know the customer to whom we are providing Services.
• to comply with our legal obligations - for example, complying with our reporting obligations and laws and regulations relating to anti-money-laundering, keeping track of transactions for tax and auditing purposes, responding to requests from government bodies or courts, and responding to litigation.
• with your consent to our collection and processing for a particular purpose - where we rely on this basis, you may have the right to withdraw your consent as described immediately below.

Users who reside in Massachusetts have the right to ask us to:

• Provide you access to and/or a copy of certain personal information we hold about you.
• Update or rectify certain personal information we hold about you.
• Object to or restrict the way that we process and disclose certain of your information.
• Withdraw your consent for the processing of your information.

Please note that certain information may be exempt from such requests. For example, we need to retain certain information in order to provide our Services to you and for legal and compliance reasons. We also need to take reasonable steps to verify your identity before responding to a request, which may include, at a minimum, depending on the sensitivity of the information you are requesting and the type of request you are making, verifying your name and email address. If you would like to exercise your legal rights, please use the following form: PRIVACY REQUEST FORM . You can also contact us at +1 (855) 734-7720. If you would like further information concerning your legal rights, please email [email protected] .

Users who reside in Massachusetts also have the right to file a complaint concerning the use or storage of your information to:

• 101 Federal Street, 12th Floor
• Boston, MA 02110
• https://massgaming.com/
• 501 Boylston Street
• Boston, MA 02116
• Consumer Hotline: (617) 973-8787
• Toll-Free Consumer Hotline: (888) 283-3757
• https://www.mass.gov/forms/contact-ocabr-by-e-mail
• https://www.mass.gov/orgs/office-of-consumer-affairs-and-business-regulation
• Consumer Advocacy & Response Division
• One Ashburton Place, 18th Floor
• Boston, MA 02108
• Consumer Hotline: (617) 727-8400
• https://mass.gov/how-to/file-a-consumer-complaint
• Other Law Enforcement Entities

We may use forms of automated decision-making or profiling, for instance to determine advertisements and offers to present to you and to conduct monitoring for regulatory reporting thresholds and assess and limit malicious or fraudulent activity. For example, we may offer new users different promotions than long-time users and we may offer users who frequently bet on certain sports different advertisements than users who have never bet on that sport. These decisions are governed by logic and rules set or reviewed by humans and this is a subject we take seriously. These decisions and actions do not produce legal or similarly significant effects because they do not result in you being subjected to systematic observation by a competent authority and do not result in the provision or denial by us of financial or lending services, housing, insurance, education, enrollment, criminal justice, employment opportunities, health care services, or access to basic necessities. You may have the right to contest a decision we have made and request direct human review or intervention; to inquire about this, please email us at [email protected] .

California Consumer Privacy Act

• If you are a California resident, California law requires us to provide you with some additional information regarding how we collect, use, and share your “personal information” (as defined in the California Consumer Privacy Act (“CCPA”)).
• Categories of personal information we collect. Throughout this Privacy Policy, we discuss in detail the specific pieces of personal information we collect from and about users. Under the CCPA, we are also required to provide you with the “categories” of personal information we collect. The categories we may collect are: identifiers (such as name, address, email address, driver’s license); commercial information (such as deposit or wagering history); financial data (such as payment information); internet or other network or device activity (such as browsing history or Services usage); geolocation information (e.g., your city and state based on IP address or precise geolocation in accordance with your settings); audio information (e.g., if you participate in a customer support call and do not opt out of call recording); in certain circumstances, information used to manage potential fraud or legal risk (such as employment status and criminal history); inference data about you; photos (e.g., if you voluntarily submit a photo); and other information that identifies or can be reasonably associated with you.
• How we use and disclose these categories of personal information. We use and disclose the categories of personal information we collect from and about you consistent with the various business purposes we discuss throughout this Policy, and how you engage with the Service. Please see the relevant section(s) above for more information.

Information About "Sales" and "Sharing"

• For online targeted advertising purposes: demographic and statistical information, device information and identifiers, connection and usage data, geolocation, and social media information.
• For sharing with third parties to send you relevant offers and promotions: contact and account registration information; demographic and statistical information, and geolocation.

Your Choices Regarding "Sharing" and "Selling"

Shine the Light Disclosures

• If you you reside in California, you may request certain general information regarding our disclosure of personal information during the preceding year to third parties for their direct marketing purposes. To make such a request, please write to us at the following address: Betfair Interactive US LLC, 123 Town Square Place, PMB #607, Jersey City, NJ 07310 (Attn: Privacy Officer).

We reserve the right to change this Privacy Policy at any time. Any changes will be effective immediately upon the posting of the revised Privacy Policy and your use of our Service indicates your consent to the privacy policy posted at the time of use. However, we will not use your previously collected Personal Information in a manner materially different than represented at the time it was collected without your consent. To the extent any provision of this Privacy Policy is found by a competent tribunal to be invalid or unenforceable, such provision shall be severed to the extent necessary for the remainder to be valid and enforceable.

How Do You Contact Us?

If you wish to contact Betfair Interactive US LLC regarding our information practices or in relation to this Privacy Policy, please email us at [email protected] . For all other inquiries, please visit this page .

It is extremely important that you keep your account information and other confidential account data protected and secure. Do not share your log-in information or leave your computer unattended when logged in to the Services. Please make sure that all information you provide to BIU is accurate and complete. Contact us immediately by email at [email protected] if you find any discrepancies in your account data or if you wish to inspect the records pertaining to you at our offices.

The following entities provide goods or services directly related to sports wagering, including platform design, operation, and maintenance; lines and odds setting; risk management; customer verification; integrity monitoring; and sportsbook data:

The following third parties that collect information from you on the Service have given us notice that you may obtain information on their policies and practices, and in some instances opt-out of certain of their activities, as follows:

PLEASE NOTE: We are not responsible for third-party policies or practices. We try to keep this information current, and will add to and subtract from the chart above as appropriate, but it is provided as a courtesy and may not be current or accurate. Please contact the relevant third parties regarding their privacy and data security policies and practices.

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Distribution of Cable Royalty Funds

A Notice by the Copyright Royalty Board on 06/28/2024

Document Details

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FOR FURTHER INFORMATION CONTACT:

Supplementary information:, final determination of royalty allocation, i. background, a. legal context, b. posture of the current proceeding, c. allocation standard, ii. introduction to regression section, iii. the data relied on by the parties, iv. the role of regression analysis in the statutory context, v. minimum fee issue, a. ccg position on the minimum fee issue, b. program suppliers position on the minimum fee issue, c. ptv position on the minimum fee issue, d. ctv position on the minimum fee issue, e. jsc position on the minimum fee issue, f. sdc position on the minimum fee issue, g. the judges' analysis and conclusions regarding the minimum fee issue.

• VI. The Allegations of “Specification Searching”  32

A. Allegations of Concealed Specification Searching by Dr. Crawford Applicable to the Present Proceeding

B. ccg response regarding alleged specification searching by dr. crawford, c. ctv response regarding alleged specification searching by dr. crawford, d. ptv response regarding alleged specification searching by dr. crawford, e. allegations of concealed specification searching by dr. johnson in this proceeding, f. sdc assertions after further discovery, g. rebuttals to the sdc's assertions of specification searching, h. the judges' analysis and conclusions, i. the allegation that dr. johnson engaged in improper specification searching, vii. issues specific to ptv, a. how should “must-carry” ptv stations be analyzed in the regression analyses, 1. ptv's position on the “must-carry” issue, 2. the other parties' positions regarding ptv “must-carry” signals, a. the sdc position on the “must-carry” issue, b. the ctv position on the “must-carry” issue, c. the program suppliers position on the “must-carry” issue, d. the ccg position on the “must-carry” issue, 3. the judges' analysis and conclusions regarding the “must-carry” issue, b. are ptv's multicast stations exempt from royalty payments  51, 1. ptv's position on multicast stations, 2. ccg's position on multicast stations, 3. ctv's position on multicast stations, 4. sdc's position on multicast stations, 5. jsc's position on multicast stations, 6. the judges' analysis and conclusions regarding multicast stations, viii. parties' positions regarding regression models, a. introduction, b. ctv's regression approach: the marx model, 1. dr. marx's “directional” analysis for 2015-2017, 2. rebuttals to dr. marx's analyses, a. rebuttals to dr. marx's wdt by sdc witness dr. erdem, b. rebuttals to dr. marx's wdt by program suppliers witness dr. tyler, c. rebuttals to dr. marx's wdt by program supplier expert dr. gray, d. rebuttals to dr. marx's wdt by ptv's expert dr. johnson, e. rebuttals to dr. marx's wdt by ccg's expert dr. george, 3. the judges' analysis and findings regarding the marx model and directional approach, c. program suppliers' regression approach: the tyler model, 1. criticisms of the tyler model, a. criticisms of the tyler model by sdc expert witness dr. erdem, b. criticisms of the tyler model by sdc expert witness dr. rubinfeld, c. criticisms of the tyler model by ctv expert witness dr. bennett, d. criticisms of the tyler model wdt by jsc expert witness dr. majure, e. criticisms of the tyler model wdt by jsc expert witness mr. harvey, f. criticisms of the tyler model by ccg expert witness dr. george, g. criticisms of the tyler model by ptv expert witness dr. johnson.

• 2. The Judges' Analysis and Findings Regarding the Tyler Model  90

D. CCG's Regression Approach: The George Model

1. criticisms of the george model, a. criticisms of the george model by sdc expert witness dr. erdem, b. criticisms of the george model by sdc expert witness dr. rubinfeld.

• c. Criticisms of the George Model by JSC Expert Witness Mr. Harvey  97

d. Criticisms of the George Model by CTV's Expert Witnesses Dr. Marx and Dr. Bennett

E. criticisms of the george model by program suppliers' expert witness dr. tyler.

• 2. The Judges' Analysis and Findings Regarding the George Model  100

E. PTV'S Regression Approach: The Johnson Model

• 1. Criticisms of the Johnson Model  111

a. Criticisms of the Johnson Model by CCG Expert Witness Dr. George

B. criticisms of the johnson model by ptv expert witness dr. bennett, c. criticisms of the johnson model by ptv expert witness dr. marx, d. criticisms of the johnson model by program suppliers expert witness dr. tyler, e. criticisms of the johnson model by sdc expert witnesses dr. asker, dr. majure, and mr. harvey.

• f. Criticisms of the Johnson Model by SDC Expert Witness Dr. Erdem  113
• 2. The Judges' Analysis and Findings Regarding the Johnson Model  114

IX. A General Criticism of the Regressions: Dr. Erdem's Eight-Model Argument In Rebuttal to the Use of the Proffered Regressions

A. erdem's rebuttal model 1, b. erdem's rebuttal model 2, c. erdem's rebuttal model 3, d. erdem's rebuttal model 4, e. erdem's rebuttal model 5, f. erdem's rebuttal model 6, g. erdem's rebuttal model 7, h. erdem's rebuttal model 8.

• I. Dr. George's and CCG's Rejoinder to Erdem's Modeling Exercise  127

J. The Judges' Analysis and Conclusions

X. sub-category values, xi. regression decision, a. regression analyses, b. a separate criticism: the tyler model as a “fee generation” model, c. the economics of the tyler model, xii. canada zone, xiii. the judges' allocation of shares pursuant to the regression approach, xiv. 3.75% fund, xv. industry experts, a. assumptions regarding cso behavior, 1. volume of programming minutes, 2. unique niche content, 3. streaming and availability on other platforms, 4. bandwidth, 5. other factors: cost, acclaim, trust, c. industry experts regarding bortz survey respondents' identity and capacity, xvi. changed circumstances, xvii. survey evidence and expert testimony relying on surveys, a. background, b. the bortz surveys, 1. conduct of the bortz surveys for 2014 through 2017, 2. results reported from the bortz surveys, 3. issues raised with respect to the bortz surveys, a. the exclusion of ptv-only and canadian-only systems, b. the constant sum methodology, c. value measurement, d. the identification and qualification process of survey respondents, e. whether there was interviewer error, interviewer bias, or a lack of training, f. whether the bortz survey questions are overly complex or caused confusion or recall bias, g. whether pre-testing and post-testing verification procedures were needed, h. whether bortz media used undisclosed quotas, financial incentives, and pressure to produce “extraordinary” results that biased the data, c. the testimony of professor papper, xviii. conclusion and award, before the copyright royalty judges, the library of congress, order 46 granting in part and denying in part ptv's motion for rehearing and denying jsc's motion for rehearing, i. procedural background and legal standard, a. procedural background, b. legal standard, ii. jsc's motion for rehearing, a. jsc's motion is deficient because it does not state a standard under which it can seek rehearing, b. whether the judges' initial determination relies on an incorrect version of the mclaughlin adjustment, i. whether exhibit 3049 is outdated, and should not be used to determine shares, 1. summary of the parties' arguments, a. the jsc motion, b. the ccg, ps, and sdc joint response, c. the ptv response, d. the jsc reply, 2. discussion, ii. whether use of the mclaughlin adjustment requires base plus 3.75 weighting rather than royalty-based weighting, iii. conclusion concerning the mclaughlin adjustment and the request for rehearing  267, c. whether jsc's share for 2014 is inconsistent with the record evidence and the reasoning of the initial determination, i. introduction, ii. the parties' positions, 1. the jsc motion, 2. the ptv response  271, 3. the jsc reply  272, iii. the judges' analysis, jsc wrongly maintains that the judges erred by inconsistently applying the bortz survey results to the royalties actually paid inclusive of minimum fee payments, while declining to similarly rely on minimum fee payments when considering the regression results, iv. conclusion, d. whether the judges adopted a version of the tyler model that no witness endorsed for the 2015-2017 time period, and whether it is at odds with the record evidence, i. the parties' filings, 2. the adverse parties' responses  283, a. the joint response, the ptv response, ii. the judges' analysis and conclusion, 1. the judges' adoption of a version of the tyler model in the record does not warrant rehearing, a. the judges did not err by adopting the above-minimum fee tyler model, let alone commit “clear error”, b. jsc is improperly seeking a “second bite at the apple” by asking to submit additional evidence regarding dr. tyler's above-minimum fee model, 2. the judges' adjustments to the version of the tyler model they adopted do not support jsc's motion for rehearing, a. introduction.

• b. The CCG Share Adjustment (Adjustment A)  290

1. JSC Misapprehends the Process for Ascertaining Relative Value in Allocation Proceedings

3. jsc's proposal that the judges disregard the regression evidence on which they relied—and instead “fully rely” on jsc's industry witnesses by adopting the bortz survey—is a blatantly impermissible request for a “second bite at the apple”, 4. jsc's argument—that rehearing is necessary because the tyler modeling simply “parrots” the statutory formula—cannot be grounds for rehearing because this argument was made at the hearing, and because jsc fails to note in its motion the judges' detailed explanation for rejecting that argument, 5. conclusion, iii. ptv's motion for rehearing, a. whether “adjustment b” in the judges' initial determination is premised on clear error that must be corrected, i. the judges' analysis and conclusion regarding ptv's adjustment b rehearing motion arguments, b. whether “adjustment c” in the judges' initial determination reflects a clear error that must be corrected, i. the judges' analysis and conclusion regarding ptv's adjustment c rehearing motion arguments, 1. application of the rehearing bases on which ptv relies for adjustment c: “manifest injustice” and “clear error”, a. ptv has not satisfied the “manifest injustice” standard, b. ptv has not satisfied the “clear error” standard, 2. ptv's claims of “manifest injustice” and “clear error” also fail because ptv is seeking to relitigate an issue raised and determined in the initial determination, iv. correction of typographical and arithmetic errors, v. ruling and order, enhanced content - submit public comment.

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Copyright Royalty Board (CRB), Library of Congress.

Final allocation determination.

The Copyright Royalty Judges announce the allocation of shares of cable royalty funds for the years 2014, 2015, 2016, and 2017 among six claimant groups.

This determination is effective June 28, 2024.

The final determination is posted in eCRB at https://app.crb.gov/​ . For access to the docket to read the final determination and submitted background documents, go to eCRB and search for docket number 16-CRB-0009-CD (2014-17).

Anita Brown, CRB Program Specialist, (202) 707-7658, [email protected] .

The purpose of this proceeding is to determine the allocation of shares of the 2014-2017 cable royalty funds among six claimant groups: the Joint Sports Claimants, Commercial Television Claimants, Public Television Claimants, Canadian Claimants Group, Settling Devotional Claimants, and Program Suppliers. [ 1 ] The parties have agreed to settlements regarding the shares to be allocated to the Music Claimants and National Public Radio (NPR). Joint Notice of Settlement Regarding 2014-2017 Royalty Claims of Music Claimants . . . at 1-2 (June 29, 2022); Joint Notice of Settlement and Motion for Final Distribution Regarding Royalty Claims of National Public Radio at 1 (Jan. 7, 2022).

Between 2016 and 2022, the Judges ordered partial distributions of the 2014-2017 cable funds to the “Phase I” participants (including Music Claimants and NPR) according to allocation percentages agreed upon by the participants. Order Granting Motion for Partial Distribution (May 22, 2019); Order Granting Motion for Partial Distribution, Docket No. 16-CRB-0009 CD (2014) (Aug. 15, 2016); Order Granting Motion for Partial Distribution, Docket No. 16-CRB-0020 CD (2015) (June 6, 2017); Order Granting Motion for Partial Distribution, Docket No. 17-CRB-0017 CD (2016) (Jul. 30, 2018).

In 2022, the Judges ordered the final distribution of the settled shares from the remaining funds to Music Claimants and National Public Radio. Order Granting Motion for Final Distribution to National Public Radio (Feb. 14, 2022), Order 23 Granting 2014-15 Cable Final Distribution to Music Claimants . . . (Dec. 7, 2022).

When the Judges ultimately order the final distribution of the remaining 2014-17 cable royalty funds, they will direct the Licensing Division of the Copyright Office to adjust distributions to each participant to account for partial distributions and to apply the allocation percentages determined herein.

Based on the record in this proceeding, the Judges make the following allocation of deposited royalties.

PTV and JSC filed timely requests for rehearing on September 21, 2023 (Rehearing Requests). The Judges issued their ruling on the Rehearing Requests on March 21, 2024 (Order on Rehearing), denying rehearing on any basis asserted by JSC in its Rehearing Request and granting rehearing on a basis asserted by PTV in its Rehearing Request to correct arithmetic errors. This Final Determination includes the corrections contained in the Initial Determination of Royalty Allocation (Corrected and Redacted) filed on March 29, 2024, which addressed technical and clerical errors. [ 2 ] This Final Determination also includes the corrections set forth in the March 29, Start Printed Page 54167 2024 Order on Rehearing, which is included herein, as “Addendum A”, to be published in the Federal Register . [ 3 ]

In 1976, Congress granted cable television operators a statutory license to enable them to clear the copyrights to over-the-air television and radio broadcast programming which they retransmit to their subscribers. The license requires cable operators to submit semi-annual royalty payments, along with accompanying statements of account, to the Copyright Office for subsequent distribution to copyright owners of the broadcast programming that those cable operators retransmit. See 17 U.S.C. 111(d)(1) . To determine how the collected royalties are to be distributed among the copyright owners filing claims for them, the Copyright Royalty Judges (Judges) conduct a proceeding in accordance with chapter 8 of the Copyright Act. This determination is the culmination of one of those proceedings. [ 4 ] Proceedings for determining the distribution of the cable license royalties historically were conducted in two phases. In Phase I, the royalties were divided among programming categories. The claimants to the royalties have previously organized themselves into eight categories of programming retransmitted by cable systems: movies and syndicated television programming; sports programming; commercial broadcast programming; religious broadcast programming; noncommercial television broadcast programming; Canadian broadcast programming; noncommercial radio broadcast programming; and music contained on all broadcast programming. In Phase II, the royalties allotted to each category at Phase I were subdivided among the various copyright holders within that category. [ 5 ] In the most recent proceeding, regarding cable royalties for the 2010-2013 period, the Judges broke with past practice by combining Phase I and Phase II into a single proceeding in which the functions of allocating funds between program categories and distributing funds among claimants within those categories proceeded in parallel. [ 6 ] This determination addresses the Allocation Phase for royalties collected from cable operators for the years 2014, 2015, 2016 and 2017.

The statutory cable license places cable systems into three classes based upon the fees they receive from their subscribers for the retransmission of over-the-air broadcast signals. Small- and medium-sized systems pay a flat fee. See 17 U.S.C. 111(d)(1) . Large cable systems (“Form 3” systems)  [ 7 ] —whose royalty payments comprise the lion's share of the royalties distributed in this proceeding—pay a percentage of the gross receipts they receive from their subscribers for each distant over-the-air broadcast station signal they retransmit. [ 8 ] The amount of royalties that a cable system must pay for each broadcast station signal it retransmits depends upon how the carriage of that signal would have been regulated by the Federal Communications Commission (“FCC”) in 1976, the year in which the current Copyright Act was enacted.

The royalty scheme for large cable systems employs a statutory device known as the distant signal equivalent (DSE), which is defined at 17 U.S.C. 111(f)(5) . The cable systems, other than those paying the minimum fee, pay royalties based upon the number of DSEs they retransmit. The greater the number of DSEs a cable system retransmits the larger its total royalty payment. The cable system pays these royalties to the Copyright Office. These fees comprise the “Basic Fund.” See 17 U.S.C. 111(d)(1)(B) . In addition to the Basic Fund, large cable systems also may be required to pay royalties into one of two other funds that the Copyright Office maintains: the Syndex Fund and the 3.75% Fund.

As noted above, the utilization of the cable license is linked with how the FCC regulated the cable industry in 1976. [ 9 ] FCC rules at the time restricted the number of distant broadcast signals a cable system was permitted to carry (“the distant signal carriage rules”). National Cable Television Assoc., Inc. v. Copyright Royalty Tribunal, 724 F.2d 176, 180 (D.C. Cir. 1983). FCC rules also allowed local broadcasters and copyright holders to require cable systems to delete (or blackout) syndicated programming from imported signals if the local station had purchased exclusive rights to the programming (“syndicated exclusivity” or “syndex” rules). Id. at 187. In 1980, the FCC repealed both sets of rules. Id. at 181.

The Copyright Royalty Tribunal (CRT) initiated a cable rate adjustment proceeding to compensate copyright owners for royalties lost as a result of the FCC's repeal of the rules. Final rule, Adjustment of the Royalty Rate for Cable Systems; Federal Communications Commission's Deregulation of the Cable Industry, Docket No. CRT 81-2, 47 FR 52146 (Nov. 19, 1982). The CRT adopted two new rates applicable to large cable systems making section 111 royalty payments. The first, to compensate for repeal of the distant signal carriage rules, was a 3.75% surcharge of a large Start Printed Page 54168 cable system's gross receipts for each distant signal the carriage of which would not have been permitted under the FCC's distant signal carriage rules. Royalties paid at the 3.75% rate—sometimes referred to by the cable industry as the “penalty fee”—are accounted for by the Copyright Office in the “3.75% Fund,” which is separate from royalties kept in the Basic Fund. See id.; s ee also 17 U.S.C. 111(d) ; 37 CFR part 387 .The second rate the CRT adopted, to compensate for the FCC's repeal of its syndicated exclusivity rules, is known as the “syndex surcharge.” Large cable operators were required to pay this additional fee for carrying signals that were or would have been subject to the FCC's syndex rules. Syndex Fund fees are accounted for separately from royalties paid into the Basic Fund. [ 10 ]

Royalties in the three funds—Basic, 3.75%, and Syndex—are the royalties to be distributed to copyright owners of non-network broadcast programming in a section 111 cable license distribution proceeding. See 37 CFR part 387 . [ 11 ]

Cable system operators are required to file Statements of Account with the Copyright Office detailing subscription revenues and specific television signals they retransmit distantly, and to deposit section 111 royalties calculated according to the reported figures. Testimony of Gregory S. Crawford, Ph.D., Corrected (2010-2013), Trial Ex. 7031, ¶ 74 & n.37 (“Crawford 2010-2013 CWDT”).

In February 2019, the Copyright Royalty Board (CRB) published notice in the Federal Register announcing commencement of proceedings and seeking Petitions to Participate to determine distribution of 2014, 2015, 2016, and 2017 royalties under the cable and satellite licenses. [ 12 ]

On March 20, 2019, the Judges issued a Notice of Participants and Order for Preliminary Action to Address Categories of Claims. On April 5, 2021, they issued an Order . . . Adopting Claimant Categories in which they identified eight categories of claimants for the proceeding: (1) Canadian Claimants, (2) Commercial Television Claimants; (3) Devotional Claimants, (4) Joint Sports Claimants, (5) Music Claimants, (6) National Public Radio, (7) Program Suppliers, and (8) Public Television Claimants. National Public Radio and Music Claimants reached settlements with the other claimant groups and received respective final distributions. Order Granting Motion for Final Distribution to National Public Radio (Feb. 14, 2022), Order 23 Granting 2014-15 Cable Final Distribution to Music Claimants . . . (Dec. 7, 2022).

With the settlement of the Music Claimants' share, only the Program Suppliers claimant group has an interest in the royalties in the Syndex Fund. Program Suppliers' Post Hearing Brief ¶ 81 (PS PHB). Public TV Claimants claim a share only of the Basic Fund. Public Television's Post-Hearing Brief at 83 (PTV PHB).

The hearing in the present proceeding commenced on March 20, 2023, and concluded on April 20, 2023. During that period, the Judges heard live testimony from 33 witnesses and admitted written and designated testimony from a number of additional witnesses. The Judges admitted into the record more than 400 exhibits. Many motions related to the hearing were filed and ruled on. Participants made closing arguments on June 12, 2023, after which time the Judges closed the record.

Congress did not establish a statutory standard in section 111 for the Judges (or their predecessors) to apply when allocating royalties among copyright owners or categories of copyright owners. However, through determinations by the Judges and their predecessors (the Copyright Royalty Tribunal, the CARPs, and the Librarian of Congress), the allocation standard has evolved, and the present standard is one of “relative marketplace value.”  [ 13 ] See Distribution Order, Distribution of the 2004 and 2005 Cable Royalty Funds, 75 FR 57065 (Sept. 17, 2010) ( 2 004-05 Distribution Order).

“Relative marketplace values” in these proceedings have been defined as valuations that “simulate [relative] market valuations as if no compulsory license existed.” Final Rule, Distribution of 1998 and 1999 Cable Royalty Funds, 69 FR 3608 (Jan. 26, 2004) (1998-99 Librarian Order). Because such a market does not exist (having been supplanted by the regulatory structure), the Judges are required to construct a “hypothetical market” that generates the relative values that approximate those that would arise in an unregulated market. 2004-05 Distribution Order at 57065; see also Program Suppliers v. Librarian of Congress, 409 F.3d 395, 401-02 (D.C. Cir. 2001) (“[I]t makes perfect sense to compensate copyright owners by awarding them what they would have gotten relative to other owners . . . .”). [ 14 ]

Four parties have proposed that the Judges utilize regression analysis to estimate the relative marketplace value of each party's programs distantly retransmitted by CSOs during the four-year period 2014-2017. Each party relies on testimony from economic Start Printed Page 54169 experts to support its position. CCG relies on the testimony of Dr. Lisa George. CTV relies on the testimony of Dr. Leslie Marx and the supportive testimony of Dr. Cristopher Bennett. Program Suppliers rely on the testimony of Dr. Cleve Tyler and the supportive testimony of Dr. Gray. Finally, PTV relies on the testimony of Dr. John Johnson.

Two parties oppose all of the regression approaches on which each of the above parties relies. The SDC, through the testimony of economists Drs. Erkan Erdem and Daniel Rubinfeld, oppose the regression approach for many of the same reasons it (unsuccessfully) opposed the regressions proffered in the 2010-13 allocation proceeding, which was the most recent section 111 allocation proceeding. However, the SDC has also presented arguments that are differentiated from those it made in that prior proceeding. JSC, although it relied in part on a regression approach in the prior proceeding, opposes the regression approaches through the testimony of two economists, Dr. W. Robert Majure and Dr. John Asker, and a statistician, Mr. R. Garrison Harvey.

Dr. Marx, identified above as an expert who relies on the regression approach, does so only for the 2014 royalty year. For the 2015-2017 period, she opposes the use of the regression approach, based on industry changes that she maintains (consistent with a criticism from the other opposing experts listed above) diminished the quality of the available economic data necessary to conduct an appropriate regression.

The models of each of the four experts who proffered regression analyses are discussed individually below, together with the rebuttals levied by the opposing experts. However, in order to understand and contextualize the regression-related evidence, it is helpful to address several overarching issues that color the Judges' analysis and conclusions. Accordingly, before jumping into the specific regression models, the Judges first (1) consider in greater detail their allocation standard of “relative marketplace value”, (2) address the changing impact of the “minimum fee” in the 2014-2017 period, (3) evaluate assertions of inappropriate econometric practice (“specification searching”) that may compromise the regression approaches, and (4) analyze questions regarding whether certain types of PTV programs are properly included within the regression analyses.

After clearing this analytical underbrush, the Judges proceed to a discussion of the sequential presentation of the parties' regression models, followed by the Judges' “Analysis and Conclusions” regarding those models. Finally, the Judges consider several additional important issues arising from the regressions that relate specifically to (1) the CCG claims for Canadian programming issues and (2) the 3.75% Fund.

All of the parties' experts who relied on data detailing royalty reporting and programming information essentially utilized the same data sources and processed the data in basically the same manner. Specifically, the parties engaged in the following steps:

1. Establish a method to link the CSOs distant signal carriage to the programs carried on each signal, by merging CSO and distant signal carriage data to television programming and scheduling data (as detailed below).

2. Obtain a dataset on distant signal carriage from Cable Data Corporation (CDC), that covers each semiannual accounting period from 2014-1 through 2017-2 for the larger “Form 3” cable systems. [ 15 ] CDC compiles and digitizes this dataset data directly from the SA3 Statement of Account (SOA) forms that Form 3 cable systems are required to file semiannually at the Licensing Section of the Copyright Office. (The CDC data is set forth in the Written Direct Testimony of Jonda K. Martin.)

3. Obtain through these SOAs, for each CSO, information about its (a) ownership, rates, gross receipts, total number of subscribers, and communities served, and (b) the identity of every broadcast television station carried and a calculation of royalties owed for the transmission of distant signals under section 111.

4. Obtain station, program, and scheduling data from Red Bee Media (formerly FYI Television, Inc.) to merge with the foregoing carriage and royalty data. (Red Bee Media is an international broadcasting and media services company that publishes television airing data, using programming data that it sources directly from stations in the form of interactive program guides.)

5. Examine the Red Bee Media's database of U.S. and Canadian broadcast and cable channels carried by U.S. CSOs, together with network data and detailed program and scheduling data for the period January 1, 2014, through December 31, 2017, to identify, per station, (a) program titles, (b) program type/category, (c) originating station, and (d) date and time of program airing.

6. Obtain Canadian television program log data from the Canadian Radio-Television and Telecommunications Commission (CRTC), which regulates and supervises broadcasting and telecommunications within Canada.

7. Develop and apply an algorithm, using the aforementioned data, that assigns program airings to their correct categories.

8. Review and confirm the results and make any modifications that are appropriate.

Amended Corrected Written Direct Testimony of Christopher Bennett, Ph.D., Trial Ex. 7203, ¶¶ 10-27 (Bennett ACWDT) (describing the CTV data process); Corrected Written Direct Testimony of R. Garrison Harvey, Trial Ex. 7105, tech. app., pt. A (Harvey CWDT) (describing the JSC data process); Written Direct Testimony of John H. Johnson, IV, Trial Ex. 7300, ¶¶ 46-51 & app. G (Johnson WDT) (describing the PTV data process); Written Direct Testimony of Lisa M. George, Ph.D., Trial Ex. 7403, at 47-50 & app. B (George WDT) (describing the CCG data process, also supplemented with U.S. Census income information); Amended Corrected Written Direct Testimony of Jeffrey S. Gray, Trial Ex. 7605, ¶¶ 16-18; 32-34, & 39 n.23 (describing the Program Suppliers' data process).

Given the voluminous nature of the data relating to programming and minutes, the data-related processes suffered from several hiccups during assembly and analysis for the several experts. The record reflects that most of the data-based problems were resolved before the experts filed their direct testimonies, and there were some data-related amendments and corrections set forth in subsequent testimonies. To the extent any of the data problems were unresolved, material, and need to be addressed in order for the Judges to properly allocate shares, those data problems are discussed in this determination.

Section 111 sets forth no standard for the Judges (or their predecessors) to apply in allocating royalties arising from the payments made by CSOs. This was no mere oversight. The legislative history makes it clear that Congress Start Printed Page 54170 intentionally omitted a standard to guide the Judges:

[T]he bill does not include specific provisions to guide . . . determining the appropriate division among competing copyright owners of the royalty fees collected from cable systems under section 111 [because] it would not be appropriate to specify particular, limiting standards for distribution. Rather, the Committee believes that the [adjudicator] should consider all pertinent data and considerations presented by the claimants.

House Report No. 94-1476, Notes of Committee on the Judiciary. This standardless delegation has led the parties, as well as the Judges and their predecessors, to invoke an evolving set of five broad factors, that have waxed and waned, to consider when allocating royalties among program category claimants. As the Judges recounted in a prior proceeding:

[T]he standards for determining distribution awards have changed dramatically since the inception of the license. In the first Phase I [allocation] proceeding, the Copyright Royalty Tribunal identified three primary factors to guide its determinations: (1) The harm to copyright owners caused by distant signal retransmissions; (2) the benefit derived by cable systems from those retransmissions; and (3) the marketplace value of the copyrighted works retransmitted. 45 FR 63026 , 63035 (September 23, 1980). The Tribunal also identified two secondary factors: (1) The quality of the retransmitted material; and (2) time-related considerations. Id. By the time of the last fully litigated Tribunal determination, the Tribunal dropped its consideration of the two secondary factors. 57 FR 15286 (April 27, 1992). The first CARP to undertake a Phase I distribution, the 1990-92 proceeding, discarded the “harm” criterion in its consideration . . . . That action was upheld by the Librarian of Congress and, subsequently, the Court of Appeals. Nat'l Ass'n of Broadcasters v. Librarian of Congress, 146 F.3d 907 (D.C. Cir. 1998). The 1998-99 CARP refined the approach further still, noting that “ every party to this proceeding appears to accept `relative marketplace value' as the sole relevant criterion that should be applied by the Panel.” CARP Report at 10 (emphasis in original). As a consequence, the CARP announced that its “primary objective is to `simulate [relative] market valuation' as if no compulsory license existed.” Id. The Librarian upheld this conclusion as well, and the Court of Appeals once again affirmed. Program Suppliers v. Librarian of Congress, 409 F.3d 395 (D.C. Cir. 2005).

Distribution Order, Distribution of the 2000-2003 Cable Royalty Funds, 75 FR 26798 , 26801-02 (May 12, 2010) (2000-03 Distribution Order). [ 16 ]

The D.C. Circuit Court of Appeals has recognized that “the process that Congress ordained” has placed the Judges and their predecessors in a context where “mathematical exactitude . . . appears well-nigh impossible [and] rough justice in dividing up the royalty pie seems to be . . . inevitable.” Nat'l Ass'n of Broadcasters v. Copyright Royalty Tribunal, 772 F.2d 922, 926 (D.C. Cir.1985) (emphasis added) (“ NAB ”). Moreover, despite the shifts in the administrative standard for allocating royalties, the D.C. Circuit has continued to note this practical concern. See, e.g., Settling Devotional Claimants v. Copyright Royalty Board, 797 F.3d 1106, 1121 (D.C. Cir. 2015).

It is in the context of this “rough balancing of hotly competing claims,” NAB at 940, that the Judges find it appropriate to rely (in part) on regression approaches in this proceeding. The counter-argument that the regressions do not generate a proxy for price that meets the exactitudes of econometric theorizing may be correct, but it appears to be a precise answer to the wrong question, namely, what is the price that would obtain in a marketplace ill-defined in the record in this proceeding?

The Judges have experience in considering market proxies when exercising their companion jurisdiction of setting royalty rates for certain forms of music and sound recording distributions. In those proceedings, the parties proffer, and the Judges consider, benchmark evidence from analogous markets, market-based evidence from the regulated market itself, economic models, economic experiments, and survey evidence—all in an attempt to identify applicable market factors. Often, more than one of these approaches are proffered in the same proceeding, and the Judges consider whether to apply more than one model in rendering a determination. Here, the parties have provided evidence from the regulated market itself, in the form of regression analyses, and survey evidence, in the form of the Bortz Survey.

Focusing here on the criticism of the regression evidence generated from the regulated market itself, [ 17 ] the Judges consider the emphasis of the regression opponents upon the exactitude of the price proxies, and find that fixation to be dubious. As the Judges have explained, also in their rate determinations, intellectual property goods (whether retransmitted television stations or streams of musical works or sound recordings) are often licensed at various royalty rates because the nature of these goods invites price discrimination. See, e.g., Final rule and order, Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III), 84 FR 1918 , 1980 (Feb. 5, 2019) (dissent, Strickler, J.) (for intellectual property goods there “exist many alternative rate structures with varying rates for various segments of the market . . . forms of `price discrimination,' which, in the broadest sense, means simply a departure from a single, per-unit price.”). Thus, the very idea of a single econometrically correct price for the royalties at issue in this proceeding is fanciful, particularly in the absence of any evidence of such prices or even a methodology to establish price.

Additionally, in line with the D.C. Circuit's acknowledgment that these allocation proceedings may afford the Judges only the ability to dispense “rough justice,” the Judges note an economic corollary: It is better to be “roughly correct” than “precisely wrong.”  [ 18 ] Similarly, in matters of econometrics, Professor Kennedy, cited infra by parties on both sides of the regression divide in this proceeding, has cautioned econometricians against making what he calls “Type III errors[,] . . . when a researcher produces the right answer to the wrong question.” Peter Kennedy, A Guide to Econometrics 391 (5th ed. 2003). Indeed, Professor Kennedy, then echoing the quote attributed to Keynes, advises that in econometric practice “a corollary of this rule is that an appropriate answer to the right question is worth a great deal more than a precise answer to the wrong question.” Id.

In this proceeding, counsel for the SDC, a party vigorously advancing the price-based criticism of the regressions, argues that application of any regression analyses would indeed be “rough” but acknowledges that, as for “justice,” only the Judges could say. 6/12/23 Tr. 6007-08 (closing argument). Counsel is essentially correct on both points. First, the use of regression analyses is not precise, but rather “rough,” at least compared to the exactitude of a full- Start Printed Page 54171 fledged hedonic regression or a discrete choice approach noted by SDC's economic witnesses as possible alternatives (but not proffered as alternative models). And further, Congress most clearly left to the Judges the decision as to the standard to be applied and the methods by which the standards could be effectuated. [ 19 ]

CCG argues that “[it] is incorrect to claim that regressions are not useful . . . because of the minimum fee structure,” or because of “the presence of more minimum fee or `excess capacity' systems” in the 2015-2017 period compared to the prior four years. Proposed Findings of Fact and Conclusions of Law of the Canadian Claimants Group (CCG PFF) at 72-73. In support of this argument, CCG asserts that the regressions proffered in this proceeding do not require accurate measures when the royalty fees “ actually paid ” are the minimum fees, even though they may be “poor proxies for price.” CCG PFF ¶ 197 (and record citations therein) (emphasis added). Rather, CCG maintains that the regression coefficients—which are calculated using unpaid subscriber-group base fees—nonetheless provide useful information regarding the correlation between “carriage decisions and royalty payments.” CCG PFF ¶ 197 (and record citations therein). In further support, CCG cites to a statement by the Judges in the prior proceeding, citing Final Allocation Determination, Distribution of Cable Royalty Funds, Docket No. CONSOLIDATED 14-CRB-0010-CD (2010-2013), 84 FR 3552 , 3555-56 n.17 (Feb. 12, 2019) (2010-13 Determination). [ 20 ]

CCG acknowledges though that reliance in these regressions on minimum-fee-paying CSOs generates “measurement error,” but claims that this is not a concern, because it is “an ordinary part of regression . . . reduc[ing] precision but . . . not bias[ing] claimant shares.” CCG PFF ¶ 198 (citing 4/18/23 Tr. 5125-26 (George)). In fact, CCG maintains that the data pertaining to CSOs that pay only the minimum fee reveals that, for them, the value of the distant signal is essentially zero—information that could not have been ascertained from data in an unregulated market. [ 21 ] CCG ¶ 199 (citing 4/18/23 Tr. 5139-41 (George); Written Rebuttal Testimony of Lisa George, Trial Ex. 7404, at 15-16, 47 (George WRT)).

Focusing on the dramatic increase in the number of minimum-fee-only CSOs, CCG dichotomizes this cohort. With regard to CSOs that “do not carry distant signals” at all, CCG reasons that their voluntarily refusal to retransmit means that they cannot be used to determine the value of distant signals in a regression. [ 22 ] CCG PFF ¶ 201 (citing George WRT at 15; 4/18/23 Tr. 5141 (George). And, with regard to the CSOs that do carry some distant signals, but still have “excess capacity” and thus also pay only the minimum fee, CCG maintains that “these are the same ones that would determine value absent the compulsory license.” CCG PFF ¶ 201 (citing George WRT at 15; 4/18/23 Tr. 5141 (George)).

According to Program Suppliers, notwithstanding the increase in the number of minimum-fee-only CSOs, regression remains the most useful technique for estimating relative marketplace value. Program Suppliers' Proposed Findings of Fact and Conclusions of Law (PS PFF) at 78. They note that, despite this increase, still “20% of CSOs who carry distant signals have a calculated royalty fee which is approximately the size of the minimum fee.” This “cluster of CSOs at the threshold . . . provides evidence that . . . certain CSOs that paid the minimum fee nevertheless engaged in economic decision-making with regard to distantly retransmitted signals carried.” Amended and Corrected Written Direct Testimony of Cleve B. Tyler, Ph.D., Trial Ex. 7600, ¶¶ 151-52 (Tyler ACWDT). Further elucidating this point, Program Suppliers rely on additional oral testimony by Dr. Tyler, explaining that his regression model “is based in part on the . . . likely uncertainty, at the time that carriage decisions are made, as to whether the minimum fee or the calculated rate [ i.e., the base rate] would bind . . . increas[ing] the economic content within the decision-making process, even where the minimum fee ultimately binds.” PS PFF ¶ 323 (citing 4/19/23 Tr. at 5521-22 (Tyler)) (emphasis added). [ 23 ] Further in this regard, Program Suppliers aver that even CSOs with zero distant signal carriage derive “option value” from the section 111 license, because they are always permitted (“privileged” in the language of section 111) to engage in such retransmission. Tyler ACWDT ¶ 102. According to Dr. Tyler, the base fee calculation would tacitly reflect this option value. Id.

In any event, Dr. Tyler rejects as “too extreme” the alternative of “[d]ropping most of the observations” by excluding the minimum-fee-only CSOs, because that would implicitly incorporate the assumption that “there is essentially no value associated with any of the minutes for the systems paying the minimum fee.” 4/19/23 Tr. 5474 (Tyler). In support of this point, Program Suppliers note that “[n]o expert in this proceeding took the approach of dropping minimum fee systems from the analysis.” PS PFF ¶ 327 (and record citations therein). [ 24 25 ]

Despite Program Suppliers' assertion that there is economic evidence from the carriage decisions of minimum-fee-only CSOs, they acknowledge that there is also merit to considering a version of the model that includes only CSOs paying above the minimum fee. Tyler Start Printed Page 54172 ACWDT ¶¶ 155-156. According to Dr. Tyler, this restricted data set presents with the “highest degree of confidence” the CSO tradeoffs between different stations and categories of minutes. Tyler ACWDT ¶ 155. To this end, Dr. Tyler undertook a “sensitivity” analysis that considered only CSOs paying more than the minimum fee, and determined the following estimated shares (and standard errors):

According to Dr. Tyler, these shares are sufficiently close to the shares he proposes through his analysis of all CSOs, i.e., including those only paying the minimum fee. Compare Tyler ACWDT fig.3.2, with Tyler ACWDT fig.6.3. According to Dr. Tyler, this “sensitivity” comparison of his recommended share allocation and the allocation generated by above-minimum-fee-only CSOs reveals that his “modeling approach . . . is reasonably robust and . . . sufficiently reliable for informing allocation of the 2014-2017 Cable Royalties among the Allocation Phase claimant categories.” Tyler ACWDT ¶ 105.

PTV, like CCG, finds economic significance in the choices of a CSO “to retransmit a distant signal to particular subscriber groups” despite the fact that the CSO pays the minimum fee, relying in part on Dr. Marx's testimony that those choices reveal only ordinal preferences as to distant programming types. Public Television's Proposed Findings of Fact and Conclusions of Law (PTV PFF) ¶ 58 (citing, inter alia, 4/11/23 Tr. 4165 (Marx)). Thus, PTV finds it appropriate to rely on what it describes as the “ample variation in the decision-making of CSOs that pay the minimum fee . . . to . . . inform[ ] . . . relative marketplace value. . . .” PTV PFF ¶ 59.

As an alternative basis for finding relevance in the decision-making of CSOs that paid only the minimum fee after the WGNA conversion, PTV finds relevance in the fact that many CSOs had distantly carried certain PTV signals pre-conversion together with WGNA, paying above the minimum fee, and continued to transmit that companion signal post-conversion, when only the minimum fee applied. According to PTV, this continuity of PTV carriage is record evidence of the value of the PTV carriage during the minimum-fee-only periods. PTV PFF ¶ 60; Johnson WRT ¶ 78 (“The WGN conversion in 2015 does not mean the value of KAET-DT [Public Television signal] declined or disappeared altogether.”); see generally Johnson WRT ¶ 79 (As in the KAET example, “there were 1,115 CSO-Public Television distant signal combinations in the 2015-2017 period where the CSO paid a minimum fee during those years [and] [f]or 55 percent of these combinations, the same CSO also carried the same Public Television distant signal, at a different point in time, when it paid section 111 royalties greater than the minimum fee.”(emphasis added)).

As another alternative, Dr. Johnson, on behalf of PTV, and like Dr. Tyler, undertook a “sensitivity test” that excluded the minimum-fee-paying CSOs. According to PTV, the results of this sensitivity test were sufficiently consonant with the coefficients in Dr. Johnson's preferred “baseline” fee-based regression, which included the minimum-fee-only CSOs, to suggest that decisions made by CSOs that paid minimum fees are informative as to the question of relative value. PTV PFF ¶ 84 (and record citations therein); compare Johnson WDT fig.11 (baseline model coefficient, with Johnson WDT fig.14 (“sensitivity test” coefficients excluding minimum-fee-paying CSOs). This consonance was important, according to Dr. Johnson, because it justified his use of the “baseline” model, which, because it included the minimum-fee-paying CSOs, relied on 18,666 observations, and therefore was more precise than his “sensitivity test” approach. Johnson WDT ¶ 84.

From yet another economic perspective, PTV maintain that for minimum-fee-paying CSOs making some retransmissions, the value of the retransmitted programming must have some marginal value, in excess of “opportunity costs” regarding alternative uses of bandwidth including streaming alternatives. PTV PFF ¶¶ 62-63. Taken together, PTV asserts that the foregoing facts support the inclusion of the base-fee decisions of minimum-fee-paying CSOs. PTV PFF ¶ 97. Start Printed Page 54173

CTV presents a nuanced argument regarding the relevancy of minimum-fee-only CSOs, consistent with the opinions of their economic expert, Dr. Leslie Marx. On the one hand, CTV and Dr. Marx maintain that the retransmission decisions of minimum-fee-only CSOs were not so numerous as to preclude the use of base fee data from minimum-fee-only CSOs in a regression for the years 2010-2013 (addressed in the prior determination) and for 2014 (the earliest year addressed in the present proceeding). 4/11/23 Tr. 4157 (Marx) (testifying that “the mere presence of royalties from excess capacity CSOs” does not make the fee-based regressions invalid” because “it's a matter of degree . . . .”). On the other hand, CTV and Dr. Marx maintain that the retransmission decisions of the minimum-fee-only CSOs were so pervasive during the years 2015-2017 as to preclude the use of fee-based regressions for those three years. Id. at 4157-58. See generally Commercial Television's Proposed Findings of Fact and Conclusions of Law (CTV PFF) at 38 (describing CTV's and Dr, Marx's approach as measured, because it “utilize[ed] a fee-based regression only for 2014, [which was] the sole year at issue in this proceeding without significant marketplace changes.”)  [ 26 ]

CTV continues its argument on this point by pointing out that when a CSO elects to carry a set of distant signals resulting in a payment higher than the minimum fee, that indicates the CSO sufficiently values the programming minutes bundled into the carriage to make it willing to pay marginal royalty payments above the minimum fee. Written Rebuttal Testimony of Leslie M. Marx, Ph.D., Trial Ex. 7208, ¶ 21 (Marx WRT). Alternatively stated, for these CSOs which CTV accurately describes as “above-capacity”, i.e., retransmitting more than 1.0 DSE and thereby paying above the minimum fee, the base fee royalties reported by their subscriber groups are their actual royalty payments, revealing the CSO's perceived value of the distantly retransmitted stations and their constituent programs. Written Rebuttal Testimony of Christopher Bennett, Ph.D., Trial Ex. 7035, ¶ 15 (Bennett WRT); CTV PFF ¶ 158.

To contrast from the “above-capacity” CSOs, CTV and its experts examine the carriage decisions of CSOs that had carried WGNA in 2014, either solely or with other signals, but could not, and thus did not, carry WGNA after 2014. CTV asserts that because the WGNA conversion generated the explosion of minimum-fee-only CSOs, the majority of the royalties and CSOs do not reflect incremental costs associated with incremental carriage. CTV PFF ¶¶ 177, 186. This change is reflected in a series of figures presented by Dr. Marx. First, she demonstrates the share of royalty payments by CSOs carrying distant signals relative to the minimum fee, across the relevant years:

Next, Dr. Marx identifies the percentage of all CSOs carrying distant signals that are paying the minimum fee over the relevant years:

These data present the contrast between how the actual royalty obligations through 2014 were directly linked to base fees at the subscriber-group level and the actual royalty obligations in the 2015-2017 period where they were instead predominantly a function of the minimum fee. CTV PFF ¶ 167 (citing Bennett WRT fig.5). Likewise, Dr. Marx testified that there was no substantial dissimilarity in the 2010-2014 period between: (1) the overall regression coefficients (not allocation shares) for all CSOs and (2) the regression coefficients for only CSOs carrying fewer distant signals than the minimum fee would permit, which Dr. Marx aptly described as “excess capacity” CSOs. Marx WRT ¶ 62. This substantially similarity was depicted as follows by Dr. Marx:

Moreover, according to Dr. Marx, many of the CSOs with “excess capacity” also had less than the two subscriber groups necessary to be observed by the Crawford regression, thus making their “excess capacity” status inconsequential to the regression for this independent reason. 4/11/23 Tr. 4157 (Marx).

The scenario for the 2015-2017 period was drastically different, according to Dr. Marx. She also presents coefficients (not allocation shares) for this latter three-year period, and shows how the coefficients for all CSOs differed from those with no excess capacity:

With regard to the necessity of at least two subscriber groups within a system during an accounting period (required by Dr. Crawford's system-accounting period fixed effect), Dr. Marx reported that, beginning in 2015, fully 62% of CSOs, accounting for almost 35% of total royalties, did not satisfy this requirement. Amended Corrected Written Direct Testimony of Leslie M. Marx, Ph.D., Trial Ex. 7204, ¶ 58 (Marx ACWDT). By 2017, 93.8% of the royalties were paid via the minimum fee, rather than the base fees. CTV ¶ 189 (citing Marx WRT, fig.14).

Although CTV and Dr. Marx do not consistently characterize the evidentiary weight of the royalty data from “excess-capacity” CSOs as wholly uninformative, they unambiguously report Dr. Marx's own opinion that the 2015-2017 minimum fee royalty data is decidedly “less informative” than the royalty data from CSOs that transmitted more than 1.0 DSE. Marx WRT ¶ 22.

Further bolstering the point that minimum-fee-only-CSO royalty data dominated the 2015-2017 landscape, CTV points to the following data:

CSO carriage of fewer distant signals after 2014 sharply increased the percentage number of excess capacity CSOs, from less than 20% of CSOs in 2014 to 73% of CSOs in 2016 onward. Marx WRT ¶ 64.

The percentage of CSOs paying more than the minimum fee decreased from 48% in 2014 to only 19% by the end of 2017 (measured by including CSOs with zero retransmittals).

CTV PFF ¶¶ 209-210 (and record citations therein).

Based on the foregoing, CTV relies on Dr. Marx's conclusions that:

The changed circumstances in the real-world market have infected the quality of the data and reduced the quantity of the data utilized by the proffered fee-based regressions making those regressions in the 2015 to 2017 timeframe unreliable. 4/11/23 Tr. 4510-12 (Marx).

A regression requires reliable data that fits the underlying assumptions, otherwise the model is putting “garbage in” and getting “garbage out.” The data no longer represents carriage decisions based off of royalty payments from the CSOs. 4/11/23 Tr. 4147; 4194 (Marx).

CTV PFF ¶¶ 299-300. See also Marx WRT ¶ 82 (“[F]or a minimum fee-paying CSO, the inclusion of a distant signal in the channel line-up to a subscriber group . . . reflects the CSO's choice over other alternative signals that also have no incremental cost. This can be informative as to the value of the program minutes on whatever signal the CSO elects to offer.”).

Like CTV, JSC contrasts the 2010-2014 period with the years 2015-2017. In the former period, JSC notes, most CSOs calculated “a Base Fee + their 3.75% Fee that equaled or exceeded the Minimum Fee.” More particularly, JSC specifies that, “in 2014, 71.8% of all CSOs calculated a Base + 3.75% Fee that met or exceeded their minimum fee obligation, and during the 2010-13 period, 73.0% of all CSOs did so . . . account[ing]for 76.5% of total royalties paid in 2014 and 79.9% of total royalty fees paid during the 2010-13 period.” Proposed Findings of Fact and Conclusions of Law of the Joint Sports Claimants (JSC PFF) ¶ 17 (citing 3/30/23 Tr. 2578 (Majure); Harvey CWDT ¶ 17 & tbl.3; Corrected Bortz Report, Trial Ex. 7101, at 9 (Bortz Report).

Further, JSC maintains that even if an economic model could produce reliable ordinal rankings, which none of the regressions in evidence attempted, it is not possible to make the leap from such rankings to cardinal relative values, i.e., allocation of specific royalty amounts to each of the claimant categories in this proceeding. 3/30/23 Tr. 2512-13 (Asker).

JSC also maintains that the base fee calculations of any minimum-fee-only CSO cannot reveal the programming preferences of such CSOs or otherwise be useful in the estimation of relative marketplace value. Specifically, JSC first maintains that “[a]ny alleged uncertainty about application of the Minimum Fee is speculative.” Reply Proposed Findings of Fact and Conclusions of Law of the Joint Sports Claimants (JSC RPFF) at 11. Not only does JSC find this uncertainty to be speculative, they further argue that it is “highly unlikely that most Minimum Fee CSOs would have been uncertain about whether a carriage decision would affect their royalty payment.” JSC RPFF ¶ 32. In support of this point, JSC notes that, after 2014, among minimum-fee-only CSOs that retransmitted at least one distant signal, approximately 86% calculated a base fee + 3.75% Fee that was 75% or less of the CSO's minimum fee. JSC RPFF ¶ 32. Further to this point, JSC takes note of Dr. Tyler's acknowledgement that “the further you are away from the minimum fee threshold, the less likely it would be that there would be that risk of exceeding it.” JSC RPFF ¶ 32. [ 27 ]

In further criticism of the usefulness of regressions, particularly for the two-year 2016-2017 period, JSC notes that only 55.2% of [CSOs chose to carry] distant signals. Harvey CWDT ¶ 26. JSC further notes that, out of this 55.2%, Start Printed Page 54176 approximately 74% paid only the minimum fee.

Additionally, JSC notes that during the two-year 2016-2017 period, 14% of all CSOs met or exceeded the minimum fee, accounting for but 6.8% of total royalty payments, which reflected a 91% decrease compared to 2014. Harvey CWDT tbl.11. [ 28 ]

With regard to 2015, JSC relies on Mr. Harvey's finding that, after he removes reported WGNA carriage, 72% of CSOs carrying at least one distant signal then paid only the minimum fee. JSC notes that Mr. Harvey found that only 13.4% of CSOs calculated a minimum fee, accounting for 85.2% of total royalty payments for that year. JSC PFF ¶ 46 (citing the Harvey CWDT). [ 29 ] Considering these 2015 data from the opposite perspective, JSC cites Mr. Harvey's calculation that only 13.4% of CSOs calculated a base fee + a 3.75% fee in excess of the minimum fee, reflecting only 9.8% of the total royalties paid in that year. JSC PFF ¶ 47 (further the Harvey CWDT).

JSC also relies on another of its expert witnesses, the economist Dr. W. Robert Majure, who explained that, in the 2015-2017 period, most CSOs that formerly carried WGNA under the section 111 license chose not to replace it with an equivalent number of DSEs, and as a result “made far less use of the section 111 license.” JSC PFF ¶ 49 (citing Written Direct Testimony of W. Robert Majure, Ph.D., Trial Ex. 7103, ¶ 77 (Majure WDT)).

Based on these data related to the minimum fee, JSC maintains that the fee-based regressions, as they relate to the 2015-2017, period wrongly use base fees (with or without the 3.75% fee) as “price proxies,” in that when the minimum fee binds, the marginal royalty cost of carriage is zero. JSC PFF ¶¶ 148-152 (and record citations therein).

In econometric terms, Dr. Asker, on behalf of JSC, measured the alleged errors that Drs. George, Johnson, and Tyler introduced into their regressions by using the incorrect base-fee-related price proxies. These alleged “measurement errors,” according to Dr. Asker, were correlated with the variables measuring distant signal content minutes in the entire 2014-2017 period and equal the difference between the improper price proxies y and the zero price implied by the payment of the minimum fee. Written Rebuttal Testimony of John Asker, Ph.D., Trial Ex. 7114, ¶ 79 (Asker WRT).

JSC further notes in this regard that Dr. George herself conceded that the link between base rate royalties and actual CSO demand is “not super tight,” and adds the very sort of “measurement error to the dependent variable” that Dr. Asker has calculated. JSC PFF ¶ 154 (citing Dr. George's hearing testimony).

Dr. Asker also takes issue with the regression experts' use of the base fee as a price proxy even for CSOs paying above the minimum fee. He explains that for a perfectly rational CSO calculating price, the true marginal cost of distantly retransmitting a local station in this context—the difference in cost to the CSO between retransmitting and not retransmitting—is not the base fee, but rather the difference between (1) the total fees that would bind, which may have been the minimum fee, without retransmitting that local station, and (2) the total base fees that would bind (the minimum fee having been exceeded) if that local station was distantly retransmitted. See Asker WRT ¶¶ 59-77 (applying the definition of price, stated in ¶ 61, as “the extra expenditure required to have it, as compared to not having it.”).

Finally, JSC takes note of Dr. Asker's point that it is standard practice among statisticians and econometricians to test the validity of a regression against other available external evidence, as a sort of “reality filter.” JSC PFF ¶ 169 (citing Asker WRT ¶ 104); see also 3/28/23 Tr. 1910-11 (Harvey) (agreeing with Judge Strickler that “validity test” is synonymous with “reality filter”). Here, JSC points out that the validity of the regressions is refuted by the fact that, during the 2015-2017 period, CSOs did not behave in accordance with the assumption behind the regressions. That is, despite the assumption that the incremental benefits of distant carriage were positive (according to the regression estimates) and the incremental royalty cost was zero, most CSOs elected not to add additional distant signals. Thus, the regressions purportedly were invalid, unrealistic, and self-contradictory (“false within their own premise” one might say), according to JSC. Written Rebuttal Testimony of W. Robert Majure, Ph.D., Trial Ex. 7104, ¶¶ 15, 47-50 (Majure WRT); 3/30/23 Tr. 2594-95, 2598-99 (Majure).

At the outset, when framing the relevant minimum fee issue, the SDC maintain that, “while it may be true” that CSOs' ordinal decision-making shows their ranked preferences, “no regression model in this case has been specified for such a theory.” SDC PFF ¶ 39. Rather, these regressions consider the calculated (but not paid) base fees (and the 3.75% Fee, depending on the regression at issue) of these minimum-fee-only CSOs.

But the SDC maintain that the minimum fee “confounds any interpretation of a fee-based regression” premised on the CSOs' “willingness-to-pay.” Settling Devotional Claimants' Proposed Findings of Fact and Conclusions of Law (SDC PFF) at 27. In this regard, the SDC point to the testimony of several experts who opine that the minimum fee structure “largely obviate[s] the purported causal theory based on `willingness-to-pay,' ” because the minimum-fee-only CSOs “are required to pay a minimum fee equivalent to a 1.0 DSE . . . whether they are `willing' or not.” SDC PFF ¶ 60 (citing Asker WRT ¶¶ 78-86; Marx WRT ¶ 22.). Stating the point in economic terms, the SDC state that “there is no marginal cost” incurred by a CSO unless and until “the minimum fee is exceeded.” SDC PFF ¶ 60.

The SDC do not limit their criticism of the minimum fee issue to the regressions proffered in this proceeding. They also look back to the 2010-13 proceeding, where “approximately 50% of the CSOs paid only the Minimum Fee,” which, the SDC maintain now (as they did in the 2010-13 proceeding), constituted a “serious problem” for the Crawford regression upon which the Judges relied in the prior proceeding. SDC PFF ¶ 61.

But the SDC assert that their criticism in the 2010-13 proceeding is even more relevant in the present proceeding, in that this minimum fee problem is “exacerbated after 2014, [because] the proportion of fees paid by systems paying the Minimum Fee went up from 39.2% to 93.8%.” SDC PFF ¶ 62 (citing Ex. 7204 at 29, Marx ACWDT ¶ 65). In this environment, the SDC maintain, it is difficult to see how any inferences could be drawn about “willingness to pay.” SDC PFF ¶ 62. Start Printed Page 54177

The SDC then evaluate the attempts by the regression experts to address the minimum fee issue, as summarized below:

—The SDC acknowledge that Dr. Tyler's “sensitivity test of this issue,” in which he dropped the minimum-fee-only CSOs, “might provide some rough guidance as to the potential direction and magnitude of bias introduced by the presence of minimum fees.” SDC PFF ¶ 63 (emphasis added) (citing Tyler ACWDT ¶ 156). But the SDC take note of what they characterize as “the vast amount of data” that Dr. Tyler had to discard to apply this sensitivity test, leading the SDC to conclude that Dr. Tyler's attempt to drop all minimum-fee-paying CSOs was “probably too extreme.” SDC PFF ¶ 63 (citing 4/19/23 Tr. 5473-74 (Tyler).

—Dr. Johnson's sensitivity test, in which he too applied his model only to systems paying above the minimum fee, resulted in large swings in the JSC coefficients, rendering them statistically insignificant. SDC PFF ¶ 104.

—The SDC acknowledge that Dr. Marx “makes good points about the confounding effects of minimum fee-paying systems . . . in the 2015-2017 timeframe,” but find “her position on the reliability of the model before 2015 . . . too convenient to credit.” Harkening back to their criticism of the 2010-13 Determination's adoption of the Crawford regression, the SDC maintain that Dr Marx's Bayesian regression for 2014 is deficient with regard to this minimum fee issue because “ `CSOs paying the minimum fees accounted for a large proportion already before the conversion of WGNA,' ” and any 2014 modeling “ `should have been specified' ” to address this issue. SDC PFF ¶ 130 (citing Written Rebuttal Testimony of Daniel L. Rubinfeld, Trial Ex. 7505, ¶ 95 (Rubinfeld WRT) (“The fact that Dr. Crawford's model does not hold up when applied to 2014-2017 data in the current proceeding reveals that the regression specification put forth by Dr. Crawford was not robust or informative.”).

The Judges find that the dramatic increase in the number of minimum-fee-only CSOs ( i.e., those with no distant retransmittals and those with some distant retransmittals but with “excess capacity”) renders regression analyses that include those CSOs less reliable and thus can be accorded only very limited economic evidentiary weight. Moreover, the Judges accord significantly more evidentiary weight to regression modeling that focuses only on the CSOs that actually revealed their preferences by willingly paying above the minimum fee, i.e., at the base fee level.

In particular, as discussed infra, the Judges rely on the Tyler Model, as Dr. Tyler applied his model to the CSOs paying above the minimum fee. See Tyler ACWDT ¶ 156 & fig.6.3 (discussed infra). Although there is hardly a consensus as to the adoption of this variant of the Tyler Model, the Judges are struck by the supportive argument of the SDC, set forth below, regarding the Tyler Model as applied to above-minimum-fee-paying CSOs:

Dr. Tyler, whose rate-based methodology is the most explicitly based on a “minimum willingness to pay” theory . . . offers a sensitivity test of this issue. Tyler [ACWDT] ¶ 156. (It is a fairer sensitivity test than Dr. Johnson's similar test, which was selected retrospectively out of hundreds of tests that were tried and is performed in the presence of the distortion of multiple misspecifications). Dr. Tyler's sensitivity test might provide some rough guidance as to the potential direction and magnitude of bias introduced by the presence of minimum fees.

SDC PFF ¶ 156. See also 4/19/23 Tr. 5473 (SDC's counsel's statement to Dr. Tyler on cross-examination) (“I do want to point out to your credit that your first sensitivity test tries to address this issue.”). This argument is generally consistent with Dr. Tyler's response to SDC counsel on this point, agreeing that it was important to be “cognizant” of this minimum fee issue and that it be “considered and addressed” because there is “reasonable disagreement about how to handle the issue.” Id. at 5473-74.

The Judges do not see the disagreement as necessarily “reasonable” regarding whether to rely on the calculated base fee data of all CSOs (including the CSOs paying only the minimum fee) or only those who actually paid their calculated base fees. But, however one couches this disagreement, the Judges find the latter approach appropriate, and that—to borrow the SDC's phrase—the variant of the Tyler Model in Figure 6.3 of the Tyler ACWDT offers the Judges' “rough guidance” in the allocation of shares. [ 30 ]

With regard to the issue of precision, mathematical or economic, the Judges do not adopt Dr. Asker's analysis, discussed above, that the appropriate method to calculate royalties for above-minimum-fee-paying CSOs should be based on the difference between (1) the actual royalty amount paid when a distant station is added; and (2) the amount that the CSO would have paid pursuant to the minimum fee calculation if it would bind in the absence of transmittal of that station. Although in theory that would appear to be a rational approach, there is no evidence that any CSO actually engages in such an activity. Further, as the Judges note elsewhere in this determination, they credit the designated testimony of Ms. Hamilton, a cable industry expert, who stated that the amount of money at issue regarding section 111 royalties is essentially de minimis to the CSOs (although quite significant to the parties in this proceeding), and that the CSOs do not devote much attention to issues regarding distant retransmittals. In this context, and in the absence of any evidence to the contrary, the Judges cannot assume, let alone apply, a pricing rationale that suggests a tunnel-vision sort of hyperrationality, when Ms. Hamilton's testimony suggests a broader rationality, whereby CSOs rationally apply their scarce time and attention to more economically consequential matters. [ 31 ]

VI. The Allegations of “Specification Searching”  [ 32 ]

In their determination in the 2010-13 cable proceeding, the Judges relied predominantly, although not solely, on the fee-based regression model presented by Dr. Crawford, who was then a witness on behalf of CTV. In deciding to rely on Dr. Crawford's regression (the Crawford Model), the Judges credited his testimony denying allegations by the SDC that he had improperly attempted and rejected many alternative regression models. 2010-13 Determination at 3566-3567; see also SDC PFF ¶ 68 (and record citations therein). Start Printed Page 54178

The SDC maintain that three of the four fee-based regression models presented in this proceeding, PTV's, CCG's, and CTV's, are based upon the Crawford Model. In order to understand the relationship of these three models to the Crawford Model, the SDC argue (and the Judges agree) that it is necessary to understand the characteristics and history of the Crawford Model, comparing what was known at the time of the 2010-13 cable proceeding with what was subsequently uncovered. SDC PFF ¶ 69 (and record citations therein).

To begin its review of the Crawford Model, the SDC point to the basic hypothesis undergirding the approach—attempting to “relat[e] a measure of royalty fees to numbers of [program] category minutes.” SDC PFF ¶ 70. The SDC state that, although the Crawford Model “followed a framework that somewhat resembled . . . the model offered by Dr. Waldfogel [the Waldfogel Model] in the 2004-05 cable proceeding,” Dr. Crawford actually made “multiple dramatic departures.” SDC PFF ¶ 70 (citing 2010-13 Determination at 3557 for a description of Dr. Waldfogel's model). Dr. Crawford departed from the Waldfogel Model, according to the SDC, because after he “tested Dr. Waldfogel's model as a starting point using 2010-13 data (which he falsely denied doing), the Waldfogel [M]odel yielded implausible results . . . demonstrating, at a minimum, that [the Waldfogel Model] . . . performed poorly on out-of-sample data.” SDC PFF¶ 70 (and record citations therein). Moreover, the SDC assert that Dr. Crawford undertook, but failed to disclose, his sensitivity testing when he constructed the Crawford Model, which showed that the results of the Waldfogel Model were extremely sensitive to annual changes, suggesting that the Waldfogel Model may have been “selected to fit the data in 2004-05.” SDC PFF ¶ 70 (and record citations therein).

Expanding on the foregoing, the SDC imply that specification searching is widespread, noting that “[a]t least 10 different expert witnesses have presented at least 10 different fee-based regression models in the last five allocation proceedings: Dr. Rosston (CTV, 1998-99 cable), Dr. Waldfogel (CTV, 2004-05 cable), Dr. Crawford (CTV, 2010-13 cable), Dr. Israel (JSC, 2010-13 cable), Dr. George (CCG, 2010-13 cable, 2014-17 cable), Dr. Heeb (CTV, 2010-13 satellite), Dr. Gray (PS, 2010-13 satellite), Dr. Johnson (PTV, 2014-17 cable), Dr. Tyler (PS, 2014-17 cable), and Dr. Marx (CTV, 2014-17 cable). Further, the SDC emphasize that only Dr. George has appeared more than once, and that her models in the 2010-13 proceeding and in this proceeding are “very different” from each other. SDC PFF ¶ 73 (and record citations therein).

Dr. Erdem, also, later discovered, based on CTV's compelled production in the 2010-13 satellite case, that Dr. Crawford had actually tested many different functional forms before deciding to use the log-linear form. Only then did he perform the appropriate statistical test (the “Box-Cox” test), which Dr. Erdem claims “specifically rejected the log-linear form.” Dr. Erdem further claims that Dr. Crawford improperly failed to run the test on the independent variables, limiting the test to the dependent variable (the royalty measure). Amended Written Direct Testimony of Erkan Erdem, Ph.D., Trial Ex 7502, ¶¶ 41-42 (Erdem AWDT); see also Supplemental Written Rebuttal Testimony of Erkan Erdem (2010-13 satellite proceeding), Trial Ex. 7054, ¶¶ 16-18 & Ex. 3. See SDC PFF ¶ 76 (and record citations therein).

According to Dr. Erdem, the failure of Dr. Crawford and CTV, in the 2010-13 cable proceeding to disclose, in Dr. Crawford's direct testimony or in discovery, this testing and the results thereof served to conceal the potential for “distortion and bias” in the Crawford Model arising from the use of a “linear form” of a control variable for the number of subscribers in the subscriber group during the prior accounting period (the so-called “lagged subscribers”) as affecting the dependent variable (royalties) expressed not in level ( i.e., linear) form, but rather in log form. See Erdem AWDT ¶¶ 51, 71; see also Asker WRT ¶¶ 98-99; Written Rebuttal Testimony of R. Garrison Harvey, Trial Ex. 7106, ¶¶ 194, 197, 202 & Ex. H (Harvey WRT); see also SDC PFF ¶ 77.

The SDC maintain that the foregoing exemplifies the “poor economic practice” and econometric “sin” of specification searching broadly undertaken by Dr. Crawford. SDC PFF ¶ 87 (citing Kennedy, supra, at 367). [ 33 ] Moreover, the SDC assert that Dr. Crawford did not merely commit the “sin” of specification searching; he also lied by repeatedly denying his econometric misconduct. Erdem AWDT ¶ 36; Written Rebuttal Testimony of Erkan Erdem, Ph.D., Trial Ex. 7503, ¶ 77 (Erdem WRT). According to the SDC, Dr. Crawford instead “acknowledged performing only a single alternative analysis,” and the Judges trusted and relied on his testimony. SDC PFF ¶ 88 (citing 2010-13 Determination at 3568 (finding that Dr. Crawford “had not run such an alternative regression by generating a regression and then discarding it . . . .”)). In fact, according to the SDC, Dr. Crawford “had performed and rejected . . . undisclosed alternative models . . . with different combinations of variables, interactions of variables, no fixed effects, different forms of fixed effects, and a wide range of functional forms . . . produc[ing] wide ranges of implied shares, including 0% shares for every . . . category in . . . some models.” SDC PFF ¶ 88 (and record citations therein).

According to the SDC, a telltale sign that Dr. Crawford had engaged in specification searching was the Crawford Model's inclusion of “indicator variables that had no function . . . [given] his system-accounting period fixed effects . . . [thereby] suggesting that he had tested the regression with no fixed effects or at other levels of fixed effects . . . . [But] Dr. Crawford repeatedly denied trying a specification without fixed effects or at a different level of fixed effects.” SDC PFF ¶ 90 (and record citations therein). Moreover, the SDC claim that, in response to a question from Judge Feder, Dr. Crawford lied by claiming he did not test regressions without fixed effects; his test results, later produced in the satellite proceeding, showed that he “ran most of his hundreds of models without fixed effects and at different levels of fixed effects, searching for the best results. ” SDC PFF ¶ 91 (and record citations therein) (emphasis added).

Returning to the issue of whether to transform variables from linear to log form, the SDC claim to have identified “[p]erhaps the clearest fingerprint” of Dr. Crawford's specification search. Specifically, although Dr. Crawford had testified that he did not perform a sensitivity test on a log-log form of regression because he “strongly fe[lt] that including log subscribers is not an appropriate specification as an Start Printed Page 54179 explanatory variable”, this “was a lie” because the discovery in the satellite proceeding showed that Dr. Crawford did test a log-log form of regression, which resulted in “an approximately 10-point drop in CTV shares (about an $80 million value).” SDC PFF ¶ 93 (and record citations therein).

After reviewing the satellite discovery, which included approximately 500 regression model runs, and weighing it against Dr. Crawford's cable testimony, SDC expert Dr. Rubinfeld stated: “I've never seen anything on this scale . . . .” 4/6/23 Tr. 3638 (Rubinfeld). The SDC characterize Dr. Crawford's purported specification searching and related alleged untruths as “[e]vidence of fraud in a past proceeding” that constitutes “changed circumstances,” thus “requir[ing] a reevaluation of those characteristics of a Crawford-like regression that have infected the regression models presented in this proceeding. ” SDC PFF ¶ 96 (emphasis added).

In this regard, the SDC take particular note that Dr. Marx acknowledges that because her Bayesian model relies directly on Dr. Crawford's results her results are unreliable if Dr. Crawford's results are unreliable. SDC PFF ¶ 129 (citing 4/11/23 Tr. 4323-24 (Marx)).

CCG's “primary response” to the SDC's claim is that any specification searching by Dr. Crawford is irrelevant because “regression has the advantage of transparency and replicability.” CCG PFF ¶ 217 (and record citations therein). This occurred in the present proceeding, CCG maintains, as the work of various experts presenting testimony in this case showed, that every aspect of a regression such as the Crawford Model could be and was examined and tested. 4/18/23 Tr. 5177-79 (George); George WRT at 53.

Further, CCG maintains it is appropriate for experts in the present proceeding not to “mov[e] away from an approach that the Judges have found highly useful in determining relative market value” unless there were “clear theoretical or empirical reasons” to do so. CCG PFF ¶ 218 (and record citations therein). CCG analogizes to the “academic setting,” in which “differing views” among econometricians can be “addressed through the `referee' process . . . where the most important criterion for evaluating a proposed alternative model is whether the proposed change undermines the theoretical relationships in some way . . . .” George WRT at 52.

Applying the foregoing points, Dr. George was unconcerned that Dr. Crawford's procedures appeared to include “more than one model.” She analyzed the Crawford Model on its merits, concluding that it “was tightly linked to the economics of the cable marketplace and estimated to minimize bias.” It was on this basis, as well as the Judges' endorsement of the model, that Dr. George used the Crawford Model as the basis for her work in this proceeding. 4/18/23 Tr. 5131, 5176 (George); George WDT at 6; Ex. 7404; George WRT at 10-11, 13, 43-44; see also CCG PFF ¶ 220.

When asked whether she believed Dr. Crawford had or had not engaged in improper specification searching, Dr. Marx demurred stating that she was “not offering that opinion.” 4/11/23 Tr. 4119 (Marx). When asked specifically about the more detailed arguments made by the SDC witnesses regarding Dr. Crawford's alleged specification searching based on supplemental discovery Dr. Marx sought to make sure her “no-opinion” testimony was unambiguous:

I want to be clear that I didn't reach an opinion about whether or not [Dr.] Crawford had a fair underlying theoretical structure behind the regressions that he ran. I didn't see anything in what I reviewed that raised red flags that that was not the case, but what I saw was consistent with or at least not inconsistent with proper econometric practice.

4/11/23 Tr. 4121 (Marx) (emphasis added). See also 4/11/23 Tr. 4226 (Marx) (testifying similarly in response to questioning by Judge Strickler); 4/11/23 Tr. 4257 (Marx) (same). On cross-examination, Dr. Marx elaborated while reiterating her “no opinion” regarding the characterization of Dr. Crawford's consideration of hundreds of regression alternatives:

[I]n my direct testimony . . . I wanted to emphasize that I am not opining that [Dr.] Crawford had an underlying theoretical structure. I'm just saying that what I saw was consistent with that. What I saw was not inconsistent with proper econometric practice, but I'm not offering an opinion about what [Dr.] Crawford was thinking in the process of running these tests. And I'm not trying to speak for [Dr.] Crawford.

[SDC counsel Mr. MacLean]

So you would agree that . . . running hundreds of different models and then selecting models based on preferred or expected results or what you referred to as casting about, that would not be a good research practice . . . ?

It is not a good research practice to cast about without thinking and without an underlying theoretical structure . . . without the underlying economics being kept in mind. The mere observation of a large number of regressions being run, by itself, in the context of the 2010 to 2013 proceeding, I don't find at all surprising, and seeing that did not raise any concerns in my mind about either the reliability of the work or my ability to use my usual procedure and thinking to assess the reliability of the work.

4/11/23 Tr. 4325-27 (Marx).

However, after being confronted with Dr. Crawford's testimony that he had “perform[ed] only one alternative analysis, that he hadn't provided” in discovery, in contrast to what was uncovered in the satellite discovery, Dr. Marx acknowledged that as to Dr. Crawford's oral testimony “there are statements that were made that seem in retrospect not accurate.” 4/11/23 Tr. 4332 (Marx). Dr. Marx then nonetheless retreated to one of her stock statements, asserting that “nothing that I saw raised any concerns in my mind that [Dr.] Crawford's results were not reliable . . . .” 4/11/23 Tr. 4334 (Marx).

Accordingly, rather than render her own judgment as to the appropriateness of Dr. Crawford's conduct or adjust her application of the Crawford Model in light of these issues, Dr. Marx testified that she reviewed and assessed Dr. Crawford's 2010-13 regression model as she would consider any such model, whether in her role as an economist or as an academic journal referee (which is a function she performs). On this basis, she determined that Dr. Crawford's model was reliable, i.e., regardless of any of the specification searching and dissembling that SDC claimed had been uncovered in the satellite proceeding discovery. Marx WRT ¶¶ 42-54; 4/11/23 Tr. 4112-20, 4325-4327, 4334 (Marx); CTV PFF ¶¶ 366-69; Reply of the Commercial Television Claimants to Proposed Findings of Fact and Conclusions of Law (CTV RPFF) ¶ 169.

A key reason why Dr. Marx declined to express an opinion as to Dr. Crawford's alleged specification searching is the following: What the SDC characterize as Dr. Crawford's wrongful experimentation with alternative model specifications, Dr. Marx maintains it can also be understood as a form of sensitivity analysis—not only a standard activity, but actually a best practice in econometric analysis. Marx WRT ¶ 10; 4/11/23 Tr. 4120-21 (Marx). More broadly, CTV asserts that what Drs. Erdem and Rubinfeld criticize as evidence of the improper practice of specification searches can all be understood as the “standard practice of economists”—involving “[r]obustness checks, sensitivity analyses, and Start Printed Page 54180 differences across economists in regression specifications.” CTV PFF ¶ 371 (citing Marx WRT ¶¶ 31-36).

PTV's expert economic witness, Dr. Johnson, did not address the soundness of Dr. Crawford's 2010-13 regression methodology, which, to repeat, the SDC economic experts characterize as the wrongful undertaking of a specification search. [ 34 ] But PTV emphasizes that, although Dr. Johnson acknowledges that his own regression analysis is based on the economic theory and principles underlying Dr. Crawford's regression analysis, Dr. Johnson modified and improved some aspects of Dr. Crawford's regression model. PTV PFF ¶¶ 113, 115 (citing Crawford WDT ¶¶ 32-36, 46.) Thus, PTV argues, even if Dr. Crawford engaged in wrongful specification searching to construct his 2010-13 model, “it makes no sense for it to adversely affect the reliability of Dr. Johnson's regression specification, which has a different set of variables and has been tested on the 2014-17 data.” PTV PFF ¶ 143.

Turning from the work of Dr. Crawford to the work of Dr. Johnson, on behalf of PTV in the present proceeding, the SDC accuse PTV and Dr. Johnson of similar misconduct as they allege was committed by Dr. Crawford in the 2010-13 proceeding. SDC charge that Dr. Johnson concealed numerous regression modeling tests in discovery, limiting production to only a few sensitivity tests. SDC PFF ¶ 105. Despite this modest discovery, based on the documentation that had been produced by PTV, Dr. Erdem saw evidence suggestive of specification searching. 4/5/23 Tr. 3429; 4/6/23 Tr. 3552-55 (Erdem). These suspicions gave rise to the SDC's motion to compel SDC's production of all regression models that Dr. Johnson had considered, and the Judges granted the motion. See Order 24 Granting the SDC Motion to Compel PTV to Produce Documents (Jan. 19, 2023).

After PTV was compelled by the Judges to provide further discovery, it produced documents revealing that Dr. Johnson's team had selected the four models that he presented out of more than four hundred models. He and his professional subordinates had actually engaged in over 400 runs of regression approaches over several different data sets (resulting in numerous different results in terms of program category coefficients implied allocation shares). Erdem WRT ¶ 82; Supplemental Written Rebuttal Testimony of Erkan Erdem, Trial Ex. 7504, ¶ 3 n.3 (Erdem SWRT); 4/5/23 Tr. 3403 (Erdem); SDC PFF ¶ 106. Further, the SDC cataloged the use by Dr. Johnson and his professional subordinates of 44 different dependent variables (including log transformations) and wide ranges of shares (negative as well as positive) in all claimant categories. Erdem WRT ¶ 82; Supplemental Written Rebuttal Testimony of Daniel L. Rubinfeld, Trial Ex. 7506, ¶ 21, tab 2 (Rubinfeld SWRT).

Dr. Erdem analyzed these tests according to dates and sequence numbers included in the documents produced by PTV and claimed to find that the successive testing by Dr. Johnson and/or his team was correlated with a steady rise in PTV's allocation share. Erdem SWRT Ex. 2.

The SDC dismissed as implausible Dr. Johnson's explanation of this correlation. Specifically, the SDC rejects Dr. Johnson's claims that the correlation was a “coincidence” or that it could be explained by incomplete and erroneous data that needed to be corrected or updated. SDC PFF ¶ 109 (citing 3/22/Tr. 737-39 (Johnson)). [ 35 ]

In any event, Dr. Erdem testified that if Dr. Johnson and his team were not engaged in specification searching, the allocation results arising from the data updates or corrections should have been more randomly distributed, and, further, that as a matter of regression methodology it was inexplicable that data changes would serve to generate hundreds of regressions with different combinations of specifications. 4/6/23 Tr. 3565-67 (Erdem). Moreover, Dr. Erdem accused Dr. Johnson and his professional subordinates of self-servingly searching not only for the specifications that would increase PTV's allocation share, but also of attempting to search for an optimal combination of a specification set and a dataset for increasing PTV's allocation share. 4/6/23 Tr. 3552-55 (Erdem). As purported proof, Dr. Erdem points to his running of Dr. Johnson's preferred (“baseline”) model, but with Dr. George's dataset, which caused PTV's allocation share to decrease by 8 percentage points, with the share of every other category increasing. Erdem WRT Ex. 8.

In addition to the more technical econometric evidence relied on by the SDC, they also point to physical evidence. Specifically, the SDC relies on notes left by a project manager on this assignment, Ms. Yan, which showed the search criteria that Dr. Johnson's team applied: a search for positive and statistically significant coefficients on all content and a high allocation share for PTV, denoted in a document as “PBS↑” ( i.e., an “increase value to shift w/lots of minutes”). Erdem SWRT ¶¶ 8-9 & app. E; SDC PFF ¶ 114. The SDC's other econometric expert, Dr. Rubinfeld, using the essentially synonymous phrase “p hacking” to describe the alleged specification searching conduct of Dr. Johnson's professional subordinates, asserts that this behavior “invalidates” Dr. Johnson's statistical tests. Rubinfeld SWRT ¶ 23. SDC's counsel characterizes this note from Ms. Yan as the proverbial “smoking gun.” SDC PFF ¶ 115.

The SDC further assert that when the hundreds of regression models developed by Dr. Johnson and his team were culled to a sub-group of those with “positive and statistically significant coefficients for all categories,” only four had higher share allocations for PTV. Moreover, Dr. Erdem opined that these other four had data and statistical anomalies that would have made them difficult for Dr. Johnson to defend in any event. 4/5/323 Tr. 3424-25 (Erdem). The SDC thus concludes that Dr. Johnson and his team essentially chose the model with the highest PTV share that they thought they could defend. SDC PFF ¶ 116.

The SDC also maintain that there was an intentional separation between Dr. Johnson and other professionals at his consulting firm, Edgeworth Economics (“Edgeworth”) intended to shield Dr. Johnson from regression specifications that would have generated lower shares for PTV—a form of “plausible deniability.” In support of this assertion, the SDC point to written communications within Edgeworth indicating that certain documents Start Printed Page 54181 needed to be kept from Dr. Johnson or else PTV would be required to turn them over in discovery. See, e.g., Erdem SWRT ¶ 8 (reproducing notes of Edgeworth employee Eduardo Munoz-Alonso, dated 7/8/2021, distinguishing between material for “John's report (he'll see) [and] other stuff (John won't)”; Erdem SWRT ¶¶ 8-9 & app. E (5/26/22 note written by Esther Yan, 5/26/2022 stating “Anything we show John gets turned over. . . .”); and Erdem SWRT ¶ 8 (an email containing a link to CDC distant signals data sent to Dr. Johnson's team includes the caveat: “. . . these data files are being shared for consulting purposes only and should not be shared with John”).

Looking at the entirety of the record regarding the procedures undertaken by Dr. Johnson and others at Edgeworth, Dr. Rubinfeld, one of the two SDC expert witnesses, opined:

Dr. Johnson's practices (or the practices of other experts or their staff on behalf of PTV Claimants) are counter to sound empirical research practices. Their analyses involve the misuse of the regression methodology to obtain statistically significant results that deliver coefficient values that generated relatively high shares for PTV Claimants.

Rubinfeld SWRT ¶¶ 28-30. [ 36 ]

Dr. Johnson maintains that the SDC and other critics of his work (including Dr. Tyler and Mr. Harvey) have misunderstood the nature of the many regression specifications that were generated and run on behalf of PTV. More particularly, he explains in detail that he and his team ran many of the regression specifications for the purpose of testing the data, a process that needed to be repeated to incorporate corrections and updates to the data. 3/21/23 Tr. 416-23, 627-745 (Johnson) (explaining the regression log, the research process, Edgeworth team structure and personnel, timing of data receipts and updates from vendors and scope of discovery productions). See also PTV PFF ¶¶ 139, 145.

Dr. Johnson further maintains that assuming arguendo there was any untoward activity in the nature of a specification search, it is essentially a moot point because through discovery (including the discovery PTV at first withheld and later produced only in response to an order compelling production) every regression specification that he and his team ran has now been produced. This production, according to Dr. Johnson, eliminates any concern that the Johnson Model was misspecified, whether intentionally or otherwise. 3/21/23 Tr. 641 (Johnson) (“Again, you actually have everything. . . . I followed . . . what counsel instructed me to do in terms of what I was required to turn over. And when we were required to turn over everything, everything has been turned over that my team ever ran, so we have given you everything.”). See also PTV PFF ¶ 146.

Additionally, many of the regression models generated and run by Dr. Johnson and other professionals at Edgeworth Economics (Dr. Johnson is the founder and CEO), according to Dr. Johnson, reflected their efforts to understand the Crawford Model proffered in the 2010-13 proceeding and to determine whether the Crawford Model could be applied to the 2014-17 data. 3/21/23 Tr. 367-68, 370-73 (Johnson). Those purposes, PTV maintain, are inconsistent with a characterization of their work as specification searching. Public Television's Reply Proposed Findings of Fact and Conclusions of Law (PTV RPFF) ¶ 208.

Overall, given the full disclosure of all the work by Dr. Johnson and his fellow professionals at PTV, PTV maintains that this comprehensive body of evidence shows that the Johnson Model generated regression results that are unbiased and best reflect the data available to be input into the Johnson Model. PTV RPFF ¶ 210.

As an initial matter, the Judges reject SDC's argument that Dr. Crawford's deviations from the prior regression models presented by Drs. Joel Waldfogel and Gregory Rosston ipso facto demonstrate, or even suggest, that Dr. Crawford engaged in the wrongful process of specification searching. The record reflects no legal, economic or econometric principle that an expert cannot alter, revise, add to or subtract from a prior economic model. Indeed, the history of the Judges' acceptance of fee-based regression models as evidence shows quite the opposite. A brief examination of the evolution the regression methodology, set forth immediately below, makes that clear.

In the allocation (Phase I) proceedings for the 1998-99 royalties, the CARP described the first fee-based regression relies upon in such proceedings:

Dr. Rosston's regression attempts to analyze the relationship between royalties paid by cable operators for the carriage of distant signals in 1998-1999 and the quantity of programming minutes by programming category on those distant signals. . . . It compares the relative volume of the various Phase I categories of programming contained in the station signals actually purchased by CSOs in 1998 1999 with the total royalties each CSO actually paid for that programming . . . identifying the amount of royalties as the dependent variable . . . .

Dr. Rosston included more than royalties and programming minutes in the dataset he used for his regression analysis. In order to account for the non-programming factors that may affect the royalties paid by a cable system, Dr. Rosston added the following variables: (1) the number of subscribers to the cable system in the prior period (the so-called “lagged subscribers” variable); (2) the number of activated channels for the cable system; (3) the average household income of the market in which the cable system was located; (4) the total number of local channels carried; (5) a variable to account for the payment of 3.75% royalties; and (6) a variable to account for the carriage of partially distant signals.

Report of the Copyright Arbitration Royalty Panel to the Librarian of Congress, in Docket No. 2001-8 CARP CD 98-99 (“1998-99 CARP Report”) at 45-46 (Oct. 21, 2003). The CARP accepted Dr. Rosston's fee-based regression, but only as corroborative of survey results also in evidence. Id. at 50. The CARP declined to give more evidentiary weight to the Rosston regression, relative to the Bortz Survey (which the CARP found to be “extremely robust,” id. at 30).

In the allocation (Phase I) proceeding for the 2004-05 years, the Judges received in evidence the Waldfogel fee-based regression. Dr. George has described in her testimony in this proceeding the key changes made by Dr. Waldfogel to the Rosston regressions:

(1) estimating the marginal value of additional programming minutes (regression Start Printed Page 54182 coefficients) using pooled data for all years, improving the precision of the estimates;

(2) calculating claimant shares using only compensable programming; and

(3) estimating the regression model with a sample of programming covering three full weeks per accounting period.

George WDT at 24 n.22. See also 2004-05 Distribution Order at 57068 (noting that the Waldfogel regression was “similar” to the Rosston regression, not identical).

Similarly, in the 2010-13 proceeding, the Judges found that the regression approach on which they relied—the Crawford Model—reflected an improvement over the Waldfogel Model, because, inter alia, the Crawford Model: (1) relied on more granular subscriber group data (made available by statutory changes in CSO reporting requirements); and (2) employed “fixed effects” to diminish the impact of potentially “omitted variables.” 2010-13 Determination at 3569. See also George WDT at 24-26 (identifying the improvements made by Dr. Crawford).

This history clearly shows that the Judges have not found that the mere presence of model modifications reveals any inherent defect in fee-based regressions writ large or in any such model in particular. Rather, a modification of a fee-based regression model may properly reflect (1) improvements in the model; (2) improvements in the data; (3) changes in the underlying industry; (4) changes in applicable economic theory; and/or (4) wrongful specification searching. Without further analysis, deviations from prior models is not itself informative.

But the SDC maintain that Dr. Crawford's development of his model was—to say the least—troubling, and not consistent with an attempt simply to improve upon prior regression models or to generate a more relevant model for this proceeding. As noted supra, SDC argue essentially that Dr. Crawford engage in the improper process of specification searching, and lied on the witness stand to cover-up that improper conduct. To summarize, SDC contends that Dr. Crawford lied under oath about the following:

—his testing of many different functional forms

—his development and rejection of many undisclosed alternative models

—his inclusion of indicator variables with no apparent function

—his running of hundreds of models without Fixed Effects when he actually ran these models at various levels of Fixed Effects.

See SDC PFF ¶¶ 90-91, 99, 106.

As Chief Judge Shaw noted at the hearing, the Judges are not in a position to find whether Dr. Crawford did or did not engage in improper professional conduct, as alleged by SDC, because he is not appearing as a witness in this proceeding. 3/22/23 Tr. 894-95 (Shaw, C.J.) Thus, the Judges were loath to conduct a “trial-within-a-trial” as to Dr. Crawford's work and procedures.

However, that is hardly the end of the matter. SDC has presented compelling evidence of potential specification searching and dissembling by Dr. Crawford. Moreover, SDC provided to the other parties in this proceeding, as voluntary discovery disclosures, Dr. Crawford's internal workpapers, which the Judges had ordered produced in the 2010-13 satellite proceeding that followed on the heels of the 2010-13 cable proceeding —disclosed only after SDC's Motion to Compel and the Judges' in camera review of those documents.

The fee-based regression experts view Dr. Crawford's potential transgressions with less concern. Dr. George, CCG's expert witness, maintains that Dr. Crawford's non-disclosures and untruths, as cataloged and characterized by SDC, are of no consequence, because she, and the other experts, were able to examine the Crawford Model as it was presented, and evaluate it on its merits. George WRT at 53. In essence, this response is in the nature of a “no harm, no foul” rationale for disregarding any of Dr. Crawford's alleged improprieties as alleged by SDC. And, in that context, Dr. George examined the Crawford Model and found no cause to reject it as a starting point for her analysis (although she modified the Crawford Model to account for marketplace changes, arising predominantly from the WGNA conversion, that she found to necessitate modeling changes particularly with regard to the use of fixed effects). George WRT at 50-54.

Dr. Marx's carefully repeated testimony is similar, but nuanced, hedged and cast in the form of a double negative: “[W]hat I saw was consistent with or at least not inconsistent with proper econometric practice.” 4/11/23 Tr. 4121 (Marx). She does make a more specific defense of Dr. Crawford, offering her opinion that, the “mere observation of a large number of regressions” in Dr. Crawford's workpapers is “not surprising,” and is what one would expect to see as a “sensitivity” analysis, which is a “best practice” in regression modeling. Marx WRT ¶ 10. As a final defense of Dr. Crawford's modeling conduct, Dr. Marx analogizes his proffer of expert testimony before the Judges to an academic economist's submission of a proposed article to a professional journal, which would be reviewed by an editor and referees, in a process that is within the ambit of Dr. Marx's professional responsibilities. In that context, Dr. Marx would not require that all the modeling decisions by the econometrician be set forth in the proposed article, 4/11/23 Tr. 4328 (Marx) (“in my work as a professional economist, as a referee, as an editor, I don't expect to see the full list of every regression that was ever run.”) and she notes that she was able to evaluate Dr. Crawford's submission on its own merits, like a proposed article, without all the prior regression runs. Id. at 4111-4115. [ 37 ]

The Judges find that the other experts in this proceeding—particularly Drs. Johnson, George and Marx—who proffered fee-based regression models—were obligated to adequately address the impact of Dr. Crawford's workpapers, as well as the assertion that they demonstrated he lied in his testimony in the prior proceeding. This obligation existed because, as SDC witness Dr. Rubinfeld testified, in his decades of experience, he has “never seen anything on this scale” where “a researcher selected a model from hundreds that were tried.” 4/6/23 Tr. 3638 (Rubinfeld). The economists' careful analysis of Dr. Crawford's work is necessary, because—as explained in more detail infra —the discovery of his potential concealment and dissembling, which was unearthed in discovery in the satellite proceeding, may have been procedural in origin, but procedural matters can be outcome-determinative, or at least impactful as to the outcome of a legal proceeding. [ 38 ] As explained below, Drs. George, Johnson and Marx all failed in this regard.

The fundamental problem with the self-exculpations by these experts is that they failed to address an issue that the Judges made explicit in the 2010-13 Determination. Specifically, in response to the SDC's speculation that Dr. Crawford had engaged in specification searching, the Judges agreed that the problem inherent in such improper Start Printed Page 54183 behavior was that it would “consum[e] . . . `phantom degrees of freedom,' i.e., `variables that were tried and rejected—rather than included in the regression model in evidence.' ” 2010-13 Determination at 3566. [ 39 ]

In that prior proceeding, the Judges found that the record did not reveal evidence of specification searching (recall that this finding was made prior to the CTV's compelled production of Dr. Crawford's workpapers in the companion satellite proceeding). However, in response to an SDC Motion to Strike Dr. Crawford's testimony, which the Judges denied given the absence of evidence of specification searching, they did reserve the right to reduce the weight they accord to the regression Dr.] Crawford presented. Id. n.64. Ultimately though, the Judges declined to reduce the weight they accorded to Dr. Crawford's regression analysis based on the claim of specification searching. Id.

Of course, between the two cable proceedings then and now, the satellite proceeding intervened. In Order 24 in the present proceeding, the Judges granted SDC's Motion to Compel another party, PTV, to produce document that might reflect specification searching by its expert Dr. Johnson (discussed infra ). The Judges' discussion of specification searching in Order 24 also bears on the Judges' present consideration of how Dr. Crawford's modeling procedures impacted the models proffered by Drs. George, Johnson and Marx in this proceeding, all of which were based on the Crawford Model. In summary fashion, [ 40 ] below is what the Judges stated regarding specification searching in Order 24:

—the particular importance of discovery relating to econometric evidence is underscored by the potential for models to be manufactured in the service of a particular result, where findings are presented with “ notoriously misleading accounts of how the research itself was conducted. ”

—it is important that econometricians explain fully their specification search in order to judge how the results may have been affected.

—econometricians should disclose “ all the regressions that were run, not just the good ones . . . basically an `honesty is the best policy approach.”

—these criticisms of special import here, where the applied econometric work can affect the allocation of significant royalty sums.

—specification searching is a concern here because the “hired gun” role of the expert creates an environment in which specification searching can cause “far-reaching harm.”

—but what can be construed as improper “specification searching” can “in fact constitute good econometric practice” by using the empirical evidence to rank models and let the data speak for itself;

—adding specifications to the modeling can assist in solving the econometric problem at hand

—suppressing failed specifications and arbitrarily presenting one successful specification is a “spurious success,” but it is not necessarily dishonest.

—it would be fallacious to prefer not to search but simply to write down a model and to conduct a one-shot test. . . .

—there are search methodologies that support, rather than distort statistical hypothesis tests.

—specification searches are necessary, provided there is a “full accounting” of all alternative models, specifications and datasets

Order 24 at 48-51 & n.65. (citations omitted).

In sum, as one authority cited by the Judges concluded: “ [T]here are good and bad search procedures. ” Order 24 at 51 (emphasis added).

The foregoing summary makes clear that, on the surface, the methods and practice of an econometrician may look either like improper specification searching or like a proper searching for the appropriate model specifications. In order to determine which characterization is more accurate, further expert analysis is needed.

However, as to this, the parties that relied on the Crawford Model punted. Most startingly, Dr. Johnson testified that he never received the satellite case documents that SDC's counsel produced to PTV's counsel (and to all counsel) or the testimony by Dr. Erdem in the satellite proceeding that was designated as evidence (Ex. 7054) in this proceeding by the SDC. 3/21/23 Tr. 340-41; 611, 616-17 (Johnson). [ 41 ]

For her part, Dr. Marx in essence simply restates the difficult nature of the process, testifying that she was unable to distinguish Dr. Crawford's process as either an improper specification search or a useful sensitivity search. But Dr. Marx did not indicate that she examined the documents produced by SDC in any detail approximating the analysis engaged in by Dr. Erdem on behalf of SDC, before figuratively throwing up her hands and declaring the characterization of Dr. Crawford's position as unknowable. Moreover, although Dr. Marx was troubled by Dr. Crawford's apparently false statements under oath, she remained incurious as to whether his troubling testimony was indicative of a covering-up of specification searching. [ 42 ]

Moreover, when the specification process has been shrouded, as here, the position taken by Drs. Johnson and George becomes untenable. Their analysis and replication of the Crawford Model is materially incomplete, given that it has credibly been described as allegedly constructed by a specification search that may have generated the “phantom degrees of freedom” discussed supra, or through a process which is analogous to the equivalent of the spurious coin flip experiment also discussed supra. The problem for the regression experts who ignore the evidence of potential specification searching is that they simply cannot appreciate the problems that may have been generated, unless and until they have engaged in a reasonable forensic Start Printed Page 54184 analysis of the work (and workpapers) of the expert who constructed the model at issue.

The failure of Drs. George, Johnson and Marx to thoroughly re-examine the Crawford Model in light of the discovery obtained by SDC in the 2010-13 satellite proceeding has consequences. Although, as noted supra, the Judges are not in a position to engage in a “trial within a trial” and render findings regarding the Crawford Model in this proceeding (where Dr. Crawford is absent), these three expert witnesses were not similarly constrained. They had a duty to review all materials relevant to their assignments, in a sufficient manner, and the satellite discovery pertaining to Dr. Crawford's work clearly falls within that category of materials. For Dr. Johnson to have not even received that material is inexplicable. For Dr. Marx to acknowledge the problematic nature of Dr. Crawford's apparent dissembling under oath without further analysis of his work is troubling. And for Dr. George to dismiss the assertions of improper specification searching by claiming that she could independently evaluate the Crawford Model is to dismiss the very idea that specification searching may generate hidden problems.

Indeed, among the witnesses proffering regressions, only Dr. Tyler appeared to respond reasonably, relying (in part) on the troubling facts uncovered in the satellite proceeding regarding Dr. Crawford's processes to generate his own model that deviated in important ways from the Crawford Model.

The impact of Dr. Crawford's troubling conduct is that it raises an issue familiar to judges and lawyers in another context—how to handle testimony and evidence that may be characterized as the “fruit of the poisonous tree.” Although this evidentiary concept is typically pertinent to the criminal law, it is instructive in other areas, including intellectual property matters:

The animating principle of the fruit of the poisonous tree doctrine is causation: If you had not violated the law, you wouldn't have found the evidence, and you wouldn't have followed whatever investigative path that was triggered by finding that evidence. The newly discovered evidence-the fruit-is tainted by the poison of the illegal search. Civil law also concerns itself with chains of causation . . . [b]ut it does not typically apply the logic of the fruit of the poisonous tree to chase down every consequence of a wrong.

M. Lemley, The Fruit of the Poisonous Tree in IP Law, 103 Iowa L. Rev. 245, 246 (2017). As to the present issue, the “fruit of the poisonous tree” logic—if the source of the evidence or evidence itself is tainted, then anything gained from it is tainted as well—has application because it would be inequitable for the Judges to adopt regression evidence built on the Crawford Model, when the witnesses who proffered that evidence inadequately addressed reasonable questions regarding the appropriateness of the methods used to generate the Crawford Model.

If the Crawford Model had been the first regression model utilized in these allocation proceedings, the Judges might consider rejecting the models proffered by Drs. George, Johnson and Marx for their failure to address in more and sufficient detail how the factual bases for the allegations of Dr. Crawford's specification searching impacted their models. But, as described supra, the Crawford Model itself was built upon, but differentiated from, the prior regressions produced by Drs. Rosston and Waldfogel and relied upon by the Judges. Thus, the regression models of Drs. George, Johnson and Marx are not the product merely of the Crawford Model, but also of those models that preceded it. Moreover, Drs. George and Johnson take pains to explain how their models are different from Dr. Crawford's, particularly in the reduction or elimination, respectively, of fixed effects, in order to generate more observations (as discussed elsewhere in this determination). [ 43 ] So, it is clear that these two experts engaged in independent economic analysis separate and apart from what was undertaken by Dr. Crawford.

The consideration of Dr. Marx's full adoption of the Crawford Model, as it pertained to the year 2013, in order for her to generate her Bayesian model for 2014, must be considered separately. Dr. Marx explicitly relies on the Crawford Model, despite her inability to explain or address his apparent prevarications and despite her unwillingness to determine whether his methods constituted specification searching, sensitivity analysis or something else. However, Dr. Marx's qualitative and directional economic (not econometric) testimony regarding the years 2015-2017 are not compromised in this regard.

Accordingly, among the regression approaches proffered in this proceeding, the experts' responses and non-responses to Dr. Crawford's conduct lead the Judges, ceteris paribus, to give diminished weight to the Johnson and George Models, and the least weight to the Marx Model for 2014. The Judges do not diminish the weight they shall give to the Tyler Model on this basis, given his deviation from the Crawford Model.

Unlike the specification searching issue regarding the Crawford Model, there is no valid allegation that Dr. Johnson made any material misrepresentations in his testimony. Although SDC correctly notes that PTV did not provide full discovery of the work by Dr. Johnson and other professionals at Edgeworth until compelled to do so pursuant to SDC's motion and the Judges' Order 24, PTV appears to have withheld production of documents regarding this regression work based on its understanding that the Federal Rules of Civil Procedure do not require production of documents which related to regressions that an expert had rejected or had not otherwise seen or upon which he did not rely. [ 44 ]

However, the Judges remain troubled, as they so expressed in Order 24, that PTV appeared to allow for the creation of two different “teams” within Dr. Johnson's firm—one identified as the “consulting team,” and the other as the “testifying” team. As noted supra, the regression-related documents generated by the “consulting team” were not provided to Dr. Johnson. The Judges noted in Order 24 that a “consulting team” of experts can be utilized by a party's law firm, to allow for work product confidentiality in connection with the law firm's evaluation of the facts. However, as Order 24 further explained, when the “consulting team” is created withing the same firm of economists who are also preparing testimony and actually testifying, there is the risk that work by the “consulting” team will be utilized as a screening device for work that should have been undertaken by the “testifying” team. Thus, the use of a “consulting” team can allow a party to also cloak from discovery expert work by claiming the protection of the work-product rule.

This is essentially what SDC alleges, when it points to evidence, as noted supra, that Edgeworth had shielded Dr. Start Printed Page 54185 Johnson from certain documents. Moreover, the soundness of the “wall” between the “consulting” team and the “testifying” team was questionable, given that the “consulting” team was led by Drs. Michael Kheyfets and David Colino, but they also were the senior members of the “testifying” team that reported to Dr. Johnson, along with dual team members Dr. Stephanie Cheng and Esther Yan. 3/21/23 Tr. 664-65 (Johnson). Additionally, when PTV first produced documents to SDC, it did not also provide a privilege log describing the Edgeworth documents otherwise withheld because of an assertion of a privilege relating to a consulting team. (After SDC's motion to compel, PTV provided a privilege log, but, after Order 24 issued, PTV produced virtually all of the previously withheld material.) Thus, the Judges find some evidence that PTV attempted to avoid discovery of the work undertaken by the firm it engaged for expert work in this proceeding—the work that has been characterized by SDC as evidence of specification searching. [ 45 ] This evidence serves to diminish the Judges' reliance on the Johnson Model that was generated out of this scenario, although the Judges stop well short of any finding that Edgeworth, or any of its professionals, engaged in any misconduct. [ 46 ]

Turning to the substance of the documents produced in response to Order 24, the Judges are struck, as was SDC, with the sheer number of regression runs undertaken by Edgeworth. In particular, the Judges agree with SDC that the experimentation with 44 dependent variables is specifically troubling, as it suggests that the model-building was not well-grounded in economic theory.

Also troubling was the fact that, over a prolonged period, successive testing by Dr. Johnson and other Edgeworth Economics professionals was highly correlated with a steady rise in PTV's allocation shares. Although the Judges disagree with SDC's distortion of Dr. Johnson's testimony as to the “coincidental” nature of this correlation, as noted supra, the Judges do not find any sufficient basis in the record to explain this correlation between sequential regression runs and the growth of PTV's allocation share. Although PTV argues that this correlation subsided as data corrections were completed, PTV presented no sufficient basis to rebut SDC's charge that data changes should not consistently be correlated with the growth of PTV's share allocation, as opposed to a randomized effect on share percentages. [ 47 ]

On balance, the Judges find that the regression analyses undertaken on behalf of PTV at least demonstrate an appearance—in the words of SDC's expert, Dr. Rubinfeld—of practices that ran “counter to sound empirical research practice,” and that this work may well have been undertaken with an overzealous attempt “to obtain . . . results that . . . generated relatively high shares for PTV Claimants.” Rubinfeld SWRT ¶ 28. For this reason—and for other reasons set forth elsewhere in this determination—the Judges give reduced weight to the Johnson Model.

PTV first emphasizes its legal argument. They begin by acknowledging that under the Cable Television Consumer Protection and Competition Act of 1992 (the “Cable Act”) and the regulations of the Federal Communications Commission (“FCC”) (the “must-carry” rules), CSOs are required to retransmit certain broadcast signals. PTV PFF ¶ 70 (citing 47 U.S.C. 534-35 ). Nonetheless, PTV maintain that “the Judges and their predecessors . . . have never found that must-carry requirements materially affect the value of distant retransmissions of Public Television programming.” PTV PFF ¶ 71 (emphasis added).

PTV follows this legal point with a factual issue, challenging the testimony of JSC's witness, Mr. Harvey, who identifies 15.5 percent of PTV distant signals as having been retransmitted in compliance with these must-carry rules, using criteria that Mr. Harvey believed were “generally indicative” of must-carry carriage. PTV PFF ¶ 72. Specifically, Mr. Harvey categorized distantly retransmitted signals as “must-carry” if they were:

(1) carried to all subscriber groups within the system,

(2) local to at least one subscriber group within the system, and

(3) were licensed to a community whose reference point was within 50 miles of the location where the CSO received signals for cable distribution (the “headend”).

PTV PFF ¶ 72 (and record citations therein). A primary assertion by PTV is that, because of the third criterion above, these stations, designated as “must-carry” while technically “distant” within the meaning of section 111, “were more likely to reflect the demands and preferences of regional viewers” and thus contained “valuable programming.” PTV PFF ¶ 72 (and record citations therein).

But PTV takes issue with the entirety of Mr. Harvey's approach to designating “must-carry” stations. First, PTV points out that “even . . . expert witnesses whose opinions rely on Mr. Harvey's must-carry analysis” acknowledge that his analysis “did not definitively identify must-carry signals.” PTV PFF ¶ 73 (and record citations therein) (emphasis added).

Second, PTV argues that “Mr. Harvey failed to provide a reason for adopting his first criterion that the must-carry rules should apply to signals carried “to all subscriber groups within the system.” PTV PFF ¶ 74 (and record citations therein). PTV maintains that there presumably would be no reason to use that as a criterion unless he thought that the must-carry law required carriage “to all subscriber groups within the system.” PTV PFF ¶ 74 (and record citations therein). More particularly, PTV understands that a “cable system,” as defined in the must-carry rules, “is a smaller unit than the `cable system' as defined in section 111.” PTV PFF ¶ 75 (and record citations therein). Thus, PTV argues that “carriage of such a signal to all of the subscriber groups in a system may be evidence of that cable system's choice to carry that signal more broadly than the must-carry rules require.” PTV PFF ¶ 75 (and record citations therein). PTV concludes that Mr. Harvey's must-carry analysis “ likely results in overstating the [number] of [PTV] signals subject to mandatory carriage, perhaps dramatically so.” PTV PFF ¶ 75 (emphasis added).

PTV further makes what can be characterized as a “no changed circumstance” argument. Specifically, Start Printed Page 54186 PTV points out that Mr. Harvey fails to address the fact that mandatory carriage of PTV distant signals has become more expansive since the 2010-2013 proceeding, and that no party argued in that proceeding that the must-carry rules had any material impact on relative market value. Further, PTV avers that “the fraction of PTV signals that Mr. Harvey identified as . . . must-carry declined substantially over the period from 2014 to 2017,” suggesting that, even under his analysis, “the share of PTV distant retransmissions that were subject to must-carry is less than in prior proceedings.” PTV PFF ¶ 76 (and record citations therein).

Additionally, PTV asserts that Mr. Harvey incorrectly implied that PTV's multicast streams  [ 48 ] are subject to the must-carry rules. PTV PFF ¶ 77 (and record citations therein). To the contrary, PTV avers that “it is undisputed that the must-carry rules do not require CSOs to retransmit those non-primary signals of a PTV broadcast station, and all carriage of Public Television multicast streams was due to the voluntary choice of the cable operators.” PTV PFF ¶ 77 (and record citations therein).

Beyond its legal and factual arguments, PTV adds an argument based on economic analysis. Taking on a point made by another JSC witness, Dr. Majure, PTV opines that “there is no basis to assume that any distant signal carried pursuant to the must-carry rules provide `$0' of value to the CSO, as Dr. Majure argues.” PTV PFF ¶ 78 (and record citations therein). More particularly, PTV explains that “[p]eople are routinely required to purchase things, such as health insurance and seat belts, which they may value highly.” PTV PFF ¶ 78 (and record citations therein). See also PTV PFF ¶ 81 (“Dr. Majure's theory of `$0' value fails [to pass through a] `reality filter' [by] suggest[ing] that all local [PTV] programming has [ zero ] value.”)

Changing tacks, PTV points out that, without dispute, “many CSOs chose to retransmit [PTV] distant signals when they could have carried another distant signal instead.” PTV PFF ¶ 79 (and record citations therein) Additionally, PTV compares this CSO decision-making to the CSOs' responses to the Bortz Survey, in which “[s]everal CSOs that carried the purportedly must-carry [PTV] distant signals attributed significant value to those Public Television distant signals in their [survey] responses . . . .” PTV PFF ¶ 79 (and record citations therein).

PTV further points to various “sensitivity tests” undertaken by Drs. Johnson, Bennett and George, all of which “found that those purportedly must-carry Public Television distant signals do not have relative marketplace value that is statistically significantly different from the relative marketplace value of other Public Television distant signals.” PTV PFF ¶ 82 (and record citations therein). Thus, PTV takes issue with any implicit assumption “that any distant signal carried pursuant to the must-carry rules are, on average, less valuable to the CSOs.” PTV PFF ¶ 82.

But PTV also acknowledges the presence of an indemnification provision in the must-carry statute, whereby Congress exempted from mandatory carriage any noncommercial educational signals that qualify as distant signals, “unless [the noncommercial educational broadcast station] indemnifies the cable operator for any increased copyright costs resulting from carriage of such signal.” PTV PFF ¶ 84 (quoting 47 U.S.C. 535(i)(2) ). Thus, a CSO “was eligible for indemnification only if and to the extent that its section 111 royalty fee increased due to the carriage of a distant signal that was subject to must-carry; and the station then had the choice of declining indemnification, in which case the [CSO] was released from any must-carry obligation.” PTV PFF ¶ 84. Nonetheless, PTV criticizes any party seeking to exclude must-carry stations from the regressions based on this statutory provision, which cancels out any royalty payment, because PTV argues (echoing its criticism of Mr. Harvey's analysis), that no party has “reliably identified any distant signals that are subject to mandatory carriage . . . for which the retransmitting cable operator received indemnification.” PTV PFF ¶ 85 (and record citations therein).

PTV also makes a more general argument that would apply to PTV “must-carry” stations, even assuming they had no value. Specifically, PTV maintains that “[a] fee-based regression model is designed to estimate the average relative value of programming in a bundle, such that bundling of programming of different values does not bias the regression estimates of relative marketplace value.” PTV PFF ¶ 91.

As a matter of legal interpretation, JSC argues that it would not be reasonable to remove from the hypothetical market any statutory provisions that apply to the distant signal market, other than the section 111 license. JSC PFF ¶ 2 (and record citations therein). Applying this approach, JSC notes that, as a matter of statutory law, the Must Carry statutory and regulatory provisions are not found within the section 111 license provisions, but rather are statutorily set forth at 47 U.S.C. 535 , and therefore should remain in effect in the hypothetical market the Judges must construct in this proceeding. And, because the Must-Carry provisions preclude any finding of Willingness-to-Pay and fail to reveal CSO's preferences, it is also economically reasonable to maintain the impact of the Must Carry provisions on the regression approach by excluding such stations from that valuation methodology. JSC PFF ¶ 3 (and record citations therein).

JSC also points to the following 1992 legislative history of the must-carry provisions as supporting, from both the legal and economic perspectives, a finding that must-carry PTV stations do not generate additional value that can be incorporated into the fee-based regressions:

The [House Committee on Energy and Commerce] Committee believes that absent statutory carriage requirements, there is a substantial likelihood that local public television stations will be deleted, will not be carried, or will be switched to undesirable channels on cable systems. Because cable operators are for-profit enterprises, they necessarily seek to provide customers with the package of programming and services that will maximize the operators' profits. As commercial enterprises, cable operators ordinarily lack strong incentive to carry programming that does not attract sufficient dollars or audiences. Traditionally, public television has provided precisely the type of programming commercial broadcasters and cable operators find economically unattractive. For this reason, the Committee believes that, without `must carry' provisions, public television service increasingly will become unavailable to cable subscribers.

JSC PFF ¶ 475 (citing Trial Ex. 1003 (House of Representatives Report 102-628) at 62).

JSC points out that this was not only the Congressional viewpoint at the time of enactment of the must-carry law, but also that PTV has continued to agree with Congress's assessment of the economic circumstances described in the above legislative history, insisting that public television stations need must-carry status to guarantee carriage. JSC PFF ¶¶ 476-478, 488-489 (and record citations therein).

Last, but certainly not least, in apparent response to PTV's criticism of Mr. Harvey's estimate of the number of must-carry stations, JSC suggests that PTV knew or should have known how many of the stations it represents in this Start Printed Page 54187 proceeding in fact were must-carry stations. JSC PCOL ¶ 13 (“When a party is in a position to proffer testimony or evidence that would elucidate a point, or rebut an adverse point, but declines to do so, a finder of fact may determine that the testimony would not have been supportive of that party's position.”) (citing Final Rule and Order, Determination of Rates and Terms for Digital Performance of Sound Recordings and Making of Ephemeral Copies to Facilitate Those Performances (Web V), 86 FR 59452 , 59476 (Oct. 27, 2021) (Web V Final Determination), (citing in turn Huthnance v. District of Columbia, 722 F.3d 371 (D.C. Cir. 2013)), aff'd NRBNMLC v. CRB, 77 F.4th 949, 2023 WL 4831376 (July 28, 2023).

The SDC apply their broad criticism of minimum-fee-only CSOs to the question of how to address the must-carry PTV stations: “[N]o inference can be drawn regarding `willingness to pay' or any other potential theory on the basis of cable system decision-making in the presence of mandatory carriage of certain PTV signals.” Asker WRT ¶ 17 n.11; 4/11/23 Tr. 4319-21 (Marx); see al so SDC PFF ¶ 64.

Like the JSC, the SDC maintain that, as a legal issue, the Judges' consideration of economic market forces to determine relative market value does not mean that the statutory must-carry rules should be ignored:

The task in these royalty distribution proceedings is to determine the relative value of the relevant program categories in a hypothetical market that exists in the absence of the section 111 compulsory license. There is no basis for assuming away the existence of other aspects of the regulated market, nor has any party in this proceeding presented a rational framework by which one could pick and choose which other aspects of the regulated market would survive. At a minimum, the Retransmission Consent and Must-Carry Requirements set forth in the Communications Act and Federal Communications Commission's (“FCC”) rules would continue to regulate the relationship between broadcast stations and CSOs. See 47 U.S.C. 325(b) ; 47 CFR 76.55 , 76.64 .

SDC PFF ¶ 218.

The SDC also emphasize a point central to their general criticism of the fee-based regressions—the impact of geography on retransmission decisions:

Unlike commercial stations, the must-carry zone for noncommercial stations is determined by distance from the cable system rather than by DMA [Designated Market Area]: a noncommercial station is entitled to cable carriage under the FCC's must-carry rules if its city of license is within 50 miles of the cable system's principal headend. 47 CFR 76.55 .

SDC PFF ¶ 222. Further, the SDC note the indemnification provision, discussed supra, also compromises the attempt to derive marketplace evidence of the value of must-carry stations:

[Although] [u]nder section 111, a noncommercial station is only considered “local” within 35 miles of the cable system's headend . . . [a] cable operator is not required to carry a noncommercial station that would be considered distant for copyright purposes unless the noncommercial station agrees to indemnify the CSO for any increased copyright liability resulting from such carriage.

Presumably, this indemnification requirement would be moot in the absence of section 111, because there would be no cost at all to cable systems carrying noncommercial signals within the FCC's 50-mile must-carry zone in the absence of section 111. There is no basis to believe the inapplicability of the indemnification requirement would affect the relative marketplace value of noncommercial stations, as carriage of noncommercial stations would still result from the federal must-carry mandate rather than any CSO choice.

SDC PFF ¶ 222 (citing 17 U.S.C. 111(f)(4) ).

CTV emphasizes the substantial importance of the must-carry issue, noting first that “[d]uring 2014-2017, no less than 33.9% PTV signals were carried pursuant to must-carry rules.” CTV PFF ¶ 249 (citing Harvey CWDT ¶ 87; 3/28/23 Tr. 1836-37 (Harvey)). See also CTV PFF ¶¶ 256-57 (42.6% of all PTV distant reported base fee royalties are from PTV signals subject to the must-carry rule.)

CTV also expands upon the evidentiary point made by JSC, noted supra, regarding PTV's failure to produce evidence as to the number of must-carry stations:

PTV, the claimant with the most accurate information regarding PTV distant stations carried by CSOs pursuant to the must-carry rules, has provided no evidence or statistics to refute the foregoing. At most, PTV economics witness Dr. Johnson contends that Mr. Harvey's findings are speculative, but he neither contested nor provided any alternative calculations to Mr. Harvey's conclusions.

CTV PFF ¶ 258. Echoing the criticism noted supra, CTV maintains that carriage of a PTV signal under the must-carry rules does not reflect a CSO's revealed preference through a weighing of incremental costs versus incremental benefits, and thus does not reflect relative marketplace value. CTV PFF ¶ 272 (and record citations therein).

Moreover, CTV also points out that even when CSOs retransmitting must-carry stations pay more than the minimum fee, they nonetheless cannot reveal a willingness to pay for that programming because of the indemnification obligation, discussed supra, of PTV stations to pay back CSOs for any additional royalty costs associated with the required ( i.e., must-carry) retransmission of its programming. CTV PFF ¶ 259.

CTV further notes the “material” effect of the must-carry issue on PTV's regression and allocation shares, both individually and jointly. CTV PFF ¶ 264. Pointing to a sensitivity analysis by one of its expert witnesses, Dr. Bennett, CTV notes that eliminating the royalty payments the Johnson Model has attributed to must-carry stations substantially reduces the PTV values on either attribute, and in combination. Bennett WRT ¶ 95. These adjustments are shown in the figure below:

Similarly, Dr. Bennett undertakes the same adjustment to Dr. George's regression coefficient and allocation share regression results for PTV:

And in like fashion, Dr. Bennett makes the same must-carry adjustment for PTV to Dr. Tyler's analysis:

In conclusion, CTV underscores the existence of a consensus on this must-carry issue, noting that Drs. Marx, Bennett, and Majure all agree that including PTV must-carry stations in the regressions results in an overestimation of the value of PTV content for all four years. CTV PFF ¶ 534 (and record citations therein). Start Printed Page 54189

Program Suppliers join with the other parties that maintain the FCC's must-carry rules should still be deemed by the Judges to apply in their modeling of the economic and marketplace environment necessary to allocate the royalties at issue. That is, in the hypothetical environment, even though the section 111 conditions are relaxed, Program Suppliers argue that the parties must “still continue to be subject to the same must-carry rule and agreement obligations . . . .” PS PFF ¶ 101 (and record citations therein).

However, Program Suppliers take issue with any assertion that accounting for PTV's must-carry stations would have a significant effect. Their expert, Dr. Tyler, noted that Dr. Bennett's calculations—reproduced supra —showed that removing the must-carry stations (that were identified by Mr. Harvey) from the Tyler Model barely changed the PTV share allocation. 4/19/23 Tr. 5456 (Tyler). Moreover, Dr. Tyler opines, consistent with the testimony by PTV's expert Dr. Johnson that, “even with must-carry, CSOs may still have some value related to that carriage.” 4/19/23 Tr. 5456 (Tyler). [ 49 ] See also PS PFF ¶ 337.

CCG is part of the chorus asserting that the Judges should include the impact of the must-carry provisions in their economic analysis of relative marketplace value. CCG PFF ¶ 62. However, CCG parts company with those parties arguing that the compelled nature of such retransmission decisively compromises the informational worth of that carriage in estimating such value.

Specifically, Dr. George, CCG's expert, like Dr. Johnson, analogizes public television programming to other “real-world examples” of goods that have value, notwithstanding the fact they are mandated by the government. In this regard, as examples, she points to health insurance, which she says generates value, and to automobile airbags and seatbelts which, although mandated, increase the value of an automobile. Similarly, she points to the federal government requirement that individuals carry health insurance to argue that the mandate does not mean that the product does not have value to them. 4/18/23 Tr. 5346. (George). Based on these analogies, CCG maintains that the must-carry rules have a positive effect on the value of PTV programming. CCG PFF at 81. See also CCG PFF ¶ 224.

Nonetheless, Dr. George recognizes the possibility of an alternative finding—that any assertion of value in must-carry stations would be rejected. Accordingly, she turns to Dr. Bennett's analysis cited supra —at Bennett WRT fig. 21—which she recognizes as showing the “downward adjustments” to her “regression” to account for a finding of the absence of value in PTV's must-carry signals. CCG PFF ¶ 225 (and record citations therein).

The Judges agree with JSC and CTV, based on the caselaw cited by JSC, that PTV, whose clients include the public television stations that are in fact subject to must-carry requirements, bore the twin burdens of proof—the burden of producing evidence and the burden of persuasion —regarding which stations were subject to the must-carry provisions and which were not. Further, because PTV is seeking a determination including must-carry station data in the regression, those burdens are apportioned to PTV as a matter of statute. See 5 U.S.C. 556(d) .

But rather than produce such evidence or prove its significance, PTV elected to attack Mr. Harvey's attempt to estimate the number of must-carry stations. Those attacks are insufficient. The Judges first take note that PTV argues only that Mr. Harvey “perhaps” or “likely” overstated the number of must-carry stations. But Mr. Harvey engaged in a reasonable attempt to estimate this number, which PTV could have set forth in its submissions, but did not.

Further, the Judges do not credit PTV's argument that the must-carry status of some PTV stations can be deemed irrelevant because the issue of must-carry stations was not raised in previous section 111 allocation proceedings. Each of these proceedings is de novo in nature, and the determination is based on the evidentiary record in that proceeding, as well as on the pertinent findings and conclusions in prior proceedings. Although regurgitated factual argument from prior findings may be summarily rejected by reference back to the findings in prior determinations, and although renewed legal arguments are cabined by the precedential effect of prior determinations, new arguments are not similarly restricted. Moreover, the absence of an issue in a prior proceeding, such as the impact of the must-carry status of PTV stations, certainly does not preclude consideration of that issue in this proceeding.

The Judges also reject the argument made by PTV and CCG that the must-carry stations have value, notwithstanding that indemnification provisions would offset any royalty payments. There are two reasons why this argument is incorrect. First, the point is not that the programs on must-carry stations, including those subject to royalty indemnification payment back to the CSOs, lack value; rather, the point is that they lack objective and measurable value. On the issue of objective value, the experts for PTV and CCG mistakenly seek to analogize must-carry PTV stations to two “must-buy” automobile attributes, seat belts and air bags, and to “must-carry” health insurance, which come at a cost. There are two problems with this argument. First, although one can quite reasonably argue that these coerced purchases are beneficial, from an economic point of view the purchase does not reveal a buyer's preference because seatbelts, air bags, and health insurance are coerced, not voluntary. [ 50 ] Second, a price proxy could likely be generated for seat belts and air bags by comparing the retail price of cars immediately before and after their inclusion was mandated for new cars, or by comparing the spread in price between new cars (with such a safety device) and used cars (lacking such safety devices). Regressions seeking to use such data would be true, full-fledged hedonic regressions. But here, the task is markedly different and more difficult, because no such historical or comparative comparisons were possible. Thus, as noted elsewhere in this determination, the regressions are “inspired” by, and in the nature of, hedonic regressions, using the context of section 111 to identify the market-related revealed preferences of CSOs, just as fee-based regressions have been utilized in previous allocation proceedings. But the attempted analogy to market-generated attributes included in market-priced products misses the mark and continues the unfortunate strained attempts by the experts supporting and criticizing fee-based Start Printed Page 54190 regressions to compare the fee-based regressions to hedonic regressions.

As to the issue of measurable value, PTV and CCG fail to address the fact that, if these stations do not generate net royalties, then the regressions should not be attributing (correlating) their minutes with royalties. The regressions will not “see” the indemnification payments made by the PTV stations back to the CSOs who made royalty payments. Thus, to the extent these royalty payments are recorded as base fee payments on the SOA forms relating to subscriber groups, they will falsely be “seen” by the regressions as indicating that the minutes were associated (correlated) with additional royalties, when that was not the case. As several witnesses have noted, the regressions are “dumb,” and will calculate whatever it is they are programmed to calculate. It is up to the econometrician who constructs and evaluates the regression to “think,” and decide whether the regression has reflected reality (legal, institutional, and economic) in a proper manner. The Judges find that Mr. Harvey made a prima facie case regarding the number of PTV stations that were must-carry.

The Judges also do not credit PTV's point that many CSOs chose to retransmit PTV signals when they could have carried another distant signal instead. Not only does that point ignore the problem of whether a station was subject to indemnification, it also indicates merely an ordinal preference.

The Judges also reject the argument that the regressions can include the must-carry station data because CSOs responded to the Bortz Survey by attributing value to such signals. This “whataboutism” argument holds no purchase—either the data belongs in the regressions, or it does not. The Bortz Survey is a form of model seeking to address relative marketplace value from a different perspective, and the requisites or output of one model do not necessarily map onto another model. Cf. NRBNLMC v. CRB, supra, slip op. at 41 (affirming the Judges' Web V rate determination that a finding applicable to one economic model (the issue of opportunity cost) did not automatically apply to the same issue when addressed in a different type of model).

PTV's assertions regarding the value of any adjustment regarding presence of must-carry stations with their attendant indemnification requirements is merely an argument regarding the extent of the adjustment, not regarding the need for one. As noted, the extent of the adjustment varies, depending upon how it is applied and to which regression model it is applied. The Judges consider that point in making their adjustments, infra.

Finally, the Judges agree with the argument that the legislative history relating to the must-carry provisions, and PTV's own prior positions, reflect an understanding that public television stations need must-carry status in order to obtain carriage. Such real-world facts serve as “reality filters” that can and should override the “dumb” manner in which a regression “sees” the royalty and carriage data.

For these reasons, the Judges find that PTV failed to discharge its evidentiary burdens, failed to demonstrate that Mr. Harvey's estimation should be rejected by the Judges, and failed to adequately demonstrate the existence of value in must-carry stations sufficient to include them as part of the relative marketplace value generated by the regression approach.

In terms of the necessary adjustments, the Judges agree with Dr. Bennett's approach, in which he eliminates the value attributed to the must-carry stations in both the regressions and the allocations, as there is no evidence or testimony sufficient to warrant only an adjustment in one of these regards. Thus, the Judges agree with the adjustments in column number 3 in Dr. Bennett's adjustment made in figures 38, 21 and 52, respectively, set forth supra.

The parties dispute whether multicast stations should be included in the fee-based regressions. Before setting forth the parties' respective positions, it is helpful to set forth a brief history of the relevant statutory provisions and the industry reaction. In this regard, the SDC's overview of the context is accurate and succinct:

Prior to the analog-to-digital television transition, a broadcast station could transmit only a single stream of programming. The transition to digital broadcasting, completed for all full-power stations in 2009, enabled stations to broadcast multiple streams of programming, i.e., a “primary stream” and one or more “multicast streams.”

Accordingly, the Satellite Television Extension and Localism Act (“STELA”) of 2010 added a DSE for distant transmissions of multicast streams. STELA, Public Law 111-175 , 124 Stat. 1218, 1239 (2010).

Certain multicast streams were temporarily exempted from having a DSE value assigned, including those that (a) had been carried by a CSO prior to February 27, 2010, or (b) had an agreement in place prior to June 30, 2009, for free carriage on a CSO. See STELA, 124 Stat. 1218, 1239; see also Marx ACWDT ¶ 70.

The Association of Public Television Stations (“APTS”) entered into such an agreement with the National Cable and Telecommunications Association (“NCTA”) in 2005, which was renewed in 2016 . . . . [REDACTED]. . . .

The PBS-NCTA agreement governed carriage of PTV stations during the 2014-2017 time period and required participating CSOs to carry up to four programming streams per PTV station ( i.e., the primary stream and three multicast streams). The agreement thus served to “exempt” up to three multicast streams per station from generating copyright liability until its expiration and renewal in 2016, at which time the exempted multicast streams were reclassified for royalty purposes as “non-exempt” streams with a DSE value of 0.25.

SDC PFF ¶¶ 223-224 (and record citations therein). Accord PTV PFF ¶ 67 (and record citations therein).

The record in this proceeding also reflects the parties' and the industry's awareness of the terms of the 2016 renewal of the 2005 PBS-NCTA agreement referenced above. Accordingly, although the Judges denied the post-hearing admission of the PBS-NCTA agreement into the record, [ 52 ] the Judges have relied upon the record evidence of the parties' understanding of that agreement.

PTV maintains that, for the years 2016 and 2017, multicast stations should be treated like all other distantly retransmitted broadcast stations for the purposes of establishing relative marketplace value through the fee-based regression analysis, noting that, under section 111, they “are assigned the same DSE value as that station's primary stream.” PTV PFF ¶ 66 (citing 17 U.S.C. 111(f)(5) ; PTV PFF ¶ 67 (and record citations therein).

PTV distinguishes the multicast stations from the must-carry rules, asserting “it is undisputed that the must-carry rules do not require CSOs to retransmit those non-primary signals of a [PTV] broadcast station, and all carriage of PTV multicast streams was due to the voluntary choice of the cable operators.” PTV PFF ¶ 77 (and record Start Printed Page 54191 citations therein). PTV acknowledges that PTV primary and multicast stations are functionally retransmitted distantly as a “bundle,” but that fact is neither unique to distant carriage of PTV stations nor consequential with regard to the inclusion of the multicast stations in a fee-based regression model. As to the latter point, PTV asserts that, because “[a] fee-based regression model is designed to estimate the average relative value of programming in a bundle, such . . . bundling of programming of different values does not bias the regression estimates of relative marketplace value.” PTV PFF ¶ 91. More particularly, PTV explains that the Waldfogel-style regressions of Drs. Johnson and George rely on “average relative valuations,” and that programming which does not correlate with higher royalties “will be factored into the regression.” PTV PFF ¶ 91 n.140 (citing George WDT at 51; 4/18/23 Tr. 5170-74 (George); 3/21/23 Tr. 350, 456-58:15, 595 (Johnson); Johnson WRT ¶ 65.

Because he understood that programming of multicast streams on distantly retransmitted broadcast signals to be compensable under section 111, Dr. Johnson applied his regression model to estimate the average relative value of distantly retransmitted programming inclusive of multicast streaming. And, as indicated supra, he understood that, to the extent CSOs might value PBS primary and multicast streams differently, these different values for “multicast streams would be averaged out by the subscriber-weighted distant minutes.” PTV PFF ¶¶ 133-34 (and record citations therein).

PTV also notes how relative values, as between JSC and PTV programming, moved in opposite directions during the 2014-2017 period. That is, in 2015, when WGNA converted from a broadcast station to a national cable network, JSC could not claim section 111 royalties for sports programming that was televised on WGNA. But for PTV, the converse was the case: Compensable programming arguably increased when in 2016 multicast stations transformed from being statutorily exempt (no right to section 111 royalties) to non-exempt (royalty-generating). PTV PFF ¶ 135.

CCG argues that the minutes of programming on the PTV multicast stations that were reclassified from exempt to non-exempt should be included in the fee-based regressions because their continued retransmission as royalty-generating stations is the consequence of deliberate strategies by CSOs. CCG PFF at 25. Specifically, CCG relies on the fact that the substantial portion of stations that had been distantly retransmitted by Bright House (an MSO) while exempt (from royalties) continued to be retransmitted in 2016 as non-exempt (royalty-bearing) contemporaneously with the acquisition of Bright House by a larger MSO, Charter Communications (formerly Time Warner Cable). CCG PFF ¶ 79 (citing Marx ACWDT ¶ 78).

According to Dr. George, Charter Communications could have chosen to cease distantly retransmitting these PTV multicast stations after they became non-exempt (royalty-bearing), but for commercial purposes they elected to maintain carriage, indicating that Charter Communications perceived value in these multicast stations. George WRT at 20. In this regard, Dr. George concluded that the fact that Charter decided to include the PTV signals in its cable lineup and treat those PTV signals as paid while deciding not to carry other distant signals “reveals the relative value of the programming to the cable system.” George WRT at 20. See also CCG PFF ¶ 547. [ 53 ]

Like, CCG, CTV states that the reclassification of PTV multicast signals from exempt to “paid” ( i.e., non-exempt, or royalty-bearing) had a “significant impact in the industry.” CTV PFF at 17. But quite unlike CCG, CTV disagrees with the inclusion of the “paid” multicast signal minutes in the fee-based regressions. After reciting the same industry merger history recounted supra, CTV PFF ¶ 75, CTV notes that the reclassification of these multicast PTV stations increased both (1) PTV subscriber-weighted minutes and (2) the data inputted into the regression (seeking to measure the correlation between category minutes and royalties). CTV PFF ¶ 76.

More particularly, 231 PTV signals were reclassified from exempt to paid from 2014 to 2017, “with over 90% of the reclassification of PTV minutes taking place in 2016 and 81% of those reclassifications associated with Charter Communications' acquisitions of Time Warner and Bright House.” CTV PFF ¶ 77 (and record citations therein). CTV further notes the combined industry concentration of Charter Communications, Time Warner, and Bright House prior to the 2016 merger, together accounting for 26.2% of total cable industry subscribers. CTV PFF ¶ 78.

But CTV argues that the reclassification had no impact on whether those PTV multicast minutes should have been inputted into the fee-based regressions. Specifically, CTV asserts, “The increase in PTV paid minutes did not create any changes subscribers would notice; there was no change in channel line-ups, viewer access to programming, or content broadcast. Rather, PTV signals that had previously existed on channel lineups became `nonexempt.' ” CTV PFF ¶ 79 (and record citations therein). Thus, CTV concludes that the reclassification merely “created an illusion” of an increase in the number of distantly retransmitted PTV minutes.” CTV PFF ¶ 237 (and record citations therein).

The SDC echoes Dr. Marx's position on behalf of CTV, that, although reclassification from exempt to non-exempt “changes the reporting of PTV minutes in the data, [it] does not change the content or value that CSOs offer to their subscribers.” SDC PFF ¶ 241 (citing Marx ACWDT ¶ 71).

Further, Dr. Marx takes note, in her consideration of the Charter acquisitions discussed supra, of the existence of the PBS-NCTA agreement in place that maintained the exempt (no royalty) status of a number of public television stations. 4/11/23 Tr. 4272 (Marx).

JSC takes note that, although the number of primary PTV signals did not increase significantly, “CSOs . . . began carrying significantly more PTV multicast channels, with the share of PTV volume comprised of multicast channels nearly doubling between the beginning of 2014 and the end of 2017.” JSC PFF ¶ 74 (and record citations therein) (emphasis added). More particularly, JSC acknowledges that some of this increase in reported PTV multicast carriage is attributable to the change in status of certain PTV multicasts from “exempt” to “non-exempt,” as a result of Charter Communications' acquisitions of Time Warner Cable and Bright House Networks in 2016. JSC PFF ¶ 75 (and record citations therein).

But JSC rejects the notion that the increase in non-exempt (royalty-bearing) multicast carriage reflects an increase in value for which the PTV allocation should increase. In support of this argument, one of JSC's economic experts, Dr. Majure opines that (1) mere reclassification from exempt to non-exempt itself does not reflect an Start Printed Page 54192 increase in value and (2) CSOs chose to carry additional PTV multicasts during 2015-2017 when doing so was typically cost-free, even if they were non-exempt) because their carriage addition did not cause the CSO to exceed the minimum fee. JSC PFF ¶¶ 76-77 (and record citations therein).

Moreover, JSC relies on the testimony of PTV's own witness, Dr. Johnson, who acknowledged that the PBS-NCTA agreement provides for CSOs who were NCTA members to carry up to three PTV multicasts in addition to the carriage of the primary PTV signal, that PTV would not require payment for the carriage of these multicasts, and that, should the CSO incur financial liability under section 111 for such multicast carriage, PTV would be obligated to either indemnify the CSO for the royalty costs (as with must-carry primary signals ), or waive the PTV station's right to compel carriage. JSC PFF ¶ 7 (citing 3/22/23 Tr. 985-88 (Johnson)).

Based on the foregoing, JSC claims that, without the multicast provisions in the PBS-NCTA agreement, which JSC characterizes as “marketplace” facts, CSOs would pay “little or nothing” for the programming on the multicast stations. JSC PFF ¶ 9 (and record citations therein). See also JSC PFF ¶¶ 25, 395; Harvey CWDT tbls.37-39.

The Judges have the same type of problem with PTV's claim for royalties for the multicast programming as they do for the must-carry station programming discussed supra. That is, there was evidence available to be produced by PTV, namely the PBS-NCTA agreement as well as the number of entities it represents that would provide significant marketplace evidence of how PTV stations and the licensor CSOs valued multicast station programming. But, as noted supra, PTV did not produce either this agreement or the number of entities bound by it as evidence, although its own expert witness testified as to some of the agreement's contents.

Thus, the Judges were deprived of full knowledge of the terms of the agreement, the parties' fulsome testimony as to the meaning of its provisions and the number of entities signing on to the agreement. Moreover, PTV opposed the admission of that agreement into evidence. See Order 41 Denying as Moot Public Television's Motion for Reconsideration of Order 33. Accordingly, the Judges here, too, find that PTV bore, but failed to discharge, the burdens of production and persuasion with regard to the details of the agreement and the extent of its coverage. See Web V Final Determination at 59452; Huthnance v. District of Columbia, 722 F.3d 371 (D.C. Cir. 2013); see also 5 U.S.C. 556(d) (placing the burden of proof regarding facts on the party seeking an order based on those facts).

Nonetheless, relevant terms of the PBS-NCTA agreement were well-understood by the parties, without dispute. As noted supra, PTV's own expert, Dr. Johnson, understood what the agreement provided with regard to multicast stations and the absence of a royalty obligation attendant to their carriage. This constitutes a market-based fact, which has two implications. First, as a direct agreement among parties in the sector at interest in this proceeding, it is an agreement that reflects actual value, not hypothetical value. As such, it is more credible than attempts to tease out market value via regression-derived price proxies or a constant sum survey such as the Bortz Survey. Second, within the context of a fee-based regression, the existence of such zero valuations would certainly affect the regression as well as the number of minutes by which the impacted PTV regression coefficient would be multiplied. But without any information regarding the number of PTV stations covered by the PBS-NCTA agreement, the Judges cannot simply assume that no multicast stations that generated zero net royalties were covered by this agreement. [ 54 ]

If the Judges had full information regarding the PBS-NCTA agreement from PTV, whose clients are signatories thereto, as well as information from PTV regarding the number of its station clients and base fee royalties impacted by the agreement, the Judges' analysis could have been different. For example, the Judges are not convinced that the fact that these signals had been exempt (not royalty-bearing) previously is a dispositive point. The argument in favor of that position is that the mere change in legal obligation has no impact on economic value. But a simple thought experiment demonstrates the paucity of that reasoning: What if these multicast signals had started off as non-exempt (royalty-bearing) and then were changed to exempt (non-royalty-bearing)? It would have been the same change, only in reverse. Would the original classification remain in place in this juxtaposed scenario, such that royalties would continue to be included in the regression?

Also, there was a contentious dispute regarding whether the multicast PTV stations' programming was “duplicative” of the PTV primary signal programming or of each other. Questions arose regarding whether duplication should be narrowly tailored to mean the retransmitting of the identical program at the identical time, at the same proximate time or within a certain period of time, and whether different episodes from the same series retransmitted at the same or some proximate time or day were likewise duplicative. But without information as to whether any multicast station that had retransmitted such potentially duplicative programming was contractually unable to generate royalties under the PBS-NCTA agreement in any event, these issues of potential duplication appear to be indeterminate. [ 55 ]

Four parties, CCG, CTV (for 2014 only), Program Suppliers and PTV, through their expert witnesses, proffer regressions that they assert are useful methodologies to determine relative market value. An overview of each regression model and the criticisms thereof are set forth below.

On behalf of CTV, Dr. Leslie Marx  [ 56 ] adopted a fee-based regression model (the “Marx Model”) applicable to 2014, Start Printed Page 54193 but not for the 2015-2017 period, because she found that data issues rendered the use of such a regression approach “substantially less reliable and informative” for the 2015-2017 timeframe. 4/11/23 Tr. 4117 (Marx). More particularly, for 2014, she adopted a “Bayesian” approach in her fee-based regression model, using that methodological technique to mitigate concerns regarding the reduction in the quantity and quality of 2015-17 data.

At a high level, she described the Bayesian approach as “a technique that allows [an econometrician] to use results from one period and add additional data to it to then update . . . inferences based on . . . that earlier period.” 4/11/23 Tr. 4209:3-6 (Marx). [ 57 ] According to Dr. Marx, three basic reasons supported her use of a Bayesian regression:

1. In the prior proceeding, the Judges found Dr. Crawford's approach to be appropriate for allocating, inter alia, 2013 royalties.

2. The 2014 data largely patterns the 2013 data analyzed by Dr. Crawford because (unlike the 2015-2017 data) the 2014 data had not been affected by the growing predominance of excess capacity CSOs, reductions the number of SGs, or the reclassification of PTV stations.

3. Although the 2014 data alone would not be robust enough to adequately or reliably model a regression, the Bayesian approach incorporates a methodological technique that helps to resolve concerns regarding the quantity of data.

4/11/23 Tr. 4207-08 (Marx).

Accordingly, Dr. Marx ran her Bayesian fee-based regression only for 2014. The estimates she generated from her regression generated 2014 shares aligned with the shares calculated from Dr. Crawford's fee-based regression in the 2010-13 Determination. 4/11/23 Tr. 4126:16-4127:4. (Marx). [ 58 ]

As noted supra, Dr. Marx found that the data generated for the 2015-17 period was insufficient to allow her to use a fee-based regression for those years. To be clear, the paucity of data she identified was not a data collection problem, but rather what she considered to be an insufficient quantity of data borne from significant “changed circumstances,” namely the 2015 conversion of WGNA to a cable station from a local station that had previously been the most distantly transmitted. These changed circumstances led Dr. Marx to highlight as a key finding from her analysis that “a regression similar to [Dr.] Crawford's would [be] less informative and less reliable.” Marx ACWDT ¶ 9(c) (emphasis added); see also Marx ACWDT ¶ 67 (reiterating after her full analysis that in her opinion a Crawford-style regression would be “ less informative and less reliable for estimating relative marketplace value after 2014.”) (emphasis added).

In granular detail, Dr. Marx identified the following dramatic modeling ramifications arising from the WGNA conversion:

1. The fulsome data set utilized by Dr. Crawford in the 2010-13 proceeding did not exist for the 2015-2017 period.

2. The number of CSOs carrying at least one distant signal declined substantially after 2014. More particularly, more than 800 CSOs carried distant signals in 2014, but only approximately 500 CSOs carried distant signals by 2017.

3. Total royalties declined by approximately 32% from 2014 to 2017.

4. There was a dramatic reduction in the number of subscriber-weighted minutes.

5. The number of “excess capacity” CSOs increased dramatically. [ 59 ]

6. More than 90% of royalties in 2016 and 2017 were paid by these “excess capacity” CSOs, i.e., systems that could have carried more DSEs but declined, notwithstanding the zero marginal royalty cost associated with additional carriage.

7. Alternately stated, less than 10% of the SG-level calculated royalties reported by CSOs reflect royalties actually paid for retransmission of signals by CSOs in 2016 and 2017.

8. Consequently, all the royalties calculated for each subscriber group in a cable system do not represent actual or incremental costs paid by the CSO because of the minimum fee requirement. [ 60 ]

9. Underscoring the impact of the WGNA conversion, 92% of CSOs that had previously carried WGNA (with or without an additional distant signal) in 2014, were paying only the minimum fee.

10. Finally, whereas the percentage of all CSOs that carried no distant signals had increased from only 13% in 2014, 30% in 2015, 44.6% in 2016, and then to 44.8% in 2017.

CTV PFF ¶¶ 93-94; 156-163; 167; 170; 195-199 (and record citations therein).

With regard to the effect of these changed circumstances on a fee-based regression, Dr. Marx testified that Dr. Crawford's regression model relies on variation between the distant retransmission decisions at the SG level— but only within a given CSO. Marx ACWDT ¶ 57. Thus, the Crawford Model included a CSO only if the CSO had at least two SGs. But with the dramatically changed circumstances caused principally by the WGNA conversion and the resulting increase in the number of excess-capacity CSOs, there were far fewer CSOs in the 2015-2017 period who created the necessary multiplicity of SGs. Id. More particularly, Dr. Marx relied on the following facts:

1. In 2015, 62% of CSOs—accounting for almost 35% of total royalties—did not meet the Crawford regression threshold that a CSO have at least two subscriber groups.

2. The proportion of CSOs with fewer than two SGs increased from 54.9% to 68.8%.

3. The percent of CSOs with zero SGs increased from 13% to 44.8% from 2014 to 2017.

4. The number of CSOs qualified to be included in a Crawford fee-based regression continued to decline throughout the relevant time period, with only 31.2% of CSOs included in 2017.

Marx ACWDT ¶¶ 58-59 & fig.12; 4/11/23 Tr. 4178 (Marx).

These are the detailed changed circumstances, referred to supra, which Dr. Marx found to render a Crawford fee-based regression less informative and reliable in the present proceeding than in the 2010-13 proceeding. Marx ACWDT ¶¶ 64, 67. More particularly, she noted that, in her opinion, the relatively small percent of CSOs that otherwise satisfied the requisites for inclusion in a Crawford-style regression could not be considered a representative sample or a representation of the Willingness to Pay of the larger CSO market. 4/11/23 Tr. 4161, 4173 (Marx). [ 61 ]

For the foregoing reasons, Dr. Marx utilized a fee-based regression only to estimate the regression coefficients and share allocations for 2014. Her results—are set forth in the figures below:

Dr. Marx then multiplied the subscriber-weighted minutes for each program category, as calculated by another CTV expert, Dr. Christopher Bennett, [ 63 ] by her Bayesian coefficients (as adjusted pursuant to her PTV analysis) and she estimated the following allocation shares for 2014:

(A) Applying Dr. Marx's 's preferred analysis excluding duplicated minutes:  [ 64 ]

Estimated 2014 Shares

PS—19.73%

JSC—43.89%

CTV—15.56%

PTV—16.41%

SDC—0.48%

CCG—3.93%.

(B) Applying the inclusion of duplicated minutes as in the 2010-13 Determination:

PS—20.69%

JSC—41.73%

CTV—13.94%

PTV—18.85%

SDC—0.47%

CCG—4.31%.

Marx ACWDT ¶ 39.

Having rejected the use of a fee-based regression to estimate relative marketplace value for the 2015-2017 period, Dr. Marx switches gears in two contexts. First, she shifts the demand-side focus, by analyzing how choices of downstream consumers of cable television programming have purportedly changed—and how those changes impact the “derived demand”  [ 65 ] for categories of programming delineated in this proceeding. Second, Dr. Marx uses this analysis to provide what she describes as a “directional” approach, which she opines should guide the Judges regarding the relative increases or decreases in category royalty shares. This “directional” approach is in contrast to both the regression and the survey methods for ascertaining relative marketplace value, which seek to provide specific estimates of the category values. See Marx ACWDT ¶ 83 (“This is a ‘directional' analysis in that I do not quantitatively measure the effect of streaming on relative market values.”). [ 66 ]

More particularly, Dr. Marx evaluates the changes in how consumers viewed cable television programming content in the 2014-2017 period, compared to viewing in prior years. Specifically, Dr. Marx examined how the introduction and growth of streaming of programming through over-the-top (OTT) platforms during the 2014-2017 period affected not only how consumers chose to access content but also, derivatively, the “differential effects” of this change in distribution “across the claimant groups.” Marx ACWDT ¶ 82.

Dr. Marx's directional “derived demand” evaluation proceeds as follows:

1. She summarizes the expansion of streaming prior to and during the 2014-2017 period.

2. Dr. Marx then uses viewership data  [ 67 ] to identify evidence indicating how the growth of streaming was likely to have increased or decreased the relative value of the claimants' respective program categories groups to a CSO. More particularly, Dr. Marx opines that a program category with “content [that] had a larger shift to streaming would, all else equal, be likely to have a decrease in relative importance when it comes to delivery as a distant signal by CSOs [and] [c]onversely, claimant groups whose content had smaller shifts to streaming likely would, all else equal, have an increase in relative importance.”

3. She next reviews data on household viewership over the relevant period, focusing on the “directional relative effects of streaming growth on CTV, PTV, and Program Suppliers categories . . . .”  [ 68 ]

Marx ACWDT ¶¶ 83-84.

Through this analysis, Dr. Marx reaches the following conclusions:

1. From as far back as 2010, “streaming and smart device penetration have increased while CSOs have lost subscribers.”

2. Viewership data reveals a reduction in TV viewership over the 2014-2017 period.

3. Because of increased streaming and lower cable subscribership the “importance of “PTV and Program Suppliers content appear[s] to have diminished . . . relative to CTV content.”

4. Although the data reveal a decline in the absolute number of households watching content within the CTV, PTV, and Program Suppliers categories, the relative declines were greater for PTV's and Program Suppliers' content than for CTVs' content.

5. The absolute and relative decline in the share of viewership on cable of Program Suppliers content is consistent with the contemporaneous improvement in the “quality of streaming video content provided on platforms such as Netflix, Amazon Prime Video, and Hulu.”

6. In addition to licensed TV shows, these streaming platforms also transmit original content which they have produced, with quality levels generating Emmy Award nominations, indicating the growing and high quality of content carried by streaming platforms.

Marx ACWDT ¶¶ 85-98 & figs.21-24.

Applying the foregoing to the Judges' present task of estimating relative marketplace value across the claimant categories, Dr. Marx concludes as follows:

In sum, streaming grew rapidly during 2014-2017 [and] Nielsen data show concomitant declines in viewership of the PTV and Program Suppliers claimant groups' content. CTV content viewership also declined, but that decline was smaller than for PTV and Program Suppliers. This implies that the growth of streaming likely had a greater adverse impact on Program Suppliers and PTV claimants than on CTV claimants. All else equal, this is consistent with a higher relative market value for CTV claimants over the 2014-2017 period as compared with Program Suppliers and PTV claimants.

Marx ACWDT ¶ 99.

One of the SDC's expert economic witnesses, Dr. Erkan Erdem, [ 69 ] characterizes Dr. Marx's rejection of the applicability of the fee-based regression approach in a broader context than Dr. Marx. Instead, Dr. Erdem avers that the inconsistency between the 2010-2013 data and the data over the entirety of the 2014-2017 period reveals something more profound: that the “Crawford model was made specifically only for the 2010-2013 data . . . [and] is not robust enough to measure the market value of distant minutes per claimant to fit data from other proceedings.” Erdem WRT ¶ 126. By this criticism, Dr. Erdem tacitly criticizes Dr. Marx's Bayesian approach for not applying her criticism with appropriate breadth, maintaining that “[e]ven if there is a shift in the trend of this proceeding's data, [her modeling] should still theoretically be useful for this proceeding, if one were to believe it was useful in the first place, since they are dealing with the same variables.” Erdem WRT ¶ 126. See als o Erdem WRT ¶ 130 (opining that Dr. Marx was wrong to maintain that after the WGNA conversion all that was needed was “an adjustment . . . in the Crawford model” because, although “[t]he underlying trends in the data . . . shifted, . . . the variables used are still the same, as well as the computation of distant minutes and distant signals.”).

Whereas Dr. Erdem finds the forgoing criticism of the use of a Crawford fee-based regression as incomplete, he finds a second criticism by Dr. Marx to be exaggerated. Specifically, he takes issue with her concern that the number of CSOs with two or more subscriber groups had decreased after 2014, thereby reducing the presence of the Start Printed Page 54196 sufficient observations of programming decisions arising from the different stations retransmitted by such subscriber groups. Erdem WRT ¶ 131. Dr. Erdem finds this criticism overblown because the percentage of CSOs with fewer than two subscriber groups only increased from 54.9% to 68.8% from 2014 to 2017, and the CSOs thus excluded from the fee-based regressions would “only account for 38% of the total royalties.” Erdem WRT ¶ 131. Thus, he finds Dr. Marx's reliance on this changed circumstance as obscuring his essential point, to wit, that if the Crawford Model had been “correctly specified in the first place” it would not need “to be adjusted for changes in the data,” but rather “should be able to withstand [data changes] to remain accurate.” Erdem WRT ¶ 131.

Finally, but in the same vein, Dr. Erdem disagrees with Dr. Marx's conclusions that the reduction in the percentage of CSOs paying only the minimum fee limits only the applicabilit y of the fee-based regression approach, as opposed to (as Dr. Erdem maintains) demonstrating the overall incorrectness of the model's specifications. Erdem WRT ¶ 132. More specifically, Dr. Erdem characterizes the 39% of CSOs paying only the minimum fee in 2014 as itself a “large proportion,” which would have required the Crawford Model, or a model fashioned in the manner of the Crawford Model, to have been “specified” for this effect. Instead, Dr. Marx treats the increase in the shift in CSOs paying minimum fees after 2014 only as grounds to find the fee-based regression model inapplicable for 2015-2017, rather than misspecified, and she wrongly deemed the 39% figure in 2014 sufficient to incorporate into her Bayesian regression. Erdem WRT ¶ 132. [ 70 ]

Dr. Tyler  [ 71 ] levies three criticisms at Dr. Marx's direct testimony. First, he criticizes Dr. Marx's regression-based approach for estimating 2014 values for the same reason he criticizes all the other fee-based regression proffered in this proceeding (and Dr. Crawford's model as well). [ 72 ] That is, Dr. Tyler criticizes Dr. Marx's 2014 modeling because her dependent variable, as in the models of Drs. Crawford, George and Johnson, is “a royalty amount.” Written Rebuttal Testimony of Cleve B. Tyler, Ph.D., Trial Ex. 7601, ¶ 30 (Tyler WRT). Dr. Tyler's criticism of this form of dependent variable is that it “contain[s] a substantial amount of variability due to factors other than categories of distantly retransmitted minutes for a subscriber group.” Tyler WRT ¶ 31. According to Dr. Tyler, these models then need to include fixed effects to limit this unrelated variability, but Dr. Crawford's model—subsumed in Dr. Marx's 2014 model—suffers from a loss of information arising from these fixed effects.

Moreover, Dr. Tyler notes that, for the 2015-2017 period, Professor Marx's inability to apply a fee-based regression arises from data limitations generated by the WGNA conversion, but such data limitations are obviated by the change in the dependent variable to his Subscriber Group Royalty Percentage (“SGRP”), which he avers does not require fixed effects, and thus his model does not discard information from the substantial number of CSOs that have just one Subscriber Group. Tyler WRT ¶ 70.

Dr. Tyler also maintains that because Dr. Marx relies on Dr. Crawford's 2010-2013 model, she began her regression analysis from an “imprecise starting point” and a potentially biased “prior belief.” Tyler WRT ¶ 57. That is, because Dr. Tyler is of the opinion that Dr. Crawford's process in generating his model generates “serious questions,”  [ 73 ] she has implicitly ported those problems into her model, which “cast[s] a substantial shadow of doubt on any of her conclusions.” Tyler WRT ¶ 57.

Finally, Dr. Tyler takes aim at Dr. Marx's default to a directional analysis in which she opined that expanded streaming services likely “reduc[ed] the value of Program Suppliers and PTV claimants' retransmitted programming relative to the programming offered by CTV claimants.” While not disputing the relative value shift posited by Dr. Marx, Dr. Tyler maintains that an appropriate regression analysis, such as his approach, would capture this effect and in a manner superior to the inappropriate speculation embodied in Dr. Marx's “directional” analysis. Tyler WRT ¶ 72.

Dr. Gray  [ 74 ] raises the following criticisms of Dr. Marx's approach:

1. In support of her “directional” analysis, Dr. Marx claims only that local viewership declined for each of the Program Suppliers, Commercial Television, and Public Television claimant categories, but she fails to provide information on the level or trend of distant viewing of these locally produced programs. Written Rebuttal Testimony of Jeffrey S. Gray, Trial Ex. 7606, ¶¶ 47-48 (Gray WRT).

2. Relatedly, although the Judges have previously ruled that local viewing patterns are not probative of distant viewing patterns, absent contemporaneous local and distant measures demonstrating that local viewing patterns are sufficiently informative as to subscribers' distant viewing patterns, Dr. Marx offers only local viewing data, which the Judges have previously found not probative of distant viewing pattern rather than evidence of distant viewing patterns. Gray WRT ¶ 48 n.40 (citing Order Reopening Record and Scheduling Further Proceedings, Consolidated Docket Nos. 2012-6 CRB CD 2004-2009 (Phase II) and 2012-7 CRB SD 1999-2009 (Phase II) at 3-4 (May 4, 2016)).

3. Dr. Marx fails to account for the substantially diminished number of households which even had distant-retransmitted access to CTV programming in the years 2015-2017. Thus, she fails to address the fact that “the relative number of subscribers receiving [CTV] programming on a distant basis declined precipitously over the 2014-2017 royalty years,” as shown even in “[s]tatistics presented in Dr. Marx's direct testimony show[ing][CTV's] share of claimant category minutes weighted by the number of distant subscribers reached [had] declined 72% between 2014 and 2017.” Gray WRT ¶ 49.

Dr. Johnson  [ 75 ] recognizes that he and Dr. Marx essentially agree as to the use of fee-based regressions and allocation methodologies for 2014, but that they disagree with regard to the usefulness of a fee-based regression to determine allocation shares for the 2015-2017 period. Johnson WRT ¶ 88. With regard to the latter three years, Dr. Johnson takes issue with Dr. Marx's opinion that the WGNA conversion would Start Printed Page 54197 necessarily “ `exclude a large proportion of CSOs and royalties from the analysis,' ” rendering a fee-based regression approach “ `less informative and reliable.' ” Johnson WRT ¶ 89. More particularly, Dr. Johnson criticizes Dr. Marx for not presenting in her WDT “any regression analysis or testing that would support this claim,” and, moreover, that although she produced what appeared to be “computer code . . . appl[ying] Dr. Crawford's model to the entire 2014-2017 period,” she did not provide any explanation how that code might have supported her otherwise conclusory opinion that a fee-based regression for the 2015-2017 period would be “ `less informative and less reliable.' ” Johnson WRT ¶ 89 n.163.

Regarding Dr. Marx's substitution of her “directional” analysis for a regression approach to analyze the 2015-2017 period, Dr. Johnson raises two criticisms. First, he finds her decision to not apply any modeling approach for that period to be too severe. Johnson WRT ¶ 91. Second, Dr. Johnson criticizes Dr. Marx's “directional analysis” as lacking any specificity, information or guidance as to what any particular claimant groups' royalty shares should be in the 2015-2017 period. Rather, her analysis is nothing more than a recitation of purported “qualitative changes Dr. Marx believes were `likely' to have happened.” Johnson WRT ¶ 92.

Dr. George  [ 76 ] first addresses Dr. Marx's critique of Dr. Crawford's model somewhat obliquely—not by disputing the critique that his model reduces the available number of meaningful variations (among subscriber groups within CSOs) but by purportedly failing to recognize (as Dr. George opines) that relaxing fixed effects in Dr. Crawford's model would increase the number of subscriber group variations, thus salvaging the use of a fee-based regression. That is, an adjustment allowing for “estimating coefficients from variations within systems over time rather than within each system each accounting period,” allows for a regression to analyze “all systems carrying distant signals in two or more accounting periods [to be] included, regardless of the number of subscriber groups.” George WRT at 18. [ 77 ]

Further, Dr. George “agrees with Dr. Marx that programming on streaming services is likely a closer substitute for [PTV] and Program Supplier programming than other claimant types,” Dr. George finds that Dr. Marx's analysis “likely overstates the relative decline of Program Supplier and Public Television programming relative to Commercial Television content.” George WDT at 21. She reaches this finding by noting that Dr. Marx's reliance on local (rather than distant) viewing neglects the likely fact that local CTV news programming would be less popular in distant markets, whereas Program Suppliers' content is not geographically distinct and would not be less valued for this reason. George WRT at 21.

Finally, Dr. George takes issue with Dr. Marx's use of a Bayesian regression incorporating 2013 data into the methodology used to calculate 2014 share estimates.

Dr. George emphasizes that pooled data from 2010-2013 reflects the choices made by CSOs in that earlier period with different market conditions. In this regard, Dr. George notes that decisions in 2010-2013 reflect neither the WGNA conversion nor later cable industry acquisitions and entry. George WDT at 22. [ 78 ]

Having considered all aspects of the CTV Marx Model and directional analysis presented by Dr. Marx, as well as all the criticisms of those approaches contained in the submissions by the other parties, the Judges find as follows:

1. Dr. Marx's Bayesian modeling, ceteris paribus, is an appropriate econometric tool to use in the process of estimating relative marketplace value across the program categories for 2014. The Judges do not credit Dr. George's criticism that Dr. Marx's Bayesian approach is deficient because it pools 2014 data with data from the 2010-2013 period. Dr. Marx opined, and the Judges agree, that 2014 was sufficiently similar to this prior period to justify the Bayesian approach. [ 79 ]

2. Dr. Marx's directional analysis for the 2015-2017 period can be useful, despite the absence of any allocation share estimates, in that it suggests to the Judges which of the quantitative estimates on which the Judges do rely could be more probative, in that they are consonant with Dr. Marx's directional analysis. However, in the present proceeding, as discussed infra, the Judges adopt the Tyler Model as a regression model that is probative of relative marketplace values over the entire 2014-2017 period. Accordingly, the Judges find Dr. Marx's `directional” analysis, although useful, not as probative or definitive as the Tyler Model. Nonetheless, the Judges will utilize the Marx Model, as appropriate, to reconcile differences between the Tyler Model and the adjusted Bortz approach undertaken infra.

3. Nonetheless, the Judges emphasize the appropriateness of Dr. Marx's `directional” analysis, because they do not want to leave the implication that such qualitative analyses are inappropriate. Dr. Marx's 2015-2017 directional analysis was an appropriate alternative to a fee-based regression—because (as discussed elsewhere in this determination) the WGNA conversion substantially increased the number of minimum-fee-only CSOs and the number of CSOs with less than two subscriber groups—reducing significantly the number of CSOs and subscriber groups that was accepted by the Judges in the 2010-13 Determination. In this regard, the Judges do not credit Dr. Erdem's reliance on separate arguments, seeking to discredit Dr. Marx's use of the regression approach have evidentiary weight commensurate for 2014, regarding the impact of (a) the reduction in the number of CSOs with two or more subscriber groups; and (b) the increase in the number of minimum-fee-only CSOs. Rather, Dr. Marx has considered the combined effect of these factors.

4. Although Dr. Marx's “directional” approach is probative and useful, she overstated the point that the reduction in above-minimum-fee-paying CSOs rendered their revealed preferences without benefit. Rather, their channel selections/programming preferences are also probative and useful, even if less so than in the 2010-13 Determination because of the reduction in the number of such CSOs and in the percentage of royalties they represent.

5. Dr. Marx's allocation shares related to “duplicated” minutes is superior to her share allocation excluding “duplicated” minutes, because the Judges adopted the former in the 2010-13 proceeding, because of problems relating to the latter as described in the prior determination. See 2010-13 Determination at 3565, 3569, 3591, and 3610-11.

6. The evidentiary weight of Dr. Marx's “directional” analysis for the 2015-2017 period is not diminished due to her reliance on local viewership data, because the evidence in this proceeding indicates that a substantial percentage of distant viewing is retransmitted to areas in close proximity to the origin of the local signal. See, e.g., Erdem WRT 59 (“91% of systems are retransmitting the same signal on a local basis to some Start Printed Page 54198 subscriber groups and on a distant basis to other subscriber groups [and] [of]f these systems, on average, 76% of the channels that are distant to a subscriber group are retransmitted as local to another subscriber group . . . .”).

7. Dr. Marx's “directional” analysis provides evidence suggesting that PTV and Program Suppliers content declined in viewership relative to CTV, implying, ceteris paribus, a higher relative share value for CTV. The Judges note that Dr. George agrees with this point (but see point (8) below).

8. However, the Judges' prior reluctance to use viewership as a direct proxy for value in the allocation (Phase I) proceedings cautions against applying too much probative weight to this “directional” analysis. Accordingly, the Judges adopt Dr. Gray's criticism regarding Dr. Marx's reliance on local viewership data, but only as a caution regarding its evidentiary weight. In this regard, Dr. George agrees that the weight placed on Dr. Marx's viewership-based approach be limited.

9. The Judges further limit the evidentiary weight of Dr. Marx's “directional “analysis, because, as Dr. Gray further notes, Dr. Marx's own data shows that CTV's share of claimant category minutes declined significantly between 2014 and 2017.

On behalf of Program Suppliers, its expert witness, Dr. Tyler, proffered a regression analysis that, while within the broad category of fee-based regressions, is differentiated in ways that Dr. Tyler opines to be important in this proceeding. The Judges' review of his testimony, infra, highlights these broad similarities and the assertedly important differences.

At a high level, Dr. Tyler agrees with the finding in the 2010-13 Determination that regression analysis is very informative for estimating relative marketplace value in this case. But by way of differentiating his approach, Dr. Tyler notes that a regression seeking to establish relative marketplace value should estimate incremental value, which he posits here to be the marginal value of an additional minute of different types of programming content relative value—rather than a value r elative to a reference or base category, as in the other proffered regressions. Tyler ACWDT ¶ 65; 4/19/23 Tr. 5439-40 (Tyler).

Next, Dr. Tyler notes that—although the statutory royalty formula in section 111 prevents the setting of market prices for distantly retransmitted stations—a regression can observe how CSOs reveal their preferences for different types of stations bundling various types of programming content, given the pre-existing section 111 royalty rate provisions. In turn, the observations of the decision-making by CSOs provides insight into their willingness-to-pay (WTP) for different programming categories on their distantly retransmitted local stations. The final link in this analytic chain, according to Dr. Tyler, is that the regression can measure this WTP and thus estimate the “relative values of market outcomes” that cannot be directly observed. Tyler ACWDT ¶ 65.

More particularly, Dr. Tyler explains that regression analysis as applied to determine relative marketplace value in these proceedings “exploits the fact that CSOs make choices as to which bundles of content they retransmit.” Tyler ACWDT ¶ 66. He adds that the regression will estimate the incremental royalty amount that CSOs paid (or, more accurately appeared willing to pay)  [ 80 ] to acquire different types of content, which, he opines, “is akin to finding the relative value of programming content, based on actual choices made by marketplace participants.” Id. Finally, Dr. Tyler explains that the “marginal values” calculated via his regression must be multiplied by the quantities of minutes “to compute relative marketplace value.” Tyler ACWDT ¶ 68.

Notwithstanding his broad agreement with other experts in this and prior proceedings that fee-based regressions are useful, he parts company with them in an important way. Rather than start from the assumption that Dr. Crawford's 2010-13 model is useful or correct, Dr. Tyler constructed a regression model that differed from the approach taken by Dr. Crawford and from Drs. Johnson George and Marx (for 2014), whose approaches were modified versions of Dr. Crawford's model. More specifically, he avers that the Tyler Model diverges importantly and beneficially from prior fee-based regressions and from the fee-based regressions proffered by the other experts here, because of his model's use of a Rate as the dependent variable.

In this regard, Dr. Tyler explains that Crawford-style regressions use actual dollar royalty amounts as the dependent (left-hand side) variable, which is problematic because “substantial variability exists across the royalty amounts calculated for each subscriber group . . . . ” More particularly, because “copyright royalties are determined on the basis of gross receipt percentages . . . greater [dollar] royalty amounts . . . for a subscriber group [may occur] for no other reason than that one CSO has more subscribers or higher prices, or both, than another CSO.” Tyler ACWDT ¶ 83.

Accordingly, a regression model using royalty amounts calculated (such as the Crawford Model) “must control for these sources of variability to attempt to isolate the incremental value of minutes by category type.” Tyler ACWDT ¶ 83. This control is made in the Crawford-style regression by the use of “fixed effects,” which “discard information from the substantial number of CSOs that have just one subscriber group,” a loss of data that is unnecessary in the Tyler model. Tyler WRT ¶ 70.

Dr. Tyler's use of royalties as a percentage of gross receipts, at the subscriber group level, allows him to calculate what he coins (as noted supra ) the “Subscriber Group Royalty Percentage” (“SGRP”). When the SGRP is regressed against the number of transmitted minutes for each category, Dr, Tyler obtains coefficients for his regression equation that he describes as “represent[ing] a type of price.” Tyler ACWDT ¶ 84.

This attempt by Dr. Tyler to characterize the SGRP dependent variable as a “type of price” is no mere academic detail. By making this characterization, Dr. Tyler claims that his model sits within a well-accepted class of econometric regressions known as “hedonic regressions,” which he defines as follows:

Hedonic regression . . . model[s] . . . estimate the influence that various factors have on the price of a good, or sometimes the demand for a good. In a hedonic regression model, the dependent variable is the price (or demand) of the good, and the independent variables are the attributes of the good believed to influence utility for the buyer or consumer of the good. The resulting estimated coefficients on the independent variables can be interpreted as the weights that buyers place on the various qualities of the good.

Tyler ACWDT ¶ 85.

Dr. Tyler then constructs his purported hedonic regression by using what he describes as the calculated “actual”  [ 81 ] royalty rate per subscriber— Start Printed Page 54199 determined by the base fee royalty as a percent of each subscriber group's gross receipts. Tyler ACWDT ¶ 87. He proceeds to weight the regression model by the gross receipts of the CSOs, which he opines is “consistent with assessing relative marketplace value [because] [s]ubscriber groups with larger gross receipts would tend to contain more information [and] CSOs would be expected to scrutinize decisions regarding distantly retransmitted signals more carefully when there are more dollars at stake.” Tyler ACWDT ¶ 88. [ 82 ]

Dr. Tyler's regression model “includes interaction terms for each year . . . which allows for estimated valuations that vary” for each year in the 2014-17 period. This annualizing of the valuations is distinguishable from the “pooled” approach of other regression experts in this proceeding, who (in the models proffered in their direct testimonies) “pool” their data across all four years. Dr. Tyler rejects this approach and utilizes an annualized approach instead, because, he opines, utilizing the same coefficient across the four years is both (1) legally inappropriate because calculating share allocations for specific years is statutorily required and (2) inconsistent with “best practices” for hedonic regressions (data permitting), which allow the underlying relationships between types of minutes and SGRP to vary over time. Tyler ACWDT ¶ 91.

Summing up, Dr. Tyler identifies what he understands to be the many advantages of his model:

1. SGRP—as a type of price—reflects a “minimum willingness to pay” and thus has a “clear economic interpretation.” PS PFF ¶ 285 (and record citations therein).

2. The focus of the regression is on “nearly 20,000 observations/data points, and more than 2,000 distinct pricing relationships, providing the variation needed for a meaningful regression. PS PFF ¶ 286 (and record citations therein).

3. By using SGRP as the dependent variable instead of royalties (in any functional form), the Tyler Model is not influenced by variability in gross receipts caused by the number of subscribers in a subscriber group or higher CSO subscription prices arising from for example, the number and type of cable networks carried, the quality of (or deficiency in) customer service, and the bundled pricing of cable, internet and/or phone. Unlike the regressions that use royalties as the dependent variable, the Tyler Model does not need to control for these statutorily unrelated effects, thus avoiding the potential for bias when fixed effects are introduced. PS PFF ¶¶ 290-292 (and record citations therein).

4. Because the SGRP is a “type of price” the Tyler Model is “closer” to the definition of a traditional hedonic regression and “closer to the definition of a traditional hedonic model.” PS PFF ¶ 293 (and record citations therein).

5. By establishing values and shares for each year, rather than pooling the results over the four-year period, the Tyler Model: (a) is in line with the Judges' statutory task; (b) captures annual industry changes; and (c) is consistent with “best practices for hedonic regressions.” PS PFF ¶¶ 294-296 (and record citations therein).

6. The Tyler Model looks at the more economically logical hypothetical marginal expansion per minute of a program type to determine value rather than the hypothetical shift of minutes among program categories. PS PFF ¶ 298 (and record citations therein).

7. The Tyler Model avoids the problem inherent in the other regressions that must rely on incorrect subscriber number estimates. PS PFF ¶¶ 299-300, 358, 360-3623 (and record citations therein). Unlike the models proffered by Drs. George, Johnson and Marx, the Tyler Model is not based on the Crawford Model. Therefore, unlike those models, the Tyler Model is not tainted by the potential “specification searching” suggested by the high number of models and specifications tested by Dr. Crawford. Moreover, Dr. Tyler only considered the results of fewer than two dozen models (all linear in functional form) many of which were robustness/sensitivity checks and not generated as potential alternative base models. PS PFF ¶¶ 305, 307, 311-313, 315-316, 376-379 (and record citations therein).

8. Despite its differentiation from the Crawford Model, particularly with regard to the SGRP as the dependent variable in the Tyler Model and in the absence of a need for fixed effects, the Tyler Model is an improvement of the fee-based regression approach, not a departure. PS PFF ¶ 317 (and record citations therein).

9. The Tyler Model does not cherry-pick or otherwise overstate an allocation share for Program Suppliers, for whom Dr. Tyler presented testimony. PS PFF ¶ 308-309 (and record citations therein).

Applying his model in the foregoing manner, Tyler estimates royalty shares (and standard errors) for each year as follows:

Dr. Erdem opines that, notwithstanding Dr. Tyler's claim that his model is differentiated to address defects in the approach used by Dr. Crawford, the Tyler Model “essentially carries the same flaws.” Erdem WRT ¶ 43. But before examining alleged flaws in the Tyler Model, Dr. Erdem acknowledges that, in his opinion, the other regression experts' modeling is more “egregious” than Tyler's model. Erdem WRT ¶ 121. More particularly, Dr. Erdem recognizes that Dr. Tyler has made what Dr. Erdem understands to be the following salutary changes from the approach used by Dr. Crawford:

1. A change in the dependent variable from the log of royalties into a fees/revenue ratio.

2. The removal of fixed effects. [ 83 ]

3. Division of each claimant category into “Canada” and “non-Canada” zone minutes. [ 84 ]

4. Removal of the effect of “the number of subscribers” by “divid[ing] the . . . fees paid by a metric [gross receipts] that scales with the number of subscribers.”

Erdem WRT ¶¶ 43, 61.

However, according to Dr. Erdem, despite the positive significance in these model changes, the core principle of the Tyler Model remains unchanged from other regressions, because “the dependent variable Dr. Tyler uses is still driven by fees [and] attempt[s] to estimate the relationship between fees and programming minutes.” Erdem WRT ¶ 43. [ 85 ] More granularly, Dr. Erdem criticizes Dr. Tyler's use of the SGRP as the dependent variable because it “basically boils down to the number of DSEs.” In this regard, Dr. Erdem further opines:

This is because a system's royalty fees are calculated by multiplying their revenues by a specified amount that increases as the system adds more DSEs, so dividing the fees by revenue will produce a number that correlates strongly with the number of DSEs the system carried. As a result, Dr. Tyler is essentially saying that DSEs equate to market value.

Erdem WRT ¶ 122. Dr. Erdem asserts that this change in the dependent variable from the log of royalties to the SGRP does not cure the fundamental problem in all fee-based regressions, to wit: fee-based regressions are “trying to calculate market value when no market exists, using variables determined by regulation.” Erdem WRT ¶ 122.

Dr. Rubinfeld testifies about the deficiencies in all the fee-based regressions, but he pointedly criticizes Dr. Tyler for characterizing his regression as a hedonic regression. Rubinfeld WRT ¶ 71. Dr. Rubinfeld levies this objection because he is of the opinion that Dr. Tyler's dependent variable, the SGRP, does not equate or analogize to a “market price”—a necessary element for a regression to qualify as hedonic. Rubinfeld WRT ¶ 71. Thus, according to Dr. Rubinfeld, Dr. Tyler's dependent variable, the SGRP, falls victim to the same deficiency as the other regressions, in that there is “no reason to believe that a regression based on statutory royalty fees—whether in dollar terms or expressed as a percentage of gross receipts—will identify the marginal value of programming that would prevail if the royalty fees were determined in a free market.” Rubinfeld WRT ¶ 75.

However, Dr. Rubinfeld approvingly cites Dr. Tyler's testimony (in the same vein as Dr. Erdem) for its critique of the modeling undertaken by Dr. Crawford. In this regard, Dr. Rubinfeld notes:

1. Dr. Tyler examines Dr. Crawford's regression model to the 2014-2017 data available in the current proceeding and finds a “serious” underlying modeling problem in the fact that “the Crawford Model estimates zero shares for JSC in 2014 (as well as the other years) . . . .”

2. Dr. Tyler analyzes the troubling pattern of the regression's “residuals” in Dr. Crawford's model—again using 2014-2017 data—and finds that the latter's regression model is “not well specified for the 2014-2017 data.”  [ 86 ]

Rubinfeld WRT ¶ 93.

In sum, Dr. Rubinfeld does not find economic support for Dr. Tyler's regression model, but does find common cause with Dr. Tyler' broad criticism of other fee-based regressions. [ 87 ]

As an initial criticism, Dr. Bennett avers that Dr. Tyler's use of his SGRP as the dependent variable, instead of royalties, may potentially and illogically fail to link “variation in the composition of minutes [to] value unless that variation is also accompanied with a change in . . . the SGRP.” Bennett WRT ¶ 124. To make this point, Dr. Bennett hypothesizes a scenario in which two minimum-fee-paying CSOs make subscriber-increasing changes in distantly retransmitted stations, thus increasing royalties, but each maintains the same SGRP because royalties have not increased (remaining at the minimum fee level). Bennett WRT ¶ 125.

Moving to another critique, Dr. Bennett opines that Dr. Tyler's regression sample “is based on a relatively small and non-representative sample of the CSOs whose royalty payments comprise the aggregate of the royalty pool.” Bennett WRT ¶ 135. Dr. Bennett does not suggest that this small sample is unique to Dr. Tyler among the regression experts, acknowledging that this applies to “the other witnesses relying on regressions for 2014-2017.” Bennett WRT ¶ 136. [ 88 ]

In addition to his general criticisms of all fee-based regressions, Dr. Majure levies criticisms that he aims most particularly against Dr. Tyler's regression approach. Dr. Majure acknowledges that “[p]rior to WGNA's conversion, there was some variation in the royalty rate a CSO would pay for incremental content,” such that only “[t]he regressions that rely on data for 2015-2017 have little to no connection with how much CSOs value the content.” Majure WRT ¶¶ 75, 77. Thus, he opines that “only after the WGNA conversion [the regressions] do not—and cannot—estimate the value of a minute of content to CSOs.” Majure WRT ¶ 75.

Dr. Majure maintains that the Tyler Model well-demonstrates the foregoing Start Printed Page 54201 point, and that the Tyler Model essentially estimates only “the equation given by the statutory formula . . . .” Majure WRT ¶ 78. Thus, he opines that the SGRP in the Tyler Model does not establish a “price” that can be explained and applied as in a bona fide hedonic regression. Majure WRT ¶¶ 78-79 (“For example, [in the Tyler Model] the `price' calculated for the subscriber groups of a CSO carrying a full DSE or less than a full DSE across all subscriber groups would be 1.064 percent of the subscriber group's revenues multiplied by its total number of DSEs.”).

However, Dr. Majure is careful to acknowledge that “the statutory formula could lead to variation in Dr. Tyler's `price' beyond what comes from the DSE value” in 2014 but “this is not the case after 2014 [because] after 2014, the vast majority of subscriber groups belong to CSOs that paid the minimum fee, leaving little variation in the percentage of royalties they would owe.” Majure WRT ¶ 80. Thus, Dr. Majure appears to recognize that for 2014 the Tyler Model presented an acceptable proxy for “price” as its the dependent variable.

Although Mr. Harvey opines that the Tyler Model, like the other regression models, is unable to correctly value JSC programming for the 2015-17 period, he acknowledges that the Tyler Model is superior to the others in one respect: it calculates annual coefficients rather than “pooled” coefficients for all four years (2014-2017). Harvey WRT ¶¶ 28, 35.

But Mr. Harvey is otherwise decidedly critical of the Tyler Model—maintaining first that it does not “reliably estimate[e] [JSC] value[ ] in 2015-2017,” because “[s]ixty-six percent (4 of 6) of the compensable sports coefficients are not statistically significantly different than zero.” Harvey WRT ¶ 45 & tbl.9.

Next, Mr. Harvey separates out minimum fee systems from the Tyler Model, in order to isolate those CSOs making retransmission decisions that Mr. Harvey asserts had economic consequence in terms of royalty payments. Harvey WRT ¶ 46 & tbl.10. He then turns to various “sensitivity tests” undertaken by Dr. Tyler, that were not contained in the Tyler Written Direct Testimony but which were produced in discovery by Program Suppliers. Harvey WRT ¶ 68. Looking at these tests, Mr. Harvey notes that Dr. Tyler “selected a specification that, among his many sensitivity analyses, resulted in one of the lowest shares for JSC and one of the highest for Program Suppliers.” Harvey WRT ¶ 70. See also Harvey WRT fig.6. [ 89 ]

At the outset, Dr. George, avers that Dr. Tyler's model “diverges from economic theory” through his consideration of the SGRP, rather than a measure of royalties, as the dependent variable affected by claimant programming minutes. George WRT at 11-12. More particularly, Dr. George maintains that this change in the dependent variable:

removes the link between the value of distant signal programming to [CSO] and royalty cost that lies at the heart of the theoretical framework [and] effectively replicates the regulatory formula [rather than] reflect value.

George WRT at 12. Further to this point, Dr. George asserts that the inclusion of the SGRP as the dependent variable “attenuate[s]” the differentiated marginal value of assorted types of programs. She explains that by looking at royalties from all retransmitted programming as a proportion of gross receipts, the Tyler Model “understates the value of high-quality, differentiated program and overstates the value of undifferentiated, low-quality programming.” George WRT at 12.

Another criticism levied against the Tyler Model by Dr. George is that (as with the Johnson Model, discussed infra ) it suffers from the consequential defect of:

includ[ing] no fixed effects at all [and the] coefficients [thus] are estimated using variation across different cable systems . . . the variation most likely to be contaminated by the effect of unobserved factors, also known as bias from omitted variables . . . [the coefficients therefore] cannot be relied on to reflect underlying value.

George WRT at 13 (emphasis added).

Although Dr. Johnson finds that he and Dr. Tyler agree on a number of points, see Johnson WRT ¶ 26, Dr. Johnson takes issue with the following aspects of Dr. Tyler's WDT.

At the outset, Dr. Johnson criticizes Dr. Tyler's use of the SGRP as the dependent variable in the Tyler Model because, according to Dr. Johnson, “the SGRP does not capture the CSO decision-making process and identify their valuation of such programming,” because the SGRP essentially replicates the statutory formula without regard to “the type of programming . . . on the signals the CSO retransmits.” Johnson WRT ¶ 34. Thus, according to Dr. Johnson, the SGRP dependent variable in the Tyler Model fails to capture the “chain of logic” of the correlation in the fee-based regressions, i.e., that “[t]o the extent . . . a CSO's bundle of programming includes more valuable programming, the price of that bundle will be higher, the CSO's gross receipts will be higher, and thus the amount of royalties that the CSO pays will be higher.” Johnson WRT ¶ 35.

Next, Dr. Johnson looks at the “sensitivity tests” Dr. Tyler applied to his own model and notes “the extreme variability in Dr. Tyler's regression results” uncovered by these tests relative to Dr. Johnson's more stable results, which, according to Dr. Johnson “suggests that modeling royalty amounts rather than the statutory royalty rate is more appropriate.” Johnson WRT ¶ 40.

2. The Judges' Analysis and Findings Regarding the Tyler Model  [ 90 ]

The Judges make the following findings with regard to the Tyler Model:

1. Dr. Tyler's measurement of “an additional minute” of programming content, as contrasted with a “value relative to a reference or base category” in other regressions, is appropriate, but neither approach is superior inter se.

2. The base fee calculations of minimum-fee-only CSOs do provide some “insight” into how those CSOs might actually value different program categories, but that “insight” is limited, because it is predominantly informative as to ordinal rankings of relative value, rather than cardinal measures, as required in these proceedings. See 2010-13 Determination at 3578 (“the Judges do not place much weight on the relative rankings of the program categories”); cf. Phonorecords III, Initial Ruling and Order after Remand at 38 (July 1, 2022) (distinguishing the benefit of an economic model's “insight” from a useful “real-world relationship”).

3. A CSO whose base fee calculations are more proximate to the minimum fee it eventually paid would be more probative of CSOs' willingness-to-pay than when there is a large gap between the calculated base fee and the paid minimum fee, because the CSO could have understood that the base fee might bind. However, the record provides Start Printed Page 54202 insufficient evidentiary basis to apply this point in the present proceeding.

4. On the present factual record, the Tyler Model's SGRP is preferable to the log of royalties, or royalties themselves, as the dependent variable in a fee-based regression, because it does not require the use of questionable controls and fixed effects, and remains appropriate even in the absence of such controls and fixed effects. However, the log of royalties, or royalties themselves, are appropriate dependent variables, provided the factual record and the specifications of the regression are appropriate.

5. The Tyler Model is not a hedonic regression as generally understood by economists, because it is not based on actual market prices. Dr. Tyler at times acknowledges this point, by describing his SGRP as a “type” of price, rather than an actual price and by also describing the SGRP as “closer” to the definition of a traditional hedonic model. However, the approach taken by the Tyler Model is in the nature of a hedonic regression, in that it utilizes a similar approach by creating a useful proxy for price proxy in the form of a budget constraint, i.e., the SGRP. ( See also the discussion regarding “relative marketplace value” supra and the section, infra, comparing the Tyler Model to a “fee generation” approach).

6. The Tyler Model's use of weighting of each CSO's gross receipts is appropriate of the CSOs because the decisions by CSOs with larger gross receipts will have a greater impact on the royalty pool making the programming category information they provide more important.

7. The Tyler Model, calculating coefficients for each year, is superior to the other regression models in this proceeding to the extent those models were originally proffered as “pooled” models, using one coefficient for the entire 2014-2017 period. (However, this advantage is mitigated where there is evidence or testimony that such “pooled” models were themselves subsequently recalculated on an “unpooled” basis either by the proffering regression expert or by other expert witnesses in their rebuttal testimonies.)

8. The Tyler Model provides sufficient variation among the CSOs' decisions because it contains approximately 20,000 data points for observation, and more than 2,000 distinct pricing relationships. 4/19/23 Tr. 5436 (Tyler).

9. The Tyler Model is superior to the other fee-based regressions by not requiring as a control variable an estimate of the number of subscribers in a subscriber group, which cannot be estimated without measurement error. PS PFF ¶¶ 300, 360-362 (and record citations therein). This issue is a critical reason why the Judges give greater weight to the Tyler Model vis-à-vis the other regression models, and thus necessitates getting “into the weeds” for a more detailed explanation.

The control for the number of subscribers is very important in the other fee-based regressions where the dependent variable is a functional form of royalties, because the number of subscribers clearly would have a substantial effect on the level of royalties ( i.e., more subscribers = more royalties). Moreover, the number of subscribers must be controlled because the number of subscribers could also be positively correlated with the number of minutes. Thus, it must be controlled in order to isolate the “effect” of interest, which is the impact of different program category minutes on the royalties. However, there is no data available regarding the number of subscribers in a subscriber group, and the other fee-based regression experts are forced to make an estimate by “proportionally assigning the number of overall CSO subscribers to each subscriber group based on the gross receipts for each subscriber group.” Tyler WRT ¶ 41 (emphasis added).

The problem with this estimate is two-fold, inaccuracy and impact on the regression. As Dr. Tyler explains:

The estimate is “inaccurate because allocating the number of subscribers based on the distribution of gross receipts is akin to assuming that customers in each subscriber group are paying the same monthly rates on average. [T]his assumption is flawed because, as Dr. Johnson acknowledges, CSOs may broadcast one set of stations to one set of subscribers and a different set of stations to another set of subscribers [and] cable prices vary across customer type, geography, and over time. . . . The only way that subscriber groups would have the same average prices is if they all bought the same products at the same prices in the same proportions across groups. Thus, one would expect the average prices to be different across subscriber groups, not the same as assumed by Dr. Johnson and Dr. George.” Tyler WRT ¶¶ 42-43; 45-46. [ 91 ]

This inaccurate estimate of the number of subscribers is also impactful on the other fee-based regressions that must use the number of subscribers as a control variable. Dr. Tyler explains:

For example, assume that customers in suburbs have a higher average price than downtown customers, such that Dr. George and Dr. Johnson undercount subscribers in the suburbs and overcount subscribers in urban areas. The types of distantly retransmitted signals that are broadcast to these two types of customers are likely to vary. Thus, the use of inaccurate subscriber group numbers would lead to a mismeasurement of the incremental value of the minute categories in the regression analysis.

In short, the use of inaccurate subscriber group numbers is potentially a serious problem for Dr. George and Dr. Johnson. The use of “filled-in” data when actual numbers are not available may have introduced bias into their results and this could have important consequences for their estimates. Tyler WRT ¶¶ 49, 52.

10. Because the Tyler Model is not based on the Crawford Model, it is not tainted by the potential “specification searching” that haunts the Crawford Model through its consumption of “phantom degrees of freedom,” as discussed in the 2010-13 Determination. Moreover, there is no persuasive evidence that Dr. Tyler engaged in anything that could be construed as specification searching.

11. The Tyler Model is also not the subject of the criticisms levied against the other fee regressions. For example. Dr. Erdem applauds the Tyler Model for its abandonment of the royalty-based dependent variable, the unnecessity and removal of fixed effects and the use of a dubious measure of the number of subscribers as a control variable.

12. The overarching criticism that Dr. Erdem does levy against the Tyler Model are insufficient to damage its usefulness. Specifically, Dr. Erdem states the obvious as a criticism: “[T]rying to calculate market value when no market exists . . . .” Erdem WRT ¶ 122. But that is simply a restatement of the problem created by the structure of section 111. As the Judges explain in more detail elsewhere in this determination, as they explained in the 2010-13 Determination and as acknowledged by the D.C. Circuit, the regressions identify market-based behavior among CSOs, in the form of revealed preferences for different program categories, and such behavior is relevant evidence useful for estimating relative marketplace value. And, with specific reference to the Tyler Model, the SGRP is reflective of, first, the budget constraint that limits the CSOs' distant retransmittals and, second, the program categories they select when so constrained. (This point is discussed further infra in the discussion of the Tyler Model to a fee-generation approach.)

13. The other SDC expert, Dr. Rubinfeld, likewise applauds Dr. Tyler's approach to the problem, agreeing with him that there exist serious modeling problems in connection with the Crawford Model and those based on that model. However, Dr. Rubinfeld—like Dr. Erdem—restates the statutory problem—the absence of a “market price,” in order to argue that the Tyler Model is not a true “hedonic” regression. (Dr. Majure makes the same argument.) As noted supra, the Judges find that the Tyler Model is not a true “hedonic” regression, as Dr. Tyler (albeit sometimes grudgingly) seems to concede. However, as discussed in more detail elsewhere in this determination, the Judges find the Tyler regression to be a “Hedonic-inspired” regression, useful in this proceeding to identify an appropriate market-factor driven allocation of royalty shares.

14. Dr. Bennett's attacks on Dr. Tyler for originally engaging in an erroneous critique of the Crawford Model is inconsequential. Dr. Tyler acknowledged his error and withdrew the portion of his original WDT that contained his erroneous critique of the Crawford Model. There is no reason to consider this issue relevant, and, if anything, it indicates that Dr. Tyler is willing to acknowledge a mistake.

15. More broadly, the Judges do not find the criticisms by Dr. Bennett or by Dr. George that relate to Dr. Tyler's other criticisms of the Crawford Model to be relevant to the issues pertaining to the Tyler Model itself.

16. Dr. Bennett's Tyler Model-specific criticism—regarding the impact of channel lineup changes by two hypothetical CSOs paying the minimum fee—is of no Start Printed Page 54203 consequence in the Judges' analysis, because the Judges—as discussed elsewhere in this determination—are focusing on the above-minimum-fee CSOs in their application of the Tyler Model. More specifically, the Judges credit the testimony of JSC's expert, Mr. Harvey, who separated out the minimum-fee-only systems from the Tyler Model, in order to isolate those CSOIs making transmission decisions that had economic consequences in terms of royalty payments. See Harvey WRT ¶ 46 & tbl.10.

17. The Judges do not question the Tyler Model for selection a specification that resulted in “one of the lowest shares for JSC and one of the highest for Program Suppliers.” Absent a showing of specification searching, which is not even alleged against Dr. Tyler, these results are not indicative of any wrongdoing.

18. Dr. Majure's criticism that the Tyler Model essentially estimates only “the equation given by the statutory formula” is incorrect. See the discussion of the Tyler Model as related to a “fee generation” approach, infra.

19. The absence of a “reference category (a/k/a “numeraire” or index) in the Tyler Model is not a fault. As noted above, the Tyler Model measures the minimum willingness to pay for an additional minute of distant programming across each program category, not the value of a minute of one program replacing minutes from a reference category.

20. Any greater precision or stability in the Johnson Model compared with the Tyler Model is a consequence of Dr. Johnson's decision to remove “fixed effects” from his model where, unlike in the Tyler Model, the dependent variable was royalty-based, not the SGRP. That is, Dr. Johnson obtained more precision, but at the expense of generating “omitted variable bias.” Although this econometric jargon suggests an analysis “deep in the weeds,” it is of great importance: Precision and stability are not particularly helpful if the model is measuring the wrong thing—here, with the Johnson Model more in the nature of predicting the royalty level by omitting “fixed effects” rather than focusing on the effect of program category minute on royalties (subject to the cost constraint reflected in the SGRP).

Dr. Lisa George, a CCG expert witness, [ 92 ] explicitly relied on Dr. Crawford's approach from the 2010-13 proceeding, “[b]ecause [Dr.] Crawford's approach was determined by the Copyright Royalty Board to be `highly useful in estimating relative values' . . . . .” George WDT at 26-27. [ 93 ] More particularly, Dr. George followed Dr. Crawford's approach by “estimat[ing] a regression model at the subscriber group level with fixed effects and [royalties as] a logged dependent variable.” George WDT at 27.

However, Dr. George adjusted the specifications in her model in a manner that differentiated her model from Dr. Crawford's model in two ways to reflect: (1) changes in the distant signal market; and (2) to address comments from the Judges in the 2010-13 Determination. George WDT at 27. The key differentiators are (1) Dr. George's inclusion of separate “system accounting period fixed effects” rather than Dr. Crawford's “interacted system-accounting period fixed effects” and (2) the elimination of an interacting of controls for the (a) top multi-system operators (MSOs) with (b) lagged subscribers ( i.e., subscribers from the preceding accounting period). George WDT at 27.

More particularly, Dr. George significantly reduced the number of fixed effects in her preferred regression model compared to Dr. Crawford's number of fixed effects. Specifically, Dr. George testifies that her preferred model “includes one fixed effect for each system plus one for each accounting period (number of systems plus 8 [six-month accounting periods]),” whereas Dr. Crawford's model included “one fixed effect for every system every accounting period (number of systems times 8 [six-month accounting periods])”. George WDT at 27 (emphasis added). According to Dr. George, this deviation for Dr. Crawford's approach was measured and beneficial:

Since fixed effects operate by narrowing the variation used to identify coefficients, my specification is less restrictive than [Dr.] Crawford's. In other words, I make use of variation within cable systems over time but not across cable systems. [Dr.] Crawford's specification did not make use of variation within cable systems over time or across cable systems, identifying coefficients using only variation within systems each accounting period.

George WDT at 27 (emphasis added).

As in the Crawford Model, Dr. George's dependent variable is the natural log  [ 94 ] of royalty fees and, as in the Crawford Model, is related by the regression to the subscriber groups' respective distant programming minutes for each claimant's program category. George WDT at 51. The regression process produces an estimate of coefficients, one for each claimant program category, showing the effect of one additional programming minute on the natural log of royalty payments. George WDT at 51. She then uses these coefficients to calculate, in dollars, the “average marginal value” of an additional programming minute for each claimant category. George WDT at 51-52.

To calculate shares, Dr. George likewise adopts the method used by Dr. Crawford and, indeed, consistently across fee-based regression models. That is, she multiplies these average marginal values by compensable programming minutes for each subscriber group, thus producing a value of compensable programming for each claimant program category. For each category, she uses that category's values as a numerator in a fraction where the denominator is the sum of the totals over each claimant.

Dr. George reported the following claimant shares: Start Printed Page 54204

Highlighting an important aspect of her analysis, Dr. George states that “[a]s expected, estimated shares for 2014 are substantially different from those for 2015-2017 due to exit of WGNA.” George WDT at 57.

Delving deeper into her regression equation, Dr. George explains that she includes a number of control variables. As she explains, “[T]hese control variables are included in the econometric model based on the expected economic relationship with royalty payments [and] [e]ach of these terms has been included in prior regression models for these proceedings.” George WDT at 54.

Specifically, Dr. George includes, explicitly or implicitly, the following controls:

CSOs paying minimum fees

CSOs paying into the 3.75 fund

CSOs paying into the Syndex fund

Canada Zone System in Canadian re-transmission zone

Number of permitted stations in the subscriber group

Number of distant stations in the subscriber group

Number of local stations in the subscriber group

Activated channels in the prior accounting period (lagged channels in subscriber group)

Subscribers in prior accounting period (lagged subscribers in subscriber group)

Median income in primary county served by the system

System operated by top MSO, i.e., Comcast, Verizon, AT&T, Charter, Cox, Time Warner, Cablevision, Altice.

George WDT at 53 tbl.19. Dr. George explained her reasons for including these controls as follows:

[I]indicators for systems paying minimum fees, syndicated exclusivity surcharges, or 3.75 fees as well as the number of permitted stations carried in the subscriber group [are] all variables expected to be correlated with royalty payments.

An indicator for systems in the Canadian Zone is needed because re-transmission rules are different in this region and may affect subscribers and royalty payments.

The (lagged) number of subscribers is an important control because royalties increase with gross receipts, which in turn increase with the number of subscribers. The number of subscribers is entered in lagged form to avoid the possibility of reverse causality biasing the coefficients on program minutes. (Channels activated enters as a lag for the same reason.)

The number of distant stations is included to ensure that the coefficients on programming minutes are estimated all else equal. In other words, estimates of the . . . coefficients should measure how a change in claimant minutes affects royalty payments holding constant the total number of distant minutes broadcast, which is a function of the number of distant signals re-transmitted.

Indicators for each of the top MSO's (Comcast, Verizon, AT&T, Charter, Cox, Time Warner, Cablevision and Altice) are included to account for potential differences in strategies that might affect the demand for system offerings not otherwise included in the econometric model. For example, changes in strategy by Time Warner Cable systems acquired by Charter Communications would be captured by the MSO indicators. While [Dr.] Crawford included indicators for only the top six MSO's, I add Cablevision and Altice because the largest transaction in the 2014-2017 period was the Altice acquisition of Cablevision, which was the 7th largest MSO at the time of acquisition.

George WDT at 53-54.

To determine whether her regression model was robust to certain specification changes, Dr. George conducted sensitivity checks whereby she made certain changes to her model. Specifically, she conducted the following three robustness/sensitivity checks:

(1) Changing her regression model specifications to include “interacted system-accounting period fixed effects (number of systems times 8).”

(2) Changing her regression model specifications to include “not only indicators for the top MSO's but also these indicators interacted with lagged subscribers.”

(3) Changing her regression model to include “both adjustments [ i.e., (1) and (2) above] . . . thus correspond[ing] to the model estimated by [Dr.] Crawford for his 2010-2013 analysis.”

George WDT at 58.

Dr. George found that the estimated shares in these three robustness/specification tests “are close to those derived from the preferred model.” George WDT at 59; see also id. at tbls.25-26. She also notes that the confidence intervals are tighter in the third alternative robustness/sensitivity checks, see George WDT tbl.27, reflecting the smaller standard errors contained in that check, which she attributes to the fact that the changed specifications in that checks are “restricting the variation on which coefficients are estimated.” George WDT at 61-62. Despite her acknowledgement that this greater precision is “useful,”  [ 95 ] Dr. George is willing to tolerate “the point estimates from [her preferred] baseline model because they make use of more variation in the data while still precisely estimated.” George WDT at 62.

Beyond his criticisms of the Crawford Model that are derivatively applicable to Dr. George's model, Dr. Erdem levies further criticisms of the George Model. He asserts that although she has altered and reduced the number of fixed effects from the Crawford Model, her alterations do nothing to redeem her approach. Rather, he notes that Dr. Start Printed Page 54205 George's specifications continue to remain very close to those in versions that Dr. Crawford ran in the previous proceeding.

But, Dr. Erdem acknowledges that, unlike in the Crawford Model, Dr. George applies two separate fixed effects for accounting period and system ID, and yet he finds this to be a difference that fails to rescue her model from the overfitting defects that he claims to pervade Dr. Crawford's regression approach. Dr. Erdem also opines that. Dr. George retains some variables from the Crawford Model which lack a “clear basis for their helpfulness in the model, such as the lag of subscribers (subscribers in the previous accounting period).” Erdem WRT ¶ 41. Finally, he opines that Dr. George aggravates an already-present overfitting problem by adding “other variables such as median county income,” without adequately supporting her decisions. Erdem WRT ¶ 41.

Dr. Rubinfeld likewise notes that although Dr. George essentially “applied Dr. Crawford's specification to the 2014-2017 data,” she “replaced system-period fixed effects with separate system and period fixed effects [and dropped] [s]ome explanatory variables . . . . ” But, like Dr. Erdem, he did not find that these alterations salvaged her model from the defects that, in his opinion, pervade the Crawford Model and, indeed, all fee-based regressions. Rubinfeld WRT ¶ 94. [ 96 ]

c. Criticisms of the George Model by JSC Expert Witness Mr. Harvey  [ 97 ]

Mr. Harvey opines that Dr. George introduced “multicollinearity”  [ 98 ] into her regression by including “a variable on the independent side of [her] regression equation[ ] that controls for the number of distant stations broadcast to the subscriber group.” Harvey WRT ¶ 170. Mr. Harvey understands that this control variable was likely introduced “to control for non-compensable broadcast minutes, such as Big-3 minutes,” but he asserts that the regression should have been specified by “simply includ[ing] the `Big-3' variables . . . achiev[ing] the same stated goal more directly while avoiding problems of multicollinearity.” Harvey WRT ¶ 174.

There is a formal statistical test to identify multicollinearity called the variance inflation factor (VIF). Harvey WRT ¶ 176. When he ran the VIF test on the George Model, Mr. Harvey found meaningful multicollinearity between these variables. Harvey WRT ¶ 182. Accordingly, Mr. Harvey performed a sensitivity test on the George Model in which he removed the distant stations and permitted stations variables. Harvey WRT ¶ 183. The resultant change in the coefficients for the program categories translated into revised share allocations that included substantially higher JSC shares, as set forth in the table below:  [ 99 ]

CTV's experts criticize the George Model for the following reasons:

1. Because of the dramatic increase in the number of minimum-fee-only CSOs, the George Model relies too heavily on royalty payments that do not reflect the revealed preferences of CSOs. CTV PFF ¶¶ 289, 302 (and record citations therein).

2. The “pooling” of data to generate common coefficients within each claimant category skews the share allocations because of the sharp distinction between 2014 and 2015-2017 due to the WGNA conversion. Moreover, the “precision” generated by lumping all the data points together across these four years is overhyped, because it is a statistical precision unreflective of reality, and Dr. George did not perform any statistical tests to confirm that pooling was appropriate. CTV PFF ¶¶ 331, 334 (and record citations therein); Bennett WRT, figs.12-13; see also4/18/23 Tr. 5309, 5366-68 (George).

3. Dr. Bennett unpooled Dr. George's calculations, revealing the lack of actual precision compared with her pooled approach. CTV PFF ¶¶ 335-36, 342 (and record citations therein).

Dr. Tyler levied the following criticisms at the George Model:

1. Royalties in any functional form are inferior as the dependent variable compared with the SGRP in the Tyler Model. PS PFF ¶¶ 351-52 (and record citations therein).

2. Pooling of data across all four royalty years is distortionary and improper. PS PFF ¶ 363 (and record citations therein).

3. Dr. George's reliance on the Crawford Model, without regard to the potential specification searching that may have marred its genesis, calls into question the reliability of the George Model. By way of example, Dr. Tyler takes note of the “hammer-shaped” graphical plotting of residuals in the George Model, which would typically be random rather than concentrated (in “hammer-shaped” form), as indicative of one or more model specification errors, such as the omission of important independent variables or improper or mismatched functional forms ( e.g., the misapplication of the linear form or Start Printed Page 54206 an improper log transformation of data). PS PFF ¶ 365.

2. The Judges' Analysis and Findings Regarding the George Model  [ 100 ]

The Judges make the following findings with regard to the George Model:

1. The George Model reasonably altered the Crawford Model by estimating a model with fewer fixed effects, in an attempt to increase the number of observations lost after the WGNA conversion, by attempting to balance precision with an acceptable increase in omitted variable bias.

2. The George Model reasonably included control variables in order to isolate the effect of interest, the correlation between program category minutes and royalties.

3. Dr. George utilized appropriate sensitivity tests that modified her fixed effects, which showed a level of robustness in the George Model.

4. But Dr. George's tolerance for greater bias, in the form of omitted variable bias, eliminated the benefit created by the Crawford Model that gave the Crawford Model a level of primary weight vis-à-vis other methodologies for estimating relative marketplace value.

5. There is no sufficient evidence that the George Model suffers from overfitting, and her decision to include certain control variables, such as a control for “median county income,” was a reasonable exercise of discretion that an econometrician could make in specifying her model.

6. The George Model reasonably utilized the Big 3 network minutes as a reference category (a/k/a numeraire or index). Contrary to Mr. Harvey's critique, this which was unrelated to the separate control in the George Model for the number of distant stations, which was included in order to avoid a cause of changes in the number of minutes that would bias the relationship between program category minutes and royalties which was the “effect” the regression was seeking to evaluate.

7. The pooling of all four years over the 2014-2017 period in the George Model was inappropriate, given the substantial break in market conduct created by the WGNA conversion commencing in 2015.

8. Dr. Bennett's recalculation of an unpooled version of the George Model is a more probative model.

9. Dr. Bennett's further revision of the George Model, correcting for an admitted error in her JSC programming mis-categorization, is more accurate than the George Model originally proffered by Dr. George.

10. The non-random (hammer-shaped) residuals in the George Model are suggestive of omitted variables or misspecification of functional form, as in the Crawford Model upon which the George Model is predicated, and appear to be examples of the problems that may have arisen because of Dr. Crawford's alleged specification search.

Dr. Johnson, PTV's expert witness, [ 101 ] constructed a fee-based regression model based on the framework of a “Waldfogel-type” regression. Johnson WDT ¶ 55. He also acknowledges that he reviewed Dr. Crawford's testimony from the 2010-13 proceeding, and that his model “generally follows the framework used by [Dr.] Crawford” and, parenthetically, he notes a general consistency with the model proffered by Dr. Joel Waldfogel in a prior proceeding. Johnson WDT ¶ 57. See also 3/21/23 Tr. 367-68 (“[T]he starting point . . . was to look at the prior work, particularly [Dr.] Crawford's Waldfogel-type regression model that was adopted in the prior proceeding. . . . However, I did not, and my assignment was not to just simply blindly accept Dr. Crawford's work, but to put it to the test, understand what it did, understand how it worked, and then build that model and determine whether it could apply here.”). [ 102 ]

Dr. Johnson also “assessed the Judges' deliberation from the previous proceeding,” and “address[ed] econometric modeling concerns . . . raised by the Judges in the previous proceeding [and] changes in the industry from the 2010-2013 to the 2014-2017 period.” Johnson WDT ¶ 57.

Dr. Johnson identifies the following aspects of his regression model:

1. The regression analyzes each subscriber group in each six-month accounting period.

2. The dependent variable is the “natural log” of the base royalties accrued by a CSO for each subscriber group in an accounting period.

3. The explanatory variables include—as the variable of interest—the number of minutes of each claimant group's programming content distantly retransmitted to that subscriber group in that accounting period.

4. The coefficients for this explanatory variable for each claimant group's content, which estimate the percentage change in base royalties (the dependent variable) associated with an additional minute of that type of content.

5. The control variables below:

a. A control for the number of subscribers in each subscriber group and accounting period, because, “[in] addition to being driven by CSOs' distant retransmission decisions, royalties paid also increase with the number of subscribers (and associated gross receipts) in each subscriber group.” By adding a control variable for the number of subscribers, the regression accounts for this relationship.

b. A control for the number of distant broadcast stations retransmitted by each CSO to its subscriber groups because it “creates a `control group' against which the relative marketplace valuations for each claimant group at issue are estimated[,]” with this control group consisting of “programming that is either `off-air,' `Big 3' network programming that is not compensable or associated to any relevant claimant group, or content for which program information was not specified in the data, including `To Be Announced' programs.”

c. An indicator variable for CSOs that paid the minimum fee, in order to account for the possibility that decision-making is systematically different between CSOs that paid the minimum fee ( i.e., those that potentially could have retransmitted distant signals without experiencing an increase in their royalty payment) and CSOs that paid royalties above the minimum fee (and thus, would have faced an incremental cost to any additional distant signal). This indicator variable does not separate out the model's reported coefficients, but “allows [the] model” to generate information “to account for these differences . . . . ”

d. An indicator variable distinguishing between subscriber groups that also generated 3.75 fees (in addition to the base fee payments included in the regression) and subscriber groups that did not generate 3.75 fees.

Johnson WDT ¶¶ 55-56. [ 103 ]

Dr. Johnson also emphasizes what he has omitted from his regression model that had been included in Dr. Crawford's model. First, Dr. Johnson omits a set of controls in the form of “system-accounting period fixed effects.” Although Dr. Johnson acknowledged that these fixed effects had attempted to establish a relative value unbiased by factors irrelevant to the correlation at interest (the effect of programming minutes on the log of royalties) by isolating and comparing variation only in “a given CSO's retransmission decisions across its subscriber groups,” Dr. Johnson wanted to address the Judges' statement that in the 2010-13 Determination that they were “troubled” by Dr. Crawford's inadequate response to the argument that these controls “effectively Start Printed Page 54207 discarded” approximately 15% of his observations [generated by] “approximately half of all systems in his data set . . . . ” Johnson WDT ¶ 59. Dr. Johnson claimed that the same issue exists to a greater extent in the present proceeding, because “49 percent of CSOs that retransmitted at least one distant signal reported only one subscriber group,” thus excluding them from the regression through the inclusion of these “system-accounting period fixed effects.” Johnson WDT ¶ 59. [ 104 ]

Second, Dr. Johnson also omits from his regression several so-called “lagged” variables included by Dr. Crawford, because these “lagged” variables “assume[ ] that outcomes from an earlier point in time affect outcomes in the present time.” Johnson WDT ¶ 59 & n.84. Whatever merit lie in these lagged variables was a moot point for Dr. Johnson, because he found that the available data was insufficient to measure this “lagged” effect, and because the data did not allow for subscriber groups to be “consistently tracked over time” (due to, most noteworthily, the WGNA conversion and the cable system acquisitions by Charter Communication). More particularly, and by way of example, Dr. Johnson explained that there was insufficient data to construct a “prior period” for the first six-month period of 2014, which (if he had retained the lagged subscriber variable) would have “effectively discard[ed] data on CSO distant retransmission decisions [for] about one-eighth of all data.” Johnson WDT ¶ 59. [ 105 ]

Further, Dr. Johnson excluded from his model the following additional controls included by Dr. Crawford in his model, which Dr. Johnson found to be “redundant or inappropriate . . . [and] also hind[rances] to the model's ability to perform the task at hand”:  [ 106 ]

1. A control for county-level median income, which Dr. Crawford had included to account for variation in demand for cable services by impacting the number of subscribers, the total CSO revenue and, accordingly, “the royalty paid by that CSO. Dr. Johnson omitted this control because he found it to be redundant and confounding, in that it seeks to control for the number of subscribers, which is already included in the model at the more informative subscriber group level. This subscriber count at the subscriber group level, according to Dr. Johnson, implicitly takes into account of variations in demand and the impact of relatively different values in high-demand areas.

2. Controls for the number of local stations and the (lagged) number of activated channels. Although Dr. Crawford opined that these controls would have the salutary effect of “account[ing] for other features of the cable service on which distant signals may be offered which could influence the number of subscribers to that service,” Dr. Johnson found these controls unnecessary and potentially problematic because (1) Dr. Crawford did not explain how the second of these controls, i.e., the number of local and “activated” channels would impact CSOs' decision-making process with respect to distant channels and (2) as proffered proxies for factors that might “influence the number of subscribers,” they too are redundant and potentially confounding, given the presence in the regression model of a direct control for the number of subscribers.

3. Controls for the six largest MSOs, which Dr. Crawford included “to capture potential differences in factors not included in the econometric model that could shift demand for bundles that include imported distant broadcast signals.” Dr. Johnson notes that Dr. Crawford provided no explanation as to what “factors” these controls were intended to reflect, and Dr. Johnson asserts that these controls are redundant and potentially confounding. Dr. Johnson avers that potential differences between and among the six largest MSOs “could shift demand,” and thus “[r]eflect[ ] valuable information for the model's estimation of relative value.”

Johnson WDT 60.

Dr. Johnson further explains that his regression (like the regressions of Dr. George and Dr. Crawford, and the 2014 Bayesian regression by Dr. Marx) calculated the relative coefficients for the six compensable program categories by relating them to a “control group” of program minutes that are “non-compensable” in section 111 proceedings. Specifically, Dr. Johnson testified:

The number of distant broadcast stations [compensable and non-compensable] retransmitted by each CSO represents the universe of that CSO's distantly retransmitted content. . . . [T]he difference between the universe of content and that corresponding to the claimant groups at issue is content that does not correspond to any claimant group at issue. This non-claimant content “control group” is a mix of programming that is either “off-air,” “Big 3” network programming that is not compensable or associated to any relevant claimant group, or content for which program information was not specified in the data, including “To Be Announced” programs. [The] model is specified in a way that allows for the “control group” content to have absolute value to subscribers (and thus to cable operators), even if it is not compensable in this proceeding. However, using this content as a control group allows my model to estimate relative valuations for the compensable claimant groups.

Johnson WDT 55 n.76. [ 107 ]

Utilizing the foregoing inputs, Dr. Johnson calculates regression coefficients estimated by his model, as well as the associated standard errors. Johnson WDT fig.11. In words, Dr. Johnson helpfully describes these coefficients, which are the common output of fee-based regressions, as

measur[ing] the percent change in royalties associated with an additional minute of each claimant's programming, after controlling for the other relevant factors present in the regression [and] represent[ing] the relative value of each claimant group's content on a per-minute basis.

Johnson WDT ¶ 61. Dr. Johnson, in the model he recommends (his “baseline” model), and like Dr. George and Dr. Crawford—but unlike Dr. Tyler—did not generate separate coefficients for each of the four years. Crawford WDT fig.14. (However, Dr. Johnson did an annualized break-out as well. See 3/21/23 Tr. 467-68 (Johnson).)

Dr. Johnson reports that the estimated regression coefficients in his preferred “baseline” model “are all statistically significant, at the 99 percent level or higher.” Johnson WDT ¶ 62. In lay terms, he again helpfully explains that this level of statistical significance means that “given the data analyzed, [the] regression can reject with 99 percent (or higher) certainty the Start Printed Page 54208 hypothesis that an additional minute of programming of each of the claimant groups has no effect on royalties.” Johnson WDT ¶ 62. According to Dr. Johnson, his regression can estimate coefficient value with this high level of “precision” because the model is based on “over 18,000 subscriber group-level observations . . . . ” Johnson WDT ¶ 62.

Next, Dr. Johnson uses these coefficient values to generate his estimated royalty shares, in dollars, undertaken in all fee-based regressions. Specifically, and as in regressions proffered in previous proceedings and in this case, he multiplies the coefficient by the total number of compensable minutes for the respective program category. This product generates the shares of base royalties associated with each claimant group in each year. Johnson WDT ¶ 63.

In the figure below, Dr. Johnson presents the implied shares of the Basic Fund royalty, but excluding the 3.75 Fund and the Syndex Fund royalties that can also accrue to one or more of the six claimant groups:

Dr. Johnson explains why the implied relative share values are starkly different:

[A]lthough the relative value of a minute of [JSC] content, on average, is typically larger than that of other content types, the quantity of compensable [JSC] content is relatively small (and decreased substantially after the WGN conversion). As a result, the implied royalty share for Sports claimants is smaller than . . . for . . . Program Suppliers, which had a lower per-minute value but much more distantly retransmitted content during the relevant period.

Johnson WDT ¶ 66.

In addition to his foregoing proffered regression model, Dr. Johnson performed what he described as a sensitivity analysis, to test the robustness of that model against alternative specifications and to assess the “key drivers” of the results of his model. Johnson WDT ¶ 68. [ 108 ] Specifically, Dr. Johnson conducted two such analytical tests.

First, he looked at the subset of CSOs from his proffered model that only “paid above the minimum fee.” Johnson WDT ¶ 68. His purpose in performing this test was to address the concern in the 2010-13 Determination that the “carriage decisions of CSOs . . . pay[ing] minimum fees [were] `potentially less informative than discretionary decisions by CSOs to incur an additional royalty expense in order to distantly retransmit particular stations.' ” Johnson WDT ¶ 68 (citing 2010-13 Determination at 3575). This first sensitivity test, according to Dr. Johnson, found “positive relative valuations” for the coefficients of all six claimant categories, although the valuations were “not statistically significant” for the JSC and SDC content. Johnson WDT ¶ 69 fig.14, cols. [a]-[c]; and app. K. [ 109 ] Apparently Start Printed Page 54209 focusing on the absence of statistical significance for the JSC and SDC content, Dr. Johnson concludes that this sensitivity test shows the appropriateness—indeed, the “importance”—of his proffered model's inclusion of “CSOs that paid minimum fees,” because exclusion of such CSOs “would cause the model to lose precision with respect to” the JSC and SDC claimant content. Johnson WDT ¶ 69. In further support of his interpretation of this sensitivity test results, Dr. Johnson adds that CSOs paying only the minimum fee nonetheless “still make affirmative distant retransmission decisions that can be informative about the relative value of content.” Johnson WDT ¶ 69 & n.103.

In his second sensitivity/robustness analysis, referred to supra, Dr. Johnson “allow[s] the coefficients to vary from year to year.” Johnson WDT ¶ 68; see also id. at fig.14, cols. [a], [d]-[g]. He opines that this analysis “indicates . . . there is a statistically significant difference” in the coefficient values between 2014 and 2015-2017 for JSC program content. Johnson WRT ¶ 121 fig. K-3 (notes).

According to Dr. Johnson, this second sensitivity test shows the following:

1. Relative marketplace values for the PTV, SDC, CCG, CTV and Program Suppliers claimant categories were not statistically different across the 2014 to 2017 period.

2. However, the relative marketplace value of JSC content significantly declined from 2014, when WGNA was the most distantly retransmitted signal (broadcasting high volumes of MLB, NBA, and NFL game content), to the 2015-2017 period, after WGN converted to a cable network, and the volume of such games was concomitantly significantly reduced. [ 110 ]

3. This second sensitivity test demonstrates that Dr. Johnson's proffered baseline model has “appropriately captur[ed]” the declining value of JSC content in the average “over the entire 2014-2017 period . . . .”

Johnson WDT ¶¶ 70-71; see also id., fig.15.

1. Criticisms of the Johnson Model  [ 111 ]

Dr. George levies the following criticisms of the Johnson Model:

1. The Johnson Model produces biased results because it excludes 3.75% fees, failing therefore to reflect the full willingness-to-pay of all claimant categories, either in the base fee or the separate 3.75% calculations made by Dr. Johnson. George WRT at 23-24.

2. The Johnson Model is “subject to bias from unobserved market characteristics and time trends” because Dr. Johnson abandoned all system effects and accounting-period effects, whether separately considered (as in the George Model) or interacted (as in the Crawford Model), without appropriately considering how that abandonment would likely generate omitted variable bias. The omitted variables risk inclusion of bias regarding variations in programming. Moreover, Dr. Johnson misconstrued the 2010-13 Determination as justification for this error. George WRT at 24-25.

3. Dr. Johnson's substitution of “contemporaneous” for “lagged” subscribers “undermines causal inference” because “[l]agged control variables . . . common in applied regression . . . minimize the potential for unobserved shocks [that can] bias coefficients . . . such as the acquisition of a cable system by a large MSO . . . . ” Further, the lagged subscriber input has been used in fee-based regressions since Dr. Waldfogel's regression in the 2004-05 proceeding and Dr. Johnson wrongly claims that “lagged subscriber” data was unavailable, because they are readily available from Cable Data Corporation. George WRT at 26-27.

4. The Johnson Model excludes controls—included in past proceedings—for unobservable factors that undermine causal interpretation, specifically excluding controls for market income, the number of local stations offered, and MSO ownership of CSOs. Dr. Johnson fails to recognize that “these controls establish the `all else equal' conditions that allow coefficient estimates to take a causal interpretation as value per minute.”  [ 112 ] Because “it is not possible to express, let alone control for, all the factors that vary across cable systems,” the econometrician must judiciously use control variables (and fixed effects, discussed supra ), or otherwise bear “the burden . . . to justify why coefficients are not absorbing the effects of omitted variables and warrant the desired causal interpretation.” George WRT at 27-30.

Dr. Bennett lodges the following criticisms specific to the Johnson Model:

1. The base fees and the 3.75% Fees reported by CSOs are decoupled from each other and are often less than the CSOs' actual royalty payments. Bennett WRT ¶¶ 66-69, figs.24-26. This is problematic because CSO carriage decisions underlying the base fees and the 3.75% fees are “inextricably linked,” in that the cost factor in the decision whether to add a station is based on the total royalty cost, which includes both the (1) the base fee or minimum fee, as applicable, and (2) the 3.75% fee. But by treating the two royalty funds separately, the Johnson Model materially increases PTV's overall share, compared to what it would be if the two royalty funds were jointly considered. Bennett WRT ¶¶ 74-78, figs.27-28.

2. Dr. Johnson provides no basis for extrapolating from the subset of Subscriber Groups with positive Base Rate fees to the broader royalty pool. Bennett WRT ¶¶ 70-73.

3. The Johnson Model excludes fixed effects, which means that his regressions do not account for omitted variable bias. But Dr. Johnson introduces the risk of such bias based on a trumped-up concern that the Judges noted in the 2010-13 Determination but which had no impact. Moreover, the resulting bias in the regression coefficient is caused by eliminating fixed effects that would have impacted royalties but were unrelated to program category minutes, for example, where different CSOs charge different subscription prices because of differences in the number of specialty channels they provide in their basic service. Similar omitted variables arise when fixed effects are eliminated because of uncontrolled differences in subscription revenue (and thus section 111 royalties) between and within MSOs. Bennett WRT ¶¶ 79-89, figs.29-35.

4. Dr. Johnson's decision to eliminate fixed effects was particularly puzzling, because he had the endorsed Dr. Crawford's “regression framework” as “appropriate” for present purposes and acknowledges that he “generally follows the framework used by [Dr.] Crawford.” Nonetheless, he eliminated Dr. Crawford's fixed effects, inflating PTV's shares as reported in the Johnson WDT. See Bennett WRT ¶¶ 90-92, figs.36-37.

Dr. Marx essentially echoes the criticisms of Dr. Bennett with regard to Dr. Johnson's allegedly improper removal of fixed effects from the regression. She emphasizes that Dr. Johnson did not appear to test or evaluate the size or direction of the bias created by eliminating fixed effects, even for 2014, which was “a year that in most significant respects was similar to 2010-2013, which is the time period for which the Judges found the Crawford regression with fixed effects to be `highly useful.'” Marx WRT ¶ 39.

Dr. Tyler does not raise any specific criticisms of the Johnson Model. Rather, he criticizes it in the same way he criticizes all the other regressions that use a form of royalties as the dependent Start Printed Page 54210 variable (as explained supra, in the Judges' summary of Dr. Tyler's advocacy for the model he has proffered in this proceeding). See Tyler WRT ¶ 29. To summarize, Dr. Tyler rebutted the Johnson Model by asserting the following:

1. The Johnson Model needed to avoid the substantial degree of variability, causing a loss of observations.

2. The Johnson Model, like the George Model, “guesses” at the number of subscribers in each Subscriber Group, introducing potential bias into the regression.

3. The Johnson Model, like the George Model, has “hammer-shaped” residuals, which indicate that a regression is misspecified.

See Tyler WRT ¶¶ 29-55.

JSC's several expert economic witnesses levy the following criticisms at the Johnson Model:

1. The Johnson Model (like the George Model) improperly engages in the pooling of data across the 2014-2017 period to estimate a single coefficient for each program category. According to the JSC economic witnesses, such pooling generally results in “unreliable” coefficients and, specifically, led in this case to an underestimation of JSC's 2014 share. More particularly, three JSC experts testified as follows:

a. Dr. Asker testified that “there was a significant change in behavior following the conversion of WGNA in 2015. . . . To adopt a specification that doesn't recognize that change and then allow the regression to adjust . . . is a considerable flaw.” 3/30/23 Tr. 2431 (Asker); see also Asker WRT ¶ 103.

b. Dr. Majure testified that “[t]he data are very different between these two periods, reflecting changes in distant signal carriage patterns from the exit of WGNA. Given the differences in the data, it is important to run separate regressions on the different time periods.” Majure WRT ¶ 38.

c. According to Mr. Harvey, the Johnson Model estimates that JSC went from the highest per minute value in 2014 to the lowest in 2015-2017 and, moreover, CSOs would pay less for a minute of JSC content during 2015-2017 than for a minute of any of the other claimant categories. Harvey WRT ¶ 37 tbl.5; 3/28/23 Tr. 1883-87, 1889-90 (Harvey).

d. Mr. Harvey further testified that for the 2015-2017 period data alone, using the Johnson Model (and the George Model) generated JSC sports coefficients that were not statistically significant and, according to Mr. Harvey, were thus unreliable in that the data implied that JSC programming had no value in those years. Harvey WRT ¶¶ 37-38 & tbl.5.

e. Mr. Harvey calculated that when a 2015-17 coefficient is estimated only for systems paying more than the minimum fee, the Johnson Model then estimates a statistically significant negative coefficient for JSC content. Harvey WRT ¶ 38 & tbl.6; 3/28/23 Tr. 1895-96 (Harvey).

2. The Johnson Model lacks “robustness” and is “unstable.” According to Mr. Harvey, these defects are evidence that Dr. Johnson had engaged in a specification search (discussed elsewhere in this Determination). But Mr. Harvey asserts that even if Dr. Johnson had not engaged in an intentional specification search, his many specifications generated results that evidenced the lack of robustness and stability. 3/28/23 Tr. 2091 (Harvey); Harvey WRT ¶ 155 & tbl.26; see also JSC PFF ¶ 196.

3. Reiterating a criticism rejected in the 2010-13 Determination, the Johnson Model (like the George Model) wrongly utilizes a log-linear specification, with the dependent variable (royalties) expressed in log form and the subscriber count variable expressed in linear form. Harvey WRT ¶ 170; 3/28/23 Tr. 1965-66 (Harvey).

4. The Johnson Model wrongly omits fixed effects (as also noted by other witnesses, discussed supra ). According to Mr. Harvey, applying the fixed effects contained in the George Model triples Dr. Johnson's estimate of the JSC share. Harvey WRT ¶ 111 & tbl.5.

f. Criticisms of the Johnson Model by SDC Expert Witness Dr. Erdem  [ 113 ]

Dr. Erdem levies the following criticisms at the Johnson Model:

1. The specifications in the Johnson Model ( i.e., Dr. Johnson's preferred “baseline” model) is but “a stripped-down version” of the fatally flawed Crawford Model, shorn of “numerous control variables such as MSO indicators and the lag of subscribers and . . . fixed effects . . . . ” Erdem WRT ¶ 42.

2. When the Johnson Model's regression was run “using the CCG data that Dr. George used for her regressions . . . PTV shares decreased by eight points [and] [e]very other claimant . . . had their implied shares . . . with] JS[C] [gaining] a five-point increase in shares.” This allegedly indicated that “[t]he processed data that PTV used for their regression was clearly made to benefit their shares . . . . ” Erdem WRT ¶¶ 98-99.

3. All of Dr. Erdem's sensitivity tests showed a similar tendency, i.e., compared to the Johnson Model, “all the sensitivities . . . [gave] PTV lower implied shares.” Erdem WRT ¶ 101.

2. The Judges' Analysis and Findings Regarding the Johnson Model  [ 114 ]

The Judges make the following findings with regard to the Johnson Model:

1. Although Dr. Johnson used the Crawford Model as his “starting point,” he made changes to the Crawford Model.

2. A major change Dr. Johnson made to the Crawford Model was to eliminate all “fixed effects” in the Johnson Model.

3. By removing all “fixed effects,” Dr. Johnson altered the Crawford Model by eliminating the protection against “omitted variable bias.” That is, Dr. Johnson failed to capture the effects of differences among systems (CSOs) and across accounting -periods that impacted the dependent variable in the Johnson Model, i.e., the log of royalties. The absence of these “fixed effects” therefore rendered significantly reduces the evidentiary usefulness of the Johnson Model. [ 115 ]

4. A purpose in Dr. Johnson's removal of “fixed effects” from his regression model was to generate what he understood to be a sufficient number of observations of CSO decisions regarding program category retransmittal decisions (through their retransmitted channel selections) to generate the variation needed for a useful regression. These additional observations were required because, after the WGNA conversion, there was a significant reduction in the number of CSOs with two or more subscriber groups, reducing the variation created by the “fixed effects” control in the Crawford Model. But, as Dr. Marx, for example, has explained, this attempt at greater “precision” came at the unacceptable expense of the generation of “omitted variable bias” discussed above.

5. Dr. Johnson's further claim—that he eliminated “fixed effects” in response to a statement in the 2010-13 Determination that the Judges were troubled by the resulting loss of 15% of the otherwise observable CSO decisions—is a red herring. The Judges in the 2010-13 Determination did not rely on the loss of such observations as a basis for diminishing the evidentiary weight of the Crawford Model. And regardless, if the lost number of observations increased in the present proceeding because of the aforementioned reduction in useful subscriber groups, the more appropriate response was not to inject “omitted variable bias” into the regression, but rather to utilize other approaches (as, for example, in the Tyler Model).

6. Dr. Johnson's inclusion in his regressions of data regarding the programming decisions of the vast majority of CSOs paying the minimum fee or less significantly reduces the evidentiary weight of the Johnson Model for the three-year 2015-2017 period. (This finding of course also applies to the George and Tyler Models.) These decisions did not reveal their preferences in a cardinal manner, that is, these CSOs did not reflect relative values because their choices did not affect the actual fees paid. At most, their decisions reflected ordinal values, in terms of which program categories they valued more than others, but Start Printed Page 54211 not how much more, which is necessary for the distribution of the royalty fund. [ 116 ]

7. But Dr. Johnson properly relied on the data relating to the subset of CSOs in his model that only paid above the minimum fee. The Judges credit that data as reflective of actual economic decision-making that is useful in determining the allocation shares in this proceeding. This cohort of CSOs can properly be viewed as essentially the only CSOs who provide revealed preference information as to the variation in relative values among the program categories (in contrast with CSOs who did not retransmit any distant local stations or those with “excess capacity”), which in that sense is a cohort unto itself, rather than a sub-sample. On the other hand, this cohort can also reasonably be viewed as but a small sample of all the CSO, which reduces the evidentiary weight of their preferences. Both perspectives on the revealed preferences of these above-minimum-fee-paying CSOs are properly considered in weighting the various strands of useful evidence in order to allocate royalty shares in this proceeding.

8. The probative value of the Johnson Model is incomplete and thus weakened, because it excludes the 3.75% fees paid by most of the claimants, thus not reflecting the full willingness-to-pay of all claimant categories. Further, Dr. Johnson's separation of the basic royalty fund and the 3.75% royalty fund materially increased PTV's overall share.

9. The probative value of the Johnson Model is weakened because it wrongly substitutes “contemporaneous” for “lagged” subscribers. This substitution is incorrect because: (a) lagged controls minimize the subsequent impact of potential unobserved factors such as the acquisition of a CSO by a large MSO; (b)”lagged” subscribers were used since the Waldfogel regression in the 2004-05 proceeding; and (c) contrary to Dr. Johnson's assertion, “lagged subscriber” data was available from Cable Data Corporation, the source of much of the data utilized in the regressions proffered in this and prior allocation proceedings.

10. The probative value of the Johnson Model is weakened because its omission of certain control variables lessens its ability to identify the causal interpretation of interest, i.e., the correlation between program category minutes and the log of royalties. Specifically, the evidentiary weight of the Johnson Model is compromised by its exclusion of control variables for market income, the number of local stations offered and MSO ownership of CSOs. In this regard, Dr. Johnson has essentially ignored the 2010-13 Determination which explains at length why the inclusion of an MSO control variable is necessary. 2010-13 Determination at 3566-67 (describing “differences . . . among the six largest MSOs in terms of their average receipts per subscriber . . . . suggest[ing] . . . important differences . . . regarding their signal carriage strategies, pricing, and other relevant dimensions,” and contrasting “a regression without the six MSO Interaction variables [where] unobserved differences in average revenue per subscriber could bias estimates of relative value of different programming.”). [ 117 ]

11. The Johnson Model improperly “pools” data across the 2014-2017 period to estimate a single coefficient for each program category. Although “pooling” in this manner is not inherently improper in these allocation proceedings, when there is a sharp demarcation in the relevant data, as existed here as of 2015 upon the WGNA conversion, “pooling” data to generate a single coefficient obscures reality. The most consequential impact of “pooling” was the underestimating of the JSC share for 2014 and its overestimation for the years 2015-2017.

Undaunted by the Judges' findings in the 2010-13 Determination discussed supra, Dr. Erdem endeavors to convince the Judges to reverse course by once more presenting an argument that all fee-based regressions should be rejected as probative evidence of relative market value, as that standard has been defined by the Judges and their predecessors. [ 118 ] To this end, Dr. Erdem presented in rebuttal eight models as pedagogical tools only (not as proposed models for use in allocating shares). He and the SDC aver that his are “simple models,” demonstrating that “all fee-based regression models” do not estimate “any plausible measure of fair market value,”  [ 119 ] but rather are “leveraged on correlations driven predominantly by geography (location of cable systems and the subscriber groups) and other features of the copyright royalty system . . . .” SDC PFF ¶ 44 (quoting Erdem WRT ¶ 2). [ 120 ]

The Judges go through each of the eight models below. Also set forth below are the rejoinders to these models presented comprehensively through the submission by CCG and the testimony of CCG's economic expert, Dr. George.

Model 1 shows “a negative correlation between the number of minutes retransmitted on a distant basis and the amount of subscriber group base fees.” SDC PFF ¶ 45 (citing Erdem WRT ¶¶ 52-53). This means, according to Dr. Erdem, that subscriber groups retransmitting fewer distant minutes tend to pay more in royalty fees. Erdem WRT ¶ 53. Dr. Erdem interprets these negative coefficients as a “hedonic” regression, implying that CSOs place negative value on retransmission of distant signals.” SDC PFF ¶ 45 (citing Erdem WRT ¶ 53) (emphasis added). [ 121 ] Given the perverse nature of this result, the SDC maintains that its negative value puts the lie to the claim that the number of minutes has something “to do with value,” but rather shows that the regression coefficients are artifacts “of the regulatory structure.” SDC PFF ¶ 45. [ 122 ]

Dr. Erdem advances what he argues is an alternative explanation for the inverse relationship between minutes and royalties that he claimed to identify: “[This] result can be explained by distance between the signal and the subscriber group [because] I argue that the number of subscribers reduce with distance, implying that the signal is being re-transmitted to fewer subscribers over longer distances.” Erdem WRT ¶ 53. See also Erdem WRT ¶ 59 (“91% of systems are retransmitting the same signal on a local basis to some subscriber groups and on a distant basis to other subscriber groups[,] . . . [and] on average 76% of the channels that are distant to a subscriber group are retransmitted as local to another subscriber group”); SDC PFF ¶¶ 46-47; see also Bennett ACWDT ¶ 33 (Across 2014-2017, nearly 95% of the distant signals imported were within 150 miles of the community served, and over 97% were within 200 miles.).

In his second rebuttal model, Dr. Erdem analyzed the relationship between claimant category minutes and base royalty fees. He testified that, quite similar to the results from his Model 1, he found that a negative or statistically insignificant relationship largely persists (except for JSC minutes). As with Model 1, Dr. Erdem interprets this result through the lens of a hedonic regression, finding that it implies that CSOs place a negative value on all distant retransmissions of local programming, except for JSC. Erdem WRT ¶ 54. And also as with Model 1, Dr. Erdem recognizes that these results are “counterintuitive” in the context of reflecting value, but rather are a function of the fragmentation of subscriber groups. Erdem WRT ¶ 54. See also SDC PFF ¶ 48. [ 123 ]

In his third rebuttal model, Dr. Erdem tested the effect of the number of subscribers in a subscriber group (the independent variable) on subscriber group royalty fees and found a strong positive correlation. Erdem WRT ¶ 58. Dr. Erdem, again viewing the modeling as a hedonic regression, has a ready and what he describes as an obvious explanation for this positive correlation: [C]able systems place a high positive value on the number of subscribers in a subscriber group.” Erdem WRT ¶ 58. As alternatively stated by Dr. Erdem, “[W]e may need to treat the number of subscribers as a measure of volume.” Erdem WRT ¶ 58. Relatedly, Dr. Erdem opines that “there is a negative correlation between the number of subscribers in a subscriber group and the number of distant minutes the subscriber group receives”—meaning that, for the more populous subscriber groups, fewer distant signals (and minutes) are retransmitted to them and, thus, the more sparse the number of subscribers in a subscriber group, the greater the number of distant signal minutes. According to Dr. Erdem, this negative correlation is inconsistent with the positive correlation between distant minutes and royalties posited by the theoretical underpinnings of the fee-based regressions. See Erdem WRT ¶ 59. [ 124 ]

Dr. Erdem's Model 4 seeks to address a finding from his Model 3: “[T]he relationship between the number of subscribers and royalty fees is positive.” Erdem WRT ¶ 58 & fig.4. Keeping with his interpretive context, which treats these regressions as hedonic in nature, Dr. Erdem posits that “[a]n analyst . . . will conclude that [CSOs] place a high positive value on the number of subscribers in a subscriber group,” such that “we may need to treat the number of subscribers as a measure of volume.” Erdem WRT ¶ 58. But he then asks, rhetorically: Could it be that, on average, subscriber groups with fewer subscribers receive more distant minutes of programming? Erdem WRT ¶ 58 (emphasis added). Dr. Erdem then turns to his next pedagogical regression model, Model 4, to address this issue.

Dr. Erdem's Model 4 indeed demonstrated a “negative correlation between the number of subscribers in a subscriber group and the number of distant minutes the subscriber group receives.” Erdem WRT ¶ 59. Dr. Erdem explained his intuitive explanation for this negative correlation:

One of the principal reasons why a rational CSO might choose to use subscriber groups is because the cable system's reach straddles the edge of the 35-mile radius in which a station is considered “local” for cable royalty purposes. In this situation, a signal is “local” to some subscribers and “distant” to other subscribers. The cable system can save money by breaking its subscribers into geographically based subscriber groups so that it is paying for the distant retransmission only for the subscribers receiving it on a “distant” basis.

Erdem WRT ¶ 59 (emphasis added). Dr. Erdem then presents the data (discussed supra ) regarding the localized emphasis on “distant” retransmission contiguous to the 35-mile legal boundary between local and distance transmissions. Erdem WRT ¶¶ 59-60.

Dr. Erdem recognizes that the several regression experts sought to remove this cost-based negative effect of the number of subscribers in a subscriber group on the number of distant minutes a subscriber group receives. First, he noted that Dr. Tyler, with his SGRP divided the dollar value of fees (the numerator in Dr. Tyler's SGRP) by “a metric that scales with the number of subscribers,” i.e., total receipts. (the denominator in Dr. Tyler's SGRP). Second, as an alternative approach, Drs. George and Johnson (and apparently Dr. Crawford previously) introduced a control variable to remove the influence of the number of subscribers (whose increasing numbers would increase receipts and potentially increase royalties either through higher binding base fees or by triggering a base fee obligation in excess of the minimum fee that would otherwise bind). Erdem WRT ¶ 61. [ 125 ]

Dr. Erdem then apparently adds to his pedagogical model the control variable that Drs. George and Johnson include, “controlling for the number of subscribers.” When Dr. Erdem does so (using lagged and unlagged subscriber numbers, respectively in his modeling), he finds that his “correlation between total minutes and royalty fees is now positive. ” Erdem WRT ¶ 62 & fig.6 (emphasis added). He emphasizes that what he terms the “fixed price” for the retransmissions in his modeling is “based primarily on the type and number of signals and revenues for the subscriber group,” despite the fact that “[r]evenues are largely based on the number of subscribers.” Erdem WRT ¶ 62.

What still remains uncontrolled, Dr. Erdem, notes, is the “impact . . . from the number of distant signals.” Erdem Start Printed Page 54213 WRT ¶ 62. He notes the perhaps self-evident point that “[t]he more signals there are, the more minutes there are, so I would expect a positive relationship after controlling for subscribers.” Erdem WRT ¶ 62.

Dr. Erdem then breaks the retransmitted minutes into their respective programming categories, and proceeds to test whether the positive correlation between total minutes and royalties (which the regression experts understood to exist) continues to hold on a per-category basis. Erdem WRT ¶ 63. He finds that this positive relationship between minutes and royalties— on a program category basis — remains positive and is statistically significant for four of the six category participants—PTV, Program Suppliers, JSC, and the SDC. However, his modeling resulted in mainly positive but statistically insignificant results for CTV and CCG, and, for a minority of CCG observations, a negative relation. (Dr. Erdem's modeling also showed negative correlations for “network programming” (not a category at issue). Erdem WRT ¶¶ 63-64 & fig.7. Dr. Erdem interpreted these results to mean that “the control for the number of subscribers lifted the coefficients for program categories into positive territory by removing the influence of the number of subscribers, but not enough to give all categories a positive and statistically significant coefficient.” Erdem WRT ¶ 64.

Dr. Erdem asserts that these results “pose a problem for any analyst hoping to interpret the model as a hedonic regression.” Erdem WRT ¶ 65. More particularly, continuing from the binary perspective of whether the fee-based regressions are hedonic or not, he unambiguously opines that these regressions are invalid because they are not hedonic, in that “[t]he price is not actually varying based on the valuation of minutes,” but rather varying based on “other factors such as the type of signal or the revenue-per-subscriber for the subscriber group or system.” Erdem WRT ¶¶ 65-66.

Dr. Erdem then states that the regression analyst who nonetheless “wishes” to describe his or her regression as hedonic must manipulate the negative coefficients into positive coefficients, so that they “appear” plausible as proxies for prices. Erdem WRT ¶ 67.

It is in this context that Dr. Erdem accuses the regression experts of “leveraging” the “negative coefficients for network programming” (which are ineligible for an allocation of the royalties to be divided in this proceeding). Erdem WRT ¶ 68. To generate this leverage, Dr. Erdem asserts that the fee regression analysts engage in two manipulations (1) they add another control variable for “the number of distant signals, which correlates directly with the total number of minutes” and (2) they exclude the variable for “the number of distant minutes of network programming,” “render[ing] all category coefficients `relative' to the negative coefficient for network programming.” Erdem WRT ¶ 68. Dr. Erdem emphasizes the elementary point that “[b]ecause any number is positive in relation to the largest negative number, the exclusion of the variable for network programming has the effect of lifting the variables for all category minutes comfortably into positive territory, creating an apparent positive and statistically significant correlation where there previously was none in some categories.” Erdem WRT ¶ 68.

To the adjustments included through Models 1-6, Dr. Erdem now injects a control for “the number of distant stations on royalty fees.” Also, his Model 7 “drops network distant minutes in order to get relative numbers” in the manner undertaken by the fee regression experts. Erdem WRT ¶ 69.

Although (as noted supra ) Dr. Erdem concedes that the prior “inclusion of a variable for subscribers . . . could be justified as a volume-based control,” he finds “no econometric justification for seeking to value category minutes relative to the negative coefficient value of network programming.” Erdem WRT ¶ 69. He states that as a general matter, “even if one believed that the coefficients were related to value, there could be no justification for trying to measure value relative to an arbitrarily chosen category with a negative value.” Erdem WRT ¶ 69 (emphasis added).

Dr. Erdem also characterizes the negative coefficient for network programming as “an artifact of the operation of the copyright royalty system, not a measure of how much anyone values programming, and certainly not a measure of how programming would be valued in the free market.” Erdem WRT ¶ 70. Alternately stated, he declares that [t]here is no intuitive reason why network programming would be expected to have negative market value when retransmitted on a distant basis.” Erdem WRT ¶ 70.

Dr. Erdem does acknowledge that, through what he calls this excluded network minute “manipulation,” all the coefficients in the categories of interest (for the distant retransmission that is permitted by law) now become positive. Erdem WRT ¶ 70 (“This is exactly how Professor Crawford's model—and, by extension, Dr. George's model and Dr. Johnson's model—works.”). [ 126 ]

From this point forward, Dr. Erdem maintains that the fee-based regression experts “are free from the constraints of econometric reasoning.” More particularly, he asserts they can, without appropriate justifications use various (1) control variables, (2) fixed effects, (3) transformations and functional forms, and (3) unspecified miscellaneous fine-tuning, all in the service of “generat[ing] whatever coefficients [they] desire or expect.” Erdem WRT ¶ 71.

The final model, Model 8, is actually not a “model” at all, but rather Dr. Erdem's more particular catalog of “manipulations” in which a fee-based regression expert could engage, with a model built up through Dr. Erdem's Models 1-7. Without linking any of the following “manipulations” specifically to any of the experts in this proceeding, Dr. Erdem states in this “Model 8” that the following “manipulations” are possible:

1. “bringing in variations in the number of subscribers to increase or decrease the effect on the dependent variable. For example, we can try the lagged number of subscribers;”

2. “add[ing] interactions with the number of subscribers” (as he states Dr. Crawford did in his model); and

3. “add[ing] fixed effects, which controls for any variation due to inherent characteristics of a subscriber group.”

Dr. Erdem does not assert that such additions would be ad hoc, but rather that, consistent with the fundamental defect he finds in the fee-based regressions, they would “merely leverage the features of the copyright royalty system.” Erdem WRT ¶ 72.

I. Dr. George's and CCG's Rejoinder to Erdem's Modeling Exercise  [ 127 ]

At a high level, [ 128 ] CCG takes issue with the SDC's emphasis on the Start Printed Page 54214 assertion that fee-based regressions are predominantly rooted in correlations with (a) the geographic location of CSOs and their constituent subscriber groups and (b) statutory features of the copyright royalty system. In this regard, CCG essentially attacks this assertion as much ado about nothing, because the reason why CSOs and their subscriber groups retransmit signals as they do does not bear on the fundamental point of the regressions, i.e., to identify what the CSOs actually retransmit in order to appropriately compensate copyright owners. Dr. George emphasizes that whether or not subscriber group configurations are geographic artifacts, they nonetheless reflect the strategic profit-maximizing decisions of CSOs as to where they will transmit distant signals. It is this profit maximizing retransmission decision that is the kernel of information that provides insight into “what would determine relative market value absent regulation.” See George WDT at 15-17, 27-28; The Canadian Claimant Groups' Reply to Proposed Findings of Fact and Conclusions of Law (CCG RPFF) ¶¶ 21-22.

More broadly, CCG characterizes Dr. Erdem's eight-model analysis as incomplete and economically flawed. In this regard, Dr. George criticizes Dr. Erdem's rebuttal pedagogical modeling because therein he analyzes relationships in the data across CSOs, whereas the George Model emphasizes variation within CSOs to identify coefficients. Thus, CCG and Dr. George essentially attack Dr. Erdem's modeling as a straw man exercise. CCG RPFF ¶ 22; George WDT at 27-28.

At the conceptual economic level, [ 129 ] Dr. George takes note of the point (identified by the Judges supra ) that Dr. Erdem has contextualized his analysis in the wrong economic and legal standard:

SDC's false criticism that regressions are not driven “by any plausible measure of fair market value” suggests that measuring fair market value was a goal of regression. . . . No pro-regression expert claims that correlations are driven by “fair market value.” As the Judges wrote in the prior proceeding: “In this proceeding, the Judges distinguish between `relative values' (to describe the allocation shares), and absolute `fair market values.' Because the royalties at issue in this proceeding are regulated and not derived from any actual market transactions, they do not correspond with absolute dollar royalties that would be generated in a market and thus would not reflect absolute `fair market value.' ”

CCG RPFF ¶ 12 (quoting 2010-13 Determination at 3555 n.17) (emphasis added).

More granularly, CCG asserts that the negative correlations in Dr. Erdem's modeling between royalties (the dependent variable) and, respectively, (a) total distant minutes (Model 1), (b) claimant distant minutes (Model 2), and (c) subscriber group size (Model 3), do not, as Dr. Erdem claims, reveal a modeling “hurdle” or “problem” that bedevils the fee-based regressions. Rather, it is claimed that Dr. Erdem's first three pedagogical rebuttal models fail to consider that CSOs configure their subscriber groups strategically to maximize profits and therefore will only retransmit distant signals to groups of subscribers when the anticipated benefit (essentially, more new or retained subscriptions) exceeds the anticipated costs (royalties). CCG RPFF ¶ 24 (citing, from the 2010-13 proceeding, Crawford CWDT ¶¶ 66-68; Israel WDT ¶¶ 12-14.).

CCG also takes note of the finding in Dr. Erdem's Model 3  [ 130 ] of “a positive relationship between the number of distant signals and subscriber group royalties,” suggestive of the regression experts' hypothesis that cable systems place a high positive value on the number of subscribers in a subscriber group.” CCG RPFF ¶ 24. Unsurprisingly, CCG and Dr. George do not disagree with his finding. [ 131 ]

CCG and Dr. George then address Dr. Erdem's next point regarding: (1) the purportedly problematic “negative correlations” in Models 4 and 6 “between the number of subscribers in a subscriber group and the number of distant minutes the subscriber group receives” (Erdem WRT ¶ 59); and (2) the attempt to control for the number of subscribers considered in Model 5 (Erdem WRT ¶ 62). In defending the use of a control for the “number of subscribers” as an important feature for a fee-based regression, CCG states:

The negative correlations documented in Dr. Erdem's models are not “problems.” The negative correlation with subscriber group size results from the strategic choices of cable systems to minimize the cost associated with distant signal carriage. The negative coefficient for one category of minutes reflects the fact that programming minutes per station sum to a total of 24 hours per day. The goal of the regression is to evaluate how royalty expenditure correlates with claimant programming on distant signals retransmitted, all else equal. A control variable for the number of subscribers in a subscriber group creates these all-else-equal conditions.

CCG RPFF ¶ 25 (citing George WDT at 52-54; George WRT at 60) (emphasis added).

Turning to Dr. Erdem's pedagogical rebuttal Model 7, Dr. George and CCG assert that Dr. Erdem has changed the fee-based regression modeling in two ways by (1) “excluding the variable for network minutes” and (2) “including a variable for the number of distant signals.” CCG RPFF ¶ 26. Regarding the alleged error in Dr. Erdem's exclusion of the network minutes variable, CCG avers:

Since all stations broadcast approximately 24 hours per day, and subscriber groups must have whole numbers of distant signals, programming minutes sum to a constant equal to the number of distant signals times 24 hours per day for 6 months. Dr. Erdem has . . . effectively forc[ed] one of the program categories to produce a negative coefficient. [Dr.] Crawford and [Dr.] George address th[is] . . . by specifying a model with a control for . . . a reference category of “big-3” network minutes. Network minutes are a convenient reference choice because they are non-compensable and no coefficient for this category need be estimated.

CCG RPFF ¶ 26 (citing George WRT at 31-32, 57-58, 63-64) (emphasis added). [ 132 ]

Turning to her objection to Dr. Erdem's second alteration identified in the immediately preceding paragraph, viz., removing of the control for the number of distant signals, Dr. George responded as follows:

[R]emoving the control for distant stations changes the interpretation of program coefficients so that they no longer show the effect of an additional program minute taking away a minute of network or off-air Start Printed Page 54215 programming. . . . removing the control for distant signals [thus] alters the “all else equal” framework of the model so that program coefficients no longer isolate the effect of additional program minutes, but instead also capture the (omitted) incremental value of additional distant signals.

George WRT at 57-58 (emphasis omitted); see also id. at 63-64. [ 133 ]

Finally, in responding to Dr. Erdem's conclusory Model 8, CCG concludes by describing Dr. Erdem's pedagogical exercise as merely his recapitulation and criticism of “his own incomplete models,” rather than “a criticism of the well-specified Crawford [M]odel or those presented in this proceeding.” CCG RPFF ¶ 21. See also George WRT at 53 “(just as there is the potential for experts to `cherry-pick' results, there is the potential for adversaries to `cherry-pick' their critiques.”).

The Judges find that Dr. Erdem's pedagogical eight-model approach does not support an abandonment of the Judges' long-standing reliance on fee-based regressions as evidence of relative market value in these section 111 allocation proceedings. The Judges make this finding based on the following:

The Judges agree with SDC's counsel that Dr. Erdem's eight-model analysis is not substantively any different than what he presented in the 2010-13 proceeding. As such, it does not raise new factual arguments.

1. Dr. Erdem acknowledges at the outset that his critique is intended to show that the fee-based regressions fail to generate “fair market value.” This is a consequential error on his part, because (a) the Judges' long-existing standard is “relative marketplace value,” (b) the Judges expressly distinguished their standard from “fair market value” in the 2010-13 Determination, and (c) Dr. Erdem did not attempt to explain his switch in standards. Accordingly, it appears to the Judges that Dr. Erdem expressly characterized his eight-step modeling approach in a manner that attempted to answer “the wrong question,” in violation of Professor Kennedy's econometric “Rule #2” discussed supra.

2. Dr. Erdem's approach is to build up from models which lack control variables, and then to posit that the relationships he finds are inconsistent with the hypothesis behind the fee-based regressions. But that approach leaves out all the control variables that the fee-based regression experts have included in their models, essentially causing Dr. Erdem's simple models to be burdened by omitted variables, which cause regressions to suffer from the eponymously named “omitted variable bias.” Moreover, in Models 1 and 2, Dr. Erdem is thus not even engaged in “multiple regression” analysis, because he is analyzing only the effect of a single independent variable.

3. Related to the immediately preceding criticism, Dr. Erdem's rebuttal modeling approach thus reflects his own modeling choices and approach, not one utilized by the fee-based regression experts. Thus, his approach is in the nature of a straw man argument. Moreover, his approach does not appear to be so much pedagogical in nature, but rather more of an attempt to utilize his rebuttal testimony to set forth the rudiments of an alternative modeling exercise—after SDC had declined to proffer any such modeling approach in its original or amended written direct statement (when it was fully aware of the points it subsequently raised on rebuttal through Dr. Erdem's eight-model approach).

4. Dr. Erdem does not clearly explain how he estimated the number of subscribers in a subscriber group. If he did so by the same estimation approach as Drs. George, Johnson, and Marx (via Dr. Crawford) then his criticism is as questionable as their analyses in this regard. Moreover, the deficiency of this criticism underscores the relative strength of the Tyler Model, which did not require a control for the number of subscribers, given its use of SGRP as the dependent variable.

5. The Judges cannot credit Dr. Erdem's criticism of the relationship between the negative coefficients he discussed and the use of a “reference category” of “Big-3” network minutes in the fee-based regressions. The Judges are struck by the fact that Dr. Erdem ignored the rationale given by Dr. George (and other regression experts), viz., that a “reference category” serves as a measure of value generated by the regression but not a value at issue under the statutory scheme, and thus the six categories of value can be measured against that “reference category.” (Other experts have characterized such a “reference category” approach as an “index” or “numeraire.”  [ 134 ] ). Any sufficient criticism of this approach would need to address the “reference category” purpose head-on, rather than ignore it.

6. Further, with regard to the reference category issue, the Judges agree with Dr. George that Dr. Erdem's rejection of a referenced category/numeraire effectively forced program categories at issue in this proceeding to produce a negative coefficient, because in a 24-hour day, absent this control, any increase in one royalty-generating category's minutes would necessarily reflect a decrease in another category's minutes.

Separate and apart from the Judges' evaluation of Dr. Erdem's testimony, as discussed above, the Judges note an aspect of Dr. Erdem's testimony that called into question its reliability. By way of brief background, Dr. Erdem testified in the 2010-13 proceeding as well as the present proceeding, and his testimony was consistently reliable and thought-provoking, regardless of whether the Judges ultimately agreed with his opinions. But he also inexplicably endorsed in his testimony the present Bortz Survey as “very useful.” 4/5/23 Tr. 3465 (Erdem). Dr. Erdem's testimony in this regard was inexplicable—and jarring—because SDC did not seek to have Dr. Erdem qualified as a survey expert, he was not received as such by the Judges, and, perhaps even more unsettling, he pronounced his endorsement of the Bortz Survey “sight unseen,” that is, he endorsed it without reading it. 4/5/23 Tr. 3466 (Erdem) ([Q]: “[I]n your initial testimony that was submitted in this proceeding, you expressed your support for the Bortz Survey sight unseen, correct? [Dr. Erdem] That's correct. ”) (emphasis added)). Nonetheless, Dr. Erdem continued to attempt to justify this testimony in colloquy with Judge Strickler:

Q: Dr. Erdem, but you are not qualified as a survey expert. How can you weigh the value of a survey . . . . I understand [you] to say while there may be no perfect way to estimate relative market value, you say I'll tell you one way that isn't, and that's these fee-based regressions. I understand your testimony. But why would we credit your testimony about the survey being appropriate when it comes to that issue? You're just a lay witness.

Dr. Erdem: You are correct, Your Honor, I am not a survey expert as an economist.

4/5/23 Tr. 3476 (colloquy) (emphasis added). Dr. Erdem could have chosen to stop there, but he elected to keep digging, seeking to justify his Bortz Survey endorsement:

Dr. Erdem: I am involved in projects and analyses that rely on survey methodologies and survey data. I have a team that supports me in those.

Judge Strickler: Before you gave your testimony in this case about the Bortz Survey being an appropriate tool to measure relative market value, did you consult with that survey team?

Dr. Erdem: I did, Your Honor. You may recall the name Hilary Johnson, who is my director. She is a statistician by training. And I also have a Ph.D. statistician who supported me in the 2010-'13 proceeding. He reviewed the materials. . . . I had conversations with him about methodology. So I had a team that supported me in my reports.

Judge Strickler: Well, I don't remember you saying anything in your testimony that you relied on your survey team in any way. Hilary Johnson's name I recall, [but] [s]he Start Printed Page 54216 didn't testify in her written testimony . . . about the survey at all, did she?

Dr. Erdem: Correct.

Judge Strickler: Why didn't she give testimony that the Bortz Survey was a good and proper way to estimate value if she's an expert in this field and you're not?

Dr. Erdem: That's a good question.

Judge Strickler: That's why I asked it.

Dr. Erdem: [W]e didn't specifically focus on the methodology aspects of Bortz Survey, you are correct in that.

Judge Strickler: Thank you, Doctor.

4/5/23 Tr. 3476-79 (colloquy) (emphasis added).

The foregoing rather remarkable testimony damaged Dr. Erdem's credibility, suggesting he would be willing to testify regarding matters as to which he lacked both expertise and knowledge. Moreover, it is ironic that he would attempt to salvage his Bortz Survey opinion by reference to his “team” of other professionals with the necessary background to offer such an opinion, only to admit in short order under questioning from the bench that they did not “specifically focus on the methodology aspects of the Bortz Survey.” His testimony in this regard is rich with irony because Dr. Erdem is the witness who has most forcefully attacked Dr. (John) Johnson of PTV for delegating work to his team of professionals without personal involvement or knowledge of the work of the team.

Thus, separate and apart from the enumerated points set forth above that lead to the Judges' finding that Dr. Erdem's eight-model analysis is insufficient to invalidate the use of fee-based regressions, his foregoing survey-related testimony casts doubt as to his credibility.

In sum, the Judges find that Dr. Erdem's eight-model pedagogical exercise is insufficient to discredit fee-based regressions as a form of evidence on which the Judges may rely.

JSC, through its statistical expert, Mr. Harvey, ran what he described as “validity tests” that decomposed certain program categories to isolate the coefficients attributable to the decomposed elements. Specifically, he concentrated on (1) paid programming (including “infomercials”) within the Program Suppliers category and (2) the rare NFL football games that appeared on distantly retransmitted local stations (as opposed to being broadcast on network or cable stations, which are noncompensable in these section 111 proceedings). Harvey WRT ¶¶ 71-90.

With regard to paid programming, Mr. Harvey separated the paid programming out of the Program Suppliers category and created a new category for paid programming. Joint Sports Claimants' Post-Hearing Brief in Support of Proposed Royalty Allocations at 32-33 (and citations therein) (JSC PHB). Performing this task on the Johnson Model, Mr. Harvey calculated that the coefficient for paid programming is larger than the coefficients for the other Program Suppliers content, PTV content, SDC content, and CCG content, and that, on average, the Johnson regression would assign paid programming a share of about 6.8% of the royalty pool per year. JSC PFF ¶ 176. For further perspective, Mr. Harvey computed that this paid programming share is greater than the share of royalties that the Johnson Model assigned to the approximately 2,000 annual JSC games, and approximately three times greater than all the 2015-2017 royalties for all JSC content. Id.

In response, Program Suppliers argues that Mr. Harvey failed to properly place his findings within the context of the regression approaches in these proceedings. Specifically, PTV's expert, Dr. Johnson, testified that it was incorrect to decompose the entire category of Program Suppliers' programming and focus on any one sub-category, because the regressions offer “average relative valuations” for entire categories. More granularly, Program Suppliers take note of the following testimony on this issue by PTV's expert, Dr. Johnson:

[I]t is an average relative valuation, so I don't think that's an appropriate use of the model. But his theory is that paid-programming has no value at all, but he didn't remove them from the model. If he had simply removed the minutes that he thinks are problematic, he would have found that the estimates really don't change very much at all. So I just don't think that's a valid critique.

3/21/23 Tr. 605 (Johnson).

As a second response, Program Suppliers assert that Mr. Harvey's paid programming argument is “cherry-picked,” because he admitted to running other “validity tests whose subject matters and results he and JSC did not produce in these proceedings.” PS PFF ¶ 346 (and record citations therein).

CCG, relying on the testimony of its economic expert, Dr. George, also levied Program Suppliers' first criticism above, asserting that Mr. Harvey's validity test on paid programming ignores the very purpose of the fee-based regressions: to estimate the average relative values of the six programming categories at issue. CCG PFF ¶ 148 (and record citations therein). CCG adds, in this regard, that none of the economic expert witnesses who proffered fee-based regressions in this proceeding has maintained that it was the purpose or capacity of their models to precisely estimate the relative value of sub-groups of programs. Id.

At the hearing, Dr. George provided further detail with regard to this criticism:

So the paid programming is fixed hours at night. There's just not independent variation with other Program Supplier category. So . . . when [Mr. Harvey] breaks this up, he effectively forces one of the coefficients to be negative because . . . you can't really independently increase paid programming without decreasing the other Program Suppliers' programming.

[T]he coefficients for claimant programming . . . reflect an average. So right now the values per minute are telling us the average of the different—like the diversity of this kind of programming. So, Program Supplier programming has different sorts of things. And so the value per minute is an average [a]nd we're applying it to quantities. And so if I were to design a regression that really wanted to get at the value of paid versus non-paid programming, I could do that, but it would be a pretty different model.

4/18/23 Tr. 5163, 5166-67 (George).

In their post-hearing filings, JSC responds by emphasizing more narrowly that this “validity” test reveals the pitfall of the regression models' use of retransmission decisions by minimum fee-paying CSOs:

The failure of the regressions to accurately capture revealed preferences from Minimum Fee CSOs is clearly demonstrated by Mr. Harvey's validity tests, which reveal that the regressions would attribute substantial value to programming with no value ( i.e., infomercials) . . . .

JSC PHRB at 16-17 (and citations therein) (emphasis added).

With regard to the rare NFL game that appeared on a distantly retransmitted station (as opposed to a broadcast or cable network), Mr. Harvey performed an additional “validity” test. Specifically, he separated NFL games from other JSC content, in order to ascertain whether the regression models had the capacity to realistically estimate the relative value of NFL programming. JSC PFF ¶ 180. Mr. Harvey found that across the Johnson, George, and Tyler Models, the NFL retransmissions had lower coefficients than other JSC programming (and sometimes negative coefficients). JSC PFF ¶¶ 181-85 (and record citations therein). Based on these results, Mr. Harvey opined that these regression models were unable to identify realistic values because the high value of NFL games on television is common knowledge and undisputed, Start Printed Page 54217 and should have been confirmed by this validity test. JSC PFF ¶ 180.

In response, Program Suppliers and Dr. Tyler first reiterate the same points they made with regard to Mr. Harvey's “validity test” pertaining to paid programming, i.e., (1) that the regressions offer average relative values across a category, (2) the program category is too small to generate meaningful results, and (3) the test was “cherry-picked” out of a number of validity tests that Mr. Harvey elected not to disclose. But Program Suppliers specifically hones in on the second criticism above, that the program category is simply too small. In this regard, Program Suppliers maintain:

During the 2014-17 time period, WNBC (one of the handful of distant signals that Mr. Harvey chose to highlight) carried just one compensable regular season NFL game, meaning that compensable regular season NFL content accounted for less than one one-hundredth of one percent of the content on that station.

PS PHB at 3 & 25 (citing to PS PFF ¶ 174 (and record citations therein)). See also 3/29/23 Tr. 2062-64 (Harvey) (admitting to this percentage calculation).

Regarding this NFL “validity test,” CCG made the same argument it made in criticism of Mr. Harvey's “validity test” relating to paid programming, described supra. In her oral testimony, Dr. George elaborated more broadly regarding the attempt to decompose JSC programming into the rarely retransmitted NFL games, stating that Dr. Harvey failed to appreciate that because “there's a fixed number of regular season and post-season games in the NFL . . . we don't have independent variation there [and] our 24 model isn't capable of [that] separation . . . and it doesn't need to. 4/18/23 Tr. 5162 (George).

In his oral testimony, Dr. Johnson had a response to Mr. Harvey's NFL de-composition of JSC programming that was consonant with the former's response regarding the paid programming issue. Dr. Johnson testified:

Mr. Harvey argues that he can change the model and try to separate out NFL or playoffs. He says: Look, I get nonsensical results. I get negative values for these things. The problem is . . . he is trying to parse the regression so finely that he has got less than .01 and .04 of the total minutes that are used in the entire estimation. . . . The model wasn't intended to only estimate isolated values for NFL and playoffs. It's an average relative valuation for the claimants. It can do that well. And that's the purpose of the model.

3/21/23 Tr. 605-06 (Johnson). [ 135 ]

The Judges find that Mr. Harvey's “validity tests” do not serve to invalidate the usefulness and relevance of the regressions proffered in this proceeding. There are several reasons for this finding.

First, the Judges agree with the criticisms that Mr. Harvey's “validity tests” fail to appreciate the fact that the regressions are estimated average valuations. When an average is de-composed, looking at any one element in the average fails to consider the average itself and, depending on the question at hand, may offer an interpretation that is off-point. [ 136 ]

Second, if it in fact is the case that paid programming, by some other metric, or by the use of common sense, can clearly be found to have far less value than other program types, the fact that the regression provides paid programming with value via the averaging function of the regression does not mean that the Program Suppliers category (where paid programming is situated) received an inflated coefficient. In this regard, the Judges note Dr. Johnson's testimony, cited above, in which he notes that Mr. Harvey did not even attempt to show how, if at all, the coefficients in the regression would have changed if he had simply removed the paid programming minutes from the regression. [ 137 ]

Third, Mr. Harvey indicates that the paid programming issue is a factor (or perhaps more of a factor) as it pertains to minimum-fee-only CSOs, as noted supra. But because the Judges are relying on the results from the cohort of above-minimum-fee-only CSOs, Mr. Harvey's point in this regard is of less importance.

Further, the program categories were configured by the parties. Although the parties have raised the issue of whether the definitions of the program categories should be changed, the categorizations in this proceeding are the same as the parties have long utilized. The Judges understand these program categories to have been designed to reduce transaction costs, so that each sub-category, or each program, does not make its own claim for royalties, rendering the process prohibitively costly. (The bifurcation of the process into allocation (formerly Phase I) and distribution (formerly Phase II) proceedings is in furtherance of the reduction in transaction costs.)  [ 138 ]

However, these tests do underscore the importance of integrating the Bortz Survey as an approach to ascertaining relative marketplace value. It may be the case that a small number of games has value, outside of what is measured by the regression, in retaining subscribers, a measure of value which might be captured by the Bortz Survey, but not by the regressions.

More broadly, the question of the value of different sub-categories of programming takes on salience when the issue is whether certain types of programming have a relative marketplace value independent of the number of minutes they contribute to the category in which they are situated. And an entire category may have value not reflected in the minutes of programming associated with that category and its programming. That is, because these various categories and sub-categories are bundled together in the local stations that are distantly retransmitted, minutes alone may well not reflect the relative values of key drivers of the decision of a CSO to retransmit a station with a bundle of programming category content. For this reason, the Judges are also utilizing the results of the Bortz Survey, which reflect (albeit imperfectly) how CSOs value different types of programming.

In the 2010-13 Determination, the Judges placed “primary reliance” on a regression analysis  [ 139 ] to allocate royalty shares among the six program categories. 2010-13 Determination at 3610. In particular, they found a regression model presented by CTV's econometric expert, Dr. Gregory Crawford, “on balance . . . to be highly useful in estimating relative values in this proceeding.” Id. at 3569. Accordingly, the Judges gave greater weight to regression analysis than they had in prior proceedings, both in absolute terms and relative to other evidence and approaches, such as surveys and descriptive industry witness testimony. An important reason for the Judges' increased reliance on regression analysis was that this methodology approached the relative marketplace value from the perspective of what CSOs actually had done in terms of deciding which distant signals to retransmit on their systems.” Id. at 3610 (emphasis in original).

The general form of this regression model is identified, alternatively, as a “fee-based” regression, a “Waldfogel-style” regression, and, subsequent to the 2010-13 proceeding, a “Crawford-style” regression. [ 140 ] At a high level, a fee-based regression is characterized by the following elements:

1. It attempts to correlate variation in the program category composition of distant signal bundles with the royalties paid by CSOs to estimate the relative marketplace value of programming;

2. It regresses observed royalty payments for the bundle on the numbers of minutes in each programming category; and

3. It may employ econometric controls in the form of “control variables” and “fixed effects” in order to isolate the correlation between the dependent variable (some measure of royalties) and the independent (explanatory) variable of interest (the number of programming minutes) from the controlled other drivers of CSO payments.

See 2010-13 Determination at 3557 (record citations omitted).

In proceedings prior to the 2010-13 Determination, the Judges (and their predecessors) relied on fee-based regressions but did not place a primary weight on this approach. In the allocation proceeding for 1998-99 royalties, a Copyright Arbitration Royalty Panel (CARP) relied on such a regression model put forth by an economist, Dr. Gregory Rosston, not as a primary allocation measure, but rather as corroboration of the allocation shares generated by the Bortz survey. See 1998-99 CARP Report at 46. Subsequently, in the allocation proceeding for 2004-05 royalties, the Judges relied on the fee-based regression model advanced by Dr. Joel Waldfogel (the now eponymous “Waldfogel-regression”) as “generally reasonable” and thus “helpful to some degree” because it “more fully delineat[es] all of the boundaries of reasonableness with respect to the relative value of distant signal programming” and “provid[es] some additional useful, independent information about how cable operators may view the value of adding distant signals based on the programming mix on such signals.” 2 004-05 Distribution Order at 57063, 57068. Accordingly, the Judges found, as did their predecessors in the 2004-05 proceeding, that the fee-based regression approach served to “corroborate” some aspects of the Bortz survey and that it also served “to provide an independent reasoned basis” for departing in one respect from the Bortz methodology. Id. at 57069.

Chronologically, the 2010-13 Determination was the next allocation decision to consider the evidentiary weight to be given to a fee-based regression. In that case, the Judges elevated the regression methodology, namely the model proffered by Dr. Gregory Crawford (the Crawford Model), to a primary body of evidence in terms of explanatory power. The Judges noted that the Crawford Model, like the Rosston and Waldfogel regressions that preceded it, contained a useful differentiating feature: In contrast with the survey approach, regression modeling “analyzed value from the perspective of what CSOs actually had done in terms of deciding which distant signals to retransmit on their systems.” 2010-13 Determination at 3610. [ 141 ] But why did the Judges elevate the fee-based regression approach from the junior status of corroborative tool to a position of evidentiary primacy?

The answer mainly lies in the improved way in which the Crawford Model was constructed. Explaining this answer requires the Judges to present a brief tutorial on regressions, based upon the testimony of the econometricians in this proceeding, the textbooks they cited, and the background information set forth in the 2010-13 Determination.

Regression analysis is a “method of determining the relationship between two or more variables, and it can be a valuable tool for resolving factual disputes.” 2010-13 Determination at 3556 (citation omitted). When a regression attempts to identify the correlation between a “dependent variable”  [ 142 ] and more than one “independent variable,”  [ 143 ] the approach is known as a “multiple regression analysis.”  [ 144 ] This is the technique that was employed by Dr. Crawford (and Dr. George) in the 2010-13 proceeding and in the present proceeding by Drs. George, Johnson and Tyler. [ 145 ] Multiple regression “is the technique used in most econometric Start Printed Page 54219 studies, because it is well-suited to the analysis of diverse data necessary to evaluate competing theories about the relationships that may exist among a number of explanatory facts.” 2010-13 Determination at 3556 (citing ABA Econometrics, supra note 127, at 4). The basic notation for a multiple regression would be, for example:

Y = a + bX + cZ + u

Y is the dependent variable

X is an independent (explanatory) variable

Z is a different independent (explanatory) variable

a is the intercept with the vertical axis (on a graphed regression)

b is the coefficient (value) of X

c is the coefficient (value) of Z

u is the error term, a/k/a the “regression residual” (reflecting unobserved factors that determine Y)

See 2010-13 Determination at 3556 n.23; Stock & Watson, supra note 92, at 158-59. If econometricians are specifically interested in the impact of, say, independent (explanatory) variable X on dependent variable Y, they will hold constant the effect of any other independent (explanatory) variable, such as Z in the above example, which reclassifies Z as a “control variable.”  [ 146 ]

Because of changes in generated data as a result of statutory changes that occurred subsequent to the determination covering the 2004-05 royalty years, Dr. Crawford was able to construct a fee-based regression with more granular detail. The Judges explained this change in data generation in their 2010-13 Determination:

Between the time of the last adjudicated cable royalty allocation proceeding and the present [2010-13] proceeding, Congress passed the Satellite Television and Localism Act of 2010 (STELA). Before STELA, cable operators were required to pay for the carriage of distant signals on a system-wide basis, even though each signal was not made available to every subscriber in the cable system. . . . STELA . . . amend[ed] section 111(d)(1) of the Copyright Act, which details the method by which cable operators can calculate royalties on a community-by-community or subscriber-group basis. Id. From the 2010/1 accounting period and all periods thereafter, cable operators have been required to pay royalties based upon where a distant broadcast signal is offered rather than on a system-wide basis.

2010-13 Determination at 3554 (emphasis added).

This statutory change permitted the participants in these section 111 allocation proceedings to analyze relative value at the subscriber-group level. 2010-13 Determination at 3554 (citing Corrected Written Direct Testimony of Gregory Crawford, Ex. 2004 (Crawford CWDT) ¶ 66). More particularly, Dr. Crawford's regression “looked for a correlation in a subscriber group between changes in the number of minutes of programming the subscribers watched by categories and changes in the percentage of royalties the subscriber group paid while holding constant other potential explanatory variables (called control variables).” 2010-13 Determination at 3558. As Dr. George succinctly explained in her testimony in the present proceeding, “[w]ith [Dr.] Crawford's specification, coefficients are identified using only variation within systems in each accounting period.” George WDT at 9 (emphasis added).

Dr. Crawford's approach thus required the existence of at least two subscriber groups in a cable system in order for the retransmission (and thus the programming) decisions of a cable systems operator (CSO) to be used in the regression. The purpose of so limiting the regression was to focus on the relationship at interest in the regression, which is the association between the minutes of per-category programming retransmitted and the CSO's royalties calculated at the subscriber group level. However, by so doing, the Crawford Model reduced the number of observations that it could utilize. In the 2010-13 proceeding, the Crawford model was criticized by the SDC and one of its experts, who argued that his regression approach was “compromised” by this limitation, which “ `effectively discarded' approximately 15% of his observations by disregarding observations from systems with a single subscriber group . . . `approximately half of all systems in his data set' . . . .” 2010-13 Determination at 3566 (citations omitted).

But what the SDC saw as vice, Dr. Crawford (and ultimately, the Judges) understood as virtue. That is, Dr. Crawford included this combined control limiting the observations to intra-cable system subscriber group variations in a particular six-month accounting period in his regression to avoid introducing ( i.e., to control for) effects on royalties of different business strategies among CSOs (“system” effects) and different economic conditions over time (“accounting period” effects). In a regression, these two joint interactive controls are examples of a particular form of control known as a “fixed effect.”  [ 147 ]

Additionally, while his regression was a work in process, Dr. Crawford added another fixed effect for the “top-six” MSOs  [ 148 ] for similar reasons, i.e., to control for their variable “average receipts . . . signal carriage strategies, pricing, and other relevant dimensions.” 2010-13 Determination at 3567 (record citations omitted).

More broadly, Dr. Crawford explained that his fee-based regression was intended to explain the association between program category minutes and royalties paid. To that end, it was necessary to control for other factors, specifically including “the numbers of local and distant stations, the number of activated cable channels, and the size of the CSO.” 2010-13 Determination at 3558 (record citations omitted). These were in addition to other independent variables that Dr. Waldfogel identified as “control variables”, including “the number of subscribers, local median income, and the number of local channels.” 2010-13 Determination at 3557.

In the present proceeding, Dr. George has well stated the role of control variables in multiple regressions relied upon by Dr. Crawford and by experts in the present proceeding:

The purpose of control variables is to account for factors other than coefficients of interest that might affect the dependent variable. In the case at hand, control variables are chosen to account for market factors other than distant signal programming minutes that might affect royalty payments. Of particular concern are factors that affect demand for cable services, which in turn can affect the number of subscribers, system revenue, and royalty payments. Failing to control for factors that shift demand and are correlated with programming minutes can lead to bias in the . . . coefficients that are of primary interest. Income, the number of local stations and (lagged) number of activated channels are all factors that might affect the number of subscribers or revenue so are included as controls.

George WDT at 52. Indeed, as the Judges explained in the 2010-13 Start Printed Page 54220 Determination, Dr. Crawford's approach was designed so as to accept some loss of precision ( i.e., a greater variance and larger standard errors) in exchange for less bias (by excluding other independent variables). This tradeoff is an inevitable problem for an econometrician, and how an econometrician balances these impacts is just as much an art as it is a science. 2010-13 Determination at 3565 & n.59. The Judges noted though, that the tradeoff was moderated because Dr. Crawford “used the universe of all programming on all distant signals, rather than a sampling” which created a “rich data set” that served to “mitigate” the impact of his fixed effects “so that his parameters remained relatively precise.” 2010-13 Determination at 3569.

Accordingly, in the 2010-13 Determination, the Judges essentially agreed with Dr. Crawford's modeling decision to include his fixed effects, because he threaded the needle, minimizing bias while maintaining a sufficiently precise relationship between per-category programming minutes and royalties generated. Indeed, a key reason the Judges elevated the Crawford Model to primary evidentiary status was that “his use of a fixed effects approach avoided the criticism that he had omitted key variables.” 2010-13 Determination at 3569 (citing Crawford CWDT ¶ 107; 2/28/18 Tr. 1398 (Crawford)) (emphasis added).

According to all the experts utilizing fee-based regressions, in whole or in part, this econometric virtue extended through 2014. But in 2015, a commercial earthquake struck the retransmission market: WGNA, by far the most distantly retransmitted channel, converted from a broadcast station into a cable channel. See, e.g., Majure WDT ¶ 75 (JSC expert witness noting that “[t]he removal of the widely carried WGNA materially changed the manner in which CSOs used the section 111 license.”). This metamorphosis had several dramatic effects, one of which was the diminished evidentiary value of Dr. Crawford's new approach of limiting the observations to subscriber group variations within a cable system (accomplished by imposing his systems-accounting period fixed effects.)  [ 149 ]

After the WGNA conversion, commencing in 2015, the number of cable systems with more than one subscriber group declined significantly. Moreover, what had been a robust source of data for analysis of variation of distantly retransmitted program categories among the local channels distantly retransmitted by CSOs had shrunk. To address the loss of this robust set of data, the fee-based regression experts in the present proceeding each constructed a model that, although premised on the Crawford Model, sought a work-around for this significant change.

Dr. Johnson addressed the problem by eliminating all fixed effects from his preferred model, i.e., the “baseline” model presented in his WDT. In doing so, the Johnson Model was able to generate observable data points that showed programming variations not just among subscriber groups within a cable system in a specific accounting period (as the Crawford Model had done), but also program variations among subscriber groups across systems and across (not within) the six-month accounting periods in the SOAs.

Curiously, Dr. Johnson's justification for this change was that it allowed for an increase in the number of observations for his regression, thus addressing what he understood to be a key concern of the Judges in the 2010-13 Determination. Compare Johnson WDT ¶ 59 (“Professor Crawford's model was criticized because it `effectively discarded' approximately 15% of his observations . . . which totaled approximately half of all systems in his data set”) with id. at ¶ 62 (touting his model for containing “18,000 subscriber group-level observations”).

The Judges in that proceeding did not find the level of number of Dr. Crawford's observations to be a debilitating problem, declining to find that the Crawford Model was overfit. Rather, the Judges instead found that Dr. Crawford's balancing of a minimization of explanatory bias with an acceptable loss of measurement precision was appropriate to the task the regression was seeking to measure, i.e., the correlation between program category minutes and the log of royalties paid. In so finding, the Judges had acknowledged the value of the fixed effects (and the control variables) in his model in allowing for the isolation of the correlation. 2010-13 Determination at 3569.

Accordingly, Dr. Johnson's claimed justification for eliminating all of these important fixed effects rings hollow. Moreover, their absence from his model increased the bias in his measurements, which meant that the correlation was subject to mismeasurement. More particularly, the bias in question is what econometricians and statisticians in general refer to as “omitted variable bias.” Here, the “omitted variables” are the ones that the Crawford Model had accounted for with its fixed effects, but which Dr. Johnson injects into his model by eliminating the fixed effects. Accordingly, by this change, the Johnson Model became less probative of the claimed correlation between program category minutes and royalties, and for that reason alone the Judges place less weight on the Johnson Model in this proceeding than they did on the Crawford Model in the 2010-13 Determination.

Dr. George, unlike Dr. Johnson, did not eliminate all fixed effects. Rather, as discussed supra, she eliminated some, retained and/or modified others, and included new fixed effects. Most importantly, the George Model modified Dr. Crawford's “systems-accounting period fixed effects.” Whereas the Crawford Model limited the observed data points to differences among subscriber groups within a cable system during an accounting period, Dr. George relaxed that fixed effect. Specifically, she only limited the number of observed data points by separately fixing the effect at the “systems” level and at the “accounting period” levels. So, for example, if there were two subscriber groups in the Verizon Buffalo cable system, the Crawford Model would only observe the variations between them in a given (six-month) accounting period. By contrast, the George Model would: (1) observe variations between those two subscriber groups in the given (six-month) accounting period; and also (2) beyond the (six month) accounting period. Thus, Dr. George maintained a fixed effect that still controlled for the difference in CSO business practices and a fixed effect control for changes over time (the “accounting period” control), but, unlike Dr. Crawford, she did not combine the two fixed effects.

Alternately stated, Dr. George sought to address the loss of observable data points caused by the 2015 WGNA conversion by making a different tradeoff in the inevitable bias/variance dilemma faced by the econometrician in this context. She opted for somewhat more bias, accepting somewhat less precision, in order to generate what she understood to be a useful number of observations for her regression to analyze.

Although Dr. George makes a less draconian change from the Crawford Model than the Johnson Model does in this regard, she nonetheless introduces “omitted variable bias” into her regression. That is, by allowing variations over time (within a cable system) to impact the correlation, the Start Printed Page 54221 George Model treats temporal changes as reflective of a correlation between program category choices and royalties. [ 150 ] In sum, the George Model introduces omitted variable bias that was absent from the Crawford Model, but to a lesser degree than the Johnson Model. Accordingly, ceteris paribus, the Judges give more evidentiary weight to the George Model than to the Johnson Model.

By contrast, Dr. Tyler's approach circumvents this fixed effects dilemma. As explained supra, the Tyler Model does not use royalties (linear or log form) as the dependent variable. Rather, the Tyler Model uses the SGRP as the dependent variable. Recall that the SGRP is a fraction: the dollar amount of base fee royalties calculated by a subscriber group divided by the SG's gross receipts. The Tyler Model then looks at the variability in this SGRP across all cable systems. So, what happens to the effects arising from different CSOs (the “systems” effects) and the changes over time (the “accounting period” effect) for which Drs. Crawford and George (but not Dr. Johnson) sought to control with “fixed effects”? As Dr. Tyler explains, the system and temporal (“accounting period”), indeed, essentially all fixed effects, are rendered inapplicable when the dependent variable is the SGRP, rather than a form of royalties:

The Crawford Model used fixed effects. The inclusion of fixed effects would make sense if the SGRPs varied across CSOs due to unobserved factors in the marketplace (other than and apart from choices related to stations, and the minutes in those stations). If that were the case, the use of . . . fixed effects would focus the model on the economic decision-making by a CSO for an accounting period across subscriber groups, having controlled for these unobserved factors.

However, my model . . . instead . . . us[es] SGRP for the dependent variable. The SGRPs for each subscriber group are specified by statute (following the carriage decisions made by CSOs)—an industry characteristic that greatly reduces (and possibly eliminates) concerns over unobserved factors that might impact SGRPs.

Tyler ACWDT ¶ 87 n.71. Program Suppliers added an equivalent explanation of this point in their post-hearing briefing:

Substantial irrelevant variability exists across the royalty amounts calculated for each subscriber group. For example, greater royalty amounts might be determined for a subscriber group for no other reason than one subscriber group has more subscribers or higher prices, or both, than another subscriber group. PFF ¶¶ 290, 351. And those prices may vary based on factors like cable networks carried, customer service, bundling with internet and phone, or other factors unrelated to distant signal carriage. PFF ¶ 290. A regression model using royalty amounts calculated as the dependent variable must control for these sources of variability in an attempt to isolate the incremental value of minutes by category type. PFF ¶ 290. Unlike royalty dollar amounts, SGRP does not vary across CSOs due to unobserved factors in the marketplace—other than from choices related to distant signals. Thus, because the Tyler Model uses the more targeted SGRP, and not royalties, the Tyler Model can more precisely measure the incremental value of various types of minutes within each year. PFF ¶¶ 291-92. With less irrelevant variability to explain in the dependent variable, the Tyler Model can focus on the relationships at issue in a way that other models, which use royalties as the dependent variable, cannot. PFF ¶¶ 291-92. Furthermore, because SGRP does not vary for reasons unrelated to distant signal carriage, fixed effects (meant to control for unobserved sources of irrelevant variability) are not necessary. PFF ¶ 292.

PS PHB at 38.

Thus, the Judges understand that other demand effects (such as the impact on demand from differences in, e.g., service quality, pricing, etc.) impact the gross receipts, not the royalty decisions. [ 151 ] The Judges further note that—although other parties and their experts criticize the Tyler Model for not including fixed effects and note how shares would change in fixed effects were added—none of the partis or experts addresses Dr. Tyler's point, discussed supra, that when the dependent variable is the SGRP rather than a form of royalties, fixed effects are unnecessary because there is no variable omitted that will impact the dependent variable.

Another way to understand the evidentiary problem caused by eliminating or relaxing the fixed effects (as in the Johnson and George Models (but not the Tyler Model)) is to consider a crucial point made in the 2010-13 Determination and again in this proceeding—the difference between an “explanatory” regression and a “prediction” regression. In this regard, the Judges stated in the 2010-13 Determination:

The Waldfogel-type regression is an example of modeling utilized to explain the effects of different program categories on the relative payment of royalties—rather than an attempt to predict the level of royalties. Thus, . . . the choice of variables can reasonably be based on the “underlying theoretical model.” [G. Shmueli, To Explain or to Predict?, 25 Statistical Science 289, 290-91, 297 (2010)]; see also F.M. Fisher, Econometricians and Adversary Proceedings, 81 J. Am. Stat. Ass'n 277, 279 (1986) (“There is a natural view that models are supposed to do nothing other than predict . . .” resulting in the “danger” of ignoring “better models that do not fit or predict quite so well but are in fact informative about the phenomena being investigated.”) (emphasis added).

2010-13 Determination at 3564. As in that prior proceeding, the purpose of the fee-based regressions is to “explain” the posited correlation between distantly retransmitted program minutes and royalties. It is unsurprising that other variables may be more useful as “predictors” of royalties, but that is quite another matter. In this regard, in the 2010 Determination the Judges approvingly cited the following testimony by Dr. Crawford:

Dr. Erdem misunderstands the purpose of an econometric analysis in this proceeding . . . . For the goal of prediction, the focus is on finding the explanatory variables that best predict the outcome of interest . . . . [I]f the goal is to predict stock prices[,] and the price of tea in China helps, then . . . include it in the model (and don't worry about the economic interpretation of its coefficient).

That is not the purpose in this proceeding, however. In this proceeding, experts are using econometric analyses to help the Judges determine . . . relative marketplace value . . . . The dependent variable in these regressions, the royalties cable operators pay for the carriage of the distant signals, are informative of this relationship . . . . The key explanatory variables in this relationship, the minutes of programming of the various types carried on distant signals, are informative as the impact they have on royalties reveals the relative market value of each programming type. Other explanatory variables are included in the model to control for other possible determinants of cable operator royalties. This helps improve the statistical fit of the regression (to “reduce its noise”), providing more precise estimates of the impact of programming minutes that are the focus of the analysis. . .

The goal here is to find the econometric model that can best reveal relative Start Printed Page 54222 marketplace value. Doing so means crafting the econometric model to reflect the institutional and economic features of the environment that is generating the data being used . . . . Crawford WRT ¶¶ 91-94 (footnotes omitted) (emphasis added).

2010-13 Determination at 3564. No critic of the regression approach has persuasively addressed this finding in the 2010-13 Determination that relies on the distinction between a regression designed for “prediction” and a regression designed to measure the “effect” of a variable of interest, has persuasively addressed this finding in the 2010-13 Determination that relies on the distinction between a regression designed for “prediction” and a regression designed to measure the “effect” of a variable of interest,

Consistent with this testimony, the Judges held that it is not their “statutory task . . . to identify and rank all the causes of a change in total royalties.” Rather, the Judges' “legal, regulatory, and economic task . . . is to determine the relative market value of different categories of programming,” and thus correlations between royalties and other independent variables, for example, between royalties and the number of subscribers, “is not in furtherance of that objective.” 2010-13 Determination at 3564.

The WGNA conversion not only reduced the number of subscriber groups, as discussed supra, but also significantly reduced the number of CSOs that actually paid the base fee, as opposed to the minimum fee. A number of experts captured this undisputed effect, and Dr. Marx's testimony below in this regard is clear and illustrative:

For necessary context, it is instructive at the outset of this section to consider how the minimum fee issue was addressed in the 2010-13 Determination. There, the Judges found as follows:

1. “[A] CSO's decision to distantly retransmit any particular station, when that CSO is otherwise obligated to pay the minimum royalty fee, does not indicate a direct correlation between the decision to retransmit and the decision to incur a royalty obligation.” 2010-13 Determination at 3568.

2. “[D]uring the 2010-2013 period, on average 527 out of the 1,004 Form 3 CSOs analyzed (52.5%) chose to retransmit the exact or fewer number of signals than the regulated fees permitted [and] 83 paid the minimum fee yet elected not to retransmit any local stations. . . . Those decisions reveal that the CSO has concluded (whether by analysis or resort to a heuristic) that any of the marginal costs (physical or opportunity) associated with retransmission likely exceed the value to the CSO of such retransmission, even accounting for minimum royalties, which the CSO must pay in any event.” 2010-13 Determination at 3568.

3. “Although there is no marginal royalty cost associated with th[e] decision [to retransmit stations when . . . obligated to pay only the minimum royalty], the CSO's decision as to which stations to retransmit remains a function of choice, preference, and ranking. Thus, the CSO in this context would still have the incentive to select distant local stations for retransmission that are more likely to maximize CSO profits, through either an increase in subscribership or, as Ms. Hamilton emphasized, by avoiding the loss of subscribers through the preservation of `legacy carriage' through the non-analytical heuristic of maintaining the status quo.” 2010-13 Determination at 3569.

4. “There are substantial economic bases for this finding. Because the `tax' of the minimum fee is paid regardless of whether distant retransmission occurs, that `tax' is also in the nature of a sunk cost. Fundamental economic analysis provides that a seller should ignore sunk costs when making marginal decisions (although they should try to recoup these costs if the buyers' willingness-to-pay allows it). Nonetheless, a CSO that decides to distantly retransmit a station when the marginal royalty cost is zero has revealed that the particular station contains programming that would increase marginal value to that CSO, over and above the next best alternative `retransmittable' local station and above any other marginal costs ( e.g., physical retransmission costs or the opportunity cost of foregoing a different type of cable channel in the CSO's channel lineup).” 2010-13 Determination at 3569.

5. “CSOs that pay only the minimum royalty fee and elect to distantly retransmit one station might have elected to pay a positive fee in the absence of the minimum fee. For example, assuming Program Suppliers' programs were more valuable to a CSO than the minimum fee and disproportionately more valuable than any other program category, that CSO would have retransmitted a station that disproportionately included Program Supplier content and willingly paid the minimum fee (or more).” 2010-13 Determination at 3659.

6. ”[A]n analysis of the CSOs paying only the minimum fee might provide some useful information. However, . . . the record does not provide an adequate basis to incorporate any “relative value” differences based on a distinction between CSOs that do and do not pay only the minimum fee.” 2010-13 Determination at 3582. See also id. at 3575 (“[T]he Judges find no basis in the record by which they could or should make a reasonable `relative value' adjustment based on whether a CSO did or did not pay only the minimum fee.”).

7. “[T]he data regarding the carriage decisions of CSOs who pay only the minimum fee should not be disregarded [because] even when a CSO is obligated to pay the minimum royalty fee, it still has the incentive to select stations for distant retransmission that it believes will maximize the benefits (or, in economic terms, utility) to the CSO. However, because carriage decisions are not tied even indirectly to a contemporaneous discretionary decision to pay royalties (beyond the mandatory minimum 1.064% for the first DSE), they strike the Judges as potentially less informative than discretionary decisions by CSOs to incur an additional royalty expense in order to distantly retransmit particular stations.” 2010-13 Determination at 3575.

The Judges consider these minimum-fee-related points in the context of the present factual record, which reveals a dramatically different retransmittal landscape for the final three years of the period at issue, 2015 through 2017. [ 152 ]

There is a sub-group within the minimum-fee-only CSOs that decided not to distantly retransmit any local signals despite their duty to pay the minimum fee. Exactly what this decision indicates as to their revealed preferences is unclear from the record. One industry witness suggests that some or all of these CSOs had alternative uses for their bandwidth, for, e.g., other cable programming or internet traffic. Written Rebuttal Testimony of Lynne Costantini, Trial Ex. 7304, at 4-5 (Costantini WRT); 3/27/23 Tr. 1597-1605 (Costantini). But several other witnesses testified that bandwidth concerns no longer existed in the 2014-2017 period, because cable television had converted from analog to digital signals. Written Direct Testimony of Allan Singer, Trial Ex. 7108, ¶ 15 n.1 (Singer WDT); Written Rebuttal Testimony of Allan Singer, Trial Ex. 7109, ¶ 8 n.1; (Singer WRT); 4/3/23 Tr. 2764-65 (Singer); Written Rebuttal Testimony of Melinda Witmer, Trial Ex. 7115, ¶ 13 n.3 (Witmer WRT); 4/10/23 Tr. 4069-70 (Witmer).

Other evidence indicated that CSOs that previously retransmitted WGNA until its conversion to a cable channel simply found no other value in alternative out-of-market local channel programming sufficiently attractive to existing or potential new subscribers that was worth retransmitting. Of course, this argument raises its own questions, because, given that the marginal royalty cost is zero, the presumption of economic rationality strongly suggests that, ceteris paribus, these CSOs would have distantly retransmitted some out-of-market local channels' programming. [ 153 ] But the reasonable presumption of economic rationality requires the presumption that these CSOs were incentivized not to distantly retransmit additional stations. Start Printed Page 54223 One logical reason would be that they saw no value at all in retransmitting those stations and programming, such that any organizational effort in that regard would be a soft cost sufficient to preclude such transmissions. In this regard, the Judges again take note of Ms. Hamilton's designated testimony, in which she emphasized the de minim is nature of the revenues at issue with regard to these potential retransmissions. [ 154 ]

But the foregoing points hardly end this analysis. When CSOs have “excess-capacity” to retransmit signals/programming at zero marginal royalty cost, or when a CSO has declined to exercise its section 111 “privilege” to retransmit any signals or programming, they have differentiated themselves from above-minimum-fee-paying CSOs in a manner that is of both significant economic and of evidentiary importance. The minimum-fee-paying CSOs have revealed a marginal willingness-to-pay of zero for the distant retransmittal of local broadcast stations. The several parties and their economic experts opposing the regression approach in this proceeding make a reasonable objection that it is improper to treat the calculated-but-unpaid base fees of these CSOs as any evidence of the revealed preferences and willingness-to-pay of a minimum-fee-only CSO. But, assuming, arguendo, that this reasonable objection is entirely correct, [ 155 ] what is the appropriate way to consider the decisions of CSOs who do not reveal a positive value for such distant retransmittals?

The Judges find that these CSO decisions can be construed in two ways. First, they can be considered to reveal a zero value for these retransmittals, given that the marginal royalty cost of retransmittal is zero through a retransmittal of 1.0 DSE. And second, they could be construed as simply not providing any useful data regarding the value the CSOs assign to these retransmittals, because that value, although perhaps positive, is still less than the (non-royalty) cost of retransmitting. [ 156 ] But in either construal, the relevant takeaway is that these CSO decisions do not provide the Judges with any useful information  [ 157 ] regarding the relative value of the retransmittal of the various programming categories, the determination of which is the statutory task assigned to the Judges under section 111.

So understood, why should the decisions of these minimum-fee-only CSOs serve to diminish the economic and evidentiary usefulness of the decisions of the other CSOs who pay base fees above the minimum fee. That is, it is misleading, to say the least, to categorize the base-fee-paying CSOs as merely a small cohort of the larger population of CSOs, when they are differentiated by the key marker for section 111 purposes: whether they assign a relative value to the retransmittals and thus relative values to the retransmitted programs. The Judges find it more accurate and appropriate to consider the base-fee-paying CSOs essentially as a separate cohort of CSOs whose decision-making is pertinent to a regression analysis in this statutory context.

Indeed, this is precisely how the Judges perceived the issue in the 2010-13 Determination. There, only a minority of CSOs, 47.5% paid above the minimum fee, but their decisions were extrapolated to the entire market. 2010-13 Determination at 3568 (“during the 2010-2013 period, on average 527 out of the 1,004 Form 3 CSOs analyzed (52.5%) chose to retransmit the exact or fewer number of signals than the regulated fees permitted [and] 83 paid the minimum fee yet elected not to retransmit any local stations”—meaning that less than half of CSOs “voluntarily paid a royalty greater than the minimum fee.”). Nonetheless, the Judges deemed that minority of CSOs sufficient to justify using the entirety of the base fee calculations (whether paid or unpaid) to establish relative marketplace value.

But that extrapolation was hardly precise in the context of the slight majority presence of minimum-fee-only CSOs, a context which could have suggested a need for a proportionate weighting of the decisions of the base-fee-paying CSOs. [ 158 ] But, when the base-fee-only CSOs are considered as the separate and only cohort actually revealing their relative programming valuations, rather than a mere subsample of the entire population of CSOs, then their revealed preferences are seen to reflect 100% of the information regarding relative value generated from CSO decision-making. Implicitly, that is what the Judges did in the 2010-13 Determination.

Further, the Judges are mindful of the testimony by Dr. Marx (herself no fan of the application of the fee-based regression for the 2015-2017 period) that “ the most informative observations in a Crawford-style regression are ones in which a CSO elects to pay more than the minimum fee in royalties in order to carry additional distant signals . . . .” Marx WRT ¶ 64 (emphasis added). [ 159 ]

Colloquially, the issue may be characterized as whether the Judges should let the perfect be the enemy of the good. Here, the “perfect” fact pattern would be where all or most of the data is generated by CSOs paying above the minimum fee. That is not the factual context here. But there is “good” evidence from the CSOs who did retransmit enough programming to trigger the base fees of their subscriber groups, and that the Judges do not ignore that data. [ 160 ]

Accordingly, the Judges will give due weight to the minority of CSOs that, in the 2015-2017 period, paid above the minimum fee and thus revealed their preferences by paying an additional royalty in order to retransmit one or more additional stations. To be clear, in their weighing of this evidence, the Judges perceive the above-minimum-fee CSOs as providing evidence from three perspectives: (1) reflecting 100% of all the CSOs who did reveal their preferences in a cardinal manner, which supports the assignment of due weight to their station and programming choices; and (2) reflecting only a minority of the revealed preferences of the CSOs that found the value in distant retransmissions of local broadcast stations sufficient to add such stations to their lineup—a lower percentage which therefore would support a lower evidentiary weight; and (3) reflecting the revealed preference of an even smaller slice of CSOs and their programming, thus supporting the lowest level of evidentiary weight among these three perspectives. [ 161 ]

Two parties, SDC and PTV, ask the Judges to reject the Tyler Model by characterizing it as “similar” to a “fee generation” approach to the section 111 royalty allocation issue, asserting that this approach is improper and has been rejected previously by the Judges and their predecessors. SDC and JSC are incorrect, and this criticism deserves its own separate section.

The fee generation approach has been defined as “a valuation method that attempts to measure the amount of royalties actually generated by a particular claimant group.” Report of the Copyright Arbitration Royalty Panel to the Librarian of Congress, Docket No. 2001-8 (CARP CD 98-99) at 60. In its attempt to characterize the Tyler Model as a fee generation approach, SDC maintains as follows:

[Dr. Tyler's] approach could be viewed as similar in notion to the “fee generation” approaches that the Judges and their predecessors rejected in days long past ( see, e.g., 2004-05 Distribution Order, 75 FR at 57071-73 (“[F]ee generation is not persuasive as the best method for determining relative marketplace value because of the Canadian Claimants' failure to firmly link the relationship between section 111 royalties to that value”)).

SDC PFF ¶ 138. See also 6/12/23 Tr. 6007 (SDC counsel's closing argument) (describing the Tyler Model as “a fee-generation methodology.”).

Similarly, PTV argues:

Dr. Tyler's regression resembles the fee generation methodology, which attempts to assess relative value based on statutory royalties generated by cable retransmissions. [The] [j]udges have repeatedly considered and rejected the fee generation methodology because the statutory royalties do not relate to the relative value of the distantly retransmitted programming.

PTV PFF ¶ 159.

Of course, to assert, as SDC and PTV do, that the Tyler Model may merely “resemble,” or be “similar to” a fee generation model, is also to say that the Tyler Model is not a fee generation model. Moreover, the Judges disagree with these fee-generation-based arguments for two further reasons. First, the assertion that the Judges have rejected the fee generation methodology is simply wrong. Second, the argument (that the Tyler Model's passing resemblance to a fee-generation approach invalidates its use) fails to address the particular merit of this approach given the evidentiary record.

With regard to the prior rulings regarding fee-generation approaches, Program Suppliers accurately and compellingly demonstrate the incorrectness of the claim that these rulings have rejected a fee-generation approach and precluded its use (or the use of any similar model) in these allocation proceedings. Specifically, Program Suppliers emphasize the Judges' most recent ruling on this issue, in the 2010-13 proceeding:

[T]he Judges ruled that fees-based regression analyses are distinguishable from analyses of fees-generated. In their post-Initial Determination Order Denying Rehearing [in the 2010-13 proceeding] . . . the Judges specifically rejected the claim that fee-based regressions are the same as “fee generation” approaches. They held that fee-based regressions “identif[y] a positive statistical relationship between (a) royalties paid by CSOs; and (b) program categories on distant local stations that had been retransmitted to subscribers by CSOs. Clearly, any `fee generation' approach that did not make use of this regression approach is distinguishable.” See Order Denying Rehearing at 5 (emphasis added).

Even if the Tyler Model could be likened to a fee generation approach, SDC and PTV are wrong to suggest that such approaches have been categorically rejected by the Judges and their predecessors. Again, the Judges considered and rejected the identical argument in their Order Denying Rehearing:

[N]either the Judges nor their predecessors have categorically rejected use of the broad category of fee generation approaches to ascertain relative value in section 111 allocation proceedings. As the Librarian concluded when accepting in full the CARP Report for the 1998-99 distribution years: “[W]hile it is true that fees generated do not measure the absolute value of programming, it does not mean that they are not capable of measuring the relative value of programming between the claimant groups.” Librarian's Order, 69 FR at 3618 (emphasis added). In that Order, the Librarian expressly noted that `there does exist precedent,' in the 1990-1992 CARP Report, for using the “fee generation” approach to determine relative market value. Id. When the Judges succeeded to the CARP's jurisdiction, they likewise stated that “we are not persuaded that we are precluded from ever considering fee generation as a distribution methodology. . . .” 2000-03 Determination, 75 FR at 26805. In fact, in the [Initial 2010-13] Determination, the Judges acknowledged the ongoing use of a fee generation approach in particular instances, notwithstanding that it had been “generally discounted” in some prior cases. See Determination at 48 n.45; 78 n.145.

Program Suppliers' Reply to Proposed Findings of Fact and Conclusions of Law (PS RPFF) ¶ 88 (and record citations therein). See also id. ¶ 96. Program Suppliers have also properly relied on the earlier rulings of the Judges and their predecessors in this regard. See 2000-03 Distribution Order at 26805 (after detailing the “origins” and the “history” of the fee generation approach, the Judges stated this approach never had been “flatly rejected . . . as a methodology, ” and the Judges thus held that they were “not persuaded that we are precluded from ever considering fee generation as a distribution methodology. . . .”); 1998-99 Librarian Order at 3606, 3618 Start Printed Page 54225 (the CARP panel rejecting opposition to “the fee generation method” because “there does exist precedent” for using this methodology). More broadly, the Judges' predecessors have long understood the appropriateness of incorporating fee-generation models in the precise process in which the present Judges are now engaged—analyzing, weighing, and combining multiple approaches to the allocation of royalties—when, as now, the Judges cannot identify only “a single formula or rationale adequate to reach our determination and allocations in [the] proceeding.” 1979 Cable Royalty Distribution Determination, 47 FR 9879 , 9892 (Mar. 8, 1982) (considering a fee generation approach together with eight other allocation methods) (emphasis added).

As to the second point, assuming arguendo the Tyler Model bears a passing resemblance to a fee-generation approach, the Judges find, on this evidentiary record, such affinity constitutes virtue rather than vice. A key criticism of the Tyler model's fee-generation resemblance is premised on the fact that both appear to “ignore[ ] variation relevant to revealing CSO preferences” among program categories. CTV PFF ¶ 354 (and record citations therein); accord CCG PFF ¶ 186 (and record citations therein) (“Dividing the royalty payment by gross receipts removes the variation different signals contribute to revenue.”). However, that argument misapprehends Dr. Tyler's approach. It is decidedly not merely a “measure [of] the amount of royalties actually generated by a particular claimant group,” which is the definition of a fee-generation model, as set forth supra. Rather, the Tyler Model calculates coefficients that “represent the incremental impact on the SGRP for each type of compensable minute.” Tyler ACWDT ¶ 90. Further, the Tyler Model then weights these coefficient values by total receipts, Tyler ACWDT ¶ 88, and then multiplies these weighted coefficients by the number of minutes of each claimant's program category. Tyler ACWDT ¶ 144. That is quite different from the basic fee-generation approach.

But the proponents of the other fee-based regressions are onto something in their observation that the Tyler Model generates less variation than would otherwise be captured when the dependent variable is royalty-specified rather than specified as the SGRP. However, the Judges see this distinguishing feature of the Tyler Model as an improvement over the other fee-based regressions proffered in the present case.

From the perspective of the parties proffering fee-based regressions, the only way to estimate the appropriate variations among program categories is by utilizing a royalty-based parameter (the log of royalties to be precise) as the dependent variable. That is, these more traditional forms of fee-based regressions posit that there is an ascertainable and measurable correlation between program category minutes and the log of royalties, detectable once sufficient fixed effects and control variables are specified. So, there is a black-and-white debate: Which is the preferrable dependent variable for the fee-based regressions in the present case, a royalty based variable or Dr. Tyler's SGRP?

Recall that the first step in any regression modeling is to identify an economic theory which will guide the selection of model specifications. What is that economic theory? Perhaps the more salient phrasing of this question is: What economic theory is most consonant with the record evidence of the industry details? Let's take stock:

1. The royalties paid by CSOs for 1.0 DSE is a minimum of 1.064% of gross receipts, with two marginally lower brackets of percentage rates for additional DSEs, flattening out at 0.330% at 5.0 DSE. A CSO needs to decide how many, if any, local broadcast stations to distantly retransmit.

To answer this question, all the economist witnesses attempt to zero-in on what, in their respective opinions, would constitute economically rational decision-making. However, in identifying what is rational, they implicitly assume a CSO would be able to determine if it is retransmitting a profit-maximizing or a sub-optimal bundle of distant programming, but there is no record evidence as to how a CSO would know this.

More particularly, there is no evidence of a measure of estimated subscribers retained, obtained, or lost, or of a change in subscription rates, caused by distant retransmission decisions. Are such changes even occurring because of the configuration of distantly retransmitted stations? On this, the record is barren. [ 162 ]

2. But, as all the witnesses acknowledge, over the last three years of the relevant period, 2015-2017, the overwhelming percentage of CSOs pay only the minimum fee, and the vast majority of section 111 royalties are generated by those minimum-fee-paying CSOs. That is, most CSOs do not even retransmit enough distant signals to trigger a base fee obligation. Moreover, a large minority of those CSOs elect not to retransmit any signals, demonstrating, as Dr. George notes, that they have a zero willingness-to-pay for programming that is royalty costless. Why have these changes occurred ?

3. The answer is to be found in the evidentiary record. An industry expert witness, Sue Ann R. Hamilton (whose 2010-13 testimony was properly designated as evidence in this proceeding by Program Suppliers), stated (as summarized in the 2010-13 Determination) that:

[A] CSOs' selection of stations for distant retransmission is marked by inertia, not by an affirmative analysis and weighing of alternative stations, [because: (1)] distant retransmission costs represent a non-material expenditure for CSOs compared with their other more expensive programming and carriage decisions [and (2)] CSOs are more concerned with losing existing subscriber [`legacy distant carriage'] if they drop certain stations and the associated programs than they are with whether or not any new retransmitted station and its associated programs might entice new subscribers[, or with] adjusting the roster of distantly retransmitted stations.

2010-13 Determination at 3567 (emphasis added).

4. Ms. Hamilton's testimony regarding the CSO's primary concern over retaining legacy subscribers proved prescient when CSOs did not meaningfully substitute for the lost sports programming on WGNA, but rather just retransmitted fewer stations and programs, and thus defaulted to a binding minimum fee rather than a calculated base fee. That is, the phenomena that Ms. Hamilton described has been validated by the impact of the WGNA conversion. JSC professional and college team sports that were retransmitted on WGNA clearly were valuable, both in terms of the regressions (with the highest coefficients) and in terms of the survey results. But when WGNA converted to a cable station, despite the high value of JSC programming (its coefficient fell but remained higher than other category coefficients), JSC programming value vis-à-vis the retransmission sector, as measured by the regression methodologies, dropped precipitously, because the number of subscribers to whom JSC sports were transmitted dropped by over 90%. Although at first blush it may seem odd given the high value of JSC programming that CSOs did not “backfill” that loss, Ms. Hamilton's “inertia” and “legacy” arguments explain the absence of such a “backfill.”  [ 163 ] Such inertia, and the Start Printed Page 54226 loss of WGNA as a legacy channel, apparently made it not worth the effort for CSOs to search for and retransmit a sufficient number of replacement channels and programs.

5. In the context of this backdrop, Dr. Erdem's drumbeat that CSOs' priority is to minimize their costs takes on a bit more significance. CSOs appeared to be relatively less concerned with the “demand side” for distantly retransmitted channels and programming, and thus, relatively more concerned with the “supply side,” particularly with the royalty costs.

6. In this more cost-centric context, Dr. Tyler's regression appears to the Judges to better reflect the realities of the market than the other fee-based regressions. The Tyler Model does not put the cart before the horse; that is, it does not place priority on program category (“demand side”) decisions. Rather, it prioritizes the “budget constraint” (“supply side”) decisions of CSOs, by which they calculate the percentage of their subscriber group's gross receipts they will pay in royalties.

7. However, for those CSOs transmitting above 1.0 DSE, they have economic decisions to make regarding the mix of programming they will transmit via their signal decisions. Given the economics and reality of this retransmission market, as described above, only then will the relative value of program categories be of material economic importance. It is at this stage that the Tyler Model generates information as to relative value, through the Tyler model's coefficients.

8. To return to the issue at hand, as its critics assert: Does the Tyler Model identify fewer variations across program categories compared to the other regression models? Apparently, the answer is yes. But those other regressions, although not without evidentiary value, do not appear to be as consonant with the evidentiary record as the Tyler Model.

The foregoing points help to focus on the underlying economics of the Tyler Model. By using the SGRP as the dependent variable, the Tyler Model reflects economic principles relating to the value of a “public good,” which is a good “for which the marginal costs of providing it to an additional person are strictly zero and for which it is impossible to exclude people from receiving the good.” Joseph E. Stiglitz & Jay L. Rosengard, Economics of the Public Sector 107 (4th ed. 2015). But when the good is excludable, but still bears a marginal cost of zero (non-rivalrous in “econo-speak”), it is considered an “impure” (or “quasi-”) public good. See also 3/27/23 Tr. 1496 (Boyle) (a PTV expert witness with a Ph.D. in applied economics agreeing that there are “characteristics” and “elements” of a “quasi-public good” in these distantly retransmitted channels and programs.).

Unlike “private goods” (rivalrous and excludable), the demand curve for public goods, impure or otherwise, “can be thought of as a `marginal willingness-to-pay' curve [which], at each level of output of the public good, . . . says how much the individual would be willing to pay for an extra unit of the public good.” Stiglitz & Rosengard, supra, at 107. This is consistent with the economic logic of the Tyler Model. See Tyler ACWDT ¶ 67 (“Even though the amount of the royalty is determined by statute—and so constitutes a measure of minimum willingness to pay as opposed to the outcome of a negotiation—the estimated incremental royalties for the different program types relative to one another provide insight into how the CSOs would actually value these program categories in an unregulated market.”) (emphasis added). Also, the Tyler Model's SGRP is in the nature of an economist's “budget line” (a/k/a “budget constraint”), limiting the combinations of goods that a buyer can purchase. See Robert S. Pindyck & Daniel L. Rubinfeld, Microeconomics 82 (8th ed. 2013). [ 164 ] The Tyler Model's SGRP identifies the percentage of total costs (including profits, which reflect opportunity costs) incurred by CSOs across their subscriber groups in the form of section 111 royalties. With that percentage/budget line established, the Tyler Model then allocates the portions of the weighted category minutes attributable to that SGRP calculation.

In sum, there is a real economic and market-based foundation for the Tyler Model in the context of the present record relating to the 2014-2017 retransmission market. Moreover, the Tyler Model is essentially a fee-based regression, with characteristics of the fee-generation approach, constructed in a manner that reflects both Ms. Hamilton's persuasive testimony and the reduction in distant retransmissions following the WGNA conversion.

CTV maintains that Dr. George's calculation of the CCG share is incorrect for two related reasons: (1) the George Model as specified implies that CCG had compensable programming outside the Canada Zone; and (2) the George Model overrepresents the Canada Zone. CTV PFF ¶ 330.

This problem arises because the George Model assumes that CCG programming would be available and valuable throughout the United States ( i.e., outside of the Canadian Zone) if one assumes the inapplicability of this geographic limitation in the section 111 license for purposes of estimating relative marketplace value for CCG programming. Dr. George explains why this assumption is adopted in the George Model:

It is in most circumstances right to infer that programming on distant signals re-transmitted has higher value than other programming not transmitted. The primary exception is when cable systems are prohibited from carrying particular signals, such as the case with Canadian signals outside of the Canadian re-transmission zone.

Failing to control for the fact that transmission of Canadian stations is prohibited outside of the Canadian re-transmission zone introduces downward bias in the value of Canadian Claimant programming since the absence of carriage is equated with zero value.

It is worth repeating that the underlying economic framework is what governs model specification. The prohibition on distant signal carriage on its face imposes a restriction on cable system choices so must be reflected in the model. No further “evidence” is needed, or, in fact, possible, since we cannot observe prohibited carriage.

George WRT at 16, 25-26 (emphasis added).

Program Suppliers, through Dr. Tyler, makes the same argument as CTV, and responds to Dr. George's point above as follows:

Within the Canada zone, CSOs can choose among all of the content categories. But outside the Canada zone, CSOs do not have the option of choosing CCG content. There is a difference between having something available and not chosen versus not having something available at all. Estimating the relationships separately when the Canadian minutes are available or not recognizes this, and this approach makes more economic sense.

PS PFF ¶ 297 (and record citations therein).

Dr. Bennett, on behalf of CTV, calculated and tabulated the impact on allocation shares of the difference between the approaches of Drs. George and Tyler as summarized above:  [ 165 ]

Based on the foregoing, the Judges find that the George Model of Canadian programming's relative marketplace value is not adequately proven by her assumptions regarding the value of such signals if Canadian signals had been made available outside the Canada Zone. Rather, such values are speculative, and no extrapolations can be credibly made from the royalty data. To be clear, the Judges are not saying that programming on Canadian signals would not have value outside of the Canada Zone. But, like the programming retransmitted by minimum-fee-only CSOs, the value of retransmitted programming is not subject to accurate measurement via a revealed preference approach that is the economic concept behind these regressions. Indeed, because this point applies even with regard to minimum-fee-only CSOs who actuall y retransmitted distant programming, a fortiori it applies to the hypothetical retransmission of programming outside of the Canada Zone. Further, not only is the value of any hypothetical retransmission outside the Canada Zone speculative, there is also no showing that, as a technical matter, such transmissions further away from the Canada Zone would be feasible. See SDC PFF ¶ 219 (“[W]hile the statutory limitation restricting carriage of Canadian television stations to within 150 miles of the U.S.-Canada border or north of the forty-second parallel (the “Canadian Zone”) is set forth in section 111(c)(4) and could therefore be rendered inapplicable in a hypothetical market without the section 111 compulsory license, the laws of physics would still operate as a practical physical limitation on Canadian station broadcast signals, absent an alternative (and more costly) delivery method such as fiber or satellite feeds.”) (emphasis added). [ 166 ]

The Judges have considered all of the regression models proffered by the parties in this proceeding. None of the models were excluded from consideration. Based on the Judges' analysis and conclusions regarding each model, as set forth supra, and comparing each of them, the Judges find the Tyler Model to be the most appropriate regression model in this record. [ 167 ] To recapitulate the principal reasons:

1. On the present factual record, the Tyler Model's SGRP is preferable to the log of royalties, or royalties themselves, as the dependent variable in a fee-based regression.

2. The Tyler Model avoids the conundrum of the variance/bias dilemma that is of particular concern in this case for other proffered regression models. By contrast, Drs. George and Johnson found themselves on the horns of this dilemma. They require fixed effects to avoid bias by isolating the effect of program category minutes on royalties. But given the post-WGNA conversion, the use of fixed effects, as in the model applied in the prior proceeding, would not generate enough observations. And yet relaxing or eliminating fixed effects to obtain more observations weakens the isolation of the effect of interest, the impact of program minutes on royalties, and creates bias.

3. Among the control variables which the Tyler Model does not require is the control for the number of subscribers in a subscriber group, which is required in the other fee-based regressions, but cannot be estimated without measurement error.

4. The Tyler Model utilizes as a useful analogy to price a price proxy in the form of a budget constraint, i.e., the SGRP. Start Printed Page 54228

5. Although the Tyler Model is not based on a hedonic regression, [ 168 ] it can reasonably be described as a “hedonic-inspired” regression. [ 169 ]

6. The Tyler Model's use of weighting by each CSO's gross receipts is appropriate.

7. The Tyler Model calculates coefficients for each year, rather than “pooling” the data to generate a single coefficient for each program category across all four years.

8. The Tyler Model provides sufficient variation among the CSOs' decisions.

9. There is no credible evidence (or even a credible allegation) that Dr. Tyler engaged in anything that could be construed as specification searching. In fact, the SDC and JSC experts—who criticize the other regression models (including Dr. Marx's) for ignoring the impact of potential specification searching—acknowledge that the Tyler Model alone is free from this infirmity. The Judges agree, because the absence of specification searching in connection with the Tyler Model allows it to be transparent and, specifically, free from the consumption of “phantom degrees of freedom.”

10. The alleged superficial resemblance of the Tyler Model to a fee-generation model is not only factually off-the-mark and legally irrelevant, the shared characteristics of the two models in fact better reflect the real-world decision-making of CSOs, as described in Ms. Hamilton's testimony.

However, as also discussed supra, the Judges cannot simply adopt (for all circumstances) the Tyler Model to the extent it includes the base fees of CSOs who only paid the minimum fee from 2015-2017. Rather, for those years, the Judges, for the most part, rely on Dr. Tyler's calculation of allocation shares as derived from the coefficients he calculated for the CSOs paying more than the minimum fee.

In applying Dr. Tyler's approach, the Judges first note that, for 2014, the allocation of shares can be identified by reference to all the CSOs, including those who paid the minimum fee, as explained, for example by Dr. Marx. See Marx ACWDT ¶ 34 (“data on programming minutes and royalties based on the carriage of distant signals for 2014 are a close match to comparable data from the 2010-2013 proceeding.”) The allocation shares for 2014 in the Tyler Model, using the data for all CSOs in the regression, are the following:

Allocation Shares for 2014 in the Tyler Model

YearProgram suppliers (%)JSC (%)CTV (%)PTV (%)SDC (%)CCG (%)201426.6 (3.8)37.2 (7.5)11.3 (2.6)14.0 (1.7)4.3 (0.9)6.5 (0.9)(standard errors in parentheses).

See Tyler ACWDT fig.3.2.

However, for the years 2015-2017, the Judges principally rely on Dr. Tyler's allocation share calculations pertaining only to the CSOs who paid more than the minimum fee, i.e., those whose preferences were revealed by their retransmission decisions. These allocation shares as calculated by Dr. Tyler are the following:

Dr. Tyler noted that these 2015-2017 share allocations were not “strikingly” different from the share allocations he recommended by reliance on his regression results for all CSOs, even if they paid only the minimum fee. Tyler ACWDT ¶ 103. Moreover, as a theoretical economic matter, Dr. Tyler opined that he was not aware of “any logic, a priori,” that there would be any difference in “ relative marketplace values” as between “Above Minimum Fee CSOs” and “Positive Carriage Minimum Fee CSOs” ( i.e., including excess capacity CSOs). Id. In this regard, compare Tyler ACWDT fig.6.3 (above) with Tyler ACWDT fig.3.2 (below):

However, Figure 6.3 reports an anomalous increase in the share allocated to the CCG claimants. This anomaly is explainable.

CCG programming is unique among the program categories in this proceeding because it is limited in geographic scope to CSOs located within a 150-mile belt below the U.S./Canadian border. See CCG PFF ¶ 59 (“Under the section 111 compulsory license, it is prohibited for a cable company to distantly retransmit a Canadian broadcast signal to communities located more than 150 miles from the United States-Canada border and also south of the 42nd parallel.”) (citing 17 U.S.C. 111(c)(4)(A) ).

As such, the data reported in Tyler ACWDT fig.6.3—limited to CSOs paying above the minimum fee—would reflect the unique value of Canadian programming in that region. More particularly, CCG programming is uniquely valuable in the Canada Zone in good measure because of the retransmittal of French language programming, a niche sub-category. See CCG PFF ¶ 20 (“The programming on Canadian French-language stations plays an important role for Americans living in the northeast United States and either speak French or have French ancestry. . . . An example . . . is in the successful grassroots campaign of Sanford, Maine residents who lobbied the Metrocast cable company and their local government to restore carriage of the CBC's French-language station CKSH.”); see generally id. ¶ 19 (noting the distinct nature of French language programming in demand by CSOs to serve residents of “New York, Vermont, Maine, New Hampshire, and Massachusetts—that have a sizeable proportion of residents with connections to the French language through a current spoken language or ancestry.”); see also Written Direct Testimony of Beverley Kirshenblatt, Trial Ex. 7400, p. 6 (Kirshenblatt WDT) (the CBC programming on Canadian stations retransmitted into the Canada Zone is provided “in English, French, and eight Indigenous languages . . . broadcast . . . from around the world [as] a pan-Canadian service reflect[ing] Canada and Canadians in both official languages . . . and is a significant contributor to the cultural fabric of Canada through the promotion and creation of a variety of programming.”).

Thus, in addition to the demand for the usual complement of distantly retransmitted programming that exists throughout the wider United States, in the Canada Zone there exists this additional demand. Such greater demand means that CSOs would choose to pay more than the minimum fee by adding CCG stations, and thus Canadian claimant programming, to their channel lineup. Accordingly, CSOs in the Canada Zone would very likely be overrepresented in the cohort of above-minimum-fee-paying CSOs in Tyler ACWDT fig.6.3.

The problem this creates, for present purposes, is that the Judges are allocating a royalty pool for which, over the period 2015-2017, more than 90% of the funding came from minimum-fee-only CSOs. Thus, while the data from above-minimum-fee-paying CSOs ( i.e., in Tyler ACWDT fig.6.3) provides useful economic evidence of CSOs' revealed preferences for other claimant categories, with regard to CCG content and value, this data is distortionary as applied to the Judges' task of allocating all U.S. royalties.

Confirmatory of this distinction is the fact that CCG itself has not proposed that it receive the anomalously high allocations suggested by the data in Tyler ACWDT fig.6.3 (23.2% in 2015, 31.1% in 2016, and 34.6% in 2017). Rather, CCG has proposed that it receive 14.8% for 2015, 13.7% for 2016, and 13.6% for 2017. CCG PFF ¶ 617 fig.53. Further, CCG filed its Proposed Findings of Fact on June 15, 2023, and it was aware of the higher CCG shares in Tyler ACWDT fig.6.3 since that document was filed on September 2, 2022. And yet at no time did CCG ever seek to adopt the higher CCG share set forth in Tyler ACWDT fig.6.3.

Accordingly, in their allocations based on the Tyler Model regression, for 2015-2017, the Judges utilize the CCG shares reported at Tyler ACWDT, Fig.3.2. The difference in shares, compared to the CCG share in Tyler ACWDT 6.3, is allocated proportionately among the other five categories, as set forth in the table for Adjustment A below:

Adjustment A Table

Year	Program suppliers (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)
2014	26.6	37.2	11.3	14.0	4.3	6.5
2015	46.29	2.37	12.76	14.34	10.95	13.3
2016	39.25	1.63	16.68	18.43	10.41	13.6
Start Printed Page 54230
2017	42.79	0.65	12.84	18.41	10.11	15.2
The Judges recalculated the shares of the other five claimant categories by: (1) calculating the percentage each category represents of all the categories' shares except CCG; (2) multiplying each percentage by the reduction in the CCG share generated by replacing the CCG column of Tyler ACWDT fig.6.3 with Tyler ACWDT fig.3.2; and (3) adding that product to the shares of each claimant category.

A further adjustment is still required. As noted supra regarding the PTV share, the Judges are adopting the downward adjustments made by Dr. Bennett to reflect the presence of Must Carry PTV stations. See Bennett WRT fig.52. The Judges apply those adjustments, and recalculate the shares of the other parties as set forth in the table for Adjustment B below:

Adjustment B Table

Year	Program suppliers (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)
2014	26.80	37.48	11.38	13.36	4.33	6.55
2015	47.67	2.44	13.14	11.78	11.28	13.70
2016	40.75	1.69	17.32	15.32	10.81	14.12
2017	44.07	0.67	13.23	15.96	10.41	15.66
The Must Carry adjustment in Bennett WRT fig.52 was based on the PTV shares of all CSO royalties, whereas the Judges are applying this adjustment to the shares of CSO royalties attributable to shares generated by CSOs paying above the minimum fee (subject to the prior adjustment for CCG, discussed ). So, for 2014, the percentage point adjustment to the PTV share is the percentage point adjustment in Bennett WRT fig.52. For 2015-2017, the percentage point adjustment to the PTV share is calculated for each year by (1) finding the percentage of PTV shares reflected by the PTV shares from Tyler WRT fig.6.3 ÷ PTV's shares from Tyler WRT fig.3.2, (2) multiplying that percentage by the percentage point adjustment in Bennett WRT fig.52, and (3) subtracting that product from the PTV share from the table above.
The shares of the other claimants are adjusted upward by: (1) calculating the percentage each category represents of all the categories' shares except PTV, (2) multiplying each percentage by the Bennett Must Carry adjustment (reduced as set forth above), and (3) adding that product to the shares of each claimant category.

There remains a final adjustment. The Judges note that PTV argued that a significant number of its stations were retransmitted by CSOs together with WGNA prior to the WGNA conversion, thereby generating a base fee royalty and an expressly revealed preference and willingness-to-pay. PTV further notes that post the WGNA conversion, many of these CSOs continued to retransmit the same PTV station, but this did not trigger the base fee because the minimum fee applied (with WGNA gone). PTV maintains that the pre-WGNA conversion carriage is probative of the fact that the post-WGNA conversion evidences economic value as if it were generating base fee royalties. PTV PFF ¶ 60 (and record citations therein). The Judges agree.

On this issue, there is evidence in the form of Mr. Harvey's analysis done on behalf of JSC. Specifically, Mr. Harvey reported:

The number of PTV Only systems increased after the WGNA conversion from 44 at the end of 2014 to 173 by the end of 2017. PTV Only Systems that had carried WGNA and PTV in 2014 account for three-fifths of that increase.

Harvey WDT ¶ 106. The Judges find that Mr. Harvey's reporting demonstrates that 44% of the PTV stations that were identified as retransmitted by minimum-fee-paying CSOs after the WGNA conversion had been transmitted pre-conversion and generated base fee royalties. That is persuasive evidence of ongoing marketplace value. Accordingly, the Judges use that factual finding to increase by 44% the PTV share modification, as set forth in the table for Adjustment C below:

Adjustment C Table—Applying The PTV Adjustment To Reflect WTP of CSOs That Maintained PTV Carriage After WGNA Conversion

Year	Program suppliers (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)
2015	44.87	2.30	12.37	16.96	10.62	12.90
2016	37.51	1.56	15.94	22.06	9.95	13.00
2017	40.39	0.61	12.12	22.98	9.54	14.35
The Judges recalculated the shares of the other five claimant categories by: (1) calculating the percentage each category represents of all the categories' shares except PTV, (2) multiplying each percentage by the increase in the PTV share generated by adjusting to reflect WTP of CSOs that maintained PTV carriage after WGNA conversion, and (3) subtracting that product from the shares of each claimant category.

Returning to Tyler ACWDT fig.6.3, upon which the Judges principally rely, the Judges' decision to utilize and adjust the share allocations therein is strengthened by consideration of the confidence intervals at various levels of statistical significance, relating to those share allocations. That is, those confidence intervals serve to confirm the reasonableness of their share allocation approach. In that regard, as set forth in the table below, only one claimant category, JSC, has a negative low range bound in its confidence interval at the 90%, 95%, and 99% confidence intervals. Moreover, the negative value diminishes, as the confidence interval widens. The Judges Start Printed Page 54231 do not find that this one lower bound issue is sufficient to call into question the usefulness of the share allocations on which they rely.

Additionally, at the 55% confidence interval, this lower bound in fact turns positive, as also noted in the table below.

55%/90%/95%/99% Confidence Intervals for Claimant Shares From Tyler Only CSOs Paying More Than Minimum Fee Model

Claimant	Share	55% Confidence interval	90% Confidence interval	95% Confidence interval	99% Confidence interval
Program Suppliers	41.0% (2.4%)	39.19% to 42.81%	37.05% to 44.95%	36.3% to 45.7%	34.82% to 47.18%
JSC	2.1% (1.5%)	0.97% to 3.23%	−0.37% to 4.57%	−0.84% to 5.04%	−1.76% to 5.96%
CTV	11.3% (2.2%)	9.64% to 12.96%	7.68% to 14.92%	6.99% to 15.61%	5.63% to 16.97%
PTV	12.7% (0.8%)	12.10% to 13.30%	11.38% to 14.02%	11.13% to 14.27%	10.64% to 14.76%
SDC	9.7% (1.2%)	8.79% to 10.61%	7.73% to 11.67%	7.35% to 12.05%	6.61% to 12.79%
CCG	23.2% (0.9%)	22.52% to 23.88%	21.72% to 24.68%	21.44% to 24.96%	20.88% to 25.52%
Program Suppliers	31.3% (3.0%)	29.04% to 33.57%	26.37% to 36.24%	25.42% to 37.18%	23.57% to 39.03%
JSC	1.3% (1.9%)	−0.13% to 2.735%	−1.83% to 4.43%	−2.42% to 5.02%	−3.59% to 6.19%
CTV	13.3% (3.4%)	10.73% to 15.87%	7.71% to 18.89%	6.64% to 19.96%	4.54% to 22.06%
PTV	14.7% (0.8%)	14.10% to 15.30%	13.38% to 16.02%	13.13% to 16.27%	12.64% to 16.76%
SDC	8.3% (1.0%)	7.55% to 9.06%	6.66% to 9.95%	6.34% to 10.26%	5.72% to 10.88%
CCG	31.3% (1.4%)	30.04% to 32.16%	28.80% to 33.40%	28.36% to 33.84%	27.49% to 34.71%
Program Supplier	33.0% (2.2%)	31.34% to 34.66%	29.38% to 36.62%	28.69% to 37.31%	27.33% to 38.67%
JSC	0.5% (1.0%)	−0.26% to 1.26%	−1.15% to 2.15%	−1.46% to 2.46%	−2.08% to 3.08%
CTV	9.9% (2.0%)	8.39% to 11.41%	6.61% to 13.19%	5.98% to 13.82%	4.75% to 15.05%
PTV	14.2% (0.8%)	13.60% to 14.80%	12.88% to 15.52%	12.63% to 15.77%	12.14% to 16.26%
SDC	7.8% (1.0%)	7.05% to 8.56%	6.16% to 9.45%	5.84% to 9.76%	5.22% to 10.38%
CCG	34.6% (2.1%)	33.01% to 36.19%	31.15% to 38.05%	30.48% to 38.72%	29.19% to 40.01%
Source: Derived from data in Tyler ACWDT fig.6.3.
standard errors in parentheses.

The Judges take note of the 55% confidence level because, as they stated in the 2010-13 Determination, there is nothing sacrosanct about the three confidence levels of 90%, 95%, and 99% when a court is considering econometric analyses. In this regard, the Judges take note of the position of the United States Supreme Court regarding the limited evidentiary value of confidence intervals/statistical significance. See Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 40 (2011) (“the premise that statistical significance is the only reliable indication of causation . . . is flawed.”).

In this regard, the Judges stated in the 2010-13 Determination:

A statistical significance level of .01, .05 and .1 . . . is “often referred to inversely as the . . . confidence level,” equivalent to 99%, 95% and 90%, respectively. [ABA Econometrics at 18]. Although “[s]ignificance levels of five percent and one percent are generally used by statisticians in testing hypotheses . . . this does not mean that only results significant at the five percent level should be presented or considered [because] [l]ess significant results may be suggestive, even if not probative, and suggestive evidence is certainly worth something.” [F. M. Fisher, Multiple Regression in Legal Proceedings, 80 Colum. L. Rev. 717-718 (1980)]. Thus, “[in] multiple regressions, one should never eliminate a variable that there is a firm foundation for including, just because its estimated coefficient happens not to be significant in a particular sample.” Id. However, care must be taken not to confuse the “significance level” with the “preponderance of the evidence” standard, because “the significance level tells us only the probability of obtaining the measured coefficient if the true value is zero,” so one cannot “subtract[ ] the significance level from one hundred percent” to determine whether a hypothesis is more or less likely to be correct. Id. See also D. Rubinfeld, Econometrics in the Courtroom, 85 Col. L. Rev. 1048, 1050 (1985) (“[I]f significance levels are to be used, it is inappropriate to set a fixed statistical standard irrespective of the substantive nature of the litigation.”); D. McCloskey & S. Ziliak, The Standard Error of Regressions, 34 J. Econ. Lit. 97, 98, 101 (1996) (“statistically significant” means neither “economically significant” nor “significant [in] everyday usage [where] `significant' means `of practical importance' . . . .”).

2010-13 Determination at 3571 n.78. The Judges apply the foregoing principles here. To be clear, the Judges are not substituting the significance levels/confidence levels for the preponderance of evidence (marginally greater than 50%) standard. Rather, the Judges are looking to various levels of statistical significance/confidence intervals to determine the probability of obtaining Dr. Tyler's measured coefficient if the true value was in fact zero. And, the Judges are not wedded to the convention of the 90%, 95% and 99% confidence levels, because they agree with Dr. Rubinfeld, whose treatise is cited above, for the proposition that “if significance levels are to be used, it is inappropriate to set a fixed statistical standard irrespective of the substantive nature of the litigation.”

The nature of this litigation, as the D.C. Circuit has held (discussed elsewhere in this determination) is an intensely practical endeavor, one in which mathematical precision is not possible, and where “rough justice” is the norm. In this regard, the Judges also follow—in addition to the Supreme Court holding in Matrixx —the guidance of two scholars (also quoted above in the 2010-13 Determination) who have written extensively to caution, as a matter of economic ethics, against a fixation on statistical significance:

Statistical significance is not equivalent to economic significance nor to . . . legal . . . significance. . . . The core problem is that statistical significance is neither necessary nor sufficient for testing . . . material fact in a court of law. . . .

Stephen T. Ziliak & Deirdre McCloskey, Lady Justice Versus Cult of Statistical Significance, in George F. DeMartino & Deirdre McCloskey, The Oxford Handbook of Professional Economic Ethics 352-53 (2016). The need to avoid overreliance on low levels of statistical significance ( i.e., large confidence intervals) has been emphasized by Dr. Kennedy, in his textbook cited by the parties and the Judges in this proceeding. See Kennedy, supra, at 366 (listing as one of his “Ten Commandments of Applied Econometrics”: “Do not confuse statistical significance with meaningful magnitude.”).

Accordingly, the Judges note specifically that the table above shows, with regard to the confidence intervals for Dr. Tyler's shares, only positive numbers for all claimant categories in 2015 at the 55% level. Further, the table also shows only positive numbers for all claimant categories for all confidence levels in all years except for JSC, with a lower bound value for JSC of only −0.13 in 2016 and −0.26 in 2017. [ 170 ]

Although the Judges find these data to be persuasive in demonstrating that Dr. Tyler's shares are reasonable, they are concerned that the intervals remain somewhat wide, and they do not simply dismiss out-of-hand the one negative lower bound at the higher confidence intervals. Relatively wide ranges in regression results have been a previous concern in these proceedings, as noted with regard to the Waldfogel Model applied to the 2004-05 proceeding:

[W]hile the Waldfogel regression analysis provides useful information, we also find that there are limits to that usefulness in corroborating the Bortz survey, largely stemming from the wide confidence intervals for the Waldfogel coefficients. Thus, the implied share of royalties calculated by Dr. Waldfogel would change substantially if the true value of the variable was at one end of the confidence interval rather than at the point estimate value used by Dr. Waldfogel in his calculations. . . . Nevertheless, while one may question the precision of the results on this basis, it only cautions against assigning too much weight to its corroborative value.

2004-05 Distribution Order at 57063, 57068.

The reconciliation is different here than in the 2004-05 proceeding, because here the Judges are considering the regression evidence and the Bortz Survey evidence as essentially equally weighted and useful (but not flawless) evidence, rather than treating the regression evidence as merely corroborative of the survey evidence. Likewise, the reconciliation will be different than in the 2010-13 proceeding, because the Judges are not giving any primacy to the regression evidence in this proceeding, given how the changes in the retransmission sector after the WGNA conversion have affected the available data. But the overall point remains: As in prior proceedings, the Judges take note of the wide confidence intervals (and the negative JSC coefficient at the lower bound), as one reason to balance the shares implied by the Tyler Model, as adjusted above, against the results of the Bortz Survey, also as adjusted.

In the 2010-13 Determination, the Judges made no distinction within the regression approaches themselves between allocation shares attributable to the Basic Fund and to the 3.75% Fund. Rather, as here, the Judges first made their overall allocation share decision after applying all the useful evidence, including evidence from the surveys and regressions. Only then did the Judges consider how to allocate the claimants' royalty shares as between the Basic Fund and the 3.75% Fund.

Specifically, the Judges in the 2010-13 Determination engaged in the following approach in reconciling the 3.75% Fund with the Basic Fund: (1) The Basic Fund percentage allocations were made without disaggregating royalties attributable to the 3.75% Fund and (2) the 3.75% Fund percentage allocations were made by “reallocat[ing] the PTV share from [the Basic Fund] proportionally among the categories that participate in that fund.” 2010-13 Determination at 3611. In reaching this ruling, the Judges “considered and rejected PTV's arguments that the allocations of Basic Fund royalties must be adjusted to account for PTV's non-participation in the 3.75% Fund.” Id. (It is undisputed that PTV cannot receive any share from the 3.75% Fund.)

In the present case, all the parties, except PTV, made arguments and presented testimony proposing that the Judges make the 3.75% Fund allocations in the same manner as in the 2010-13 Determination. [ 171 ] PTV, however, through the Johnson Model, has departed from the prior approach and calculated, via regression analysis, separate allocations for the Basic Fund and for the 3.75% Fund. According to PTV, this is warranted because, even though it was not the method used previously, the Judges have acknowledged the “need to allocate the Basic Fund and the 3.75% Fund separately.” PTV PHRB at 36-37. But PTV elides the fact that Dr. Johnson's separate modeling of the two rates is not how the separate allocations were accomplished in the 2010-13 Determination, as noted supra.

As other parties note, the approach sought by PTV and Dr. Johnson is not only inconsistent with the Judges' prior approach, but also inconsistent with the facts and with economic theory. As Dr. George comprehensively explained:

Dr. Johnson's model produces biased results because it excludes 3.75% fees. Dr. Johnson's model relates base rate royalties rather than total royalties to claimant programming minutes. . . . [T}his approach does not align with the economic theory that supports regression estimates in these proceedings. Specifically, profit maximization dictates that systems add distant signals if the full incremental value exceeds the full incremental cost. By excluding royalties associated with 3.75% fees, coefficient estimates do not reflect the full cost of distant signal carriage and hence do not reflect the full value of claimant programming. Stated another way, a cable system's choice to carry a signal subject to 3.75% fees reveals the system's willingness to pay for signals to be higher than the royalty expenditure Dr. Johnson includes in his regression. Omitting 3.75% fees from the dependent variable will produce regression coefficients that systematically overstate the value of public television programming not subject to 3.75% fees and systematically understate the value of other programming.

Dr. Johnson separately estimates his regression model using only fees paid to the 3.75% fund. This model suffers from the same problem as considering base rate royalties alone: the dependent variable does not reflect the full incremental costs of carriage, so the model produces biased estimates of program values. These estimates also cannot be used to estimate the relative market value of programming because they do not reflect the economic choices of systems in the cable marketplace.

George WRT at 23-24 (emphasis added). See also Commercial Television Claimants' Post-Hearing Brief in Support of Proposed Royalty Allocations at 48 (CTV PHB) (“Dr. Johnson's isolation of the base and 3.75% fees is inconsistent both with basic economic intuition and statistical evidence of a correlation between those carriage decisions and thus does not account for the link between these retransmission decisions.”); PS PHB at 55 (“There is no rational economic reason to exclude decisions relating to the carriage of non-permitted stations in assessing CSO preferences.”).

The Judges agree that it makes no economic sense to separate out the two royalty fund payments when the CSOs would economically make no distinction between the two funds when identifying their royalty costs and benefits. (That is, money is fungible, and the CSOs would be indifferent as to how their royalty payments were divided between the two funds.) Further, the Judges are struck by the fact that PTV and Dr. Johnson did not take note of this point when proposing their novel approach, and that PTV's novel approach just so happened to significantly increase PTV's allocation share in the Basic Fund. See CTV PHB at 48 (and record citations therein) (“[I]f Dr. Johnson had estimated his regression using both the base fee and 3.75% fee, the implied shares for PTV would have dropped by more than 5% . . . from 2015 to 2017.”). See also Johnson WRT tbl.4 (acknowledging a five-percentage point increase in PTV's Basic Fund over the 2014-2017 period, from 43.5% to 48.5% (an 11.5% increase in PTV's share), by separating out the allocations for the two funds).

Accordingly, nothing was persuasively presented in the regression analyses to support a deviation by the Judges from establishing the 3.75% fund allocations as they adopted in the 2010-13 Determination.

PTV offered industry expert testimony Lynne Costantini who testified that cable companies evaluate whether to add, delete or maintain channels on their lineups by analyzing the overall value a particular channel adds to their content offerings and the ability of the programs on the channel to attract and retain pay TV subscribers, within the context of the programming mix on the then-current lineup, as well as technological and economic constraints. [ 172 ] Written Direct Testimony of Lynne Costantini, Trial Ex. 7301, at 5 (Costantini WDT); 3/27/23 Tr. 1591-92 (Costantini). She then offered her opinion that, based on the aforementioned programming goals of CSOs, the relative value to cable companies of programs included in PTV Distant Broadcast Stations had increased. Costantini WDT at 8-10. Several other industry experts attested to the value of programming that attracts and retains subscribers. See, e.g., Written Direct Testimony of Kate Alany, Trial Ex. 7302, at 2 (Alany WDT); Singer WDT at 7-8; Written Direct Testimony of Daniel Hartman, Trial Ex. 7110, at 7-9 (Hartman WDT); Witmer WRT at 7; Written Direct Testimony of Alex Paen, Trial Ex. 7603, at 13.

Sue Ann Hamilton, an industry expert whose testimony on behalf of Program Suppliers in the 2010-13 Cable Proceeding has been submitted as designated testimony in this proceeding, testified that a CSO's selection of stations for distant retransmission is marked by inertia, not by an affirmative analysis and weighing of alternative stations. Written Direct Testimony of Sue Ann Hamilton (2010-2013), Trial Ex. 7061, at 7 (Hamilton WDT (2010-13)). She identified two reasons for CSO inertia. First, distant retransmission costs represent a non-material expenditure for CSOs compared with their other more expensive programming and carriage decisions. Id. at 9. Second, she testified that CSOs are more concerned with losing existing subscribers if they drop certain stations and the associated programs than they are with whether or not any new retransmitted station and its associated programs might entice new subscribers. Id. In industry jargon, CSOs are more concerned with legacy distant signal carriage than with adjusting the roster of distantly retransmitted stations. Id. at 15. Thus, Ms. Hamilton implied, any correlation between program categories and royalties is spurious, because it is “inconsistent with [her] understanding of how CSOs actually make distant signal carriage decisions.” Id.

The Judges again find that Ms. Hamilton was a knowledgeable and credible witness, particularly with regard to the de minimis impact of distantly retransmitted stations on CSOs and the importance of “legacy carriage.” Moreover, the Judges take note that CSO time and effort are themselves finite resources (opportunity costs), and, as Ms. Hamilton implied, it would behoove a rational CSO to expend more of those resources making carriage and programming decisions with a greater financial impact. [ 173 ]

Based on the entirety of the record, the Judges do not find that the relative unimportance of distantly retransmitted stations to a CSO has deprived the regressions in evidence of value in this proceeding. Even if CSOs emphasize legacy carriage over potential increases in value from adding or substituting different local stations for distant retransmission, otherwise well-constructed regressions remain a reliable approach to capture the relative values of those legacy-based decisions. The Judges are mindful that regression analyses provide benefit because they look for a correlation between economic actors' choices (the independent explanatory variables) and the dependent variables as potential circumstantial evidence of a causal Start Printed Page 54234 relationship, but they do not purport to explain what lies behind such a potential causal relation.

Several industry expert witnesses testified that, from a distributor's perspective, the value and volume of certain categories of programming are not correlated. See, e.g. Witmer WRT at 11; 4/10/2023 Tr. 4050:11-4051:8 (Witmer); 4066:1-3, Singer WDT at 19; Singer WRT at 8; Hartman WDT at 23; Written Rebuttal Testimony of Daniel Hartman, Trial Ex. 7111, at 9 (Hartman WRT); Written Direct Testimony of John S. Sanders, Trial Ex. 7500, at 25 (Sanders WDT). [ 174 ] Such testimony was generally offered to challenge the regression analyses that look to the relationship between the total royalties paid by cable operators for carriage of distant signals and the quantity of programming minutes by programming category a reliable methods to assign relative market value. A similar indication, that value and volume of certain categories of programming are not necessarily correlated, was also expressed by industry experts who testified on behalf of proponents of regression analyses using minutes of programming. For instance, Lynne Costantini, industry expert offered by PTV, testified that “you don't sell programming or buy programming based upon the number of minutes.” 3/28/23 Tr. 1735-36 (Costantini). However, industry experts also cautioned against simply looking at the price of programming and not weighing the volume of licensed content available to consumers when assessing relative marketplace value. 4/19/23 Tr. 5406-07 (Homonoff).

Based on the entirety of the record, the Judges are not persuaded by industry expert testimony that the value and volume of programming are not correlated. The industry expert evidence is set against the more well-established sound economic reasoning underlying the regression analyses in this proceeding. The explanation for the Judges finding logical economic bases to rely on allocations based on programming minutes by programming category from the regression analyses is addressed supra.

That is not to say that regressions correlating program category minutes and a measure of royalties is necessarily the only way to determine value. As discussed elsewhere in this determination, and as confirmed by some of the industry testimony, the Judges recognize that certain categories of programming, particularly JSC programming, bundled together with programming from other claimant categories, can have a value (in terms of retaining or adding subscribers) necessarily that is not well-correlated with overall program minutes. To the extent that this bundling of programming with varying values is not smoothed out by the averaging undertaken by the regressions, survey analysis would be an appropriate tool to identify such value to a CSO within a station bundle.

CCG, JSC, and SDC assert that the regression analyses fail to adequately capture the value of “niche” programming or to appropriately reflect the testimony of industry expert fact witnesses concerning the salient market conditions in the cable industry during the years at issue in this proceeding. CCG PFF at 178-79 and record citations therein; SDC PFF at 64 and record citations therein; JSC PFF at 58-59 and record citations therein. [ 175 ] The Judges were urged to test the validity of regression analyses against other evidence of value, as a “reality filter.”  [ 176 ]

JSC's industry expert witnesses testified that JSC content is unique as “perishable” content. 4/3/23 Tr. 2750 (Singer). That is, each live game is a singular, real-time event. Mr. Singer asserted that JSC content is largely unique in the marketplace as among the last regularly scheduled “tune-in” programs. He added that live sports competitions are mostly only important while they are taking place, do not lend themselves to recording, and are not compelling on replay. He further stated that sports are popular with a passionate segment of customers of the type that television distributors focus on retaining. Singer WRT at 4-5. [ 177 ] Such sentiments, offered as an indication of the unreliability of regression analyses and their results, were reiterated by additional JSC industry expert witnesses. 4/5/23 Tr. 3349-50 (Hartman); Witmer WRT at 9; 4/10/23 Tr. 4061-62 (Witmer); Hartman WDT at 10; JSC PFF at 134-41 and record citations therein.

SDC points to similar assertions from industry experts regarding the value of its niche content. Written Direct Testimony of Toby Berlin, Trial Ex. 7508, at 7-10; Written Rebuttal Testimony of John S. Sanders, Trial Ex. 7501, at 27 (Sanders WRT); SDC PFF at 76-79 and record citations therein. Program Suppliers noted that niche programming is not limited to devotional content, and that non-JSC “Other Sports” programming is valued as niche programming. PS PFF at 18-19, citing 4/10/23 Tr. at 3824-25 (Berlin), and other record citations therein. Similarly, CCG observed that its programming, including French content, qualifies as unique and valuable niche programming that attracts and retains subscribers. CCG PFF at 178-79, citing Kirshenblatt WDT at 10-18.

The Judges find Mr. Singer and Mr. Berlin to be particularly credible witnesses in relation to their testimony regarding the unique value of JSC content and SDC content in relation to the other content categories during the relevant time period. Based on the entirety of the record, the Judges are persuaded that evidence of the unique value of CCG, JSC, and SDC content serves as a limitation on the applicability of certain proposed regression analyses and their resulting proposed allocation results. These validity test or reality filter findings do not negate valid application of regression analyses as a basis for allocation. However, these factors are taken into account within the Judges' weighting of the allocation methodologies, including application of the Bortz survey, as addressed infra.

JSC testified that the value of programming is diminished when that same type of content is available elsewhere, especially for cheaper or no cost. 4/3/23 Tr. 2749 (Singer); 4/5/23 Tr. Start Printed Page 54235 3357 (Hartman); Hartman WDT at 18-19. The JSC industry expert witnesses testified that there is a lower risk of losing any subscribers when such content is not carried. Witmer WRT at 14; 4/5/23 Tr. 3378:12-24 (Hartman); Hartman WDT at 18-19. These sentiments were echoed by PTV's industry expert Lynne Costantini. Costantini WDT at 7; 3/28/23 Tr. 1718-19 (Costantini).

SDC pointed to testimony of a similar dilutive effect from streaming, regarding Program Suppliers' programming. SDC noted that syndicated series and movies, represented in Program Suppliers content, historically had often exclusively run on broadcast stations, but were increasingly becoming available on streaming platforms, which grew in popularity during the relevant period. SDC PFF at 108, citing Costantini WDT at 7; Hartman WRT at 10-11. SDC also argued that its content did not suffer from a dilutive effect from streaming, as streaming services were not designed to cater to devotional audiences, thus preserving the retentive value of SDC content to CSOs. SDC PFF at 109-10 and record citations therein.

Program Suppliers asserted that while syndicated shows and movies are available on streaming platforms, that does not necessarily detract from the value of such programs on distant signals. It noted that that as streaming rose, the volume of Program Supplier content carried on distant signals rose as well. 4/19/23 Tr. at 5408 (Homonoff).

CCG testified that while significant CCG content was offered through streaming, it was generally only after exclusive premier via broadcast. Kirshenblatt WDT at 11-13; see also Written Direct Testimony of Tom Cox, Trial Ex. 7401, at 1-2. PTV offered testimony that during the relevant years significant portions of PBS programming were offered and viewed free through various digital streaming options. PTV also testified that PBS sold streaming devices related to such free streaming content. 3/27/23 Tr. 1545-50 (Alany).

CTV offered that during the relevant period, the dilutive effects of streaming were not present for original live and local CTV programming or for JSC programming, which was largely unavailable on streaming platforms. Written Rebuttal Testimony of Robert Papper, Trial Ex. 7206, at 45 (Papper WRT); Written Rebuttal Testimony of Mike Vaughn, Trial Ex. 7205, at 4. CTV PFF at 11-15, and record citations therein. CTV's industry experts, as well as Professor Marx, were especially convincing in distinguishing the effects that streaming had on CTV content versus other types of programming. See, e.g., 4/11/23 Tr. 4240:22-4241:12; Tr. 4234:6-10 (Marx).

The Judges find credible evidence that Program Suppliers' content was more predominantly available through streaming channels during the relevant period. Therefore, based on the entirety of the record, the Judges find evidence of dilutive effects to be persuasive as an indicator of decreased relative value of Program Suppliers content. Additionally, the Judges find that CTV content, especially original live local news content, was generally not diluted by streaming and that this is a persuasive indicator of relative increased value of CTV content. The Judges apply these factors into their weighting of allocation methodologies. Duplication

Industry executives testified that duplicative content does not add value as it does not further CSOs' goals of subscriber retention. Singer WRT at 15-16; Hartman WRT at 12; Witmer WRT at.15. JSC asserted that a significant proportion of the programming on distant PBS signals was duplicative of what was already available from CSOs to subscribers, and reiterated that such duplication did not provide value. Harvey CWDT at 51; Witmer WRT at 14; 4/10/23 Tr. 4064:18-4065:4 (Witmer). [ 178 ] JSC pointed to a study that found rates of duplication for these programs to be as high as 98.9%. Harvey CWDT at 55 tbl.28. Mr. Papper also asserted that programming on PTV stations is mostly duplicative and much of it at the exact same time. Papper WRT at 15. Mr. Papper provides specific examples to demonstrate duplicative airing of programming, all demonstrating higher duplication than the overall result average. Id at 16-41. Mr. Papper notes that the duplication was a bit lower in 2016 and 2017, but there still is significant duplication of programming. Id. at 41. In contrast, duplication with CTV signals was perceived as minimal. Id. at 42. Mr. Papper argues the large amount of duplicative programming rarely provides a good reason to import a distant PTV signal unless there really is not a local one. He argues this is supported by the data in which during the 2014-2017 period, only slightly more than a third of the systems and slightly over a quarter of the subscriber groups had both a distant and local PTV signal. Id.

The assertions against finding value of duplicative programming were criticized for treating programs as duplicative even if they did not air at the same time on both the distant and the local signal or even if the distant and local signals aired different episodes of the same program. Johnson WRT Ex. 7303 at 40-44. [ 179 ] Dr. Johnson argued that different episodes of the same program are distinct programming, and a single episode of a program can create incremental value if shown at a different time. Dr. Johnson conducted an analysis of duplication and found that only approximately 20 percent of PTV programs were retransmitted to subscriber groups at the same time as a local broadcast. Id. at 41. JSC addressed the former point by the minimal value of time-shifted programming does not accrue to retaining cable subscribers. 4/3/23 Tr. 2764:13-19 (Singer).

Based on the entirety of the records, the Judges find that significant duplicative content does not, in general, have the same value as non-duplicative programming. The industry experts presented reliable testimony that simultaneous or near simultaneous programming does not enhance the ability to attract and retain customers. However, the Judges also find that time shifted programming does have some value to customers, affording them greater flexibility in their viewing, and therefore provides customer retention value to CSOs. The Judges address this factor in making adjustments to regression methodologies (the Bennett adjustment) and in the Judges' weighting of the allocation methodologies.

Ms. Costantini testified that CSOs' programming decisions should reflect the highest and best use of scarce bandwidth, and that all decisions to carry programming are thus necessarily indicative of value. Regarding bandwidth issues, Ms. Costantini challenged the testimony of other industry experts (addressed below) by asserting that bandwidth considerations were a significant factor in the programming decision-making of cable companies during the relevant time period. Costantini WRT at 3-6. She testified that during the relevant period, many cable companies provided three distinct products: pay TV, broadband internet (important to support internet video products) and IP phone, each of which competed within the CSO that was seeking the most profit able uses of Start Printed Page 54236 appropriate amounts of bandwidth. Ms. Costantini testified that CSOs placed more value on broadband internet than CSO television programming. Costantini WRT at 4; 3/27/23 Tr. 1597-1605 (Costantini). In support of this view, she pointed to her professional experience while seeking cable distribution during the period 2012-2016, including negotiations with CSOs that oftentimes cited bandwidth allocation as a reason not to carry a new channel. Costantini WRT at 5-6. However, Ms. Costantini also testified to an inability to determine whether “most or many or the majority” of CSOs even provided internet service (bandwidth) during the relevant time period. 3/27/23 Tr. 1613 (Costantini).

Ms. Witmer testified that during the relevant period, advances in digital technology meant that bandwidth was no longer a significant driver of carriage decisions. Witmer WRT at 7 n.3. Ms. Witmer asserted that deployment of switched digital technology, headend consolidations, and reclamation of analog bandwidth cable channels opened up considerable digital bandwidth on systems that enabled the launch of more channels and other consumer products such as telephone and broadband services. Several other industry experts also testified that bandwidth was no longer a constraint during the relevant period. Singer WDT at 7; Singer WRT at 5; 3/30/23 Tr. 2595:13-2597:24 (Majure); 4/3/23 Tr. 2764:20-2765:14 (Singer).

Based on the entirety of the record, the Judges are not persuaded that bandwidth remained a significant concern for most CSOs who the record established employed more advanced technology than in previous periods. Bandwidth allocation may have been a legitimate but un-specific concern for smaller CSOs that had not employed improved digital technologies in the early years of the relevant time period. However, on the current record, the Judges are not able to perceive any reliable scope of bandwidth being a significant concern for CSOs in relation to programming decisions. Therefore, the issue does not impact the Judges consideration of the methodologies or resulting allocations offered this proceeding.

Ms. Alany's offered testimony to indicate relative market value of PTV content is demonstrated by production cost and quality/acclaim of content as well as the level of trust that PBS enjoys in the public eye. See, e.g., Alany WDT at 6-12, citing PBS Trust Brochures 2014-2018; 3/27/23 Tr. 1535:16-1537:1 (Alany). Other industry experts also offered similar testimony regarding production cost matters and quality/acclaim. 4/13/23 Tr. at 4918-21 (Paen).

In response, other expert witnesses argued that such characteristics do not equate to the ability to attract and retain subscribers and economic value. Singer WRT at 17-18; Hartman WRT at 13-15; Witmer WRT at 16. Ms. Witmer, on behalf of JSC, added that the notion that costs of such programming should be considered in royalty share allocation is contrary to the standard for determining the share allocation, namely what would a cable system pay for the content absent the section 111 license. Witmer WRT at 15.

Based on the entirety of this record, the Judges are not persuaded that issues of production cost, quality/acclaim of content or the level of trust that a producer enjoys in the public eye are meaningful toward the Judges' determination of relative market value. The Judges understand that, at some level, programming cost and acclaim may impact value. However, the present record does not equip the Judges to evaluate these factors on a comparative level. Sufficiently established studies of comparative public trust in a producer's content especially, news content, might be properly presented as a valid indication of relative market value. However, the present record, including PBS-commissioned trust survey, does not provide a reliable basis for determining the ability to attract and retain subscribers or for adjusting the Judges' determination of relative market value. In this regard the Judges note that PTV did not adequately correlate levels of public trust with what CSO might be willing to pay for programming. Therefore, these factors do not impact the Judges' weighting of the main methodologies or resulting allocations offered this proceeding.

In her rebuttal and hearing testimony, for PTV, Ms. Costantini challenged the Bortz survey by asserting that the survey likely did not reach the correct executive that is most responsible for carriage programming decision-making in more than 75 percent of the surveyed cable systems across the four years for the following reasons. Costantini WRT at 6-10, 18-47; 3/27/23 Tr. 1621-25, 1595-96 (Costantini). She maintained that the survey likely did not interview the individuals most responsible for programming carriage decisions for these cable systems. Id. She appeared to accept that Bortz Media used the Television & Cable Factbook (Factbook) to identify contacts for each respective system, particularly telephone numbers, and that Bortz Media usually selected the senior-most executive from that cable system to list as the initial point of contact or the survey questionnaire. Costantini WRT at 6-7. However, she indicated the approach was faulty because the Factbook does not specifically identify programming carriage decision-makers. She stated that in her experience job position titles at cable companies are insufficient without other data points to assess whether the individual is likely to be most responsible for programming decisions. She testified that in the majority of instances, the description of Bortz respondents' positions do not indicate programming decision-making responsibilities. Costantini WRT at 8.

Ms. Costantini also noted that while some respondents are unlikely to be most responsible for programming carriage decisions, especially for larger cable companies, in some instances, they may provide valuable input regarding programming carriage to the ultimate decision-makers. She added that the persons holding regional management positions are not necessarily more likely to be most responsible for making programming decisions and that at larger cable companies persons holding regional management positions would not be the persons most responsible for making programming decisions. 3/27/23 Tr. 1621-22 (Costantini). She also found that it would be highly unlikely for the title or position of the person most responsible for making programming decisions at a cable system to change year to year, as was alleged to be the case in the Bortz survey. Costantini WRT at 9. These factors led Ms. Costantini to opine that Bortz likely did not interview the persons most responsible for programming carriage decisions for more than 75% of the surveyed cable systems across the four survey years. A summary of these issues was included as Table 1 to her rebuttal testimony. Costantini WRT at 18-47.

Ms. Costantini added that the Factbook data are potentially unreliable as a foundation from which Bortz could ascertain the persons most responsible for making programming decisions at the surveyed CSOs. Costantini WRT at 6-7. She also found fault with the Bortz survey's failure to attempt to independently validate the respondents' roles and responsibilities utilizing publicly available sources such as LinkedIn or cable companies' websites, or by asking other questions to confirm they were speaking to the appropriate person. Costantini WRT at 6-7. Start Printed Page 54237

Ms. Costantini testified that the questions asking respondents to assign importance, cost, and value to programming on distant broadcast stations are inconsistent with how programming carriage decisions are made by cable companies. Costantini WRT at 10. She maintained that station carriage decisions are not made based upon inclusion or exclusion of a category or genre of programming, but rather on the entire bundle of the distant broadcast station's programming schedule. Costantini WRT at 9.

Ms. Costantini opined that the Bortz survey questions lacked the qualitative and quantitative specificity needed for respondents to accurately answer questions and that respondents would not necessarily understand the terminology used in the questions, and that the questions do not sufficiently address the interplay and overlap across some categories. Costantini WRT at 12-13. A similar concern was also asserted by Sue Ann Hamilton who testified in the 2010-13 Cable Proceeding that the programming categories adopted in royalty distribution proceedings are unique and “quite different from the industry understanding of what programming typically falls in a particular programing genre.” Hamilton WDT (2010-13) at 10. Oral Testimony of Sue Ann Hamilton (2010-13), Trial Ex. 7063, at 4309, 4312; Written Rebuttal Testimony of Sue Ann Hamilton (2010-13), Trial Ex. 7062, at 17-18 (Hamilton WRT (2010-13)). For example, she testified that “most cable operators” would not recognize that pre- and post-game interviews and highlight compilation telecasts would fall into the Program Suppliers category, or that locally produced high school team sports would fall into the Commercial Television category. Id. at 11. Ms. Hamilton further opined that cable operators were not likely to differentiate between network and non-network sports telecasts and that migration of live team sports programming to regional cable networks further complicates the equation. See Hamilton WRT (2010-13) at 17-18.

Ms. Costantini criticizes the Bortz Survey for not providing enough information and time for the respondents to answer the questions accurately. Ms. Costantini expressed doubt that any respondent could accurately answer the survey questions in the course of the telephone interview. She also testified that it is highly doubtful that the respondent would need access to extensive information that would not be readily available to most respondents. Costantini WRT at 10-13.

Mr. Singer and Ms. Witmer, testifying on behalf of JSC, disagreed with Ms. Costantini regarding inappropriate respondents in the Bortz survey. They testified that, while ultimate responsibility for carriage decisions may be at the corporate level, the individuals with the knowledge of why specific distant signals were carried, and why they were valuable to the system in a specific area, would be at the local or regional level. 4/3/23 Tr. 2769-73 (Singer); 4/10/23 Tr. 4054-55, 4061 (Witmer). Mr. Trautman also agreed with this assessment, adding that there is no one-size-fits-all standard for what position or level within a cable system is going to be associated with the person most responsible for programming decisions. 4/3/23 Tr. 2845-46; 2849 (Trautman). [ 180 ] Mr. Singer noted that the relevant titles at cable systems for individuals responsible for programming were “all over the place” and that there was not necessarily just one person responsible for programming carriage decisions at CSOs. 3/20/23 Tr. 2770-71 (Singer). Ms. Witmer also testified that the titles of relevant executives were a legacy of the history of lots of small systems that rolled up into bigger consolidated systems, and often had various titles, and they were not necessarily consistent from one system to the next. 4/10/23 Tr. 4060-61 (Witmer).

Mr. Trautman testified that use of the Factbook as an initial point of contact or the survey questionnaire is a feature, not a flaw, of the Bortz survey that is an effective tool for assuring survey respondents are qualified. 4/3/23 Tr. 2848-49 (Trautman). He added that while the initial target is often not the survey respondent because ultimately, the survey's goal is to speak with the person most responsible for carriage decisions. Id.

Regarding the alleged difficult of accurately answer the survey questions or understand the categories at issue, Ms. Witmer testified that the respondents would have been able to answer the questions. She further testified that the categories of programming listed in the questionnaire make sense to her as a cable executive. She explained that it is common in the cable industry for channels to have different kinds of content on them, but that people working the cable industry and the programming area would be more than capable of understanding the categories of content separate and apart from particular linear channels. 4/10/23 Tr. 4052-55 (Witmer).

Regarding the alleged complexity of addressing the complexity of the Bortz questions, JSC pointed to designated testimony from the 2010-13 proceeding from Mr. Hartman who explained that “when you look at the type of linear channels that we negotiate for, they really do fall into categories.” Mr. Hartman also testified that “it's our day-to-day job to kind of know . . . that type of programming.” 2010-13 Hartman Oral Testimony Tr., Trial Ex. 7056, at 74-75.

While Ms. Costantini raises some reasonable concerns about the Bortz survey, including concerns that the titles of some respondents may not be indicative of those most responsible for programming carriage decisions, the Judges observe that her criticisms were routinely accompanied by significant caveats, such as being generally applicable, and focused on larger cable companies. Furthermore, the Judges note her acknowledging that “there are lots of corner cases” regarding appropriate titles of respondents. [ 181 ] 3/27/23 Tr. at 1621-22 (Costantini). Based on the entirety of the record, the Judges are not persuaded that the issue of the respondents' titles is reason to disregard reliance on the Bortz survey. Furthermore, the Judges find that use of the Factbook as a starting point in pursuing the appropriate respondents is not unreasonable. The Judges do not discount the reasonable concerns that were established regarding titles, which is a factor the Judges take into account within the Judges' weighting of the Judges' reliance on the various allocation methodologies.

Additionally, the Judges find some aspects of Ms. Costantini's criticism of the Bortz survey questions are undermined by her testimony, which depicted a high level of competency as a cable industry executive who possessed a detailed understanding of nuances underlying the questions in the Bortz survey. The Judges note Ms. Costantini's testimony of her own prior roles in which she held significant responsibility for programming carriage decisions for the Time Warner cable system and was [REDACTED] 3/27/23 Tr. at 1642-43 (Costantini). Ms. Costantini's written and oral testimony indicated that she would be capable of providing meaningful responses to the sort of questions posed in the Bortz Start Printed Page 54238 survey, including while in roles that she was not the person most responsible for programming carriage decisions.

With regard to the categories in the Bortz survey questions and the categories in this proceeding, the Judges observe that they have not changed for decades, giving CSOs time to acquaint themselves fully with the programming comprising each agreed category. In the Judges view, it is not unreasonable to conclude that, even with changes in personnel, the CSOs have maintained an institutional awareness of the subjects and categories at issue in the survey and in this proceeding, and therefore that the Bortz respondents had adequate ability to understand the relevant terminology in the Bortz questions.

Based on the entirety of the record, the Judges find that the industry experts that responded to the Bortz survey were sufficiently equipped to offer reliable evidence indicative of relative marketplace value. The Judges do not find that the respondents' capacity to accurately answer the survey questions or understand the categories at issue serves as a reason to disregard the Bortz survey. Furthermore, the Judges do not find that respondents' capacity serves as a significant negative factor in the weighting of the various allocation methodologies at issue in this proceeding.

In sum, the Judges agree that the Bortz surveys are far from a perfect measure of relative market value, as discussed infra. However, based on the entirety of the record, the Judges find that despite the offered criticisms, the surveyed cable system executives were sufficiently identified, competent and familiar with the subject matter to provide reasonably reliable responses. [ 182 ]

The Judges may vary from prior decisions when there are (1) changed circumstances from a prior proceeding or (2) evidence on the record before the Judges that requires prior conclusions to be modified regardless of whether there are changed circumstances. [ 183 ]

In the 2014-2017 period, several widely agreed upon changed circumstances have taken place including (1) WGNA's conversion to a cable network, [ 184 ] (2) the reclassification of PTV signals from exempt to non-exempt, [ 185 ] and (3) the rise in streaming on alternative platforms. [ 186 ] Additionally, the Judges observe that the record regarding the conduct and development of the survey and regression methodologies has become more detailed than in prior proceedings. Based on the agreed upon record and Judges' findings here and throughout the determination, the Judges find that significant changed circumstances occurred across the relevant period.

Three of the six parties in this proceeding rely on survey evidence to support their arguments concerning the allocation of shares of the subject royalty funds. For more than 40 years, a survey approach has been offered in royalty distribution proceedings before the CRB and its predecessor bodies (the CRT and CARP), more recently in Distribution of the 2004 and 2005 Cable Royalty Funds   [ 187 ] and Distribution of Cable Royalty Funds, Docket No. CONSOLIDATED 14-CRB-0010-CD (2010-2013). [ 188 ] In the latter proceeding, data from three separate surveys administered to cable system operators (CSOs) were offered during the hearing, and then analyzed by the Judges in connection with their final allocation distribution. See 2010-13 Determination at 3582; 4/3/2023 Tr. 2825 (Trautman). In this proceeding, only one survey was conducted for use in possible litigation in connection with royalty distribution pursuant to section 111 of the Copyright Act, produced during discovery in accordance with applicable regulations, [ 189 190 ] and then offered by a party during the hearing. In particular, JSC, as supported by fact and expert testimony, argues that a constant sum survey (in which survey respondents allocate a fixed sum across different categories, at least in this case, adding up to 100 percent) is well-suited to revealing relative market values of distant signal programming to CSOs. Specifically, JSC argues that the Bortz Surveys, [ 191 ] which it commissioned and offered for the years 2014 through 2017, reliably reveal market value relevant to this proceeding. [ 192 ] See, e.g., JSC PHB at 43-71; 4/3/2023 Tr. 2822-23 (Trautman). CTV and SDC also make arguments that rely on the Bortz Surveys, as did some of their experts who testified during the hearing. See, e.g., CTV PHB at 1-3, 42-79; Settling Devotional Claimants' Post-Hearing Brief at 64-85 (SDC PHB). Yet, CCG, Program Suppliers and PTV, supported by testimony of their experts, oppose reliance on the Bortz Surveys. See, e.g., Post-Hearing Brief of The Canadian Claimants Group at 50-77 (CCG PHB); PS PHB at 9-10, 57-77; PTV PHB at 38-71, 81-82.

In addition, CTV called as an expert witness, Prof. Robert A. Papper, [ 193 ] who testified as to trends in the local television news industry, and particularly his opinion as to the impact of those trends on the relative value of CTV programming during the period 2014-2017. His opinion relied in large part on the results of an annual survey that he has directed for many years, which is called the Radio Television Digital News Association Annual Survey (RTDNA Survey), [ 194 ] especially articles and studies (mainly authored or co-authored by Prof. Papper) that concern the results of the RTDNA Surveys for the period 2014-2017. RTDNA Survey information, and the articles and studies on which Prof. Papper relied, are appended to his written direct testimony. See, e.g., 4/11/23 Tr. 4361-63 (Papper); Written Direct Start Printed Page 54239 Testimony of Robert Papper, Trial Ex. 7201 (Papper WDT); Papper WRT.

An issue was raised as to whether or not large portions of Prof. Papper's testimony should be viewed as the introduction of a survey or surveys, governed by 37 CFR 351.10(e) and, if so, whether CTV has complied with the production requirements set forth therein. Indeed, before the hearing, Program Suppliers filed their Motion in Limine to Exclude Portions of the Testimony of Professor Robert A. Papper (MIL) (eCRB no. 27485). In denying the MIL, the Judges determined, inter alia, that the written direct and rebuttal testimonies, including the portions subject to the MIL, “express detailed opinions based in large part on certain RTDNA Surveys, allowing Professor Papper to be examined on his opinions,” but that “would not necessarily mean that the surveys were offered or received into evidence.” Order 29 at 8. Application of section 351.10(e) was not required at that time. Id. Program Suppliers made similar objections to portions of the Papper testimonies during the hearing. See 4/11/23 Tr. 4354-55, 4366 (Papper); 4/12/23 Tr. 4445-52 (Papper). Subsequently, Program Suppliers filed their Motion to Strike Portions of the Written and Oral Testimony of Robert A. Papper (eCRB no. 28213). As discussed in Order 39 denying the motion to strike, the RTDNA Surveys were not conducted for the purpose of litigation or offered independently during the hearing as evidence. Rather, the RTDNA Surveys were relied on by Prof. Papper in forming and presenting his expert opinions, and the weight to be accorded data from the RTDNA Surveys shall be determined within the context of evaluating Prof. Papper's expert opinions.

During the hearing, JSC called James M. Trautman, Managing Director of Bortz Media & Sports Group, Inc. (aka Bortz Media), to sponsor the Bortz Surveys, and their report (Bortz Report) which formed part of Mr. Trautman's written direct testimony. Indeed, the Bortz Surveys, including their report, were prepared under Mr. Trautman's direct supervision at the request of Major League Baseball, the National Football League, National Basketball Association, Women's National Basketball Association, National Hockey League and the National Collegiate Athletic Association ( i.e., JSC in this proceeding). Written Direct Testimony of James M. Trautman, Trial Ex. 7100, at 1 (Trautman WDT); 4/3/2023 Tr. 2816-20 (Trautman). For nearly forty years, Mr. Trautman has supervised market research addressing a wide range of issues, for a variety of clients, affecting the cable and satellite television industries, including issues related to the valuation of television programming. Mr. Trautman has had primary responsibility for management of previous CSO studies conducted by Bortz Media for JSC and has testified concerning these studies in several proceedings before the Judges of the CRB and their predecessors. In the 2010-13 cable royalty distribution proceeding, he was qualified as an expert; and in this proceeding, he was qualified as an expert in market research, including survey research, applied market analysis and valuation in the cable and broadcast television industries. 4/3/2023 Tr. 2821 (Trautman).

As explained by Mr. Trautman, the Bortz Survey is a telephone survey. He further testified that each Bortz Survey offered in this proceeding is a survey of local CSOs and was designed to address the relative value that distant signal programming has to cable operators, or would have in a free market. See 4/3/2023 Tr. 2821-22 (Trautman). As explained by Dr. Mathiowetz, [ 195 ] the Bortz Survey may be termed an establishment survey because respondents answered questions of behalf of a business or other entity rather than themselves. 4/10/2023 Tr. 3835 (Mathiowetz).

After a Bortz Survey was first offered in a royalty proceeding in 1983, changes have been made to the design of the survey, sometimes in consultation with experts outside Bortz Media or its predecessor company. Changes were made for the Bortz Surveys offered in this proceeding, as compared to those offered in prior royalty proceedings, including the most recent proceedings for distribution of 2010-2013 royalties. See 4/3/2023 Tr. 2824 (Trautman); 4/4/2023 Tr. 3013 (Trautman); 2010-13 Determination at 3582. For example, in 2015-2017, the number of cable systems eligible for inclusion in the Bortz survey had decreased, falling from 788 (in 2014) to 328-361 (for 2015-2017). Bortz Media responded by shifting from sampling eligible systems for 2014 (as it had also done in earlier surveys) to attempting what it refers to as a census of all eligible systems for the surveys conducted for 2015, 2016 and 2017. [ 196 ] Thus, for 2015-2017, Bortz Media states that all eligible systems had an opportunity to respond to the surveys. See Bortz Rep. at 21. Furthermore, in response to additional changes in the cable industry, Bortz Media modified its questionnaire in 2015-2017 to account for WGNA's conversion to a cable network, which has already been discussed with respect to the regression evidence received in this proceeding. [ 197 ]

As in earlier surveys, for the 2014-2017 period at issue in this proceeding, Bortz Media surveyed so-called “Form 3” cable systems. Form 3 systems are those that had at least $527,600 in semiannual gross receipts from retransmitting broadcast signals to their subscribers. [ 198 ] According to the Cable Start Printed Page 54240 Data Corporation (CDC), which compiles data from the statements of account (SOAs) that cable systems file with the Copyright Office, Form 3 systems accounted for more than 95 percent of total royalty payments made by cable operators from 2014-2017. Furthermore, Form 3 systems, unlike the smaller Form 1 and 2 systems, are well-suited for Bortz surveys because they identify in their SOAs the distant signals that they retransmitted. Bortz Rep. at 20. Nevertheless, inasmuch as some Form 3 cable systems carry either no distant signals, or carry only distant signals representing a single programming category ( i.e., only PTV signals or only Canadian signals), Bortz Media determined that it would not be possible to obtain a comparative value judgment from survey respondents regarding their distant signal programming. Therefore, as it has done in connection with surveys offered in previous proceedings, Bortz Media did not interview, or attempt to interview, those systems in connection with the 2014-2017 Bortz Surveys. Id.

The level of copyright royalty payments played an additional role with respect to the 2014 Bortz Survey. As discussed above, for the 2014 survey, Bortz Media attempted to contact what it terms “a stratified random sampling of Form 3 cable systems,” with the stratification based on copyright royalty payments. Bortz Rep. at 20. JSC's expert witness, Dr. Mathiowetz testified that as in the proceeding for 2010-2013 royalties, her opinion is that “the use of a stratified sample results in an efficient sample that assures the resulting sample mirrors the population of interest.” Corrected Written Direct Testimony of Nancy Mathiowetz, Ph.D., Trial Ex. 7107, at 7 (Mathiowetz CWDT). In this case, Bortz Media obtained data from records compiled by CDC, indicating the royalty amounts paid by all Form 3 systems, based on SOAs filed by cable systems for the first accounting period of each survey year. Bortz Media then constructed a sampling plan so that proportionately more systems with large royalty payments were sampled relative to systems with small royalty payments. Specifically, the stratified sample included 361 Form 3 cable systems that collectively paid approximately 86 percent of the total Form 3 royalties. Bortz Media reasoned that cable systems that carried distant signals in 2014 were overwhelmingly paying copyright royalties that were derived directly from the distant signals they actually chose to carry, and further, while systems paying the largest royalties were typically larger systems (as measured by subscribers served), they also reported carrying more distant signals on average. Thus, Bortz Media concluded that, in general, systems paying more royalties were making more use of the section 111 license. Bortz Rep. at 20-21.

Once the CSOs for inclusion in the surveys were identified, Bortz Media used the Television & Cable Factbook ( Factbook ), as it has in the past, to identify contacts for each respective system, particularly telephone numbers. The Factbook usually lists approximately three to six managers or executives for each system. Bortz Media usually selects the senior-most executive from that cable system to list as the initial point of contact or the survey questionnaire. 4/3/2023 Tr. 2844-55 (Trautman); Bortz Rep. at A-17 n.57.

Bortz Media retained Sandra Grossman (then, of THA Research) to conduct telephone interviewing for the 2014-2017 cable operator surveys. Ms. Grossman specializes in conducting executive interviews, particularly in the cable industry. Indeed, she has provided market research to cable television industry clients for more than two decades, during which she and her company have been retained by Bortz Media or its predecessor for 17 cable operator surveys, starting with the 2001 survey and continuing through the 2017 survey received in this proceeding. Ms. Grossman personally conducted approximately 65 percent of the interviews for the 2014-2017 surveys. It is unclear whether Ms. Grossman relied solely on the information compiled by Bortz Media from the Factbook to contact potential respondents, or whether she also performed internet searches to obtain contact information. Three or four additional interviewers were supervised by Ms. Grossman, and each specialized in surveying professional and managerial personnel, with at least five years of such experience. Interviewers were instructed to call back each cable system as often as necessary to obtain a completed interview or refusal. For almost every completed interview, no more than three direct contacts with the eventual respondent were required. Tr. 2841-45, 3258 (Trautman); Bortz Rep. at A15-17.

Interviewers were instructed that once they had made contact with a cable system, they should ask first for the system executive identified in advance as most likely to have responsibility for programming decisions, and to confirm that he individual was the person “most responsible for programming carriage decisions made” by the system. The interviewers were instructed that if the identified executive did not fit the description, the interviewer was to ask for the person who was most responsible for programming carriage decisions. Calls were placed to the cable system until the individual on the telephone indicated that he or she was the individual most responsible for programming carriage decisions. In all cases, the eventual survey respondents were required to confirm that they were most responsible for programming carriage decisions made by their systems. Bortz Rep. at A-17.

Indeed, the ADS questionnaire which, as discussed above, was used for many respondents for 2014, and all respondents for 2015-2017, comprised four questions for the respondent. [ 199 ] Question 1 asked the respondent, “Are you the person most responsible for programming carriage decisions made by your system during [the year in question] or not?” Bortz Rep. app. B. If the response was no, the questionnaire ( e.g., for 2014) instructs the interviewer, “ASK TO SPEAK WITH PERSON MOST RESPONSIBLE FOR THE SYSTEM'S PROGRAMMING CARRIAGE DECISIONS IN 2014. REPEAT INTRODUCTION AND Q.1.” Id.

After the survey respondents were qualified, the interviewers proceeded to the next questions. Questions 2 and 3 in the cable operator survey are designed by Bortz Media as preliminary questions intended to focus respondents on the particular distant signals carried by the system in the survey year, the types of programming on those signals, and certain factors (importance and cost)  [ 200 ] that contribute to the key allocation (which Bortz Media sometimes calls a “budget” question) that will be required in the fourth and final survey question. Start Printed Page 54241 Bortz Rep. at 27, 30. In Question 2, the interviewer identified the particular distant signals (including call letters) for a specific respondent's cable system (Question 2a). Bortz Media obtained the distant signals for each system by reviewing each system's SOA at for the year in question that was filed at the Copyright Office. [ 201 ] The interviewer then asked the respondent to rank up to seven [ 202 ] non-network programming categories on those distant signals in order of how important it was for the system to offer each category. [ 203 ] Id. at 24-27; 4/3/2023; Tr. 2861-64 (Trautman). Indeed, for Questions 2, 3 and 4, the number of programming categories provided to each respondent depended on whether the distant signals listed on the respondent's SOA included public television, Canadian, or live professional and college team sports programming, with the corresponding categories excluded when the respondent CSO did not carry the relevant programming on a distant basis. Bortz Rep. at 26 n.36.

When asking Question 3, the interviewer asked the respondent to rank the same categories of non-network programming broadcast by the same stations in order of how expensive it would have been to acquire that programming if the system had been required to purchase it directly in the marketplace. Id. at 26-27, app. B (Ex. 7101 at 80).

The final question, again for the ADS questionnaire only, was Question 4, the constant sum question. In this question, the interviewer asked the respondent to value the various types of non-network programming on the distant signals that the respondent's system carried during the relevant year. This required the respondent to allocate a percentage of a finite dollar amount to each of the program categories on the distant signals that the system retransmitted. Id. at 27-29. For example, Question 4a in the survey instrument that incorporated the year 2014 in the text was, as follows:

4a. Now, I would like you to estimate the relative value to your cable system of each category of programming actually broadcast by the stations I mentioned during 2014, excluding any national network programming from ABC, CBS and NBC. Just as a reminder, we are only interested in U.S. commercial station(s)______, U.S. non-commercial station(s) ____, and Canadian station(s) ____.

I'll read each of the seven programming categories we've been discussing again to give you a chance to think about them; please write the categories down as I am reading them. (READ PROGRAM CATEGORIES IN ORDER, STARTING WITH CATEGORY MARKED BY THE NUMBER “1”.) [ 204 ] Assume your system spent a fixed dollar amount in 2014 to acquire all the non-network programming actually broadcast during 2014 by the stations I listed. What percentage, if any, of the fixed dollar amount would your system have spent for each category of programming? Please write down your estimates, and make sure they add to 100 percent. What percentage, if any, of the fixed dollar amount would your system have spent on (READ PROGRAM CATEGORY MARKED BY THE NUMBER “1”)? [ 205 ] And what percentage, if any, would your system have spent on (READ NEXT PROGRAM CATEGORY)? (COMPLETE LIST IN THIS MANNER.)

Id., app. B (Ex. 7101 at 81).

The survey instrument instructed the interviewer to prompt the respondent if the percentages did not add up to 100 percent. Id., app. B (Ex. 7101 at 81). As Question 4b, the interviewer read back the categories and estimates, and then asked whether each respondent wanted to make any changes. Question 4b concludes the survey; and the Question ends the interviewers thanking the respondents were for their time and cooperation. Id., app B (Ex. 7101 at 82).

The interviews were conducted after the calendar year in question. [ 206 ] Interviews were completed with between approximately 54 and 58 percent of eligible cable systems. [ 207 ] Upon completion of the survey, THA Research returned the completed questionnaires to Bortz Media for proofing and data entry. Bortz Rep. at A-16.

As in prior distribution proceedings, in order to address the issues relevant to this proceeding, the responses provided by the Bortz Surveys, particularly the constant sum rankings obtained through Question 4, must be expressed in terms of percentage allocations of the cable royalty funds to be distributed for the years surveyed, which in this case are 2014 through 2017. The procedures used by Bortz Media to perform obtain such results are in the Bortz Report. See, e.g., Bortz Rep. at A-18 through A-26. [ 208 ]

Table I-1. Bortz Survey Relative Value Allocation by Year, 2014-17 from the Bortz Report shows the following compiled results:

Table I—1 Bortz Survey Relative Value Allocation by Year, 2014-17

	Year
	2014 (n=170) (%)	2015 (n=197) (%)	2016 (n=199) (%)	2017 (n=179) (%)	Average: 2014-17 (%)
Live Professional and College Team Sports	40.4	28.5	28.5	31.5	32.2
News and Public Affairs Programs	26.0	29.7	30.0	30.6	29.1
Syndicated Shows, Series and Specials	10.4	12.7	14.8	14.9	13.2
Movies	11.4	13.8	13.1	9.0	11.8
PBS and All Other Programming on Noncommercial Distant Signals	5.9	7.9	6.8	7.8	7.1
Devotional and Religious Programming	5.6	6.5	6.0	5.4	5.9
All Programming on Canadian Signals	0.3	1.0	0.8	0.6	0.7
Total	100.0	100.0	100.0	100.0	100.0

Bortz Rep. at 2; see CTV PHB at 81 (summary of results for 2014 through 2017, with acronyms of claimant groups substituted for program categories).

Nevertheless, as discussed below, no party unequivocally proposes that the initial results, or allocations, of the 2014 through 2017 Bortz Surveys, reflected in Table I-1 of the Bortz Report, be used directly to allocate shares of the royalty funds that are the subject of this proceeding. [ 209 ]

As already detailed, Bortz Media chose not to survey Form 3 cable systems that carried no distant signal, or that carried only distant signals representing a single programming category. Thus, as it has for surveys used in connection with prior proceedings, Bortz Media excluded all PTV-only CSOs and Canadian-only CSOs from the 2014 through 2017 surveys received in this proceeding. See Bortz Rep. at 20; 2010-13 Determination at 3583; 2 004-05 Distribution Order at 57067. Bortz Media's stated rationale for this decision is that if PTV-only and Canadian-only CSO were survey respondents, they would not be able to provide comparative value judgments regarding their distant signal programming. Id. While PTV-only and Canadian-only CSOs may be limited in their ability to respond to provide a response to the Bortz Survey value question as formulated, in prior proceedings, the Judges have found that, while one must not “overstate the impact of this problem,” the exclusion of such cable systems “clearly biases the Bortz estimates downward for PTV and Canadian programming;” and further, it has been observed that “the Bortz survey may well be improved in this regard, either through the reformulation of the questions asked in the survey and/or by revisiting the underlying survey sample plan.” Id. In any event, the Bortz Media surveys at issue in this proceeding exclude PTV-only and Canadian-only CSO, and even the parties that rely on the Bortz Surveys, cognizant of adjustments made in prior proceedings, offer certain adjustments to the initial results of the Bortz Surveys. See, e.g., JSC PHB at 83-84; SDC PHB at 82-85; CTV PHB at 79-84.

The adjustments were offered largely with the so-called “McLaughlin Adjustment” in mind, which has a long history in connection with the Bortz Survey. For example, in the 2004 and 2005 proceeding, Linda McLaughlin, an economist, set forth calculations to the Bortz Survey results to make, what the Judges deemed to be, an “appropriate adjustment to the PTV share,” although her efforts did not fully mitigate deficiencies in the Bortz results with respect to others, such Canadian claimants. 2004-05 Distribution Order at 57064, 57070, 57073 (her “efforts to correct for cable systems excluded from the survey because they only carry a distant Canadian signal do somewhat ameliorate the under-representation of Canadian signals in the overall survey results”). In the 2010-13 proceeding, Ms. McLaughlin and another witness, David Blackburn, set forth methodologies for augmented PTV and CCG shares, referred to as the “McLaughlin/Blackburn adjustments,” which assume, for example, that the PTV-only systems would assign a relative value to PTV of 100%. [ 210 ]

2010-13 Determination at 3583-85, 3602. In that proceeding, three surveys were received, the Bortz Survey, the Horowitz Survey (which “did not exclude from its sample systems that distantly carried only PTV and/or Canadian signals”) and the Ringold Survey (which “focused on Canadian signals”). [ 211 ] Id. at 3582, 3591. Despite the availability of McLaughlin/Blackburn adjustments “to augment” the Bortz Survey results, the Judges placed more weight on the Horowitz results, for several reasons but “particularly the acknowledged systematic bias against PTV and CCG programming,” and thus “the Judges accord relatively less weight to the `Augmented' Bortz Survey.' ” Id. at 3591. The weighting of the Bortz Survey evidence below that of the Horowitz survey did not, however, mean that the Bortz Survey evidence had no weight or played no role in the Judges final allocations. To the contrary, before setting forth the Judges' final Basic Fund allocation, the Judges defined “ranges of reasonable allocations for each program category, and in doing so relied on “[t]he Bortz and Horowitz Surveys, together with the McLaughlin `Augmented Bortz' results and the Crawford and George regressions, taking into account the confidence intervals (when available) surrounding the point estimates . . . .” Id. at 3610.

In this proceeding, only the Bortz Surveys were offered ( i.e., no survey such as Horowitz was offered by any party), and the surveys continue to exclude the PTV-only and Canadian-only distant signal cable systems. Although Bortz Media and Mr. Trautman are highly critical of the McLaughlin Adjustment, nevertheless, Bortz Media includes two approaches for adjusting its initial results, both of which bear some relationship to the McLaughlin Adjustment. Bortz Media's “Adjustment One”  [ 212 ] accepts (while not agreeing with) the McLaughlin assumption of attributing 100 percent of value to the PTV (or Canadian category) when that is the only category the system carries distantly, but does not do so for PTV-only systems in 2015 through 2017 that previously carried WGNA. As to the latter group of systems, Bortz Media instead attempts to predict the average valuation from all systems that carried only PTV and WGNA in 2014. The stated rationale is there is no reason to assume that a CSO changed its valuation of PTV content simply because of the WGNA conversion, and indeed, CSOs surveyed in 2015-2017 did not increase their relative valuation of PTV with regard to systems that carried signals containing both PTV and other claimant categories. As for Bortz-eligible systems that were surveyed, Bortz Media weighted the results based on Base-plus-3.75 fees attributable to the distant signals actually carried by the PTV-only systems. [ 213 ] See id. at 42-43, app. D (“Potential Bortz Adjustments”). Bortz Media obtained the following, applying its Adjustment One:

Potential Allocation of Royalties Among Claimant Groups, 2014-17 (Adjustment One)

	Year				Average
	2014 (%)	2015 (%)	2016 (%)	2017 (%)	2014-17 (%)
JSC	39.1	25.6	24.3	26.0	28.8
CTV	25.2	26.6	25.6	25.3	25.7
PS	21.0	23.7	23.7	19.8	22.1
PTV	8.2	14.0	16.6	19.5	14.6
Devotional	5.5	5.8	5.1	4.5	5.2
Canadian	1.0	4.4	4.8	4.9	3.8
Total	100.0	100.0	100.0	100.0	100.0

Id. at 43 (Table IV-1). [ 214 ]

Bortz Media's “Adjustment Two” also attributes 100 percent of value to either the PTV or Canadian category when that is the only category the system carries distantly, even for systems that became PTV-only by default as result of the WGNA conversion. However, PTV-only systems that only carried distant PTV signals within those signals' originating DMAs are excluded. The stated rationale is that those systems have not demonstrated any preference for distant PTV programming based on their actual carriage patterns. Again, consistent with the treatment of Bortz-eligible systems that were surveyed, Bortz performed weighting based on the Base-plus-3.75 fees attributable to the distant signals actually carried by the PTV-only systems. See id. at 43, app. D (“Potential Bortz Adjustments”). Bortz Media obtained the following application, applying its Adjustment Two:

Potential Allocation of Royalties Among Claimant Groups, 2014-17 (Adjustment Two)

	Year				Average
	2014 (%)	2015 (%)	2016 (%)	2017 (%)	2014-17 (%)
JSC	39.8	25.2	23.5	24.8	28.3
CTV	25.7	26.2	24.8	24.1	25.2
Start Printed Page 54244
PS	21.4	23.3	23.0	18.9	21.6
PTV	6.5	15.3	19.2	23.4	16.1
Devotional	5.6	5.7	4.9	4.3	5.1
Canadian	1.0	4.3	4.6	4.6	3.6
Total	100.0	100.0	100.0	100.0	100.0

Id. at 43-44 (Table IV-2).

JSC endorses the adjustments calculated by Bortz Media, rather than the McLaughlin Adjustment. [ 215 ] JSC does so first by raising a number of supposed faults in the McLaughlin Adjustment. It is argued that PTV-only systems were almost all well below the minimum fee, and by 2016 and 2017, an average of over 93% of PTV-only systems could have carried at least one additional PTV signal to all of their subscribers without having to pay more than the minimum fee, and the calculated Base + 3.75 royalty fee attributable to the signals actually carried on PTV-only systems amounted to only 14 percent of the minimum fee royalties ultimately paid by these systems. Yet, JSC observes, the McLaughlin Adjustment would assume that these systems have an extreme preference for distant PTV programming based on their carriage decisions, even though there was almost never an incremental royalty payment associated with those carriage decisions. Furthermore, JSC argues, over 30 percent of the distant signals carried by PTV-only systems in 2014-17 were carried pursuant to the Must Carry rules or the related multicast agreement. The McLaughlin Adjustment nonetheless would assume that these systems valued their distant PTV signals more than any other categories of programming, even though the systems were required to carry the signals, and PTV was prohibited from charging for the content. JSC argues that inasmuch as the price of these signals would be $0 in the hypothetical market, it makes no sense to assign them 100% of the relative value. JSC PHB at 65-67.

Additionally, JSC argues that while more than half of the PTV-only systems during 2016-17 had carried both WGNA and PTV prior to the WGNA conversion, back in 2014, systems that carried WGNA and one or more PTV distant signals valued PTV in Bortz surveys at just 8.8%. JSC argues that the McLaughlin Adjustment would assume a sudden and major shift in valuation. Id. at 67 (quoting 3/30/2023 Tr. 2621 (Majure)). [ 216 ] Finally, with regard to the McLaughlin Adjustment, JSC argues that the majority of PTV-only systems only carried PTV signals within the signals' originating DMA. Yet, because only the PTV signal is deemed distant, the McLaughlin Adjustment would assume that these systems only care about the PTV content in that bundle of programming, thereby improperly inferring a set of preferences based on distinct regulatory treatment rather than the actual behavior of the cable systems. It is argued that there is no reason to assume that these systems value distant PTV programming more highly than any other category of content, much less at a 100% relative valuation. Id. at 67-68.

In contrast, JSC argues, the alternatives calculated by Bortz Media, Adjustment One and Adjustment Two, is supported by evidence and economic theory, and yields similar valuations among the program categories. Id. at 68-69 (citing, inter alia, JSC PFF 414 (citing Majure)). Indeed, JSC expert witness, Dr. Majure, testified that the Bortz Adjustments “avoid these gross misinterpretations that the McLaughlin adjustment would otherwise be adding into the calculations. I don't know that they completely resolve the fundamental issue of the McLaughlin adjustment, however. There's still no reason to think, for any particular PTV system, they have this very strongly different set of preferences, that the only thing they like is Public Television content.” 3/30/23 Tr. 2624 (Majure).

JSC's allocation request is based only on the Bortz survey, specifically Bortz Media's Adjustment One, whose results are reproduced above. JSC states that it prefers Adjustment One because it accounts for the fact that CSOs did not change their valuation of PTV simply because WGNA was no longer available as a distant signal. JSC PHB at 83-84. JSC claims no share of the Syndex royalties. With respect to the 3.75% royalty fund, JSC argues that the Judges should reallocate the shares attributable to PTV proportionally among the other parties, as PTV is not entitled to a share of the 3.75% royalty funds, as follows:

JSC's Proposed Reallocation of Shares of the 3.75% Royalty Funds

	Year
	2014 (%)	2015 (%)	2016 (%)	2017 (%)
JSC	42.6	29.8	29.1	32.3
CTV	27.5	30.9	30.7	31.4
PS	22.9	27.6	28.4	24.6
PTV	0.0	0.0	0.0	0.0
Devotional	6.0	6.7	6.1	5.6
Canadian	1.1	5.1	5.8	6.1

Id. at 83-84.

Similarly, SDC supports reliance on the Bortz Surveys for 2014 through 2017 in this proceeding, and supports the application of Bortz Media's Adjustment One. SDC PHB at 81. SDC argues that the McLaughlin Adjustment has always been economically unsound, and in this proceeding, there is new evidence that militates against an application of a McLaughlin Adjustment that assigns a 100% value to PTV and CCG-only stations. Id. at 82.

SDC argues that unlike past proceedings, the record here shows that a majority of PTV-only systems' distant carriage occurred exclusively within the DMAs in which the PTV signals originate, and were treated as distant only as a result of a regulatory reporting. Indeed, it is argued, PTV signals are the only category of distant content that CSOs can be required to report as “distant” under section 111 when such a signal is actually carried locally to subscribers within the signal's DMA, and all other similarly situated, but commercial, signals would be reported as local signals that are ineligible for section 111 royalties; and accordingly, a CSO's choice to carry a PTV signal within its originating DMA cannot be compared to a CSO's choice to carry other signals and programming, and there is no economic basis to assume that a majority of the PTV-only CSOs had a relatively greater preference for PTV programming than other categories of programming, much less valued at a 100% relative valuation (as past adjustments have considered). Id. at 83 (citing, inter alia, Harvey WRT ¶¶ 126-131; [ 217 ] Bortz Rep. at 17-18 (“throughout 2016-17 approximately 77% percent of the aggregate subscribers served by the PTV Only Systems did not receive any distant signals.”); Majure WDT ¶¶ 150-51).

Additionally, SDC argues that adjusting the Bortz survey results to account for PTV-only systems that were excluded from the Bortz sample would inappropriately assign a 100% value to PTV content on the significant number of systems that were compelled to carry PTV programming and reimbursed for such carriage pursuant to the Must Carry rule. See Id. at 83-84 (citing Bortz Rep. at 46; Majure WDT ¶¶ 144; Harvey CWDT ¶ 119 (“[a]pproximately 36 percent of the time that a PTV Only system distantly retransmitted a primary PTV call sign, it was pursuant to the Must Carry rule”). It is argued that there is no reason to expect that PTV-only systems value PTV content that they were compelled to carry at all, let alone at 100%. See Majure WDT ¶¶ 144-45. Thus, it is argued, there is also no economic basis to apply a McLaughlin Adjustment to the significant number PTV-only stations carried under the primary channel or multicast subchannel Must Carry rules. Id. at 84 (citing Tr. 2566 (Asker)). [ 218 ]

Nevertheless, SDC argues, SDC's and JSC's valuation experts have acknowledged that some adjustment to the PTV and CCG shares is appropriate, and the only potential Bortz adjustments presented in this proceeding were set forth by JSC and in the Bortz Report. It is argued that as its evaluation expert John Sanders testified, [ 219 ] Bortz Adjustment One in the Bortz Report is preferable to the historic McLaughlin Adjustment and to Bortz Adjustment Two because Adjustment One is substantially “grounded in the survey data that was collected” and yields reasonable relative value allocations for each of the participating claimant groups. Id. at 84 (citing, inter alia, Sanders WRT ¶¶ 43-44).

SDC argues that the Judges should conclude that the Bortz survey is the methodology that best reveals relative market value in this proceeding, but that there is no economic basis for applying the conventional McLaughlin Adjustment in this proceeding. Rather, it is argued, the Judges should find that some modest adjustment for PTV and CCG may be appropriate, and the Judges should additionally find that the Bortz survey's point estimates should be adjusted under Bortz Adjustment One. SDC argues that thus the following relative value allocations are appropriate shares for the Devotional claimants with respect to the Basic Fund: 5.5% for 2014; 5.8% for 2015; 5.1% for 2016; 4.5% for 2017; with 5.2% as the average. Id. at 85 (citing Bortz Rep. at 48, SDC PFF 246). SDC further argues that to arrive at the Devotional allocation for the 3.75% Fund, the Judges should, consistent with their decision in the 2010-13 proceeding, reallocate the PTV share of royalties proportionally among the categories that participate in that fund, and make the following allocation of the 3.75% Fund to the Devotional claimants: 6.0% for 2014; 6.7% for 2015; 6.1% for 2016; 5.6% for 2017; with 6.1% as the average. Id. at 85; SDC PFF 247 (citing 2010-13 Determination at 3611).

CTV argues that the fee-based regression estimates for 2014 that were made by Prof. Marx, [ 220 ] and the Bortz survey results for 2014-2017 provide the most appropriate starting point to determine the relative value of claimant shares in this proceeding. It is argued that the cumulative evidence of record in this proceeding shows that the fee-based regressions overestimate the value of PTV programming, while the Bortz survey underestimates the value of PTV and CCG programming. CTV proposes an adjustment to the Bortz initial results, but not the McLaughlin Adjustment, or Adjustment One or Adjustment Two calculated by Bortz Media. Rather, CTV proposes a share adjustment approach that relies on the estimates from the Marx model and the Bortz Surveys in an attempt to what it terms “the primary challenge of both methodologies,” which is how to obtain a reasonable and more reliable estimate of the value of PTV programming during the 2014-17 period. See CTV PHB at 79-80.

CTV argues that the Bortz Survey's underestimation of PTV and CCG programming due to the purposeful exclusion of PTV-only and CCG-only systems from the survey, affects results in each year, but not the year-to-year trends obtained from the survey. Thus, CTV proposes a share adjustment approach that combines the Marx non-duplicated minute estimates for 2014 with the Bortz results for 2014 to establish a starting point for allocating shares, and then applies the year-to-year net change in each category derived from the Bortz survey results for each year in 2015, 2016 and 2017. CTV argues, in its view, this provides a the only reliable basis to use regression estimates offered in this proceeding to assist in the determination of relative value of the shares. Id. at 81-82. To establish the starting point for shares in 2014, CTV proposes taking the average of the Marx 2014 Bayesian regression and Bortz survey estimates in 2014 for PS, JSC, CTV and PTV, and the maximum amount under either method in 2014, inexplicably for SDC, [ 221 ] and Start Printed Page 54246 also for CCG, as illustrated in the following table. Id. at 81-82.

CTV's Proposed Starting Point for Shares in 2014

Valuation Method & Steps	PS (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)	Total (%)
Marx 2014—excluding duplicates	19.7	43.9	15.6	16.4	0.5	3.9	100.0
Bortz 2014	21.8	40.4	26.0	5.9	5.6	0.3	100.0
Step 1: average of Bortz and Marx	20.8	42.1	20.8	11.2
Step 2: maximum of Bortz and Marx					5.6	3.9
Step 1 + 2	20.8	42.1	20.8	11.2	5.6	3.9	104.4
Normalizing 1 + 2 (to add up to 100%)	19.9	40.4	19.9	10.7	5.4	3.8	100.0

Id. at 81-82. Applying the net change from the Bortz survey results in 2015, 2016, and 2017 to the starting points established for 2014, provides the proposed shares reflected in the following table, which are presented along with the shares awarded in the 10-13 Final Determination for reference.

CTV's Proposed Shares

Year	PS (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)	Total (%)	Source
2010	26.5	32.9	16.8	14.8	4.0	5.0	100.0	2010-13 Final determination.
2011	23.9	30.2	16.8	18.6	5.5	5.0	100.0	2010-13 Final determination.
2012	21.5	33.9	16.2	17.9	5.5	5.0	100.0	2010-13 Final determination.
2013	19.3	36.1	15.3	19.5	4.3	5.5	100.0	2010-13 Final determination.
2014	19.9	40.4	19.9	10.7	5.4	3.8	100.0	Combined 2014 Bortz and Marx shares.
2015	24.6	28.5	23.6	12.7	6.3	4.5	100.1	2014 proposed shares + 2015 Bortz net change.
2016	26.0	28.5	23.9	11.6	5.8	4.3	100.0	2015 proposed shares + 2016 Bortz net change.
2017	22.0	31.5	24.5	12.6	5.2	4.1	99.8	2016 proposed shares + 2017 Bortz net change.

Id. at 82. CTV argues that no individual valuation method or share adjustment approach is perfect, but its proposed share adjustment approach helps address several evidentiary trends established in this proceeding, including: (1) correcting the over-estimation of PTV programming value under the fee-based regressions and aligning PTV shares more closely with the overwhelming evidence in the record that CSOs would not be willing to pay much, if anything, for the right to retransmit distant PTV stations absent the compulsory license; (2) aligning the value of shares during the 4-year period in a manner that reflects the impact of streaming on the value of programming to CSOs, which supports an increase in CTV and JSC programming relative to Program Suppliers and PTV programming; (3) providing a consistent allocation of shares for PS, JSC, CTV, SDC and CCG since 2010 which more reasonably and realistically reflects how CSOs would assess relative value over time; and (4) provides a reliable and reasonable basis for adjusting shares during the 2015-2017 time period when the estimates from the fee-based regressions are meaningless and uninformative and should not be given any weight in determining shares in this case. Id. at 83.

PTV argues that the Bortz Surveys for 2014 through 2017 should be rejected in their entirety due to numerous deficiencies in the way that that they were conducted, including their overwhelming bias against Public Television. Nevertheless, PTV acknowledges that the Judges and their predecessors have accepted the Bortz survey results but only after applying the conventional McLaughlin Adjustment to account for the bias against Public Television, and even then, only as a relative value floor for Public Television's allocation award. PTV PHB at 81-82 (citing PTV PCL ¶ 41; PTV PFF ¶ 204 (citing Distribution of 1998 and 1999 Cable Royalty Funds, Dkt. No. 2001-8 CARP CD 98-99, Determination at 24; Report of the Copyright Arbitration Royalty Panel, Dkt. No. 94-3-CARP-CD-90-92, at 123-24; 1998 Cable Royalty Distribution Proceeding, Dkt. No. CRT-91-2-89CD, 57 FR 15286 , 15299-300 (Apr. 27, 1992); 1983 Cable Royalty Distribution Proceeding, Dkt. No. CRT-84-1 83CD, 51 FR 12792 , 12811 (Apr. 15, 1986); 2 004-05 Distribution Order at 57070-71 n.20; 2010-13 Determination at 3610; 4/4/2023 Tr. 3139-41 (Trautman)).

PTV argues that at the hearing, Mr. Trautman conceded that he calculated a McLaughlin Adjustment for this proceeding two years before filing his written direct testimony, which showed Public Television's annual shares for 2014-17 as 8.4%, 43.6%, 48.4%, and 48.2%, respectively, with average shares of 37.1%. PTV argues that, although Mr. Trautman then embarked on a multi-year quest “to conjure up” additional adjustments that would reduce Public Television's shares, neither of Mr. Trautman's alternative proposed adjustments has any reliable basis. Indeed, it is argued, the Bortz Survey results, and Mr. Trautman's two proposed adjustments, give Public Television a lower share of royalties than the Judges awarded in 2013, despite significant changed circumstances such as the elimination of WGN as a distant signal and the substantial changes in the quantity and quality of compensable JSC and Public Television programming—all of which are realities that would warrant substantially increasing Public Television's relative share from 2013 levels. PTV PHB at 42 (citing, inter alia, 4/4/2023 Tr. 3142-43 (Trautman) (concerning table in Trial Ex. 3049)). Start Printed Page 54247

PTV argues that if the Judges were to use the Bortz survey to guide allocations in this proceeding, which PTV believes would be inappropriate, given their unreliability, several adjustments, at a minimum, would be needed to correct for clear methodological biases and flaws. It is argued that the adjustments offered by JSC (Bortz Media's Adjustment One and Adjustment Two), which result in shares for Public Television that are less than Public Television's 2013 share, are not credible. PTV argues that only the conventional McLaughlin Adjustment adopted in prior proceedings yields shares that approximate relative valuations for Public Television in 2014-17. Id. at 82. Mr. Trautman testified during direct and cross-examination that he calculated the conventional McLaughlin Adjustment to the 2014 through 2017 Bortz surveys. A table prepared by him, and upon which PTV relies is, as follows:

Weighted Bortz Survey Results by Year, 2014-17 (After Conventional McLaughlin Adjustment)

	Year				Average: 2014-17 (%)
	2014 (n=171) (%)	2015 (n=199) (%)	2016 (n=199) (%)	2017 (n=179) (%)
PBS	8.4	43.6	48.4	48.2	37.1
Sports	39.0	12.7	12.2	14.8	19.7
News	25.2	19.2	15.3	17.2	19.2
Syndicated	10.0	9.3	9.8	9.8	9.7
Movies	11.0	9.1	8.0	5.0	8.3
Devotional	5.4	4.4	5.0	3.9	4.7
Canadian	1.0	1.8	1.3	1.2	1.3
Total	100.0	100.0	100.0	100.0	100.0

PTV PHB at 82; PTV PFF 208; Trial Ex. 3049 (from calculations prepared by Mr. Trautman); 4/4/2023 Tr. 2881-82, 3142-43 (Trautman).

PS argues that there are fundamental issues with the Bortz Survey that cannot be remedied by after-the-fact adjustments, such that putting ex-post fixes on the Bortz Survey is like putting a Band-Aid on a bad wound. Indeed, the requests for royalty allocation shares made by Program Suppliers are based on Dr. Tyler's regression model, [ 222 ] and do not reference the Bortz Surveys. PS PHB at 80-82 (citing PS PFF ¶ 502 (3/27/2023 Tr. 1490-91  [ 223 ] (Boyle))); see PS PRFF ¶¶ 59-62.

CCG argues that it is time for the Judges to abandon reliance on the Bortz Survey, and does not propose any adjustment to the Bortz initial results. CCG PHB at 66-71, 77. In its reply briefing, CCG again argues that the Bortz results should not be used for any party, and further argues that Bortz results have never been used, and should never be used, for the CCG, with or without these adjustments. CCG argues that the proposed adjustments do not correct the Bortz Survey's fundamental failure to measure relative market value, and do not remedy their utter inapplicability to the CCG. Reply Post-Hearing Brief of The Canadian Claimants Group at 56 (CCG RPHB). Indeed, CCG specifically criticizes the adjustment to Bortz offered by CTV, which is based on Prof. Marx's regression analysis, arguing, “CTV offered no evidence that would support that conclusion that even though the relative quantity of their programming declined by 60% their relative unit price went up by 370%. The CTV hybrid model represents the worst of both worlds, an incomplete regression model that relies on data from the wrong period combined with the faulty Bortz Survey results.” CCG RPHB at 56-57.

With respect to the issue of which, if any, adjustment should be made to the Bortz initial results for 2014-2017, it is remarkable that no party had its expert calculate the McLaughlin Adjustment for those results, at least not for presentation at the hearing. While no party argues that royalty fund allocations in this proceeding should be made strictly according to the Bortz initial results subject to the McLaughlin Adjustment, all parties knew that the Judges applied the McLaughlin Adjustment to the Bortz Survey initial results in the 2004 and 2005 proceeding, as well as in the more recent 2010-13 proceeding. Moreover, several parties knew that they would raise the McLaughlin Adjustment at the hearing and in their posthearing filings. As summarized above, some parties specifically criticized the McLaughlin Adjustment and some, despite their criticisms or the criticisms of others, argued for application of the McLaughlin Adjustment in the alternative, or for a calculation that is based upon or otherwise relates to the McLaughlin Adjustment. To see the figures obtained when the McLaughlin Adjustment is applied to the Bortz Survey initial results at issue in this proceeding, the Judges are referred to a chart taken from a spreadsheet prepared by Mr. Trautman, originally for Bortz Media's internal use (Trial Ex. 3049, duplicated above). Fortunately, no party has challenged the figures contained therein as accurately reflecting application of the McLaughlin Adjustment to the Bortz Survey initial results; and as previously noted, the figures on the chart resemble those presented in connection with Bortz Media's Adjustment One to the extent that one would expect similar figures.

The application of the McLaughlin Adjustment to the initial Bortz results for the years now at issue, 2014 through 2017, is relevant, and the adjusted results (or “augmented” results, as they were termed in the 2010-13 proceeding) should be given varied weight, depending on whether one is considering the adjusted results for 2014, or for 2015 through 2017. With respect to 2014, the Bortz Survey for that year covers the year immediately following the last year at issue in the 2010-13 proceeding. For the 2014 survey, Bortz Media used a similar sampling method, and asked similar questions. While other factors, such as the Horowitz survey results and regression evidence, weighed more heavily in the Judges' decision, the 2013 Bortz results with the McLaughlin Start Printed Page 54248 Adjustment were taken into consideration by the Judges, even when making their final allocations. See 2010-13 Determination at 3591, 3610-11. Thus, the 2014 adjusted results may be used for comparison with earlier results, and would be expected to provide useful insight into relative marketplace value of distant broadcast signal programming retransmitted by cable systems during that year.

Nevertheless, when weighing all the evidence presented in this proceeding, including regression evidence, a concern is presented by the fact that the McLaughlin Adjustment assigns value to PTV content on cable systems that were compelled to carry PTV programming and reimbursed for such carriage pursuant to the Must Carry rule; and further, the value it assigns to PTV, even in such circumstances, is 100 percent. As discussed above, the evidence shows that more than 30 percent of PTV-only systems were subject to the Must Carry rule. See, e.g., Majure WDT ¶¶ 144; Harvey CWDT ¶ 119 (“[a]pproximately 36 percent of the time that a PTV Only system distantly retransmitted a primary PTV call sign, it was pursuant to the Must Carry rule”)). That certain PTV signals are subject to the Must Carry rule is not a new circumstance, and neither is the fact that the McLaughlin Adjustment brings PTV-only systems into the Bortz results with an assigned value of 100% for PTV. Inasmuch as PTV-only systems are still not surveyed by Bortz Media, and there is no empirical evidence to show how PTV-only systems value PTV distant signals, there is no cause now to discard the McLaughlin Adjustment due to the Must Carry rule, especially for the 2014 results which pertain to circumstances similar to 2013. The McLaughlin Adjustment has always been presented as a 100-percent or nothing approach, and the Judges can take that characteristic of the adjustment into consideration. To the extent that one would specifically exclude Must Carry signals, such as in a regression analysis, the fact that the McLaughlin Adjustment is applied to Must Carry signals diminishes the value of such adjusted Bortz results when making a comparison to such other evidence that devalues Must Carry signals.

It has also been shown that PTV signals comprise the only category of content that CSOs can be required to report as “distant” under section 111 when such signals are actually carried to subscribers within the signals' DMA, and further that a majority of the PTV-only systems reported such distant signals during the years at issue. As discussed above, it has been argued that similarly situated commercial signals would be reported as local, and thus would be ineligible for section 111 royalties. Bortz Rep. at 17-18 (“throughout 2016-17 approximately 77% percent of the aggregate subscribers served by the PTV Only Systems did not receive any distant signals.”); Majure WDT ¶¶ 150-51. Yet, the designation as “distant” is rooted in statutory definitions and requirements, and thus it is not established that such signals have no place in the hypothetical marketplace considered in this proceeding.

Furthermore, with respect to distant signals carried within their DMAs, again certain parties argue that there is no basis to assume that a majority of the PTV-only CSOs had a relatively greater preference for PTV programming over other categories of programming, much less at 100% of relative value. Yet, it has always been the nature of the McLaughlin Adjustment to augment the Bortz results with PTV-only signals, and to impute a 100-percent valuation. Accordingly, the McLaughlin Adjustment is recognized as an adjustment that helps to remedy a bias in the Bortz methodology but may do so on an imprecise basis.

For 2015 through 2017, the Bortz results, when subjected to the McLaughlin Adjustment, show a dramatic increase in the PTV results, i.e., an increase to 8.4% in 2014 to 43.6% in 2015, then to 48.4% in 2016, and by 2017, the results are 48.2%. A significant change is also seen for JSC, whose result is 39% in 2014 but only 12.7% for 2015, declining to 12.2% in 2016, with the JSC result at declining to only 14.8%. See Trial Ex. 3049. The unadjusted, initial Bortz results show increases for PTV, and decreases for JSC, but they are not nearly as precipitous between 2014 and 2015, and not nearly as steep overall. See Bortz Rep. at 2. Considering the relative value question that the Bortz Surveys set out to have answered, and the adjusted Bortz results, it is hard to see why within only about one year many CSOs went from ascribing relatively small value to PTV to considering it the most valuable. See 3/30/2023 Tr. 2621 (Majure) (“just coincidentally at the point where WGNA converted, the system suddenly went from having a small value for the Public Television content to that being the only thing they like.”). Thus, an issue is raised as to whether the Bortz Surveys, particularly after application of the McLaughlin Adjustment, are best suited for the years 2015 through 2017.

With the loss of WGNA as a distant signal, many CSOs that had retransmitted only PTV and WGNA as distant signals became PTV-only systems, which meant that they were no longer eligible for participation in the Bortz Survey. They also became subject to the McLaughlin Adjustment; and according to the adjustment, the value assigned to PTV was, as always, 100 percent. [ 224 ] It was also during this time that the universe of Bortz-eligible CSOs declined. [ 225 ] That change in the number of eligible CSOs during 2015-2017 was so great that, as already discussed, Bortz Media went from the use of a sampling technique in 2014, which was similar to that employed for many preceding years, to a new and different technique in 2015 and thereafter, which Bortz Media and Mr. Trautman described as an attempt as a census.

Although the bias caused by exclusion of PTV-only systems from the Bortz Survey became more profound in 2015-2017, as many systems that carried only PTV and WGNA as distant signals became PTV-only systems after the WGNA conversion, as illustrated above, there is little evidence to indicate that the application of the McLaughlin Adjustment rectifies the situation. Indeed, no party, not even PTV, argues that the Bortz Survey with the McLaughlin Adjustment is the best methodology of record for arriving at an allocation for 2015-2017.

Adjustment One, proposed by Bortz Media and Mr. Trautman, and supported by JSC and SDC, is offered as a response to the situation in which CSOs once carrying only PTV and WGNA as distant signals suddenly became PTV-only systems. Adjustment One also addresses Canadian-only systems, although it is opposed by CCG; and it has not been shown that Adjustment One calculations would be useful on allocation CCG's share of the subject royalty funds.

As described more fully above, Adjustment One uses the McLaughlin assumption of attributing 100 percent of value to the PTV (or Canadian category) Start Printed Page 54249 when that is the only category the system carries distantly, but does not do so for PTV-only systems in 2015 through 2017 that previously carried WGNA. As to those systems, Adjustment One attempts to predict the average valuation from all systems that carried only PTV and WGNA in 2014 because it is not assumed that a CSO changed its valuation of PTV content simply because of the WGNA conversion. Furthermore, systems that carried both PTV and Canadian distant signals (but no U.S. commercial distant signals) are weighted in the same manner, but with the fees allocated equally among the PTV and Canadian categories. See Bortz Rep. at 42-43.

The results seen from the application of Adjustment One tend to confirm the fact that the conversion of WGNA had a profound effect on the way that the McLaughlin Adjustment affected the Bortz results for 2015-2017. The application of Adjustment One prevents the steep swings seen in the McLaughlin-adjusted results. Yet, as pointed out by PTV, it does so at a cost. Adjustment One keeps the new PTV-only CSOs from bringing 100-percent PTV value into the calculation because they may have once valued another signal that no longer exists. It treats the class of new PTV-only CSOs differently from other PTV-only CSOs, even though they clearly have not replaced WGNA with other distant signals. Moreover, due to the fact that Adjustment One calculates shares for 2015 through 2017 based on the average valuation from all systems that carried only PTV and WGNA in 2014, the application of Adjustment One, for the purpose of allocating royalties, would in effect attribute a portion of section 111 royalties according to the former existence of WGNA, even though WGNA no longer existed as a distant signal in 2015-2017. Consequently, while Adjustment One is worth considering in the context of gauging the impact of the WGNA conversion on the Bortz results, it does not provide figures that can be used to calculate the allocation of shares of the subject royalty funds. [ 226 ]

CTV's proposed adjustment is not a proposed adjustment to the survey evidence available in this proceeding, i.e., the Bortz Survey for 2014 through 2017. Rather CTV proposes that data connected to the survey for 2014 (without adjustment for the exclusion of PTV-only CSOs) be used to expand the application of regression evidence from its expert, Dr. Marx. As detailed above, CTV proposes a share allocation approach that combines the Marx non-duplicated minute estimates for 2014 with the Bortz results for 2014 to establish a starting point for allocating shares, and then applies the year-to-year net change in each category derived from the Bortz survey results for each year in 2015, 2016 and 2017. There is a dearth of expert testimony concerning CTV's proposal. CTV's proposal is supported by no other party. CTV's proposal hinges on acceptance of Dr. Marx's fee-based regression estimates for 2014, which as discussed above has not been accorded the greatest weight.

Accordingly, the McLaughlin Adjustment, provided one understands its aforementioned limitations, is most helpful among the proposed adjustments in understanding the Bortz results. The following table shows the McLaughlin Adjustment allocations when organized according to the claimant groups in this proceeding.

McLaughlin-Adjusted Royalty Allocations

Basic Fund	2014 (%)	2015 (%)	2016 (%)	2017 (%)
Canadian Claimants	1.0	1.8	1.3	1.2
Commercial TV	25.2	19.2	15.3	17.2
Devotional Programs	5.4	4.4	5.0	3.9
Program Suppliers	21.0	18.4	17.8	14.8
Public TV	8.4	43.6	48.4	48.2
JSC	39.0	12.7	12.2	14.8

In the 2010-13 proceeding, some criticisms of Bortz and other survey evidence went to the way constant sum questions were worded or executed, but some criticisms went to use of the methodology per se. Dr. Mathiowetz provided an opinion in support of the particular methodology used in the Bortz Surveys received in that proceeding. See 2010-13 Determination at 3587. Ultimately, the Judges found certain regression analyses to be more persuasive than the survey results. Yet, far from rejecting the survey results, the Judges concluded, after considering all of the evidence presented in that proceeding, “ the constant sum survey methodology, with adjustments, provides relevant information relating to the relative value for each of the six categories remaining at issue.” Id. at 3591 (emphasis added).

Many criticisms have been leveled against the Bortz Surveys now at issue. Yet, even among parties that do not support use of the Bortz Survey in this proceeding, for the most part there has been an acknowledgement that constant sum surveys, if properly designed and executed, might yield useful data, even if the Bortz Surveys presented in this proceeding fall short. [ 227 ] In this proceeding, Dr. Mathiowetz testified that a constant sum methodology was used as early as the 1980s in royalty allocation proceedings before the CRB predecessors. Her testimony in this proceeding is that a constant sum question offers a perfect solution to the relevant research question. Mathiowetz CWDT at 4-6; 4/10/2023 Tr. 3849-54 (Mathiowetz). The Judges must allocate 100% of the royalty funds at issue across several different categories, and an increased allocation for one category will necessarily require a decrease elsewhere so as to allocate 100 percent. Consequently, survey evidence that Start Printed Page 54250 employs constant sum methodology, such as the Bortz Survey, could again provide relevant evidence.

PTV has a one-paragraph subsection in its main brief devoted to an argument, which it claims is unrebutted, that the key constant sum question in the Bortz Surveys (Question 4) is incapable of producing valid and reliable results because it is not “incentive compatible.” It is argued that PTV's expert witness Dr. Boyle is one of the foremost experts on stated preference surveys, of which Bortz's constant-sum question is an example, and further that his written and oral testimony is that the literature has developed on stated preference surveys, and it is now settled that stated preference surveys must be “incentive compatible.” His opinion is that the Bortz Survey constant sum question fails multiple requirements for incentive compatibility. PTV PHB at 68 (citing PTV PFF ¶¶ 355-57 (essentially tracking PTV's brief, or vice versa)); see Written Rebuttal Testimony of Kevin J. Boyle, Trial Ex. 7306, at 15, 32-36, 42-43 (Boyle WRT).

A review of the parties' briefs and proposed findings of fact shows that, contrary to PTV's claim, PTV's incentive compatibility argument was not in any sense unrebutted. [ 228 ] JSC addressed the issue of incentive compatibility at least as much as PTV did in its briefs. [ 229 ] See JSC PHB 45-46; JSC RPFF 40; JSC PFF ¶¶ 247, 248-51; JSC PRFF ¶ 67. Furthermore, during the hearing, PTV conducted a substantive direct examination concerning incentive compatibility; and then JSC conducted a vigorous cross-examination of Prof. Boyle on his opinion regarding incentive compatibility. Prof. Boyle also answered questions from the bench on this topic. [ 230 ]

There is some discussion in PTV's reply as to whether, in response to Prof. Boyle's opinion about incentive compatibility, JSC was wrong to set out to show that constant sum surveys are reasonable or widely used. See Public Television's Post-Hearing Reply Brief at 45 (PTV RPHB). Yet, Prof. Boyle's written testimony linked the reliability of constant sum methodology to incentive incompatibility, at least for purposes of PTV's case. Furthermore, the presentation of his incentive compatibility opinion appears as an alternative to evidence concerning the validity and reliability of constant sum questions. In particular, under the heading “Validity and Reliability of Constant-Sum Questions,” Prof. Boyle testified in writing, “There is limited peer-reviewed research on the validity and reliability of constant sum questions. In the absence of evidence on the credibility of constant-sum questions for eliciting preferences to support decision making, I turn to the well-known concept in economics and political science of incentive compatibility (Groves and Ledyard, 1987; Ledyard, 1989) to consider the validity of the Bortz survey constant-sum question.” Boyle WRT at 32-33 (footnote omitted, which shows Prof. Boyle's reliance on a Google Scholar search, with his search terms, to show limited peer-reviewed research). Far from leaving that statement unrebutted, at the hearing, JSC questioned Dr. Mathiowetz, and she responded, as follows:

Q. * * * Professor Mathiowetz, did you see the assertion by Dr. Boyle that there is a “absence of evidence on the credibility of constant sum questions for eliciting preferences to support decision-making”?

A. I did see that by Dr. Boyle. And I disagree with that assertion. First of all, we still see constant sum being used and appearing in the peer-reviewed journal literature. Whether it is being used as an end in and of itself for a substantive topic or sometimes you see the constant sum question being used as a benchmark to compare other relative value methodologies.

Second, in light of Dr. Boyle's comment, I thought it would be useful to go and look at recent marketing research text, because constant sum is often taught in MBA programs dealing with marketing research. And I found textbooks published as recently as 2017, I think was the most recent one, I found, that are still teaching constant sum methodology.

4/10/2023 Tr. 3852-53 (Mathiowetz). Accordingly, in view of that testimony, the use of constant sum evidence in prior proceedings, and other record evidence concerning constant sum methodology, the Judges do not adopt an opinion that there is an absence of evidence on the credibility of constant sum questions, or in the absence of such evidence one must turn to incentive compatibility (notwithstanding the importance that incentive compatibility may otherwise have).

PTV's reply brief, and the proposed reply findings cited therein, provide a summary of Dr. Boyle's testimony on incentive compatibility to the effect “that (1) a stated-preference question must be incentive compatible for it to produce valid and reliable results; (2) there are four requirements for a stated-preference question to be incentive compatible; and (3) Bortz's constant-sum question is fatally flawed because it fails multiple requirements for incentive compatibility.” Yet, the requirements for a stated-preference question are not explained in detail. See PTV RPHB at 44 (citing PTV PHB at 68; PTV RPFF ¶¶ 254-63). Turning to Prof. Boyle's hearing testimony, he explained, as follows:

A. So the constant sum, as I said before, is one example of stated preference surveys. And the literature for that has been developing for a long time.

And as it has developed in a variety of different areas of economics, in terms of stated preference questions, it's developed standards that a question needs to be incentive-compatible. And that started, really, evolving in the early 1990s and codified, really, in the 2000s.

But there are kind of four basic axioms of it; that it needs to be consequential, it needs to be truthful, it needs to be a binary choice, and payment needs to be coursed.

And so if you fail one of them, then you're in problems for incentive compatibility. If you fail more than one, you're even more in trouble in terms of incentive compatibility. And, you know, I have—three of them are listed here on the slide, but probably the two most important ones are the truthful and binary because they apply directly to the way the constant sum question is framed.

3/27/2023 Tr. 1419-20 (Boyle); cf. Boyle WRT at 34 (quoting Carson and Groves, Incentive and Informational Properties of Preference Questions, 37 Environmental and Resource Econ., 181-210 (2007), and a different formulation of the axioms).

Prof. Boyle also testified as to why, in his opinion, the Bortz Survey, particularly Question 4, is not incentive compatible, as follows:

Q. And why isn't the constant sum question incentive-compatible?

A. It's not incentive-compatible because it's not a binary question and a single application. And so when I was talking about what we did with the Deepwater Horizon, that was a specific dollar amount for a specific valuation that you answered yes or no.

There's no incentive for somebody to answer wrong on that. You have got to answer yes or no. And if you answer wrong, you get an undesirable outcome for yourself. With the Bortz Survey, when you have the different categories that you can allocate percentages to, there's a potential there for somebody to misallocate across categories when you have what's called an open-ended response that you can fill in.

You know, in the Bortz Survey, there was an enumerator, so they were giving the information to the enumerator to fill in.

But, you know, I think one of the examples I used in my report was that if someone had a devotional affinity, they could explicitly or Start Printed Page 54251 implicitly allocate more to devotional or less to others. If they are an atheist, it could be the opposite one.

So there's an opportunity, by how you allocate the percentages, that you could either explicitly, implicitly, or accidentally misconstrue what the true value is that is estimated from the questions.

3/27/2023 Tr. 1420-21 (Boyle).

PTV's argument concerning incentive compatibility is not persuasive. As pointed out by JSC, Prof. Boyle held up as a positive example an incentive compatible public resource survey in which respondents may in fact have had a financial interest in the outcome of the survey. JSC PFF ¶ 249; 3/27/2023 Tr. 1406-07, 1420 (Boyle) (“And if you answer wrong, you get an undesirable outcome for yourself”). Additionally, whether a Bortz survey respondent's personal beliefs, such as religious beliefs (or the absence thereof), might cause a respondent to “misconstrue” true value in the Bortz Surveys remains highly speculative.

Moreover, with respect to the Bortz Surveys, Dr. Mathiowetz explained that Prof. Boyle's argument is wrong because “[c]able system operators are paying [the] royalty fee regardless of how they allocate” value to program categories in the surveys. See 4/10/2023 Tr. 3854 (Mathiowetz). Indeed, it was not shown that Prof. Boyle had any knowledge of whether or how respondents' answers to Bortz Survey questions might actually affect respondents or their CSOs, and what respondents' perceptions might be on the subject. Further, JSC's suspicion that Prof. Boyle lacked knowledge in this area was confirmed on cross-examination, when Prof. Boyle could not provide clear answers to simple questions on this topic. He was, for example, specifically asked, “whether you have an understanding as to whether cable system operators have a financial interest in the outcome of these proceedings,” and he testified, “I am not testifying as an expert on cable systems. I'm testifying as an expert on survey design. And that's how I am answering you.” Furthermore, when forming his opinions, Prof. Boyle did not consult with anyone who had worked at a cable system. 3/27/2023 Tr. 1502-05, 1513-15 (Boyle).

On behalf of Program Suppliers, Dr. Stec, [ 231 ] testified that at best the Bortz Survey results represent an estimate of the cable system operators' relative willingness to pay for the different program categories they were asked to consider, but willingness to pay is not the same as a market price or market value. [ 232 ] Furthermore, it is his opinion that the Bortz Survey does not account for the supply side of the transactions, which was noted as early as the CARP 1990-1992 cable royalty proceeding. He opined that although Mr. Trautman indicates that the survey respondents are familiar with the rates charged for programming, as CSOs they do not purchase the individual programming categories as identified in the survey and instead purchase entire broadcast signals that include multiple categories of programming. He opined that survey respondents are unfamiliar with the actual prices charged in the marketplace for the specific programming categories when they are retransmitted on distant signals. Written Rebuttal Testimony of Jeffrey Stec, Trial Ex. 7608, at 21-22 (Stec WRT); 4/19/2023 Tr. 5655 (Stec); PS Brief at 67-71; PS PFF ¶¶ 513-29.

Measurement of sheer willingness to pay may not be identical with a determination of market value. Yet, as discussed throughout this determination, including with respect to regression evidence presented by another Program Supplier expert witness, Dr. Tyler, evidence concerning CSOs' willingness to pay is an important indicator when examining the hypothetical market examined by the Judges in this and prior proceedings.

Furthermore, as pointed out by JSC, Dr. Stec expressed some of the same negative opinions about the Bortz Survey in the 2010-13 proceedings, and although considered by the Judges, the opinions did not prevent the Bortz Survey results from being used by the Judges in making their allocations. See JSC PHB at 46; JSC PFF ¶ 253. Indeed, the Judges recognized that the CARP had determined that in the relevant hypothetical market, the supply of programming would be fixed and value would be determined only by the CSOs' demand as reflected in their willingness to pay. Additionally, in the 2010-13 proceeding, the Judges “agree[d] with the pronouncement in prior determinations that the royalties that would be paid in the hypothetical market would essentially be a function only of the CSOs' demand and the copyright owners' costs, and their supply curves (if any) would not be important determinants of the market-based royalty.” See 2010-13 Determination at 3583, 3555 n.18 (citing, as an example, 1998-99 Librarian Order at 3606, 3608). [ 233 ] In any event, the wording of Question 4 of each Bortz Survey for a particular year does not seek a response about actual prices charged in the marketplace, referenced by Dr. Stec. Rather, it seeks a CSO response about percentages of a fixed dollar amount the system “would have spent” and specific categories of programming that the system carried as distant signals in the subject year.

The parties have made further arguments to the effect that Bortz Survey, and its results, are unable to shed light on market value relevant to this proceeding. For example, Program Suppliers argue that the Bortz results are not credible because they are inconsistent with market changes, noting that with the conversion of WGNA to a cable system, the share of compensable minutes for JSC and CTV content significantly declined; and further, while in 2014, over 90% of the sports programming was JSC content, by 2015 that share dropped to approximately 65%, with the balance of 35% being Program Suppliers or CTV content, yet changes to programming shares observed in the marketplace are not reflected in the Bortz Survey results. It is argued, among other things, that despite the 94% decline in JSC content, the Bortz Survey suggests that JSC's volume fell by only 22% and remained the most valuable category in 2017. See PS PHB at 77. Similarly, CCG argues that according to the Bortz Survey results, JSC content retains a constant relative value, and is ranked the most expensive and most valuable according to Bortz Survey results, but that is unrealistic after 2014 when WGNA converted to a cable station. Such consistency, it is argued, does not comport with reality, inasmuch as WGNA carried 94.2% of compensable distant JSC programming minutes in 2014, and with WGNA's conversion, compensable distant programming minutes of JSC content dropped precipitously. CCG argues that the year-to-year consistency in average JSC relative values from Question 4 despite Start Printed Page 54252 a loss of over more than 90% of retransmitted content after 2014 can only be explained through heuristics, question order bias, and the possible knowledge of the survey's purpose. See CCG PHB at 60.

JSC argues that while CCG and Program Suppliers take the position that the Bortz Survey responses are not sensitive enough (by some unspecified degree) to the change in volume of subscriber-weighted minutes resulting from the WGNA conversion, the Bortz results show a strength of the Bortz survey that the Judges' predecessors have highlighted. JSC points out that in the 1998-1999 proceeding, following the conversion of WTBS from a superstation to a cable network, the Bortz survey results showed only a modest decrease in JSC's relative value allocation, despite a similar drop in volume as the one at issue in this proceeding. Indeed, JSC argues, it is wrong to expect that changes in value will track with changes in the volume of programming, as might be the case in other industries where value is driven by per-unit sales. Further, it is argued, it is entirely reasonable that, as the Bortz Surveys show, CSOs continue to value highly the other JSC programming they carry after a superstation conversion, and perhaps value it even more. JSC points to the CARP's assessment that the “Bortz respondents take account of changes in volume, viewing, and all other material factors;” and argues that as a result, the Bortz surveys, unlike other methodologies, would not lead the factfinders astray by confusing volume with value. Rather, it is argued, as the CARP found in its determination, affirmed by the Circuit Court, the surveys would “best inform [the CARP] as to whether any changes in sheer programming volume, viewing minutes, subscriber instances, or any other volume metric, truly translate into changes in value.” Joint Sports Claimants' Post-Hearing Reply Brief at 54-55 (JSC RPHB); JSC PFF at 167 ¶¶ 17, 18 (quoting 1998-99 CARP Rep. at 30-31 and Program Suppliers v. Libr. of Cong., 409 F.3d 395, 401-02 (D.C. Cir. 2005)).

JSC correctly argues that value, particularly as ascertained for the purpose of royalty allocation, is not merely reflective of compensable minutes or of the volume of programming. Furthermore, as recognized by the CARP, when determining the value of programming, CSOs, such as Bortz respondents, have the ability to take account of changes in volume, viewing, and all other material factors when assigning value. Therefore, to some extent, the Bortz results may show that the CSOs contacted for the Bortz Surveys, as argued by JSC, always valued JSC programming highly, and taking many factors into consideration may have continued to do so, or may have done so to an even greater extent, after the loss of WGNA as a distant signal. Thus, to retain usefulness in allocations proceedings, the Bortz Survey results need not track precisely the availability of WGNA. Furthermore, as JSC suggests, it is unclear exactly how closely the Bortz results would have to track such a market change for its detractors to be satisfied.

Nevertheless, the magnitude of the changes caused by the conversion of WGNA is so great that one could expect some appreciable reflection of that event in the Bortz results, particularly if there had not been significant changes in the Bortz methodology as changes in the market occurred. Indeed, the Bortz results do show diminished percentages for JSC after 2014. Yet, as already detailed, it was at the time of the conversion that, citing various factors, Bortz Media made a radical change in its methodology such that it abandoned its prior sampling methodology in favor of an attempt to contact all CSOs it deemed eligible to participate in a Bortz Survey, while still excluding CSOs that carried only PTV or Canadian programming as distant signals. Bortz Media also calculated alternative adjustments to be used when interpreting the Bortz initial results after the WGNA conversion to replace the McLaughlin Adjustment used previously by the Judges. Thus, it is not simply a question of whether the Bortz Surveys were sensitive to changes that occurred from 2014 through 2017. There should be a realization that after 2014, one is looking at Bortz results that in certain respects are based on a different methodology, and that different adjustments have been proposed. Consequently, one must exercise caution when comparing results from 2014 (or before) with results for 2015-2017.

As explained by Dr. Stec, for 2014, Bortz Media sought to interview a random sample of Bortz-eligible CSOs, but for 2015 through 2017 Bortz Media attempted something like a census while failing to interview anything near all eligible CSOs. In fact, about 46% of eligible CSOs did not participate in those surveys. Dr. Stec testified that participation or non-participation in the surveys was “self-selected,” which maybe an accurate appellation; but in any case, the sampling that Bortz Media obtained was not a random sample. Thus, in Dr. Stec's opinion, one cannot ignore whatever differences might exist between respondents and non-respondents and, relying on the statistical properties of randomness, impute the results obtained from the respondents to the non-respondents, and thus for the entire target population. To do so, he opines, could introduce bias or inaccuracies into the results. See 4/19/2023 Tr. 5671-74 (Stec); CCG PFF ¶ 354. [ 234 ]

Somewhat similarly, PTV argues there is no dispute that the massive number of Public Television and/or Canadian-Only Systems excluded from the 2014 through 2017 Bortz surveys would have responded differently than the CSOs Bortz actually surveyed, and further, Bortz's exclusion also creates a clear non-response bias in the years that Bortz attempted to conduct the surveys as a “census.” It is argued that Bortz defined its target population, in part, based on the amount of the section 111 royalties they represent, but by 2017, the scope of Bortz's exclusion of PTV- and/or Canadian-only systems exceeded the scope of CSOs that were actually surveyed as part of the attempted census, including in terms of the numbers of systems (37% of systems were excluded while 34% of systems were surveyed), the section 111 royalties they paid (45% of royalties were paid by excluded systems while 28% of royalties were paid by surveyed systems), and the number of subscribers they represented (41% of subscribers were subscribed to excluded systems while 30% of subscribers were subscribed to surveyed systems). PTV PHB at 40 (citing PTV PFF ¶¶ 199-200 (relying in part on Boyle WRT at 38-39)).

JSC argues that the Bortz opponents fail to rebut Dr. Mathiowetz's finding that there was no evidence of non-response bias impacting the Bortz estimates in any year. It is argued that, as Dr. Mathiowetz explained, the “risk and type of non-response bias” is the same under either the sampling or the “census” approach, with no assumed statistical difference or indeterminacy in one compared to the other. JSC argues that there is an established method to test for non-response bias, which Dr. Mathiowetz applied, and found no bias. JSC RPHB at 48; JSC PFF 381. Indeed, during the hearing, Dr. Mathiowetz Start Printed Page 54253 provided a succinct explanation of her assessment, as follows:

Q. * * * Just in the interest of time, if you could give us at a high level what you did to assess whether there was a problem of non-response bias here and what you concluded?

A. So as we have already established, right, there are respondents and there are non-respondents. And you worry about non-response bias to the extent that those who don't respond differ from those who do respond to the survey.

In order to make that assessment, you have to take two steps. First of all, you have to take and look at characteristics or variables that you have for both respondents and non-respondents.

So we have a lot of information about these cable systems. We know their total royalty payments. We know the region of the country. We know the distant signal equivalents. We know the programming mix being offered by those cable systems.

So the first step is to say: Are there any of these characteristics related to non-response? And as Dr. Boyle asserts, there is—we see that there is a relationship between size of royalty and non-response.

But you have to take the second step and you have to say: Now, among the respondents, is the characteristic that I saw related to non-response related to valuations? And when you look at that, total royalty payments is not related to average program valuations.

So while we see a difference in non-response rates, there is no indication of non-response bias in any of the years of the Bortz Survey.

4/10/2023 Tr. 3906-08 (Mathiowetz). Dr. Mathiowetz's opinion expressed at the hearing is supported by her written testimony. [ 235 ] See Mathiowetz CWDT at 18-19.

Dr. Mathiowetz's analysis does not answer the theoretical question of whether or not the samples obtained through the Bortz's census-type approach in 2015 through 2017 can be treated the same way as random samples. Nevertheless, with respect to the target population of the Bortz Surveys, Dr. Mathiowetz's analysis provides actual evidence of the absence of non-response bias in the Bortz Surveys for 2014 through 2017, which the Judges take into consideration when determining the extent to which the Bortz results indicate value.

Yet, Dr. Mathiowetz's analysis does not speak to a different bias, which is the bias in the design of the Bortz Survey caused by the complete exclusion of PTV-only and Canadian-only CSOs. The hypothetical allocation by those CSO's under Question 4 would presumably have to have been 100% for the only distant signal that they carried. See 3/23/2023 Simonson Tr. 1228; [ 236 ] 4/4/2023 Tr. 3131-34 (Trautman). The changes in the Bortz results that occur when PTV-only or Canadian-only CSO are taken into account, especially after the conversion of WGNA, are significant and have already been discussed.

Questions have been raised concerning the identification and qualification of the respondents that Bortz Media contacted for participation in its surveys. An inaccuracy found among the criticisms of the Bortz surveys is that the executives identified as initial contacts for the interviewers (whose identities and phone numbers were obtained primarily through the Factbook) were the targets, or target populations of the surveys, or the targets for the interviewers. [ 237 ] Yet, the target for the interviewers, and for the surveys, was always the person most responsible for programming carriage decisions. While the initial contacts may in fact serve as the survey respondents, in most cases, the interviewer was referred to a subsequent contact within the CSO. Notwithstanding some arguments to the contrary, the method of making an initial contact, and then pursuing a referral when needed, is not a new method for the 2014-2017 surveys. See 2010-2013 Trautman Oral Testimony, Trial Ex. 7043, at 103-05. Furthermore, despite suggestions to the contrary, Mr. Trautman's hearing testimony on this topic is consistent with the Bortz Report, and with the interviewer instructions of the survey instrument. [ 238 ]

The Bortz Survey has also been criticized as failing to reach the person most responsible for programming carriage decisions because decision-making authority within the systems might be at the national or corporate level, or because the survey respondents worked in the marketing or video product departments. While one cannot say with certainty that in all cases the Bortz interviewers reached the right respondents, the evidence shows that during the time period in question, individuals with the knowledge of why specific distant signals were carried often worked at the local or regional level, and furthermore could work in departments with titles such as marketing or video rather than programming. See 4/3/2023 Tr. 2769-73 (Singer); [ 239 ] 4/10/2023 Tr. 4054-55, 4060-61 (Witmer); [ 240 ] 3/28/2023 Tr. 1714-16 (Costantini);  [ 241 ] 4/17/2023 Tr. 5066-67 (Ringold).

Opponents of the Bortz Survey argue that they have found “error” by the interviewers in as many as 90% of the survey responses, although none seems to involve recording the survey responses. The alleged error, it is argued, occurred in recording information such as the recording of “partial names” or “multiple positions” for the same respondent. There are even criticisms based on respondents' LinkedIn profiles (which assumes, without record evidence, that LinkedIn accounts would be accurate, and up-to-date for the survey periods in question). See, e.g., PS PHB at 64-65; PTV PHB at 52-53; CCG PHB at 54; Tr. 1278-79 (Simonson). Yet, as explained by Mr. Trautman, respondents in these telephone surveys often hesitate to provide detailed information about themselves such as full names, or happen to provide abbreviated titles. 242 Start Printed Page 54254 4/4/2023 Tr. 2992, 3004-05 (Trautman). Furthermore, it is not uncommon for regional personnel to oversee activities at individual systems, depending on the size and individual system characteristics and responsibilities. Nor is it uncommon to find individuals who are responsible for more than one function within a company. See 3/27/2023 Tr. 1622 (Costantini).

Bortz opponents argue that Ms. Grossman's long experience working on the Bortz surveys, and the large number of interviews she conducted, could have resulted in bias in the surveys she performed. That criticism is somewhat speculative. Furthermore, Dr. Mathiowetz tested for that question, and found no such bias. Specifically, it was found that on average, responses to the surveys Ms. Grossman performed did not differ from those of obtained from other interviewers. 4/10/2023 Tr. 3893-94 (Mathiowetz). On the other hand, despite the long history Bortz Media has with Ms. Grossman, there are criticisms about a supposed lack of training materials, although the record shows that it is standard to use the survey instrument, or the questionnaire, as the training material when there is a small team of interviewers as in the case of the Bortz Surveys. [ 243 ] 4/10/2023 Tr. 3895-96 (Mathiowetz). Moreover, Bortz Media conferred with Ms. Grossman and her team with respect to the 2014-2017 interviews before starting each survey. 4/3/2023 Tr. 2841 (Trautman); 4/4/2023 Tr. 3006 (Trautman). Subsequently, Bortz Media monitored approximately 20 percent of the interviews “to ensure accurate interviewing techniques and to observe any issues related to the respondent's comprehension or ability to respond to the constant sum valuation question.” Bortz Rep. at A-15.

When examining the actual Bortz Survey constant sum question, industry experts explained that cable system executives are more than capable of understanding the categories of content separate and apart from particular linear channels, that they know these types of programming as part of their day-to-day job. The survey respondents also have experience running businesses and expenses. Thus, the constant sum question is the type of question one would ask them. See 4/10/2023 Tr. 4052-55 (Witmer); 4/3/2023 Tr. 2769 (Singer).

With respect to the terms used during the Bortz Survey interviews, there is argument and testimony that in some cases the terms used to describe the program categories are undefined or vague. See, e.g., PS PHB at 72. The terms used to describe the program categories are by necessity generalizations. Yet, there is no showing of widespread confusion among survey respondents. On the contrary, there is evidence that the categories are generally understood, in particular a term such as “live professional and college team sports.” See 2010-2013 Hartman Oral Testimony, Trial Ex. 7056, at 73-77; 3/28/2023 Tr. 1722-23 (Costantini).

With respect to the general complexity of the Bortz Survey, and especially Question 4, Dr. Mathiowetz, who has studied and conducted establishment surveys, testified that the Bortz constant sum question was similar in complexity to other establishment survey questions, and underscored that the executives contacted for the survey have a sophisticated level of knowledge about the concepts in the survey. 4/10/2023 Tr. 3854-55 (Mathiowetz). Indeed, Dr. Ringold has conducted surveys of CSO employees, and has asked respondents a constant sum question that required respondents to allocate 100 points among seven different claimant categories. See 4/17/2023 Tr. 5014-16 (Ringold).

Furthermore, one well-known indication of respondents who were overwhelmed or confused could be what is termed “satisficing,” in which a respondent may take a cognitive short cut to stay in the role of a respondent albeit at a minimum. [ 244 ] See 4/10/2023 Tr. 3855-56 (Mathiowetz). Yet, Dr. Mathiowetz found no pattern of respondent confusion or satisficing behavior in the Bortz survey data. There was, for example, a case cited by PTV of a Bortz respondent who gave the same rankings and value allocations for two different systems. Dr. Mathiowetz testified, however, “[w]hat you want to see when you're looking for evidence that there are problems with the question is that you see that pattern [of satisficing] overall across most respondents,” not just “one or two.” 4/10/2023 Tr. 4015-26 (Mathiowetz). [ 245 ]

A question has been raised as to whether the timing of the Bortz surveys led to recall error or bias. Mr. Trautman testified that as a matter of best survey practices, in general it is better to perform the Bortz Survey closer to the end of the survey year, rather than farther from it. As discussed above, the Bortz Surveys did not begin until several months after the end of the preceding calendar year. Nonetheless, Mr. Trautman did not conclude that there was recall bias in this the surveys now at issue. 4/4/2023 Trautman Tr. 3012, 3029-34. Yet, as Dr. Simonson observed, “the Bortz Survey mistakenly asked a few respondents about programming categories that they did not actually carry.”  [ 246 ] 3/23/2023 Simonson Tr. 1223. In all such cases, the respondents should have realized that their systems had not carried distant signal programming in those categories, and allocated zero value to such programming. Yet, Dr. Simonson testified, for 2017, for example, over 11 percent of respondents allocated values of up to 50 percent to categories they did not carry. Id. Dr. Mathiowetz was candid about the fact that there are some errors in the Bortz Survey. She testified, “I think there are cases in any data collection effort where there is misinformation, respondent error, respondent recall. That's the nature of the beast when you go and interview humans. And the best you can do is understand how that can impact the data.” It was her opinion, which appears reasonable, that incorrect answers in those cases, i.e., answers other than zero for a programming category that was not carried, could be the result of recall error. She explained that “a respondent is under the impression that the interviewer is giving them—most respondents work under the impression that the information being conveyed by an interviewer is accurate. And so we may have cases of recall error as opposed to just not Start Printed Page 54255 understanding.” 4/10/2023 Mathiowetz Tr. 4030-31.

Despite a relationship between importance and cost, already discussed, there is a concern that because “warm-up” Question 3 asks about cost, it might have influenced responses to Question 4, which asks about value. See, e.g., 2010-13 Determination at 3590 (“This may have injected some confusion into the respondent's estimation of relative value.”); 3/27/2023 Boyle Tr. 1422 (“But if I was doing it, I probably would not have had Question 3 before Question 4, if it was something that was important. I would have had Question 3 after Question 4, after the primary source of information that I was looking to get.”). [ 247 ]

In this proceeding, there is no strong evidence offered either way to show whether Question 3 unduly influenced responses to Question 4. The best evidence was, however, found in the opinion of Dr. Mathiowetz who testified, “when you look at the relationship between importance and relative value, you see a stronger relationship in the [Bortz] data between importance and relative value than you do between expense and relative value.” When asked whether Question 3 biases response to Question 4, she answered, that “My analysis suggests that it is not biasing, that there is a very logical relationship, but it is one that also includes understanding how respondents answered the importance question.” 4/10/2023 Tr. 3878 (Mathiowetz); see Mathiowetz CWDT at 11 (“One means by which questionnaire designers can signal the distinction among related concepts is by employing different question forms, thereby presenting the respondent with a different task. In the case of the Bortz surveys, the warm-up questions require the respondent to rank order among the program categories, from 1 to k, whereas the key question of interest related to relative valuations is a constant sum task”).

PTV and CCG criticize the Bortz survey for not performing “qualitative pre-testing” or “post-survey verifications.” For example, CCG argues that pretesting is a best practice even for longitudinal surveys that are fielded with the same instrument over a long period of time, according to the American Association for Public Opinion Research (AAPOR), [ 248 ] so that changes or adjustments can be made to the questions asked. CCG PHB at 51-52. PTV argues in favor of pre-testing, and also that Bortz failed to conduct any post-survey verification to confirm validity and reliability, such as test/retest reliability or recontacting respondents to confirm “that they actually exist, the survey actually happened, or that the respondents were qualified, and to learn how the respondent understood and answered.” PTV PHB at 58.

JSC argues that it is inaccurate to suggest that pre-testing is the only way to assess whether the surveys produce valid and reliable results. JSC argues that there are many ways to test for, for example, internal consistency in responses, evidence of satisficing, and bias; and Dr. Mathiowetz tested for all of those things, even if other experts did not do so. JSC RPHB at 52.

While neither JSC nor Dr. Mathiowetz disputes the value of pre-testing in general, Dr. Mathiowetz testified that pretesting of the 2014-2017 Bortz surveys was not necessary because the survey has been fielded for many years and has been established in prior proceedings as a valid approach to looking at relative market value. She explained that the need for pre-testing is different than if one were undertaking brand new questionnaire development. Furthermore, Dr. Mathiowetz testified that there is also a significant downside to pre-testing a survey such as the Bortz Survey because there is a small population, and Bortz Media goes back to them in the next year. Also, any cases used for pre-testing usually would not be used in the main study. Tr. 3863-64, 3958-60 (Mathiowetz).

With respect to post-survey verification, Dr. Mathiowetz explained that due to the small population, and recurring nature of the survey, “you don't want to burn bridges” by recontacting CSOs that Bortz Media knows it will want to survey again, just to verify their prior identification of the respondent. Indeed, Dr. Mathiowetz had never seen such a verification process for an establishment survey in the literature, nor had she done it herself. 4/10/2023 Tr. 3897-98 (Mathiowetz). Similarly, Mr. Trautman's reason for not contacting survey respondents after each survey is a concern about “placing an additional burden on respondents or potential respondents,” who are “busy executives,” and the resulting “risk of not being able to continue to interview respondents in the future.” 4/4/2023 Tr. 3106-07 (Trautman).

PTV argues in one paragraph of its brief that JSC has trumpeted high response rates achieved for the Bortz surveys, but never disclosed any response rate quotas it imposed, as revealed in compelled discovery showing that Bortz imposed substantial quotas on Ms. Grossman and her team, and pressured them to produce “extraordinary” results;  [ 249 ] and despite persistent and increasing difficulty, specifically pressured them to “keep the response rate as high as possible because it has been a big selling point for the Bortz survey in these proceedings . . . based on past emphasis by the Judges.” It is further argued that Mr. Trautman admitted, and documents confirmed, that Ms. Grossman and her team had a financial interest in meeting these quotas in order to keep the surveys going, and did “everything possible to reach those numbers that [Mr. Trautman] needed,” including placing many calls, pleading, calling neighboring systems, disregarding institutional policies against participating in surveys, and staying in the field for a longer time. See PTV PHB at 50 (citing PTV PFF ¶¶ 266-73).

JSC argues that Bortz Media appropriately sought to obtain high response rates, and to do so through its contractor, and at higher expense, spent more time in the field and made more Start Printed Page 54256 efforts to reach respondents than one might otherwise do. It is argued that no expert testified to the existence of “quotas” or resulting bias in the Bortz results. It is argued that to the contrary, Dr. Mathiowetz testified that there is “absolutely not” anything problematic about telling a survey organization to work hard to obtain good response rates, even if that requires interviewers to make more frequent calls or leads to cost overruns. Furthermore, it is argued, Mr. Trautman testified unequivocally that interviewers were never paid for completing an individual interview or completing a specific number of interviews. JSC RPHB at 4, 55.

JSC argues that PTV is simply misreading the AAPOR disclosure standard, which it never submitted into evidence and never showed to any of the numerous testifying survey expert, including former AAPOR President, Dr. Mathiowetz. Furthermore, JSC argues that the AAPOR standards require disclosure of quotas used as part of the “methods of sampling” for the survey, sometimes referred to as “quota sampling.” Quota sampling is used to “achieve a pre-specified distribution on some set of variables” (such as gender or Census region) within a survey sample, and there is no suggestion that Bortz used quota sampling or anything like it, and thus nothing that Bortz improperly failed to disclose. See id. at 55-56.

Indeed, there was a lack of development of any accusation that Bortz Media, or any party associated with the Bortz Surveys at issue used undisclosed sampling quotas, let alone to obtain extraordinary results. Furthermore, it has not been established that interviewers or anyone else associated with Bortz Media or its contractors received undisclosed financial incentives to obtain results, [ 250 ] or the Bortz Media or anyone else associated with the Bortz Surveys engaged in “quota sampling,” as it has been explained in the meager record on the topic.

CTV argues that the testimony its expert witness Prof. Papper, referenced above, is based on empirical analysis and his decades-long expert assessment of trends in the local television news industry generally and their impact on the relative value of CTV programming during the 2014-2017 period. In particular, Prof. Papper opines that there has been a steady rise in the production and airing of local news. [ 251 ] Thus, CTV argues that it is entitled to an increased share of royalties. See CTV PHB at 4-6. In its reply, CTV argues that despite criticisms of RTDNA surveys, Program Suppliers provide no evidence, empirical or otherwise, to rebut or refute what Prof. Papper consistently presents throughout his testimony, which is that that local television stations across the country, including those that were distantly retransmitted, were producing and airing increasingly more local news programming over the course of 2014-2017. [ 252 ] Further, CTV argues that as Prof. Marx testified, CSOs' inability to offer as much CTV content in 2015-2017 was divorced from any actual choice made by the CSOs, and was due to the reduction of available CTV programming as a result of the WGNA conversion. CTV Reply at 52-53.

Program Suppliers argue that the RTDNA Surveys should be given no weight for several reasons, including the fact that Prof. Papper failed to provide the information necessary to evaluate his target population, sample design, the data he collected (and did not collect) from the RTDNA Surveys, the quality of that data, or the accuracy of the data collection and recording of that data. Moreover, Program Suppliers argue that Mr. Papper's hearing testimony revealed that the reliability issues are more severe, pervasive, and disqualifying than originally thought. Indeed, it is argued, the RTDNA Surveys are not surveys at all, but are instead part of what CTV terms a “fact-gathering exercise,” presumably because Prof. Papper admitted that he is not a survey expert and lacks the expertise necessary to sponsor the RTDNA Surveys as evidence in this proceeding. CTV PHB 4. In addition, Program Suppliers argue that while CTV takes the position, based solely on Mr. Papper's RTDNA Survey, that there was an increase in the amount of CTV programming appearing on distant signals, this summary conclusion is directly contrary to the quantitative study conducted by the other CTV experts, Dr. Bennett  [ 253 ] and Dr. Marx, which shows the dramatic decline in CTV distant carriage over time. Program Suppliers' Post Hearing Reply Brief at 22 (PS RPHB).

The RTDNA Surveys were not offered or received as survey evidence, but rather as information, along with articles, that Prof. Papper relied upon in forming his expert opinions. As such, the RTDNA Surveys were not scrutinized as, for example, the Bortz Surveys were scrutinized in this proceeding. Based on the totality of Prof. Papper's opinions and the sources upon which he relies, including his involvement in the broadcast journalism industry, it is found that there was a trend toward increased production and airing of local news during the 2014-2017 time period, although the extent of that trend is difficult to gauge from Prof. Papper's testimony. Furthermore, that trend does not in and of itself translate to a greater allocation of section 111 royalties for CTV, and the opinions of Dr. Bennett, Dr. Marx and others who testified on the subject of CTV programming are addressed elsewhere.

For the foregoing reasons, the Judges accord evidentiary weight to the Bortz Survey, with the McLaughlin Adjustment—relatively equivalent with the weight given to the regression analysis as discussed supra. A reconciliation of these two useful (albeit imperfect) approaches, augmented by the testimony of industry witnesses, is set forth below. Start Printed Page 54257

Regression evidence was presented through Drs. Johnson, Tyler, George and Marx, with the Johnson, Tyler and George regression models generating proposed royalty fund shares for each of the claimant groups in each of the years 2014 through 2017. Furthermore, survey evidence was presented only in the form of the Bortz Survey, which was conducted for each of the years at issue, along with adjustments that could be made to the initial results to account for certain factors (most notably the exclusion of CSOs from the surveys because they carried only PTV or only Canadian programming as distant signals). In addition, the Judges received evidence from industry experts who testified from their unique perspectives about the regressions and annual surveys presented at the hearing, as well as the valuation of programming relative to several of the claimant groups.

For the reasons detailed in this determination, the Judges have found that no form of evidence, be it a regression, the Bortz Survey or the testimony of industry experts, provided data that translates directly into the allocation of royalty fund shares needed for this determination. [ 254 ] The results of all regression models in evidence have been considered, but the Judges find that the Tyler Model is the most appropriate regression model in this record, and have accorded it the most weight. The Bortz Surveys provide relevant illustrations of the values placed on distant signal programming during the relevant time period. For 2014-2017, the Bortz Surveys had limitations that other Judges and tribunals have long recognized. In some cases, a more comprehensive assessment of values can be made by applying adjustments proposed by various parties, especially the McLaughlin Adjustment, which has been used at least since the 2004 and 2005 proceeding. The Judges have also taken into consideration the fact that Bortz Survey methodology, like the regression models, faced challenges over the period following 2014, especially due to the conversion of WGNA.

In view of the totality of the evidence presented in this proceeding, the Judges find that a synthesis of regression and survey results is necessary to arrive at the required allocations. In particular, with respect to JSC, the Judges weighted heavily evidence from the Bortz Surveys. While the record shows that minute volume is not as applicable to sports programming (which is more dependent, for example, on games carried), JSC's allocation must be limited by the fact that significantly less sports was transmitted after the WGNA conversion. Yet, with respect to PTV, the regression evidence was accorded greater weight for 2014, and dispositive weight for 2015-2017. As already described, the regression evidence accounted for the reduction of shares due to the Must Carry signals, as well as increases due to the implicit willingness to pay as shown by cable systems that continued to carry PTV even when WGNA was no longer available as a distant signal. By contrast, the Bortz Surveys did not examine such circumstances, and there is no rationale for augmenting the survey results with the McLaughlin Adjustment for all the PTV-only systems that came into existence after 2014.

For CTV, the Bortz Surveys weighed heavily in making the allocation, which is not inconsistent with evidence presented by industry experts Mr. Vaughn and Prof. Papper, as well as the industry analysis provided by Dr. Marx. Relatively speaking, the value of CTV should have increased since 2013, with the rise of streaming and over the top programming, more than one sees when simply looking at the regression results. Much of the CTV programming was not available on streaming, and would increase its relative value in what was technically distant signal programming because it was retransmitted to a contiguous area.

With respect to the allocation for the Program Suppliers, the Bortz Survey evidence weighed more heavily than the regression evidence. Expert testimony showed that streaming services could substitute for retransmitted signals. This factor was not reflected in the regression evidence, but the Bortz Survey respondents, as cable industry executives, would have understood the factors affecting the value of Program Suppliers programming in much the same way as the testifying industry experts.

There is ample evidence in the record that SDC provides niche programming whose value is not so much determined by minutes, and might not show up well in regressions. Yet, the niche value of SDC has been reflected well in the Bortz Surveys received in this proceeding, and previously, and is reflected in relatively consistent numbers. Inasmuch as the allocations for SDC, by any parties' estimation, resulted in low numbers, one sees share allocations with relatively steep jumps or declines between years, but when compared to the overall allocations to be made, the variations are not great in absolute terms.

With respect to CCG, in general, the regressions examined the value of Canadian programming in detail, and were relied upon in making allocations. Yet, even the regression evidence was weighed carefully because although CCG had strength as a niche offering, it also overwhelmed some regressions, including the above-minimum-fee programming model. The Bortz Surveys were considered, but accorded no weight when arriving at the Basic Fund allocations because much Canadian programming is not taken into consideration, and the Bortz results were clearly off the mark.

Accordingly, the allocations are, as follows:

Table 2—Basic Fund Royalty Allocations

Basic Fund	2014	2015	2016	2017
CCG	6.19	14.59	14.60	15.77
CTV	20.55	19.78	17.36	17.50
JSC	36.13	11.42	10.72	12.36
Program Suppliers	21.21	28.29	25.53	23.29
PTV	11.07	19.18	24.78	25.25
SDC	4.85	6.74	7.01	5.83

With respect to the 3.75% fund, it is recognized that PTV is a nonparticipant. To arrive at the allocations for the 3.75% fund set forth in Table 1, the Judges have reallocated the PTV shares proportionally among the claimant categories that participated in that fund.

The Register of Copyrights may review the Judges' Final Determination for legal error in resolving a material issue of substantive copyright law. The Librarian shall cause the Judges' Final Determination, and any correction thereto by the Register, to be published in the Federal Register no later than the conclusion of the 60-day review period.

Dated: April 17, 2024

David R. Strickler,

Copyright Royalty Judge.

Steve Ruwe,

David P. Shaw,

Chief Copyright Royalty Judge.

The Register of Copyrights closed her review of this Determination on June 13, 2024, with no finding of legal error.

Dated: June 13, 2024.

Approved by:

Carla B. Hayden,

Librarian of Congress.

In re Distribution of Cable Royalty Funds

Docket No. 16-CRB-0009 CD (2014-17)

On September 6, 2023, the Copyright Royalty Judges (“Judges”) issued their Initial Determination of Royalty Allocation (“Initial Determination” or “ID”) in the captioned proceeding (eCRB no. 28762).

On September 21, 2023, the Public Television Claimants (“PTV”) and the Joint Sports Claimants (“JSC”) filed motions for rehearing (eCRB nos. 30637 and 30638, respectively).

On September 25, 2023, the Judges issued Order 43, permitting written responses to the motions for rehearing by October 5, 2023.

On October 5, 2023, the Canadian Claimants Group (“CCG”), Program Suppliers (“PS” or “Program Suppliers”) and Settling Devotional Claimants (“SDC”) filed a Joint Response in Opposition to the Motions for Rehearing (eCRB no. 32670) (“Joint Response”).

On October 5, 2023, JSC and the Commercial Television Claimants (“CTV”) filed responses in opposition to PTV's Motion for Rehearing (eCRB nos. 32671 and 40001, respectively).

On October 5, 2023, PTV filed a Response in Opposition to JSC's Motion for Rehearing (eCRB no. 32673).

On October 10, 2023, the Judges issued Order 44, granting movants leave to file replies by October 19, 2023.

On October 19, 2023, JSC filed a reply in support of its motion for rehearing (eCRB no. 33842) and PTV filed a reply in support of its motion for rehearing (eCRB no. 33843).

Pursuant to the Copyright Act, the Judges may grant a motion for rehearing in exceptional cases. 17 U.S.C. 803(c)(2) . Applying this statutory “exceptional case” requirement, the Judges' regulations state that the movant must show that an aspect of the determination is “erroneous.” i.e., “without evidentiary support in the record or contrary to legal requirements.” 37 CFR 353.1 -.2.

In applying these statutory and regulatory standards, the Judges grant rehearing only “when (1) there has been an intervening change in controlling law; (2) new evidence is available; or (3) there is a need to correct a clear error or prevent manifest injustice.” See Order Granting in Part and Denying in Part Motions for Rehearing at 2 n.3, Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III), Docket No. 16-CRB-0003-PR (2018-2022) (Oct. 29, 2018) (citing Order Denying Motion for Reh'g at 1, Determination of Rates and Terms for Preexisting Subscription Services and Satellite Digital Audio Radio Services (SDARS I), Docket No. 2006-1 CRB DSTRA (Jan. 8, 2008) (applying federal district court standard under Fed. R. Civ. P. 59(e))). See also Order Granting in Part and Denying in Part Sirius XM's Motion for Rehearing and Denying Music Choice's Motion for Rehearing at 1-2, Determination of Royalty Rates and Terms for Transmission of Sound Recordings by Satellite Radio and “Preexisting” Subscription Services (SDARS III), Docket No. 16-CRB-0001 SR/PSSR (2018-2022) (Apr. 18, 2018) (“ SDARS III Order”) (same). Moreover, in the SDARS III Order, the Judges made clear what would not be sufficient to warrant rehearing: “A rehearing motion does not provide a vehicle `to re-litigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment.' ”  [ 255 ] Id. at 2 (quoting Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (quoting C. Wright & A. Miller, Federal Practice and Procedure § 2810.1 (2d ed. 1995))). [ 256 ]

Pursuant to 17 U.S.C. 803(c)(2) and 37 CFR 353.1 , JSC requests rehearing, arguing that the Judges' allocations must conform to the record evidence and the law by: “(1) correcting the Initial Determination's reliance on an outdated and unreliable version of the `McLaughlin adjustment' calculation; (2) adjusting JSC's 2014 share to align with the record evidence and the reasoning of the Initial Determination; and (3) eliminating reliance on a regression model for the 2015-17 time period that no witness endorsed and is at odds with the record evidence.” JSC Motion at 1.

The JSC Motion fails to explicitly set forth a governing rehearing standard for the Judges to apply that would support the substantive arguments on which JSC seeks rehearing. As the Judges noted supra, a party may seek rehearing if (1) it demonstrates the existence of an “exceptional” case under the applicable statutory section, which, (2) by regulation, means that a party must show that the aspects of the determination identified by the movant were “erroneous,” pursuant to (3) specific grounds, such as, e.g., “clear error” or “manifest injustice.”  [ 257 ] JSC Start Printed Page 54259 does not express and apply these specific standards, let alone maintain that its arguments meet these standards.

The Judges should not have to guess at the standard on which a movant relies for seeking rehearing. Accordingly, the standardless nature of the JSC Motion renders it deficient on this basis alone. [ 258 ]

Further, the Judges note that JSC sets forth an incorrect standard for consideration of requests for rehearing, by repeating three times that the Judges' adjustments were “arbitrary”. Motion at 8-10. However, that standard is an appellate standard, not a standard for rehearing. See, e.g., Hammond v. Reynolds Metals Co. Pension Plan for Hourly Emps., 2006 WL 8436765, at *2 (N.D. Ala. May 25, 2006) (holding that the “arbitrary and capricious” appellate standard of review is inapplicable to the court's “stringent standard” for consideration of a Rule 59(e) motion and “the judicial interest in finality of decisions . . . .”); Perrin v. Hartford Life Ins. Co., 2008 WL 11472191, at *2 (E.D. Ky. Mar. 24, 2008) (“the court finds that the defendant cannot attain arbitrary and capricious review of its decision. The court concludes that the defendant has failed to demonstrate appropriate grounds for relief under Rule 59(e)). [ 259 ]

Despite the legal deficiency of JSC's “arbitrariness” argument as a basis for rehearing, in the interest of completeness, the Judges explain infra why JSC's substantive assertion that the adjustments were arbitrary is factually deficient.

As JSC states in its pending motion, in the Initial Determination, the Judges relied in part on the Bortz Survey with the McLaughlin Adjustment, as the adjustment is found in Exhibit 3049. JSC Motion at 1-2 (citing ID at 177-78, 181, 197-98). JSC argues, however, that Exhibit 3049 is an “inaccurate version of the McLaughlin adjustment,” and reliance upon Exhibit 3049 reflects two separate errors. Id. at 1.

According to JSC, the first error is that Exhibit 3049 was an early, preliminary calculation of the “conventional McLaughlin adjustment,” as proposed in prior proceedings, that was subsequently updated in Exhibit 3105, and “[t]hus, as between Exhibit 3049 and 3105, Exhibit 3105 is the more accurate calculation of the McLaughlin adjustment.” Id. at 1-2. The second error, according to JSC, is that “Exhibit 3049, as well as Exhibit 3105, rely on royalty-based weighting that is economically inappropriate after the conversion of WGNA and the enormous increase in minimum fee systems.” Id. at 2. JSC argues that

Bortz subsequently implemented a revised weighting system (referred to as “base plus 3.75”) that takes account of the proliferation of minimum fee systems in 2015-17 by weighting based on what the CSO would have paid according to the system's distant signal usage absent the minimum fee. Use of royalty-based weighting for 2015-17 conflicts with the Judges' findings regarding minimum fee systems.

Id. JSC further argues, “[i]f the Judges are relying on Bortz with the McLaughlin adjustment, they should use the version set forth in Exhibits 4001-4003, which applies base plus 3.75 weighting.” Id. Each of these two alleged errors ( i.e., (1) using Exhibit 3049 rather than Exhibit 3105, and (2) not using a “base plus 3.75” adjustment supposedly set for in Exhibits 4001-4003) are further detailed separately in JSC's motion, and are addressed separately, as follows.

In addition to the JSC arguments recounted above, specifically with respect to the use of Exhibit 3049, JSC argues:

Mr. Trautman prepared Exhibit 3049 in July 2020, roughly two years before he submitted testimony in this proceeding. See Tr. at 3142:22-3143:8, 3145:2-3146:11 (Trautman); Ex. 7100 (Trautman Corrected WDT). As Mr. Trautman testified, it takes an extensive period of time—well beyond when the surveys are fielded—for Bortz to obtain and evaluate the voluminous programming data presented in this proceeding. See Tr. at 2886:21-2887:9 (Trautman). That programming data is used in the Bortz results to project allocations to non-respondents according to programming carriage patterns. See Ex. 7101 (Corrected Bortz Report), at 29 (“Bortz projected non-respondent values based on signal carriage characteristics,” including “the carriage (or lack thereof) of JSC programming”). Thus, while the survey responses are not changed over time, the weighted results of the survey can be expected to become more accurate over time, as Bortz evaluates more comprehensive programming information.

Mr. Trautman performed, and JSC produced, “UPDATED” calculations of the weighted Bortz Survey results and “conventional McLaughlin adjustment” dated “1-21-21” which are different in small but significant respects from the July 2020 calculations. These “UPDATED” calculations are in the record at Exhibit 3105 and a copy is attached as Exhibit 1 hereto. See Tr. at 3099:12-21 (admitting Exhibit 3105).

There is no reasoned basis or record support for relying on the outdated, incorrect version of the “conventional McLaughlin adjustment” calculation in Exhibit 3049 given that an updated version is in the record Start Printed Page 54260 at Exhibit 3105 and was cited to the Judges. Indeed, the proposed findings of fact of Public Television Claimants (“PTV”) cite to Exhibit 3105 (not Exhibit 3049) in presenting the “Proposed Shares” of PTV and JSC “Determined by Various Analyses of Relative Marketplace Value in 2014-17.” PTV Corrected PFF ¶ 12, Table 3 & ¶ 43, Table 5. At a minimum, if the Judges are to rely on Mr. Trautman's calculation of the “conventional McLaughlin adjustment,” they should rely on the “UPDATED” calculation in Exhibit 3105.

The existing record supports the use of Exhibit 3105 rather than Exhibit 3049. However, if the Judges believe that additional information on this issue would be helpful, JSC respectfully requests that rehearing be granted to present additional evidence. Throughout the course of this proceeding, “[n]o party argue[d] that royalty fund allocations . . . should be made strictly according to the Bortz initial results subject to the McLaughlin adjustment,” and “no party had its expert calculate the McLaughlin adjustment . . . for presentation at the hearing.” Initial Determination at 178. As a result—while JSC vigorously argued that the McLaughlin adjustment should not be used in the abstract, see, e.g., JSC Post-Hearing Br. at 65-68—JSC has not had an opportunity to present evidence on which specific version of that calculation is most accurate and reliable.

JSC Motion at 2-4.

In their joint response, CCG, the Program Suppliers, and SDC oppose JSC's motion with respect to the McLaughlin Adjustment, arguing that merely because Exhibit 3049 was an “early” calculation that Mr. Trautman subsequently “updated” with a recalculation “does not by itself render the original version outdated or incorrect.” Joint Response at 4-5. Furthermore, they argue,

JSC has only itself to blame for failing to explain away the earlier results or to advocate more forcefully for reliance on the later results, particularly considering that Mr. Trautman was specifically asked about Exhibit 3049 and his preparation of `other documents regarding potential adjustments and weights that would alter those shares' on cross-examination.

Id. at 5 (citing 4/4/2023 Tr. 3142-3145 (Trautman)). Indeed, they argue that, contrary to JSC's assertion, nothing precluded JSC from “present[ing] evidence on which specific version of that calculation is most accurate and reliable.” Id. at 5 (quoting JSC Motion at 3-4). They argue, “[a]s the Initial Determination observes, `all parties knew that the Judges applied the McLaughlin [A]djustment to the Bortz Survey initial results in the 2004 and 2005 proceeding, as well as in the more recent 2010-2013 proceeding.' ” Id. (quoting ID at 178). According to CCG, the Program Suppliers, and SDC, “JSC was on notice and cannot use rehearing as a vehicle to present arguments or evidence that it could have raised prior to issuance of the Initial Determination. Exxon Shipping Co., 554 U.S. at 485 n.5.” Id.

PTV argues that JSC and the other parties devoted considerable time and pages during the hearing and in post-hearing briefing to the question of the appropriate weighting for the Bortz Survey responses, and the Judges, having evaluated those arguments, reached a conclusion based on the evidence and the arguments. PTV argues that JSC's motion for rehearing “merely attempts to relitigate these issues, and now inappropriately advocates for yet another of its panoply of preferred weighting methodologies (another version of a `base plus 3.75' weighting scheme), among dozens of options that JSC's experts mined to identify shares that increased JSC's allocation.” PTV Response at 3 (citing Ex. 3039). PTV argues that JSC, apparently aware that its attempt to advance yet another weighting methodology does not meet the standard for rehearing,

argues alternatively (indeed, primarily) in favor of a more modest adjustment—that the Judges should use Exhibit 3105 rather than Exhibit 3049 as the most accurate calculation of the conventional McLaughlin-adjusted Bortz Survey results. While the differences between these two exhibits appear relatively small, the record lacks evidence supporting JSC's argument, and JSC had more than ample opportunity to introduce evidence during the hearing on this point but chose not to do so.

Id. Accordingly, PTV argues, rehearing is inappropriate under the well-established requirements for a motion for rehearing. Id.

Specifically with respect to Exhibit 3015, PTV argues that “[k]nowing that its broad arguments for re-weighting pursuant to a new methodology exceed what has typically been allowed on rehearing, JSC's more modest lead argument is that the Judges should rely on a purportedly `updated' calculation of the conventional McLaughlin [A]djustment. JSC's argument should be rejected because JSC failed to argue the point . . . .” Id. at 3. It is further asserted that

JSC failed to . . . introduce evidence supporting its argument prior to its motion for rehearing, despite ample opportunity to respond to Public Television's questioning at the hearing and arguments in its post-hearing briefing. JSC's request does not meet the rehearing standard because it seeks “to raise arguments or present evidence that could have been raised prior to the entry of judgment.”

Id. at 3-4 (citing Order Denying Program Suppliers' Motion for Rehearing and Correcting 2012-13 Allocations for Certain Parties, Docket No. 14-CRB-0010-CD, at 1 (Dec. 13, 2018) (“2018 Rehearing Order”)). Indeed, PTV argues that during the hearing, Mr. Trautman was questioned extensively about Exhibit 3049, and Exhibit 3049 was the basis for Public Television's request, in the alternative, that the Judges use the McLaughlin-adjusted Bortz Survey results as the “royalty floor.” See id. at 4 (citing PTV PFFCL ¶ 208 & n.327; PTV Post-Hearing Br. at 42-43 (citing PTV PFFCL ¶ 208 (depicting Ex. 3049))). PTV argues, “Despite these arguments, JSC chose not to introduce evidence regarding the relative accuracy of Exhibits 3105 and 3049, and chose not to challenge the figures in Exhibit 3049 until its rehearing motion.” See id. PTV observes,

[a]ccordingly, in the Initial Determination, the Judges noted that they were “referred to a chart taken from a spreadsheet prepared by Mr. Trautman, originally for Bortz Media's internal use (Ex. 3049 . . .),” and correctly observed that, “[f]ortunately, no party has challenged the figures contained therein as accurately reflecting application of the McLaughlin adjustment to the Bortz Survey initial results.” Initial Determination at 178.

PTV argues that JSC belatedly asserts that Exhibit 3049 is an “outdated, incorrect version of the `conventional McLaughlin adjustment'” and that Exhibit 3105 is “an updated version.” Id. (quoting JSC Motion at 3). Yet, PTV argues, “There is no support in the record for this assertion. Nor is there support (or even any citation) for JSC's assertion that `the weighted results of the survey can be expected to become more accurate over time.' ” Id. Rather, it is argued, “there was substantial evidence that over time, Mr. Trautman attempted to develop a number of creative weighting schemes with the purpose of seeking to increase JSC's share, not to achieve more `accurate' results.” Id. at 4-5.

Finally, PTV argues that JSC is incorrect to argue that JSC lacked the opportunity to present evidence on which specific version of the conventional McLaughlin Adjustment is most accurate and reliable. Id. at 5. PTV argues that JSC “had ample opportunity to present evidence and argument on this issue, including during the extensive examination of Mr. Trautman regarding Exhibit 3049, or in response to Public Television's post-hearing submissions.” Id. It is argued that while JSC asserts that PTV cited to Exhibit Start Printed Page 54261 3105 (not Exhibit 3049), such citation “was only in two illustrative comparison tables collecting various calculations by various witnesses, in order to show that all allocation methodologies showed an increase in Public Television's share, and a decline in JSC's shares.” Id. (citing PTV PFFCL ¶¶ 12, 13 & tbls. 3, 5; PTV Post-Hearing Br. at 41-42). PTV argues that it “proposed that Exhibit 3049 could be used in the alternative as a `royalty floor.' See PTV PFFCL ¶ 208 & n.327; PTV Post-Hearing Br. at 42-43. Public Television did not advocate for the adoption of Exhibit 3105 as a basis for share allocation.” Id. (footnote omitted). [ 260 ]

In its reply, JSC reiterates that one reason Exhibit 3049 is incorrect is because it is an early, preliminary calculation that was updated in Exhibit 3105. JSC Reply at 5-6 (citing JSC Motion at 1-4). JSC argues that “[n]o party disputes that Exhibit 3105 is a more recent, `UPDATED' version of the calculation in Exhibit 3049”, or that “over time, Bortz incorporates more comprehensive programming information into its calculations.” Id. at 5. JSC argues the “Responding Parties' speculative attempts to justify reliance on Exhibit 3049 instead of Exhibit 3105 are contrary to the record.” Id. JSC argues that while the

Joint Respondents posit that a “later” calculation “does not by itself render the original version outdated or incorrect” . . . Exhibit 3105 is not simply a “later” calculation; the record supports the conclusion that Exhibit 3105 is more accurate because it incorporates more comprehensive programming data to project allocations to non-respondents.

Id. (citing, inter alia, JSC Motion at 2-3). JSC further argues that while PTV speculates that Mr. Trautman may have applied some creative weighting scheme with the purpose of seeking to increase JSC's share in Exhibit 3105, there is no evidence of that. Id. (citing PTV Resp. at 4-5). Rather, JSC argues, “Exhibit 3105 was created for Bortz's internal use, not to present a proposed share allocation in these proceedings.” Id. (citing 4/3/2023 Tr. 2881-2882 (Trautman)).

As addressed in the Initial Determination, the parties knew going into the hearing that the McLaughlin Adjustment, having been applied to Bortz surveys in the 2004 and 2005 allocation proceeding, and in the 2010-2013 allocation proceeding, would be relevant to the issues addressed during the allocation hearing for 2014-2017. See ID at 178. Indeed, during its opening argument, JSC expressed its disagreement with use of the McLaughlin Adjustment to allocate shares, particularly with respect to 2015 through 2017. See 3/20/23 Tr. 69. JSC also knew that it had produced calculations found in Exhibits 3049 and 3105, [ 261 ] which showed that Mr. Trautman, JSC's witness from Bortz Media who sponsored the Bortz 2014-2017 surveys, had calculated the McLaughlin Adjustment for the 2014-2017 time period. See, e.g., JSC Motion at 2-3; ID at 161. During Mr. Trautman's direct examination at the hearing, JSC asked Mr. Trautman questions about the McLaughlin Adjustment, including questions concerning the fact that he had performed the McLaughlin Adjustment, as follows:

Q. * * * In the course of doing your work for 2014 to `17, did you ever run the McLaughlin adjustment?

A. Early on, I did, yes.

Q. Why did you do that?

A. Well, I was aware that some form of the McLaughlin adjustment had been applied in past proceedings, including in 2010 to `13, and so I was interested to see what the outcome would be if that were applied for 2014 to 2017.

Q. And if someone were to say: Well, the fact that Mr. Trautman ran the McLaughlin adjustment shows that it was his view that McLaughlin adjustment was appropriate, what would your response be?

A. That that's not the case at all. I was simply performing a calculation in order to see what the outcome would be.

4/3/2023 Tr. 2881-2882 (Trautman). Thus, Mr. Trautman testified that “[e]arly on” he performed “a calculation.”

Subsequently, during the cross-examination of Mr. Trautman, PTV raised the fact that he calculated the McLaughlin Adjustment, as follows:

Q. * * * Mr. Trautman, you did attempt to calculate the McLaughlin adjustment for the 2014 to `17 Bortz Survey results before you filed your written direct testimony in this proceeding, correct?

A. Yes. Early on in my review of 2014 to `17, I did prepare spreadsheets that calculated what the outcome of the McLaughlin adjustment would be or could be.

Q. So let's take a look at Exhibit 3049, which was produced as JSC 00081249. Mr. Trautman, you recognize Exhibit 3049 as one of your documents, correct?

Q. And I'll represent to you that the last modified date on this document, as it was produced to us, is July 27th, 2020, nearly two years before written direct testimony was due in this case. Is that consistent with your recollection?

A. It is, yes.

Q. And there are two tables in Exhibit 3049, correct?

A. Correct.

Q. And the bottom table is titled “Weighted Bortz Survey Results By Year, 2014-`17 (After Conventional McLaughlin Adjustment).” Correct?

Q. And the bottom—and in this table, PBS is identified in the first column at the top—well, in the first row at the top of the table, row 25, correct?

Q. And there are columns labeled, from left to right, 2014, 2015, 2016, 2017, and average 2014 to `17, correct?

Q. And in this table, you calculated PBS's share as 8.4 percent in 2014, 43.6 percent in 2015, 48.4 percent in 2016, and 48.2 percent in 2017, with a 37.1 percent average from 2014 to 2017, correct?

A. That's correct.

Q. And then let's go down to the next row the Sports share. The Sports share is listed as 39 percent in 2014, 12.7 percent in 2015, 12.2 percent in 2016 and 14.8 percent in 2017, with an average 2014-to-`17 share of 19.7 percent; is that correct?

A. Yes, it is.

Q. Now, after Bortz prepared this document that we just looked at—and we can take that down. And let me, I guess, rephrase that. I mean, I don't know whether you used the term “Bortz” or you interchangeably. I'm happy—do you have a preference in that, Mr. Trautman?

A. I really don't.

Q. Okay. Well, after you prepared the document we just looked at, you prepared other documents regarding potential adjustments and weights that would alter those shares, correct?

A. I recall that I did, yes. I don't recall a specific sequence or, you know, exactly which took place when in the sequence, but I did look at other ways of examining the issue.

4/4/2023 Tr. 3142-3145 (Trautman).

As seen from the preceding transcript portion, the witness's attention, and the attention of the Judges, was directed exclusively to Exhibit 3049. On redirect, JSC did not conduct any examination to show that there was any error in Exhibit 3049 as a calculation of the McLaughlin Adjustment, or that it had been in any way updated or superseded, for example, by Exhibit 3015 or the calculations contained therein. In neither JSC's pending motion nor its reply is there any such citation to the hearing record.

Given the hearing testimony concerning Exhibit 3049 and the McLaughlin Adjustment, it was not Start Printed Page 54262 surprising that PTV relied on pertinent portions of Exhibit 3049 in its Proposed Finding of Fact (PTV PFF ¶ 208), The Judges expressly relied on this proposed factual finding in the Initial Determination. See ID at 177 (citing PTV PFF ¶ 208); see also PTV Post-Hearing Br. at 82. In its pending motion and reply, JSC has cited to no initial or reply filing in which it pointed out any particular error in Exhibit 3049. [ 262 ]

Not even in the pending motion and reply has JSC shown that any data point contained in Exhibit 3049 is erroneous. Although Exhibit 3015 is labeled “UPDATED” and the data were calculated after the tables in Exhibit 3049, it cannot be presumed that Exhibit 3049 contains error.

The closest JSC has come to explaining why Exhibit 3105 should be considered “updated” appears only in its pending motion, in which JSC argues,

it takes an extensive period of time—well beyond when the surveys are fielded—for Bortz to obtain and evaluate the voluminous programming data presented in this proceeding. See Tr. at 2886:21-2887:9 (Trautman). That programming data is used in the Bortz results to project allocations to non-respondents according to programming carriage patterns. See Ex. 7101 (Corrected Bortz Report) at 29 (“Bortz projected non-respondent values based on signal carriage characteristics,” including “the carriage (or lack thereof) of JSC programming”). Thus, while the survey responses are not changed over time, the weighted results of the survey can be expected to become more accurate over time, as Bortz evaluates more comprehensive programming information.

JSC Motion at 2-3.

Consequently, only now after the hearing, JSC argues that Exhibit 3105 can be considered “updated” because when the tables in Exhibit 3105 were calculated, Bortz Media projected allocations for non-respondents differently than it had at the time that the tables in Exhibit 3049 were calculated. JSC refers to such differences as “small but significant.” Id. at 3. Yet, inasmuch as JSC's citation to a documentary exhibit is general in nature and does not reference Exhibit 3105 and the calculation contained herein, and further JSC did not examine Mr. Trautman about his McLaughlin Adjustment calculations at the hearing (even after the relevant cross-examination by PTV), there is no way to determine whether JSC's belated characterization of Exhibit 3105 is accurate, and that the data contained therein is accurate.

In its pending motion, JSC argues, “the proposed findings of fact of Public Television Claimants (`PTV') cite to Exhibit 3105 (not Exhibit 3049) in presenting the `Proposed Shares' of PTV and JSC `Determined by Various Analyses of Relative Marketplace Value in 2014-17.' PTV Corrected PFF ¶ 12, Table 3 & ¶ 43, Table 5.” JSC Motion at 3; see JSC Reply at 8. That argument does not portray the full picture. PTV cited expressly to Exhibit 3105 in its Proposed Finding of Fact ¶ 12, in a string cite showing support for a table it created to illustrate proposed share allocations resulting from seven proposed methodologies. See PTV PFF ¶ 12; see also PTV PFF ¶ 43 (table with citation to Ex. 3105). Yet, as already discussed, PTV cited, and reproduced a table from, Exhibit 3049 in its Proposed Finding of Fact. See PTV PFF ¶ 208. Furthermore, PTV cited to Exhibit 3049 (rather than Exhibit 3105) in a table found in the PTV initial post-hearing brief, and again cited to Exhibit 3049 (via PTV PFF ¶ 208) when making its substantive argument concerning a “relative value floor” for PTV. See PTV Post-Hearing Br. at 15, 42-43. None of the citations made by PTV in its post-hearing brief and proposed findings clarify or contextualize the content of Exhibit 3105, or, more importantly, diminish the weight the Judges were able to accord to Exhibit 3049. [ 263 ]

In addition to the JSC arguments recounted above, specifically with respect to the use of base plus 3.75 weighting, JSC argues:

There is a second, independent issue concerning the Judges' application of the McLaughlin adjustment. Both Exhibit 3049 (the outdated version) and Exhibit 3105 (the updated version) use royalty-based weighting. However, after creating these exhibits, Mr. Trautman determined that royalty-based weighting is not appropriate for 2015-17 due to the overwhelming number of minimum fees systems. Mr. Trautman subsequently ran the Bortz results with the McLaughlin adjustment using the revised base plus 3.75 weighting, as set forth at Exhibits 4001-4003. If the Judges are relying on the Bortz Survey with the McLaughlin adjustment, they should use this version that applies base plus 3.75 weighting rather than royalty-based weighting.

As Mr. Trautman and Dr. Majure testified, use of royalty-based weighting improperly skews the survey calculations by giving inordinate weight to minimum fee systems that typically did not even use their full minimum fee budget. See JSC PFOF ¶ 302. The Judges similarly concluded that decisions by minimum fee systems during the 2015-17 period are not probative of relative market value. See Initial Determination at 129 & n.155 (“[T]hese [minimum-fee-paying] CSO decisions do not provide the Judges with any useful information regarding the relative value of the retransmittal of the various programming categories . . . .”).

The Initial Determination explains that in “2015-2017, the overwhelming percentage of CSOs pay only the minimum fee, and the vast majority of section 111 royalties are generated by those minimum-fee-paying CSOs.” Id. at 134. The Initial Determination likewise discusses how both the regression and survey methodologies changed (or should have changed) to account for the “dramatic increase in the number of minimum-fee only” systems in these years. See, e.g., id. at 21-22, 167 n.206. As relevant here, the Bortz Survey methodology “changed to weight the results based on the Base-plus-3.75 fees attributable to the actual signal carriage of the Form 3 systems, and to apply the results using signal carriage-based fee calculations rather than actual royalties paid.” Id. at 167 n.206. This change in the weighting was necessary to avoid “ `introduc[ing] a distortion, by giving excessive weight to systems with large Minimum Fee payments even when they have chosen to carry very little distant signal programming.' ” JSC Post-Hearing Br. at 56 Start Printed Page 54263 (quoting testimony of Dr. Majure). No party disputed the propriety of Bortz's new weighting approach, nor is it questioned in the Initial Determination.

Bortz developed its revised base plus 3.75 weighting approach over time, after recognizing that there were many more CSOs paying the minimum fee in 2015-17. See Tr. at 3149:11-3151:11 (Trautman). The first calculation in the record using an early version of the revised weighting approach (initially only applied to PTV-only systems) was performed in June 2021. See Ex. 3048; Tr. at 3147:19-3149:5 (Trautman). The “conventional McLaughlin adjustment” calculations in Exhibits 3105 and 3049 predate that change, see supra at pp. 2-3, instead applying the historical, royalty-based weighting that undisputedly distorts the results, making them unreliable for 2015-17.

The record contains more recent calculations of the McLaughlin adjustment for the years 2015-17 applying the corrected, base plus 3.75 weighting. These calculations are part of the Bortz Survey data that JSC produced in connection with Mr. Trautman's written direct testimony. See Ex. 4001, “2015 Data File” at Rows 588-590, Columns W-AD (showing “Adjusted Royalties” after “PTV/Canadian Adjustment” for 2015); Ex. 4002, “2016 Data File” at Rows 573-575, Columns W-AD (same for 2016); Ex. 4003, “2017 Data File” at Rows 571-573, Columns W-AD (same for 2017); see also Tr. at 4792:7-4793:20 (Carbert) (identifying and admitting Exhibits 4000-4003). These calculations are the most accurate and reliable version of the McLaughlin adjustment in the record, on which the Judges should rely to the extent they give weight to the adjustment. A table setting forth the relevant results from Exhibits 4001-4003 is attached as Exhibit 2 hereto.

If the Judges conclude that identifying the correctly weighted McLaughlin adjustment calculation requires further information, JSC respectfully requests that the Judges grant rehearing to present additional evidence on the issue. In the post-hearing briefing, JSC raised the problem of royalty-based weighting in the “conventional McLaughlin adjustment” calculation in response to PTV's citation to Exhibits 3049 and 3105. See JSC Post-Hearing Reply Br. at 62 (“[B]lindly applying the McLaughlin adjustment as it was proposed in prior proceedings, PTV argues that it should be attributed . . . 100% of all of those royalties, massively inflating its share . . . . PTV overlooks that almost all PTV Only CSOs were paying the Minimum Fee in 2015-17, so their substantial royalty payments have nothing to do with their distant signal usage.”). However, because PTV first embraced this calculation in its post-trial briefing, without having previously offered any witness who endorsed it, JSC did not have an opportunity to directly address the reliability of the calculation through its own witnesses.

JSC Motion at 4-6 (footnote omitted). [ 264 ]

As discussed above, CCG, Program Suppliers, and SDC argue that “coming up with a different calculation or weighting system later does not by itself render the original version outdated or incorrect.” Joint Response at 4-5. Furthermore, they argue, JSC was on notice that the McLaughlin Adjustment was relevant to the hearing, “and cannot use rehearing as a vehicle to present arguments or evidence that it could have raised prior to issuance of the Initial Determination.” Id.

PTV argues:

In a transparent overreach that is plainly improper on a motion for rehearing, JSC now argues for yet another alternative weighting methodology for the Bortz Survey that purportedly uses a “base plus 3.75” weighting scheme. JSC never presented this calculation on its own as a potential allocation methodology during the proceeding. The two Bortz adjustments that JSC actually did choose to advocate in the hearing were fully vetted in written testimony, at the hearing, and in post-hearing submissions, and the Judges ultimately rejected them. JSC had every opportunity to also present this calculation of the McLaughlin adjustment with “base plus 3.75” weighting, and chose not to do so. JSC's request accordingly must be denied. See 2018 Rehearing Order at 7.

PTV Resp. at 5-6.

PTV argues that while JSC acknowledges that Mr. Trautman originally focused on the conventional McLaughlin-adjusted Bortz Survey results, he

argues that he later preferred alternative weighting methods, including various versions of a “base plus 3.75 weighting” for which JSC now belatedly advocates. JSC Motion for Reh'g at 4. In fact, Mr. Trautman testified that, after initially calculating the conventional McLaughlin adjustment, he spent years testing multiple adjustments and weights, including those that specifically singled out Public Television, to reduce Public Television's shares from those that result from the conventional McLaughlin Adjustment.

Id. at 6 (citing PTV PFF ¶ 209; Tr. 3142-3154 (Trautman); Exs. 3048, 3049) (footnote omitted). [ 265 ] PTV argues that, “[c]ontrary to JSC's suggestion, there is no reason to believe that Mr. Trautman's weighting innovations became more reliable over time, as they appear to have been focused instead on achieving his results-oriented purpose of reducing Public Television's shares as generated by the conventional McLaughlin adjustment.” Id. (citing PTV PFF ¶¶ 208-13).

Moreover, PTV argues,

[t]he “base plus 3.75” weighting is inconsistent with the weighting principles that undergirded the McLaughlin-adjusted Bortz Survey in prior proceedings. The Bortz Surveys ask respondents to value only the signals that their CSOs actually distantly carried, and instruct that the sum of the values must equal 100%. As a result, the conventional McLaughlin Adjustment reflects the only possible response when a CSO distantly carried only Public Television signals: 100% to Public Television.

Id. at 6-7. Further, specifically with regard to the weighting of the McLaughlin-adjusted Bortz Survey results, it is argued,

Mr. Trautman testified unequivocally in the 2010-13 proceeding that weighting by total royalties was the correct approach—even as to PTV-only systems, which by definition were almost always “minimum-fee systems.” When asked, “But in your view . . . , the McLaughlin-Blackburn augmentation of the Bortz survey assures that an appropriate weight is applied to the PTV-only systems; correct[?],” Mr. Trautman said, “Yes, it considers the systems in the context of royalties, the total royalties that they pay.”

Id. at 7 (citing Ex. 7043 at 551 (2010-13 Trautman Oral Testimony)). Accordingly, PTV observes,

the Initial Determination rejected JSC's proposed adjustment that would have assigned less than 100% of the value to Public Television. Initial Determination at 180; see also id. at 178-79 (“Inasmuch as PTV-only systems are still not surveyed by Bortz Media, and there is no empirical evidence to show how PTV-only systems value PTV distant signals, there is no cause now to discard the McLaughlin adjustment . . . . The McLaughlin adjustment has always been presented as a 100-percent or nothing approach, and the Judges can take that characteristic into consideration.”).

In its reply, JSC argues against using Exhibit 3049 or Exhibit 3105 “because they use incorrect, royalty-based weighting.” JSC Reply at 6. JSC further argues that its “witnesses explained at the hearing that royalty-based weighting Start Printed Page 54264 would improperly skew the survey calculations in the 2015-17 period due to the overwhelming number of minimum fee systems.” Id. (citing JSC Motion at 4). JSC also seeks to analogize to the Judges' analysis of the regression evidence, arguing that,

in the context of the regression analyses, the Judges similarly recognized that the increase in minimum fee systems during the 2015-17 period required methodological changes. Initial Determination at 21-22. Accordingly, Bortz revised its methodology to use base plus 3.75 weighting. JSC Mot. at 4. Calculations of the McLaughlin adjustment for the years 2015-17 applying the corrected, base plus 3.75 weighting are in the record at Exhibits 4001-4003. Id. at 5-6.

JSC argues,

None of the Responding Parties opposed Bortz's change to base plus 3.75 weighting during the proceeding (indeed, SDC and PTV affirmatively bolstered it), and none of them can explain why the reliance on royalty-based weighting in Exhibit 3049 is anything but clear error. The Joint Respondents do not address the issue at all.

Id. (footnote omitted).

JSC argues that PTV,

lacking any evidence from the 2014-17 proceeding, attempts to rely on testimony from the 2010-13 proceeding supporting royalty-based weighting. See PTV Resp. at 6-7. But the difference between this proceeding and the last one is critical: royalty-based weighting became a problem in 2015-17 when, as the Judges found, there was a `dramatic increase in the number of minimum-fee only' systems. Initial Determination at 21. Testimony that royalty-based weighting was appropriate in 2010-13 does not support its use in the changed landscape of 2015-17.

Id. at 6-7.

In addition, JSC argues in its reply that it was diligent, and

promptly objected to PTV's belated embrace of the McLaughlin adjustment with royalty-based weighting when it first arose in post-hearing briefing. See JSC Post-Hearing Reply Br. at 62. Nothing in the rehearing standard, or common sense, justifies requiring a party to spend its limited hearing time and briefing space clarifying the most accurate version of each un-endorsed calculation that comes up, particularly where, as here, the alternative calculations presented for even a single base regression numbered in the hundreds.

JSC argues, with respect to the cross-examination of Mr. Trautman, that “pointing a witness to his own alternative calculation is a common form of criticizing a methodology, not an affirmative endorsement of the alternative,” and with respect to PTV's citations, JSC argues, inter alia, “JSC had no reason to argue for the use of Exhibit 3105 over Exhibit 3049 because PTV's average share does not meaningfully differ between the two exhibits (only the shares of the other parties do).” Id. at 7-8.

The implausible degree of foresight that the Joint Respondents and PTV would demand of any party seeking rehearing is well beyond anything necessary to deter parties from “re-litigat[ing] old matters” or raising new arguments out of time. PTV Response at 2 & Joint Response at 2. Rather, denying rehearing on this record would incentivize parties to disguise their intent to rely on a specific calculation as long as possible, so as to immunize that calculation from the full adversarial vetting process.

Id. at 8-9.

As an initial matter, the proposed adjustment contained in JSC's Motion Exhibit 2 (derived from Exs. 4001-4003) would, as indicated in the pending motion, apply only to the Bortz survey results for 2015 through 2017. Thus, the adoption of JSC's Motion Exhibit 2 would leave unanswered any questions pertaining to the McLaughlin Adjustment for 2014. In any event, the underlying problem that gives rise to the McLaughlin Adjustment, and all other adjustments advanced by the parties, is in the way that the Bortz surveys exclude certain PTV and Canadian signals. While the problem should not be overstated, the Bortz surveys contain downward biases with respect to relevant PTV and Canadian programming. See ID at 168. The McLaughlin Adjustment has been recognized as an adjustment, or augmentation, that helps to remedy bias in the Bortz methodology but may do so on an imprecise basis. Id. at 168, 179. There is no indication that any adjustment exists that compensates completely for weakness in the design of the Bortz surveys.

With respect to JSC's newly advanced adjustment, there is no indication in JSC's pending motion and reply that the adjustment derived from Exhibits 4001-4003 was the subject of hearing testimony. Indeed, the available details surrounding the calculations made therein, and condensed in JSC's Motion Exhibit 2, remain scant. JSC argues, “because PTV first embraced this [McLaughlin] calculation in its post-trial briefing, without having previously offered any witness who endorsed it, JSC did not have an opportunity to directly address the reliability of the calculation through its own witnesses.” JSC Motion at 6. Yet, this argument is unavailing for several reasons. As discussed above, all parties knew that the McLaughlin Adjustment would be at issue in the hearing. JSC even addressed the McLaughlin Adjustment in its opening argument, and later during the direct examination of its witness Mr. Trautman. As JSC expected, PTV cross-examined Mr. Trautman on the McLaughlin Adjustment, yet without corresponding redirect by JSC.

Moreover, JSC did not need to wait, nor did it wait, to find out what PTV would say in its post-hearing filings in order to set forth JSC arguments and evidence concerning adjustments to the Bortz survey results, including its own proposed adjustments. Indeed, during the hearing, JSC presented evidence with respect to its proposed “Adjustment One” and “Adjustment Two,” which were discussed at length in the Initial Determination. [ 266 ] See, e.g., ID at 170-180. One feature of the adjustments proposed by JSC was that Bortz Media weighted the results based on base-plus-3.75 fees attributable to the distant signals actually carried by the PTV-only systems. See id. at 170, 171. Aside from the substantive deficiencies in this alternative adjustment, it is not appropriate for JSC to use the rehearing process to advance this argument, when it could have (and should have) been articulated during the hearing.

In addition, JSC's motion fails to adequately address the fact that in the Initial Determination, the Judges already recognized strengths and weaknesses of the Bortz surveys, particularly after application of the conventional McLaughlin Adjustment. See, e.g., id. at 178 (“The application of the McLaughlin adjustment to the initial Bortz results for the years now at issue, 2014 through 2017, is relevant, and the adjusted results . . . should be given varied weight, depending on whether one is considering the adjusted results for 2014, or for 2015 through 2017.”); id. at 179 (“To the extent that one would specifically exclude Must Carry signals, such as in a regression analysis, the fact that the McLaughlin adjustment is applied to Must Carry signals diminishes the value of such adjusted Bortz results when making a comparison to such other evidence that devalues Must Carry signals.”); id. at 180 (“no party, not even PTV, argues that the Bortz Survey with the McLaughlin adjustment is the best methodology of record for arriving at an allocation for 2015-2017”). Having reviewed all adjustments proposed by the parties during the hearing, the Start Printed Page 54265 Judges determined, “the McLaughlin adjustment, provided one understands its aforementioned limitations, is most helpful among the proposed adjustments in understanding the Bortz results.” Id. at 181. Consequently, in allocating shares, the Judges made judicious use of the Bortz surveys (with the McLaughlin Adjustment), in some instances according the Bortz survey evidence no weight at all. Id. at 197-98.

For the reasons detailed above, the Judges find that it has not been shown that an exceptional case exists, and that an aspect of the Initial Determination is erroneous due to its reliance on Exhibit 3049 and data contained therein. The movant for rehearing, JSC, has not demonstrated that aspects of the determination relating to the McLaughlin Adjustment and Exhibit 3049 are without evidentiary support in the record or are contrary to legal requirements. In that regard, it has not been shown that there is a need to correct a clear error or to prevent manifest injustice with respect to the Initial Determination's cautious use of the Bortz surveys with the McLaughlin Adjustment. Rather, a review of the parties' filings and relevant portions of the hearing record shows that evidence concerning Exhibit 3049 went unrebutted during the hearing, and there is no reason to disturb the hearing record or the findings of the Initial Determination in favor of another exhibit or exhibits (and other calculations contained therein) as to which there is less evidentiary support, whether that be Exhibit 3015 or JSC's newly advanced adjustment as summarized in JSC's Motion Exhibit 2. Furthermore, other approaches to adjustment or augmentation of the Bortz Survey results were presented by JSC during the hearing. It has not been shown that it is necessary or appropriate to rehear any portion of the case with respect to yet another proposed adjustment. As the Judges noted supra, the rehearing process cannot be utilized to obtain a “second bite at the apple,” i.e., to re-litigate old matters or to raise arguments or present evidence that could have been raised prior to the entry of judgment.

Consequently, JSC's motion for rehearing with respect to reliance on the McLaughlin Adjustment is denied.

As explained above, it is clear that in the Initial Determination the Judges appropriately and sufficiently considered—and rejected—JSC's proffered alternative adjustments to the Bortz Survey. JSC's request for rehearing as to this issue is properly dismissed, as indicated supra, as an attempt to relitigate the issue, i.e., a violation of the “second bite at the-apple” proscription.

However, JSC also argues something else—that rehearing is required because, according to JSC, the Judges erred in the Initial Determination by applying the Minimum Fee issue differently to the survey methodology than they did to the regression methodology. [ 268 ]

To put JSC's “inconsistency” argument in context, it is helpful to begin by taking note of the basic argument in JSC's Motion regarding the alleged effect of Minimum Fee royalty payments on the Bortz Survey results. In this regard, JSC maintains the following:

[R]oyalty-based weighting is not appropriate for 2015-17 due to the overwhelming number of minimum fees systems. . . . [U]se of royalty-based weighting improperly skews the survey calculations by giving inordinate weight to minimum fee systems that typically did not even use their full minimum fee budget. . . . As relevant here, the Bortz Survey methodology changed to weight the results based on the Base-plus-3.75 fees attributable to the actual  [ 269 ] signal carriage of the Form 3 systems, and to apply the results using signal carriage-based fee calculations rather than actual royalties paid.

This change in the weighting was necessary to avoid “ `introduc[ing] a distortion, by giving excessive weight to systems with large Minimum Fee payments. . . .' ”

JSC Motion at 4-5 (citations omitted).

But, as noted supra, the JSC Motion also maintains something more than an error occurred in the Judges' adopting of this weighting. JSC asserts as well that the Judges acted inconsistently, because their “[ ]use of royalty-based weighting for 2015-17 conflicts with the Judges' findings regarding minimum fee systems.” JSC Motion at 2. [ 270 ]

Relating to this issue, PTV responded that it is JSC that is inconsistent as to this issue:

[T]he “base plus 3.75” weighting is inconsistent with the weighting principles that undergirded the McLaughlin-adjusted Bortz Survey in prior proceedings. . . . Specifically . . . Mr. Trautman testified unequivocally in the 2010-13 proceeding that weighting by total royalties was the correct approach—even as to PTV-only systems, which by definition were almost always “minimum-fee systems.” When asked, “But in your view . . ., the McLaughlin-Blackburn augmentation of the Bortz survey assures that an appropriate weight is applied to the PTV-only systems; correct[?],” Mr. Trautman said, “Yes, it considers the systems in the context of royalties, the total royalties that they pay.” Ex. 7043 at 551:9-15 (2010-13 Trautman Oral Testimony).

PTV Response at 6-7.

In Reply, JSC explained why the PTV Response fails to rebut JSC's argument as to this issue. Specifically with regard to the issue of inconsistency vis-à-vis the treatment of the Minimum Fee in the regression analyses, JSC argued:

1. The evidentiary weight the Judges gave to Minimum Fee royalty payments in the Bortz Survey model was inconsistent with the lesser evidentiary weight the Judges gave to Minimum Fee royalty payments in the regression models.

2. The Judges found that— with regard to the regression models —Minimum Fee royalty payments, standing alone, for the most part did not provide useful information regarding the “relative value” of the retransmitted Start Printed Page 54266 programming, therefore requiring “ methodological changes” to the regression approach.

3. Bortz revised its methodology used in prior allocation proceedings, substituting instead its new “base plus 3.75 weighting,” to account for Minimum Fee royalty payments as applied to the Bortz Survey model.

4. The adverse parties fail to rebut the argument that the Judges wrongly employed a royalty-based weighting approach which gives undue weight to Minimum Fee royalty payments during the 2015-17 period. Specifically, all the responding parties except PTV ignored the issue. And, as for PTV, it cites no evidence from the present proceeding, and instead relies on testimony from the 2010-13 proceeding supporting royalty-based weighting—ignoring the JSC's assertion that royalty-based weighting only became a problem in 2015-17, with the significant increase in the number of Minimum Fee-only CSOs.

JSC Reply at 1-2, 6-7.

The Judges categorically reject JSC's argument that they acted inconsistently, and thus committed “clear error,” by giving less evidentiary weight to Minimum Fee royalty payments in the regression models compared to the weight they gave to Minimum Fee royalties in the Bortz Survey model. Indeed, as explained infra, by comparing JSC's rehearing argument with the hearing testimony of its economic experts' and its post-hearing filings, it is clear that it is the JSC analysis (incorrectly advanced in support of its motion for rehearing) that is inconsistent. [ 273 ]

Specifically, JSC argues on rehearing that the Judges clearly erred because their “use of royalty-based weighting improperly skews the survey calculations by giving inordinate weight to minimum fee systems” which, JSC maintains, is inconsistent with the Judges' conclusion that in the regression models “decisions by minimum fee systems during the 2015-17 period are not probative of relative market value.” JSC Motion at 4 (citing Initial Determination at 129 n.155, 134). Moreover, in this regard JSC claims that “[t]he Initial Determination likewise discusses how both the regression and survey methodologies changed ( or should have changed ) to account for the `dramatic increase in the number of minimum-fee only' systems in these years.” JSC Motion at 4-5 (emphasis added) (citing Initial Determination at 21-22, 167 n.206).

Before proceeding to discuss the substance of this argument, the Judges take note that JSC has misleadingly utilized the Initial Determination in the quote above from the JSC Motion. In the Initial Determination, the Judges explained how they apply the Minimum Fee problem only in the context of a regression model. See Initial Determination at 21-22, 129 n.155, 134. By contrast, when referring to the Bortz Survey, the Judges simply recited how Bortz, not the Judges, sought to insinuate the Minimum Fee issue into the survey approach. See Initial Determination at 167 n.206. In this regard, the Judges note that the emphasized parenthetical quote from the JSC Motion in the paragraph immediately above wrongly intimates that the Initial Determination expressly discusses how “ both the regression and survey methodologies . . . should have changed” to address the Minimum Fee issue. JSC Motion at 4-5 (emphasis added). The Judges in fact made no such finding in the Initial Determination regarding how the Bortz Survey methodology should have changed.

Accordingly, the overt inconsistency that JSC suggests is set forth in the Initial Determination simply does not exist (and as explained infra, for good reason). With the foregoing misconstrual of the Initial Determination corrected, the Judges proceed infra to explain the s ubstantive error and inconsistency in JSC's argument that the Judges' erred in their consideration of the effect of the Minimum Fee on the regression approach compared to its non- effect on the Bortz Survey approach.

To make clear the fundamental error in JSC's argument, it is instructive to begin with certain first principles. The statutory scheme supplants marketplace pricing of distantly retransmitted local programming by CSOs. Thus, the parties proffer economic models that they claim to be sufficient to represent relative marketplace value. [ 274 ] Here, and as in prior proceedings, the Judges were presented with two starkly different types of models—the regression model and the survey model. [ 275 ] In the difference between how these two models approach the concept of relative marketplace lies the explanation why the Minimum Fee issue is a concern in the regression context, but not in the survey context. [ 276 ]

Broadly stated, the regression approach seeks to identify value from the expressions of the willingness-to-pay of CSOs, by analyzing their actual decisions ( i.e., their “revealed preferences”) as to which local stations, and thus which program categories on those stations, they decide to retransmit. See, e.g., Initial Determination at 78 (“the regressions identify market-based behavior among CSOs, in the form of revealed preferences for different program categories, and such behavior is relevant evidence useful for estimating relative marketplace value.”). The “value” element of this willingness-to-pay (the CSO's “revealed preference”) is the royalty-based value of a minute of retransmittal of programming within the program categories. However, the presence (indeed, the prevalence) of Minimum Fee-only CSOs complicates this form of value analysis because such CSOs did not incur any royalty cost associated with their specific choices. Accordingly, the Judges needed to take into account this Minimum Fee factor in order to reasonably apply the regression approach. ID at 21 (“The Judges find that the dramatic increase in the number of minimum fee-only CSOs . . . renders regression analyses that include those Start Printed Page 54267 CSOs less reliable and thus can be accorded only very limited economic evidentiary weight.”).

By contrast, a constant-sum survey, such as the Bortz Survey, does not seek to estimate relative value by examining actual decision-making, in a regression or otherwise. Rather, the Bortz Survey seeks to estimate relative value by examining hypothetical decision-making by presumably informed CSO employees, who are asked to allocate a fixed but unspecified monetary budget by percentages across identified program categories, totaling 100%. See JSC PFF ¶ 296 (and record citations therein). But at no point in the survey are the respondents asked to consider whether the relative values are affected by the CSO's payment of the Minimum Fee for any programming. [ 277 ] Rather, the Bortz Survey is an attitudinal survey, asking respondents to state the relative values they would hypothetically assign to some program categories (but not to PTV-only and CCG-only categories as discussed elsewhere in this order and in the Initial Determination), whereas the regressions seek to reveal relative value based on how much CSOs in fact paid in royalties to retransmit programs within all the program categories.

Indeed, the JSC's own expert economic witnesses dismissed the very idea that any royalty-based valuation could be probative, characterizing all statutory royalty amounts as “uninformative” and as mere “artifacts” of the statutory system. Dr. Asker, on behalf of JSC, testified in this regard:

[F]ollowing the WGNA conversion, the experts' price proxies, which are based on base rate (plus 3.75%) royalty fees and therefore ignore the minimum fee, were uninformative measures of the incremental cost cable system operators paid for distant signal content. . . . As a result, these price proxies became biased. . . .

[V]ariation introduced solely due to this feature of the base rate (plus 3.75%) royalty fee calculation is an artifact of the computation of the fee. . . .”

Asker WRT ¶¶ 58, 98 (emphasis added).

In like manner, another JSC economic expert witness, Dr. Majure, testified that all the regression models merely reflect “the statutory relationship [between DSEs, revenues, and royalties owed] parrot[ing] back the relative values of distant signals set by Congress.” Majure WRT ¶ 8. [ 278 ]

Importantly for the issue at hand, Dr. Majure explicitly opined that the Bortz Survey did not have share this defect:

By contrast with the regression models . . ., the Bortz [S]urvey method does not have the same problem of a disconnect between the data and the conceptual model that is necessary to interpret the data within a regression. . . . [T]he survey does not rely on the notion that a minute of each type of content has a specific incremental value. The Bortz survey only requires that respondents have some experience with different types of content available on distant signals, so that they will have formed preferences for these types of content. . . . The Bortz survey thus connects directly to actual market value.

Majure WRT ¶¶ 59, 61 (emphasis added).

The economic import of this point was emphasized in further testimony by Dr. Majure, explaining this distinction between the regression model and the survey model:

[T]he scarcity of valid observations for the regression method due to the increase, post-WGNA conversion, in CSOs carrying fewer signals than they could without exceeding the minimum royalty fee . . . results in a significant gap between a CSO's distant carriage decisions and how much that system paid in royalties. This creates an issue peculiar to the regression method [which] depends on statistical inferences that are more powerful and reliable when applied to more independent observations that are derived from the same underlying model of economic choices. Unlike the regression, which depends critically on the relationship between these measures to identify the relative values of content, the survey does not . . . because the survey does not rely on the incremental cost of the content to identify value. Whether a survey respondent carried enough distant signals to be above or below the minimum royalty, their response can address equally well how that CSO would apportion a fixed sum between the content types that it did carry.

A survey can reveal CSO preferences reliably because the survey does not rely upon inference but instead directly poses the relative value question to the buyers in the hypothetical market.

In summary, the survey method has the advantage of not suffering from any of the problems that make the regression method unreliable in the wake of WGNA's conversion.

Majure WDT ¶¶ 129-130, 133 (emphases added).

This expert testimony distinguishing the regression and survey approaches was foundational to JSC's economic theory of the case. See JSC PFF ¶ 236 (quoting Majure WDT ¶ 130 to distinguish the survey model from the regression model because the former model “reveal[s] CSO preferences reliably because the survey does not rely upon inference but instead directly poses the relative value question to the buyers in the hypothetical market.”); JSC Post-Hearing Brief at 3 (“ Unlike the Bortz Survey, the fee-based regressions are entirely incapable of estimating relative value in the post-WGNA world predominated by minimum fee systems.”) (emphasis added).

Likewise, in its Post-Hearing Reply Brief (responding to Program Suppliers argument), JSC expounded upon this fundamental difference between the regression approach and the survey approach to the Minimum Fee issue:

Program Suppliers mistakenly conflate the manner in which the Bortz Surveys and the fee-based regressions treat Minimum Fee CSOs, arguing that “like the regressions offered in this case, the Bortz Survey considers the stated preferences of survey respondents whose systems pay only the Minimum Fee—in this way, the Bortz Survey considers Minimum Fee systems the same way as the regressions do.” Program Suppliers misunderstand a fundamental difference between the Bortz Surveys and the regressions.

The fee-based regressions attempt to estimate relative marketplace value by associating minutes of programming with calculated royalty fees. For Minimum Fee CSOs, this presents an insurmountable issue, because Minimum Fee CSOs do not pay their calculated royalty fees but instead face an incremental royalty cost of $0 for the distant signals they choose to retransmit. In contrast, the Bortz Surveys do not rely upon a nominal royalty fee calculation to draw inferences about CSO preferences. Instead, the Bortz Surveys avoid the problem . . . by directly asking knowledgeable CSO executives to assign relative values to the distant signal programming they carry.

JSC Post-Hearing Reply Brief at 26 (footnotes omitted) (emphases added).

And yet, having repeatedly claimed that the Bortz Survey avoided the alleged analytical vice of associating the statutory nature of the royalties with relative marketplace value, JSC nonetheless now seeks to convert that vice into virtue, by seeking to justify its use of a different survey-weighting approach because of the problem of the Minimum Fee. Not only is that argument self-contradictory, as explained supra, it is also lacking in substantive merit regarding the analysis of economic models, as discussed infra. [ 279 ] In more general economic terms, the regression approach and the survey approach each considers relative Start Printed Page 54268 marketplace value from different modeling perspectives. The Bortz Survey approach does not seek to define value a priori —rather it surveys industry employees who, in response to Question 4 of the Bortz Survey, assign their relative value to the several program categories identified by the Bortz interviewer. That is, the respondent may, for example, be focused on demand-side concepts regarding subscriber growth or retention, or supply-side issues such as the hypothetical cost of acquiring the signals necessary to obtain the retransmitted programming, or both. But the reasons why survey respondents assign particular values are neither sought nor known by Bortz. In particular, the Bortz Survey respondents are not asked to address any potential impact on value arising from the statutory nature of the royalties actually paid, whether via the Minimum Fee, the Base Fee, the 3.75% fee, or otherwise.

Thus, for the Judges to make any adjustments to the Bortz Survey results based on how the respondents may or may not have incorporated concepts relating to the statutory royalty framework would be untenable, because the underlying economic reasons lurking in the minds of the respondents are not in the record.

Moreover, the thought processes of the survey respondents are irrelevant to what constitutes the probative value according to JSC and the Bortz Survey. That is, it is the status of the survey respondents as knowledgeable industry participants that makes the Bortz Survey responses probative and allows the Judges to give it an appropriate evidentiary weight. In this regard, the survey approach shares a characteristic of the benchmarking approach used by the Judges in their ratemaking cases, in which the underlying economic considerations of market participants are deemed to have been “baked-in” to the decisions of licensors and licensees, and their subjective reasons for establishing value are not relevant. See Web IV Determination, 86 FR 26316 , 26326 (May 2, 2016) (“The Judges hold in this determination, as they have held consistently in the past, that the use of benchmarks “bakes-in” the contracting parties' expectations . . . .”), aff'd SoundExchange, Inc. v. Copyright Royalty Bd., 904 F.3d 41 (2018). So understood, any connection between the Bortz Survey results and the statutory fees is both unknowable and irrelevant.

By contrast, as noted supra, the regression approach is based on an a priori assumption as to what constitutes value in this proceeding, positing that a CSO's relative valuation of the various program categories can be derived from their actual decision-making, i.e., their revealed preferences, based upon the royalties associated with a minute of programming in each category. Thus, for the regression approach, the Judges found (rejecting the arguments of the regression proponents) that the existence of the Minimum Fee royalties was a matter to be addressed, because the evidentiary strength of this a priori assumption is compromised by the presence of the royalties paid by Minimum Fee-only CSOs, which are not associated with the cost of any programming (absent particular circumstances necessitating adjustments (such as discussed in the Initial Determination regarding PTV and CCG programming)).

Simply put, whereas the value proposition in the regression model lies in the actual retransmission decisions by CSOs, the value proposition in the Bortz Survey approach lies in the responses to the survey instrument. Properly understood, the evidentiary weight of the Bortz Survey approach, compared to the regression modeling, lies in the fact that the survey model circumvents what JSC and its expert witnesses characterize as the economic irrelevancy of the Minimum Fee and other elements of the statutory royalty formula set forth in 17 U.S.C. 111 . That is, rather than rely on what they claim to be economic “artifacts,” JSC and Bortz rely instead on the survey responses of CSO representatives as a practical way to value and allocate royalties that are paid according to statutory fiat rather than by revealed preference. However, by attempting to inject concerns regarding the Minimum Fee that apply to regression analyses—through its misconceived plea for consistency—JSC actually reveals its inconsistent understanding of its own survey model, [ 280 ] converting it into a tool that, so to speak, is neither fish nor fowl. The Judges appropriately declined to make this analytical error.

For the foregoing reasons, the Judges find that there is no inconsistency between the Judges' decision to address the Minimum Fee issue in connection with the regression model, but not with regard to the Bortz Survey model. Indeed, as explained supra, the inconsistency revealed by JSC's rehearing argument lies in JSC's own willingness to abandon its experts' testimonies regarding the fundamental economic modeling differences between the regression and survey approaches, and to pollute the survey approach with irrelevant aspects of the statutory fee. [ 281 ]

Accordingly, the Judges' decisions in these regards do not constitute error—let alone “clear error,” or otherwise serve as a basis for granting rehearing. [ 282 ]

In its Motion for Rehearing regarding the Judges' adoption of the Tyler Model and the adjustments thereto, JSC argues the following points:

1. The Initial Determination adopts a version of the Tyler Model that no witness endorsed for the 2015-17 time period. JSC Motion at 8-9.

2. The other experts opined that the Tyler Model merely “parroted” the statutory formula. JSC Motion at 9.

3. The Initial Determination makes “arbitrary” adjustments to the Judges' adopted Tyler Model contrary to record evidence. JSC Motion at 9-10.

4. The Initial Determination allocates shares to PTV and CCG that are beyond “reasonable limits” because for PTV they are greater than the unadjusted levels, and, for CCG, they are greater than levels from prior years. JSC Motion at 10.

5. The Initial Determination fails to credit allegedly unrebutted testimony of industry fact witnesses inconsistent with the allocations made by the Judges to PTV and CCG. JSC Motion at 10.

In their Joint Response, CCG, Program Suppliers, and SDC respond as follows:

1. JSC does not satisfy any standard for rehearing because it is merely raising points as to which it did not meet its burden of persuasion. Joint Response at 3-4.

2. JSC's attempt to litigate issues already considered or which it failed to consider constitutes an improper attempt to obtain the so-called “second bite at the apple” that the Judges' reject as a proper basis for rehearing. Joint Response at 4.

3. The Judges adoption of and adjustment to a version of the Tyler Model based on record evidence is consistent with the D.C. Circuit's prior ruling that the Judges are “not strictly limited to choosing from among proposals set forth by the parties,” but, like agencies in general, “have authority to modify proposals set forth by the parties, or to suggest models of their own.” Joint Response at 4 n.2; see also id. at 6.

4. JSC fails to note that the higher shares for PTV and CCG were consistent with the regression evidence on which the Judges relied, and, by contrast, JSC asks the Judges instead to rely fully on the Bortz Survey evidence, an argument which the Judges expressly considered and rejected. Joint Response at 6.

In its Response, PTV argues as follows:

1. JSC correctly asserts that the record contains no evidence to support the Judges' reliance on the Tyler above-Minimum Fee Model.

2. The record contains “minimal” yet “disputed” evidence— i.e., the “conventional McLaughlin-adjusted Survey” and the Tyler Model inclusive of Minimum Fee-paying CSOs—to support a higher PTV share than determined by the Judges.

3. JSC incorrectly maintains that there is no record evidence to support what JSC characterizes as the “large shares” awarded to PTV in the Initial Determination for the 2015-17 period.

PTV Response at 1-2, 9-10.

JSC's Reply contains the following points:

1. JSC identifies the “clear error” standard as its specific standard for seeking rehearing. JSC Reply at 2.

2. JSC's arguments in its Motion regarding alleged methodological errors cannot be construed as a mere “rehashing” of arguments previously considered at the hearing and in the Initial Determination (a/k/a seeking a “second bite at the apple”) because the above-Minimum Fee version of the Tyler Model was not “endorsed” by any witness. JSC Reply at 2, 9.

3. JSC minimizes the importance of its own motion argument that cited industry executive testimony supporting their request for rehearing. Rather, JSC states in their Reply that this is not the “heart” of their argument, but rather only reveals that the differences between the regression results and the cited industry witness testimonies “are so at odds” as to indicate problems with the regression evidence on which the Judges relied. JSC Reply at 9.

JSC maintains that the Judges wrongly adopted the above-Minimum Fee analysis undertaken by Program Supplier's expert economic witness, Dr. Tyler. As recounted in detail below, the Judges explained in the Initial Determination why regression modeling for 2015-17 that relied only on above-Minimum Fee CSOs was more useful and why, by contrast, modeling that relied on the Base Fees calculated by the subscriber groups of CSOs who actually paid only the Minimum Fee was of limited usefulness (as when used to adjust for economic value from the regressions uncaptured by the above-Minimum Fee modeling). See Initial Determination at 21 (“The Judges find that the dramatic increase in the number of minimum fee-only CSOs . . . renders regression analyses that include those CSOs less reliable and thus can be accorded only very limited economic evidentiary weight [and] the Judges accord significantly more evidentiary weight to regression modeling that focuses only on the CSOs that actually revealed their preferences by willingly paying above the minimum fee, i.e., at the base fee level.”); id. at 142-144 (noting particular regression adjustments  [ 284 ] to economic value necessitated by the evidence).

The Judges further recognized that, despite the evidentiary usefulness of the royalties paid by the above-Minimum Fee cohort in this proceeding, that group generated a smaller portion of the CSO market than in the prior (2010-13) allocation proceeding. Accordingly, the Judges did not accord this regression approach primary weight vis-à-vis the results of the Bortz Survey, as they had in that prior proceeding. See Initial Determination at 147 (“[T]he Judges are not giving any primacy to the regression evidence in this proceeding, given how the changes in the retransmission sector after the WGNA conversion have affected the available data.”); id. at 197 (“[T]he Judges accord evidentiary weight to the Bortz Survey, with the McLaughlin Adjustment—relatively equivalent with the weight given to the regression analysis . . . . [T]he Judges find that a synthesis of regression and survey results is necessary to arrive at the required allocations.”).

Turning to a more granular review, the record is replete with evidence, argument, and judicial colloquy regarding the use of above-Minimum Fee evidence as a building block for the ascertainment of relative value. See Initial Determination at 12-13. There, the Judges relied on the testimony of Dr. Tyler, who expressly found “merit” in a “version of the model that includes only CSOs paying above the minimum fee [which] presents with the “ highest degree of confidence” the CSO tradeoffs between different stations and categories of minutes.” Id. at 12-13 (quoting Tyler ACWDT ¶ 155) (emphasis added). As a general matter, when the Judges have decided to rely, as here, on the specific opinion testimony of an expert whom they have credited and who himself has the “highest degree of confidence” in that specific opinion, under no standard could the Judges' ruling in that regard be subject to rehearing. Start Printed Page 54270

Moreover, further support exists in the record for the Judges' adoption of this above-Minimum Fee modeling. See id. at 15 (“for these CSOs which CTV accurately describes as `above-capacity' . . . paying above the minimum fee, the base fee royalties reported by their subscriber groups are their actual royalty payments, revealing the CSO's perceived value of the distantly retransmitted stations and their constituent programs.” (citing Bennett WRT ¶ 15 (a CTV economic expert)); CTV PFF ¶ 158 (For above capacity CSOs, “the reported [Subscriber Group] royalties reflected the amount of royalties actually paid . . . [by CSOs] [that] decided to incur an increased marginal royalty cost[,] . . . revealing the CSO's perceived value of the distantly retransmitted stations.”).

Additionally, the Judges were persuaded by the following supportive argument of the SDC (no fan of the regression approach, to say the least) regarding the Tyler Model as applied to above-Minimum Fee-paying CSOs:

Dr. Tyler, whose rate-based methodology is the most explicitly based on a “minimum willingness to pay” theory . . . offers a sensitivity test [the above-Minimum Fee modeling] of this issue. Tyler [ACWDT] ¶ 156. . . . Dr. Tyler's sensitivity test might provide some rough guidance as to the potential direction and magnitude of bias introduced by the presence of minimum fees. SDC PFF ¶ 156. See also 4/19/23 Tr. 5473 (SDC's counsel's statement to Dr. Tyler on cross-examination) (“I do want to point out to your credit that your first sensitivity test tries to address this issue.”). This argument is generally consistent with Dr. Tyler's response to SDC counsel on this point, agreeing that it was important to be “cognizant” of this minimum fee issue and that it be “considered and addressed” because there is “reasonable disagreement about how to handle the issue.” Id. at 5473-74. . . . [T]he Judges find . . . . the variant of the Tyler Model in Figure 6.3 of the Tyler ACWDT offers the Judges' “ rough guidance ” in the allocation of shares.

Initial Determination at 21-22 (quoting SDC and its counsel) (emphasis added).

Additionally, the Judges carefully considered this issue at the hearing, questioning witnesses from the bench. See 4/13/23 Tr. 4719 (Bennett) (CTV economic expert responding to Judge Strickler that “the idea that you're relating carriage with the cost or willingness to pay for that carriage, I think, is an entirely reasonable modeling approach where the data exists to link the carriage to . . . those payments. And that is certainly true where you have above-minimum-fee-paying systems for which the incremental cost is apparent . . .”) (emphasis added); 4/18/23 Tr. 5125 (George) (CCG expert Dr. Lisa George responding to Judge Ruwe that “the royalty payments are not exact measures of incremental cost. They are more so when we're above minimum fees. ”) (emphasis added); see also 4/19 Tr. 5503 (Tyler) (agreeing on cross-examination that “CSOs paying above the minimum fee [is]where you have economic decision-making because the costs that they're paying for each of those distant signals are actual binding costs . . . .”).

The Judges further noted at length multiple perspectives in which an above-Minimum Fee cohort of CSOs can be viewed:

This cohort of CSOs can properly be viewed as essentially the only CSOs who provide revealed preference information as to the variation in relative values among the program categories (in contrast with CSOs who did not retransmit any distant local stations or those with “excess capacity”), which in that sense is a cohort unto itself, rather than a sub-sample. On the other hand, this cohort can also reasonably be viewed as but a small sample of all the CSOs, which reduces the evidentiary weight of their preferences. Both perspectives on the revealed preferences of these above-minimum fee paying CSOs are properly considered in weighting the various strands of useful evidence in order to allocate royalty shares in this proceeding.

[I]t is misleading, to say the least, to categorize the base-fee-paying CSOs as merely a small cohort of the larger population of CSOs, when they are differentiated by the key marker for section 111 purposes: whether they assign a relative value to the retransmittals and thus relative values to the retransmitted programs. The Judges find it more accurate and appropriate to consider the base-fee-paying CSOs essentially as a separate cohort of CSOs whose decision-making is pertinent to a regression analysis in this statutory context.

Colloquially, the issue may be characterized as whether the Judges should let the perfect be the enemy of the good. Here, the “perfect” fact pattern would be where all or most of the data is generated by CSOs paying above the Minimum Fee. That is not the factual context here. But there is “good” evidence from the CSOs who did retransmit enough programming to trigger the base fees of their subscriber groups, and that the Judges do not ignore that data.

Accordingly, the Judges will give due weight to the minority of CSOs that, in the 2015-2017 period, paid above the minimum fee and thus revealed their preferences by paying an additional royalty in order to retransmit one or more additional stations.

Initial Determination at 100, 130-131 (emphasis added).

The Judges made it clear that they found important economic evidence in the above-Minimum Fee version of the Tyler Model:

[F]or those CSOs transmitting above 1.0 DSE, they have economic decisions to make regarding the mix of programming they will transmit via their signal decisions. Given the economics and reality of this retransmission market, as described above, only then will the relative value of program categories be of material economic importance. It is at this stage that the Tyler Model generates information as to relative value, through the Tyler model's coefficients.

Initial Determination at 136.

Relying on this abundant record, the Judges held as follows:

[T]he Judges rely on the Tyler Model, as Dr. Tyler applied his model to the CSOs paying above the minimum fee. . . . [A]bove-minimum fee paying CSOs['] channel selections/programming preferences are . . . probative and useful, even if less so than in the 2010-2013 Determination because of the reduction in the number of such CSOs and in the percentage of royalties they represent.”

Initial Determination at 21, 66.

But, as indicated supra, the Judges did not ignore the fact that the above-Minimum Fee CSO cohort was substantially smaller than identified in the 2010-13 Determination. Specifically, the Judges stated:

[H]ere the Judges are considering the regression evidence and the Bortz Survey evidence as essentially equally weighted and useful (but not flawless) evidence . . . . [T]he reconciliation will be different than in the 2010-13 proceeding, because the Judges are not giving any primacy to the regression evidence in this proceeding, given how the changes in the retransmission sector after the WGNA conversion have affected the available data.

Initial Determination at 147.

To be sure, in its Motion, JSC disagrees with the Judges' adoption of the above-Minimum Fee modeling undertaken by Dr. Tyler. But JSC made its disagreements known at the hearing stage of this proceeding, and supported those disagreements with expert testimony. See Initial Determination at 19-20.

In particular, one criticism, as described by the Judges, was levied by one of JSC's expert economic witnesses, Dr. Asker, who maintained that it was improper to “use . . . the base fee as a price proxy even for CSOs paying above the minimum fee.” Id. at 19. [ 285 ] The Judges declined to adopt Dr. Asker's analysis because: (1) it amounted to Start Printed Page 54271 mere “blackboard economics,”  [ 286 ] in that there was “no evidence” that any CSO actually engages in the “tunnel-vision sort of hyperrationality” described by Dr. Asker; and (2) it was at odds with the testimony of a cable industry expert witness, Sue Ann Hamilton, who stated, in testimony credited by the Judges, that “CSOs do not devote much attention to issues regarding distant retransmittals.” Id. at 22 & n.29.

As a second criticism regarding this issue, JSC also relied—at the hearing stage of the proceeding—on what its statistical expert, Mr. Harvey opined was the lack of “statistical significance” in Dr. Tyler's above-Minimum Fee modeling. See JSC RPFF ¶¶ 29-30; Harvey WRT ¶¶ 45-46 & tbl.10  [ 287 ] (More specifically, JSC and Mr. Harvey maintained that Dr. Tyler's above-Minimum Fee modeling “failed to obtain statistically significant results for JSC minutes in 2015, 2016 and 2017 . . . .”); see also JSC Post-Hearing Brief at 27; Harvey WRT ¶¶ 45-46.

In the Initial Determination, the Judges explained in detail why they disagreed, finding that the above-Minimum Fee Tyler Model was statistically sufficient to carry the level of evidentiary weight the Judges accorded to that model. See Initial Determination at 144-148. Accordingly, although JSC may disagree with the Judges' reasoning as to this issue (even though JSC does not in fact address the Judges' reasoning in their Motion seeking rehearing), their disagreement does not remotely suggest that rehearing is warranted as to this issue.

In their present Motion seeking rehearing, JSC makes a further criticism of the Judges' reliance on the above-Minimum Fee Tyler Model. Specifically, JSC relies on Dr. Tyler's recommendation at the hearing that the Judges rely on his preferred model in which he applies all the Base Fees calculated by the Subscriber Groups within CSOs, including those for whom the Minimum Fee would bind. But JSC's present post-hearing reliance on Dr. Tyler's preference is seriously misleading.

Although Dr. Tyler preferred one of his models over another, his preference does not dictate which of his analyses the Judges may credit. Here, the Judges declined to defer to his preference because regression models that included the royalty payments of CSOs paying only the Minimum Fee were less useful in reflecting economic decision-making (an argument advanced by JSC and other parties). Instead, the Judges relied heavily on the Tyler Model based on only above-Minimum Fee paying CSOs, for the reasons explained supra, as supported by abundant aspects of the record evidence. Initial Determination at 21 (“The Judges find that the dramatic increase in the number of minimum fee-only CSOs ( i.e., those with no distant retransmittals and those with some distant retransmittals but with `excess capacity') renders regression analyses that include those CSOs less reliable and thus can be accorded only very limited economic evidentiary weight. Moreover, the Judges accord significantly more evidentiary weight to regression modeling that focuses only on the CSOs that actually revealed their preferences by willingly paying above the minimum fee, i.e., at the base fee level.”).

JSC also overplays its hand. Dr. Tyler did not maintain that his above-Minimum Fee modeling lacked probative value. Quite the contrary, he testified (as noted supra ) that his above-Minimum Fee modeling showed, with the “ highest degree of confidence, ” actual economic tradeoffs made by CSOs, even though he preferred his model inclusive of the Minimum Fee-paying CSOs. Initial Determination at 13 (quoting Tyler ACWDT ¶ 155).

Moreover, as a general matter, there is no doubt that the Judges may give greater weight to evidence that the proffering witnesses recommend should have less weight. Indeed, such an expert's disagreement in this regard ultimately is of little value, as it intrudes upon the Judges' exercise of their core judicial function to weigh evidence, and, for present purposes, cannot support a claim for rehearing under any of the available standards.

In a related criticism, JSC maintains that the Judges wrongly adopted the above-Minimum Fee Tyler Model because other experts supported their own models and approaches over the adoption of any version of Dr. Tyler's modeling. Motion at 9. [ 288 ] But again, because one of the Judges' core duties is to weigh competing testimony, including expert testimony, their decision to adopt an opinion proffered by one expert which clashes with opinions of others, is certainly not ipso facto erroneous.

More broadly, the Judges are not locked into the recommendations of the parties and the experts. This statutory process is not like “final offer” arbitration. As noted by the Joint Respondents, the D.C. Circuit has held that the Judges are “not strictly limited to choosing from among proposals set forth by the parties,” but, like agencies in general, “have authority to modify proposals set forth by the parties, or to suggest models of their own.” Joint Response at 4 n.2; see also id. at 6; see also Johnson v. Copyright Royalty Bd., 969 F.3d 363, 381-82 (D.C. Cir. 2020) (citing SoundExchange, Inc. v. Copyright Royalty Bd., 904 F.3d 41, 50-51, 57 (D.C. Cir. 2018); Association of American Publishers, Inc. v. Governors of USPS, 485 F.2d 768, 773 (D.C. Cir. 1973)).

As discussed supra, JSC submitted testimony from two expert witnesses, Dr. Asker, an economist, and Mr. Harvey, a statistician, in unsuccessful attempts to undermine Dr. Tyler's above-Minimum Fee modeling. Thus, this issue has already been considered and, as Joint Respondents assert, JSC cannot obtain rehearing to introduce further evidence that JSC “could have submitted at the hearing, but did not,” and as to which JSC “did not meet their burden of persuasion.” Joint Response at 3-4.

Alternately stated, the JSC Motion fails to satisfy the “negative” standard for rehearing noted earlier in this order—a demonstration that the movant is not seeking the “second bite at the apple” that the Judges have ruled is insufficient to support a request for rehearing. Start Printed Page 54272

JSC also argues that rehearing is warranted because the Judges made two “adjustments” via the Initial Determination that were improper. [ 289 ] JSC's argument is deficient for several reasons. At a high level, JSC simply ignores the Judges' explanations in the Initial Determination for why the above-Minimum Fee version of the Tyler Model—albeit a highly useful lens for broadly identifying relative value—generated certain results that required the Judges to make relative value adjustments for CCG and PTV programming. It is quite simple, but also simply wrong, for JSC to argue that the Judges erred in their reasoning, by omitting any reference to the Judges' actual reasoning.

To highlight the importance of these omissions, the Judges recapitulate the reasoning in the Initial Determination which JSC ignores.

b. The CCG Share Adjustment (Adjustment A)  [ 290 ]

First, with regard to the CCG share (Adjustment A) the Judges reasoned as follows in the Initial Determination:

1. The above-Minimum Fee Tyler Model generates “an anomalous increase” in the share allocated to the CCG claimants.

2. This anomaly arose because “CCG programming is unique among the program categories in this proceeding [in that] it is limited in geographic scope to CSOs located within a 150-mile belt below the U.S./Canadian border” (known as the “Canada Zone”).

3. Thus, the above-Minimum Fee Tyler Model “reflect[s] the unique value of Canadian programming in the Canada Zone, including the uniquely valuable . . . French language programming, a niche sub-category.”

4. Accordingly, in addition to the demand for the usual complement of distantly retransmitted programming that exists throughout the wider United States, in the Canada Zone there exists this additional demand. Such greater demand means that CSOs would choose to pay more than the Minimum Fee by adding CCG stations, and thus Canadian claimant programming, to their channel lineup.

5. Therefore, CSOs in the Canada Zone would very likely be overrepresented in the above-Minimum Fee Tyler Model.

6. This phenomenon creates a problem because the Judges are allocating a royalty pool for which, over the period 2015-2017, more than 90% of the funding came from Minimum Fee-only CSOs. Accordingly, although the data from the above-Minimum Fee Tyler Model provides useful economic evidence of CSOs' revealed preferences for other claimant categories, with regard to CCG content and value, this data is distortionary.

7. Confirming this anomaly, CCG itself did not propose receiving the high allocations suggested by the above-Minimum Fee Tyler Model (23.2% in 2015; 31.1% in 2016; and 34.6% in 2017). Rather, CCG proposed that it receive 14.8% for 2015, 13.7% for 2016, and 13.6% for 2017. [ 291 ]

8. Accordingly, in their 2015-2017 allocations, the Judges utilize the lower CCG shares reported by Dr. Tyler for all CSOs, rather than only the above-Minimum Fee Tyler Model.

Initial Determination at 142-143.

As noted supra, JSC studiously ignores this substantial downward adjustment of CCG's 2015-17 share, which benefited JSC and the other claimants by raising their share allocations, ceteris paribus. Rather, as noted supra, JSC focuses on a comparison of the CCG shares for 2015-17 with the CCG shares for 2010 through 2014 and claims error sufficient to warrant rehearing based on the increase in CCG shares in this proceeding. Simply put, JSC does not object to the Judges' adoption of adjustments to its above-Minimum Fee approach, but rather only to those adjustments that reduce its inter-year allocations. That argument, now in proper context, is addressed in the subsection below.

JSC argues that the sheer increase in the size of the Judges' allocation for PTV and CCG are “arbitrary.” Motion at 8. More particularly, JSC calculates that “after the Judges made multiple adjustments to the results, PTV's share in the adjusted regression increased by 51% in 2015, by 69% in 2016, and by 105% in 2017. JSC Motion at 9. With regard to CCG, JSC makes an inter-period argument, asserting that CCG's shares more than doubled in the 2015-17 period compared to the pre-WGNA conversion years of 2010-13 (in the prior allocation proceeding) and 2014 (in the present proceeding). JSC Motion at 10. As explained infra, JSC's argument in these regards fundamentally misapprehends the statutory process by which relative values and shares are determined. [ 292 ]

Addressing first the CCG inter-period share increase, the Judges note that they do not begin with some pre-determined allocation of shares and then make certain that they can “back into” that “pre-determination” by conjuring up a comporting analysis. That would not only, to put it colloquially, “place the cart-before-the horse,” but would also be antithetical to the Judges' fact-finding duty. In this regard, as the Judges proceed through their analysis, as here, by applying the probative facts—they do not decide ex ante that their factual findings cannot exceed (or fall below) some arbitrary level (whether an interim pre-adjusted level or a level from a prior proceeding). Indeed, that too would be an improper exercise by the Judges of their duty to weigh the facts. Alternately stated, when the Judges weight the evidence, they are agnostic as to the share percentages that would ultimately result.

Nonetheless, as noted supra, JSC complains that CCG's shares are higher than the shares CCG received in the 2010-13 Final Allocation Determination and in 2014 in the present proceeding. But JSC cites no authority to suggest that allocations should equal or approximate allocations in prior years or from prior proceedings. Indeed, there is no authority in that regard because in each allocation proceeding the Judges consider the allocation issues de novo, based on the record developed in that proceeding. To be sure, a party can argue that the underlying facts in the latter proceeding mirror those of the prior proceeding, suggesting it would be correct for the Judges not to deviate from the allocations in the prior Start Printed Page 54273 proceeding. And because factual patterns may remain relatively stable across years within a given proceeding, a party may argue that the annual years at issue should all reflect similar allocations.

Of course, the converse is true as well: If the facts reveal substantial differences between the years in different proceedings, or across years within a proceeding, the allocations made by the Judges should reflect those facts. Indeed, the Judges have described their consideration of this issue as a “Changed Circumstances” analysis.

In the present case, the Judges addressed this very issue in section XVI of the Initial Determination:

The Judges may vary from prior decisions when there are (1) changed circumstances from a prior proceeding; or (2) evidence on the record before the Judges that requires prior conclusions to be modified regardless of whether there are changed circumstances.

In the 2014-2017 period, several widely agreed upon changed circumstances have taken place including 1) WGNA's conversion to a cable network, the reclassification of PTV signals from exempt to non-exempt, and 3) the rise in streaming on alternative platforms. . . . Based on the agreed upon record and Judges' findings here and throughout the determination, the Judges find that significant changed circumstances occurred across the relevant period.

Initial Determination at 159-160 (citing the testimonial consensus regarding these changed circumstances.).

Thus, not only was it permissible for the Judges to deviate from allocation shares in prior years and/or proceedings, the facts of the case required the Judges to adjust the share allocations. Quite clearly, therefore, the Judges did not make any findings that—under any standard—would support rehearing based on changes in the Judges' share adjustments.

Second, with regard to the upward adjustment for PTV's relative value (Adjustment C), the Judges reasoned as follows in the Initial Determination:

1. PTV argued that, when WGNA was a local station retransmitted by CSOs pursuant to section 111, a significant number of PTV's stations were retransmitted by CSOs together with WGNA.

2. Thus, prior to the WGNA conversion, a CSO's decision to retransmit PTV and WGNA jointly generated a Base Fee royalty and revealed that CSO's revealed preference and willingness-to-pay.

3. PTV further noted that post the WGNA conversion, many of these CSOs continued to retransmit the same PTV station, but this did not trigger the Base Fee because the Minimum Fee applied (with WGNA gone).

4. PTV maintained that the pre-WGNA conversion carriage is probative of the fact that the PTV carriage post-WGNA conversion demonstrates economic value.

The Judges agreed with this analysis, increasing PTV's 2015-17 share of royalties as calculated in Adjustment C. [ 293 ]

But JSC objects to this Adjustment C on the same general basis that it objects to the CCG increase—it is simply too large an increase. As to this issue, JSC compares the Judges' interim work-in-progress ( i.e., pre-adjustment) PTV shares with the Judges' final post-adjustment analysis. But its argument hinges on the same mistaken assumption made by JSC regarding the CCG share increase across the relevant years—that the Judges are somehow precluded from increasing a party's shares by too great a percentage, regardless of where the Judges' factual findings lead.

Further, JSC's proposed alternative to the Judges' approach underscores the paucity of its argument. JSC argues that the Judges should “fully rely” on their version of the Bortz Survey approach, which the Judges rejected in the Initial Determination. JSC Motion at 8.

But this argument, like other JSC arguments discussed supra, constitutes a request for the proverbial “second bite at the apple” that is an insufficient basis for granting rehearing. The Judges agree with the Joint Respondents that because “JSC forcefully advocated for reliance on the Bortz Survey before, during and after the 5-week hearing,” this argument is “`nothing more than a recapitulation of arguments that the Judges fully considered in fashioning their [ Initial Determination ] and therefore do[es] not present the type of exceptional case that would warrant a rehearing or reconsideration.'” Joint Response at 6. See also PTV Response at 2. More particularly as explained below, in the Initial Determination, the Judges credited industry witness testimony from JSC witnesses by significantly increasing the JSC shares above the small shares arising from the above-Minimum Fee Tyler Model (and all other regression modeling).

To place JSC's present argument—and the Judges' rejection of same—in appropriate context, it is necessary to begin with the Judges' factual finding that, in the 2015-17 period, “[t]he WGNA conversion . . . drastically reduced the number of JSC subscriber-minutes distantly retransmitted.” Initial Determination at 122 n.147. There was no dispute as to this fact. See generally JSC PFF ¶ 101 (stating, without denying, that “[a]ccording to multiple non-JSC witnesses [citing Dr. Tyler and multiple other expert and fact witnesses], the absolute and relative volume of JSC programming declined significantly following the WGNA conversion when measured in subscriber-weighted minutes.”); id. at ¶ 111 (citing JSC's own expert witness, Dr. Majure, who did not deny the drastic reduction in the number of JSC subscriber-minutes, but instead argued “that it would be wrong to infer a drop in JSC value from a drop in subscriber-weighted minutes . . . .”). In like manner, JSC relied on the testimony of three industry witnesses who, while not denying the drastic reduction in JSC subscriber-weighted minutes, testified that, from a CSO's perspective, “the value and volume of different categories of programming are not correlated.” JSC PFF ¶ 112. See also Program Suppliers RPFF ¶ 26 (“JSC's witnesses did not dispute that JSC's relative subscriber-weighted volume share declined by 91 to 92 percent between 2014 and 2015, and [] JSC's relative volume share fell from approximately 7% in 2014 to 0.6% in 2015, and by 2017, it had fallen to 0.4%, representing a 94% decline.”).

This background is pertinent to JSC's present argument because the Judges (1) in fact did credit the testimony by JSC industry witnesses that subscriber-weighted minutes alone were insufficient to determine relative value for JSC programming; and (2) therefore substantially increased the relative value of JSC shares above the levels generated by the above-Minimum Fee Tyler Model and other regression modeling. However, the Judges declined to ignore the significant impact on relative value of the substantial reduction in the volume of subscriber-weighted JSC minutes distantly retransmitted. See Initial Determination at 122 n.147.

The following portions of the Initial Determination make this point in detail:

Based on the entirety of the record, the Judges are not persuaded by industry expert testimony that the value and volume of programming are not correlated. The industry expert evidence is set against the more well-established sound economic reasoning underlying the regression analyses in this proceeding.

That is not to say that regressions correlating program category minutes and a measure of royalties is necessarily the only way to determine value. . . . [A]s confirmed by some of the industry testimony, the Judges recognize that . . . JSC programming, bundled together with programming from other claimant categories, can have a value (in terms of retaining or adding subscribers) . . . that is not well-correlated with overall program minutes.

The Judges find [JSC witnesses] to be particularly credible . . . regarding the unique value of JSC content . . . . Based on the entirety of the record, the Judges are persuaded that evidence of the unique value of . . . JSC content . . . serves as a limitation on the applicability of certain proposed regression analyses and their proposed allocation results. These [findings] do not negate valid application of regression analyses as a basis for allocation. However, these factors are taken into account within the Judges' weighting of the allocation methodologies, including application of the Bortz survey . . . .

Initial Determination at 151-152 (emphasis added).

Consequently, the Judges set the 2015-17 post-WGNA conversion allocation shares for JSC substantially above the shares proposed by the above-Minimum Fee Tyler Model, as can be seen in the comparison of the two tables below:

Shares Awarded to JSC in Initial Determination

20152016201711.44%10.76%11.91%

Initial Determination at 2 tbl.1. [ 294 ]

Shares Allocated to JSC by Above-Minimum Fee Tyler Model

2015201620172.1%1.3%0.5%

Initial Determination at 13.

As a comparison of these two tables shows, by departing from the above-Minimum Fee Tyler Model, and giving due weight to the Bortz Survey, as suggested by JSC's industry witnesses, the Judges increased JSC's shares by 445% for 2015, 728% for 2016, and by 2,282% for 2017. To be sure, these higher shares are still well below what the Bortz Survey proposed, and what JSC sought, both at the hearing and again via rehearing. But, as noted above, the JSC share of subscriber-weighted minutes declined by over 90% during this period, which is reflected in the effect of the regression analysis in the above-Minimum Fee Tyler Model, and which the Judges found highly relevant.

Thus, JSC's claim of purported error regarding this issue is not premised on any failure by the Judges to ignore its expert witnesses or the Bortz Survey. Rather, JSC's complaint is that the Judges did not give zero weight to the regression model and 100% weight to the Bortz Survey (based on the survey itself and the industry witnesses JSC proffered). Of course, as noted supra, a party's disagreement as to the Judges' weighing of record evidence, including expert testimony, does not satisfy any grounds for granting a motion for rehearing. [ 295 ]

JSC argues that the Tyler modeling (in its several varieties) should have been rejected because it simply “parrots” the statutory formula. JSC Motion at 9. Ironically, this basis for rehearing must be denied because it “parrots” the argument made by JSC and other parties at the hearing. See Initial Determination at 74 (“Dr. Majure maintains that the Tyler Model . . . essentially estimates only `the equation given by the statutory formula . . . .' ”); id. at 75 (noting that CCG's expert economic witness, Dr. Lisa George, likewise criticized the Tyler modeling because it “effectively replicates the regulatory formula . . . .” and noting that PTV's expert, Dr. John Johnson, likewise maintained that the Tyler modeling “essentially replicates the statutory formula . . . .”).

However, the Judges comprehensively analyzed and then rejected this argument, in all its iterations. See id. Section XIB at 131-136. Nonetheless, JSC simply ignores the Judges' detailed explanation why this “statutory formula”/“fee generation” criticism lacks merit.

In sum, JSC once again asks for that improper “second bite at the apple” by seeking to reargue an issue. Moreover, JSC does not even claim that the Judges' extended discussion and findings as to this issue were incorrect. Accordingly, this JSC point is insufficient to justify rehearing.

Accordingly, JSC's Motion for Rehearing as to these issues is denied. [ 296 ]

The PTV Motion seeks rehearing with regard to the Judges' application of “Adjustment B” in the Initial Determination, which is a downward adjustment of the PTV shares derived from the Tyler Model for above-Minimum Fee CSOs. This adjustment was made by the Judges to reflect the presence of must-carry PTV signals, whose value had not been adequately demonstrated to be included as part of the relative marketplace value generated by regression approaches. However, Start Printed Page 54275 PTV maintains that the adjustment is incompatible with the record evidence and amounts to an erroneous double-counting of the Judges' intended adjustment. PTV Motion at 1.

PTV alleges that it is clearly erroneous for the Judges to derive its shares from the Tyler above-Minimum Fee Model for the 2015-17 period and also apply a downward adjustment based on Bennett Figure 52. PTV notes that the Tyler above-Minimum Fee Model excludes CSOs that paid the Minimum Fee, whereas Dr. Bennett (Figure 52) carried out the analysis applied by the Judges only based on CSOs that paid the Minimum Fee. PTV Motion at 3.

In their Joint Response, CCG, Program Suppliers, and SDC clarify that the Judges explained Adjustment B as weighting Dr. Bennett's Figure 52 analysis in order to avoid the double counting that is alleged in PTV's motion. Joint Response at 7, citing ID at 143 (note to Adjustment B Table). The Joint Response adds that the applied adjustment is likely a conservative one, understating the bias from must-carry PTV signals, because must-carry signals were also retransmitted by above -Minimum Fee cable systems. Joint Response at 7, citing ID at 45.

Similarly, JSC's response to PTV's proposed elimination of Adjustment B notes the Judges' recognition of the need to lower the Tyler Model's estimates for PTV to correct the issue of fee-based regressions falsely associating must-carry signals with additional royalties. JSC Response at 2. JSC challenges PTV's view that excluding Minimum Fee systems from the Tyler Model somehow accounts for must-carry carriage within the Tyler regression. JSC argues that the Judges were correct to conclude that all must-carry signals are being falsely interpreted by the regressions. Furthermore, JSC observes that reliance on the Tyler above-Minimum Fee Model without adopting Adjustment B, would incorporate the false inferences from must-carry signals, because the regression would “see” systems carrying those stations and making royalty payments, but would not “see” indemnification payments made by the PTV stations back to the CSO. Id.

CTV asserts that PTV's motion regarding Adjustment B reflects a fundamental misunderstanding of the evidence. CTV notes that the Tyler Model does not exclude any PTV stations that were retransmitted pursuant to must-carry requirements. CTV Response at 3, citing Ex. 7207 (Bennett WRT) at 63-64 and 4/12/23 Tr. 4608 (Bennett); Ex. 7600 (Tyler ACWDT) at 37, 64. And, for that reason, Dr. Bennett developed a must-carry sensitivity analysis to measure the impact of must-carry signals on share allocations, which is reflected in Figure 52. Id. CTV also notes that the Judges' weighting methodology effectively decreases the downward adjustment to PTV's share determination based on the ratio of the PTV shares reflected in Dr. Tyler's baseline regression model, Figure 3.2 (including all CSO royalties), and the PTV shares reflected in Dr. Tyler's Figure 6.3 (including only above-Minimum Fee-paying CSO royalties), as explained by the Judges note accompanying Adjustment Table B on page 143 of the Initial Determination. Id.

PTV's Reply reiterates its initial arguments regarding Adjustment B and argues that any weighting contained within the adjustment is also unsupported. PTV asserts that in order for the applied weighting to be appropriate, the proportion of Public Television value derived from must-carry signals estimated by Dr. Bennett must have been the same within the above-Minimum Fee CSOs as within the Minimum Fee-paying CSOs. PTV Reply at 1-2.

PTV asserts that Dr. Bennett's analysis only examined the value of must-carry signals carried by Minimum-Fee-paying CSOs. PTV maintains that the values estimated by Dr. Bennett are not proportionally distributed among Minimum Fee and above Minimum Fee CSOs. PTV argues that that such estimates do not reflect carriage among above-Minimum Fee CSOs, and that there is no basis for using the numbers calculated by Dr. Bennett to attempt to estimate that value. Id. at 3.

PTV asserts that the CSOs paying more than the Minimum Fee could have chosen to decline to carry any distant PTV signals. PTV argues that, under the relevant must-carry regulations, for the above-Minimum Fee CSOs, distant retransmission of a must-carry signal necessarily incurs an incremental royalty cost. PTV notes that under those regulations above-Minimum Fee CSOs thus have the right to demand indemnification from the originating station for that incremental royalty burden. If a station refuses indemnification, then the CSO is not obligated to carry the signal under the must-carry rules. Therefore, PTV argues, a CSO's decision to carry the signal without indemnification necessarily demonstrates value of the programs on that signal. PTV adds that the record indicates that no indemnification payments were made. Id. at 4.

The Initial Determination clearly explains the finding that must-carry signals are problematic when fee-based regressions are used to establish relative value, and thus require an adjustment. More particularly, this need for adjustment exists for Dr. Tyler's allocation share calculations pertaining only to the CSOs who paid more than the Minimum Fee. The Tyler Model does not exclude any PTV stations that were retransmitted pursuant to must-carry requirements. PTV proposes to ignore the effect of must-carry signals on the Tyler Model. PTV takes the position that the must-carry issue is addressed because the adopted Tyler Model excluded Minimum Fee systems. But excluding Minimum Fee systems from the Tyler Model does not account for PTV must-carry signals that are carried by above -Minimum Fee CSOs. Therefore, the Judges' determination on this proceeding record makes clear that the absence of an adjustment, rather than the adjustment itself, would more likely impose a clear error and manifest injustice.

PTV asserts that the Judges cannot apply an adjustment based on Dr. Bennett's analysis because Dr. Bennett examined only the value of must-carry signals carried by Minimum Fee paying CSOs. This argument does not undermine the need for an adjustment. It simply attacks the applied Adjustment B as supposedly having inadequate precision or basis in the record. There is a reason that the record evidence does not provide for greater precision, and that is the noted evidentiary failure of PTV regarding which stations were subject to the must-carry provisions and which were not. See ID at 47. However, the application of Adjustment B is reasonable, and is clearly based on evidence in the record and the Judges' assessment of the entirety of the record. [ 297 ]

Further, Adjustment B, which is properly weighted, does not amount to an erroneous double-counting of the intended adjustment. While employing the best evidence available to determine a necessary adjustment, the Judges weighted the Bennett analysis, for 2015-2017, prior to applying it to the Tyler regression allocations. This is a reasonable approach, with sufficient Start Printed Page 54276 evidentiary support, consistent with the relevant legal requirements.

As explained in the Initial Determination:

The Must Carry adjustment in Bennett WRT fig. 52 was based on the PTV shares of all CSO royalties, whereas the Judges are applying this adjustment to the shares of CSO royalties attributable to shares generated by CSOs paying above the minimum fee (subject to the prior adjustment for CCG, discussed supra ). So, for [2014], the percentage point adjustment to the PTV share is the percentage point adjustment in Bennett WRT Fig 52. For 2015-2017, the percentage point adjustment to the PTV share is calculated for each year by: (1) finding the percentage of PTV shares reflected by the PTV shares from Tyler/WRT fig. 6.3 ÷ PTV's shares from Tyler WRT fig. 3.2; (2) multiplying that percentage by the percentage point adjustment in Bennett WRT fig 52; and (3) subtracting that product from the PTV share from the table above.

ID at 143 (note to Adjustment B Table).

The weighting described above, for 2015-2017, serves to discount the Bennett downward adjustment by ratios derived from PTV allocations of above-Minimum Fee CSOs divided by the PTV allocations of all CSOs. As the Joint Response notes, these ratios and the resulting downward adjustments are conservative in that they may tend to understate the bias introduced by Dr. Tyler's inclusion of must-carry PTV signals, precisely because they do not exclude must-carry signals retransmitted by above-Minimum Fee systems. At the same time, the approach remains based in record evidence and is a reflection of reasonable and conservative judgments derived from the entirety of the record. The Judges appropriately employed the thusly discounted Bennett adjustments (derived for Minimum Fee-paying systems) when applied to the Tyler model allocations for above-Minimum Fee CSOs.

For the reasons explained herein, and based on the entirety of the record, PTV has not shown that an exceptional case exists, or that the Initial Determination is erroneous in relation to Adjustment B. Further, PTV has not demonstrated that aspects of the determination relating to Adjustment B are without evidentiary support in the record or are contrary to legal requirements. In that latter regard, PTV has not shown that, with respect to the Initial Determination's application of Adjustment B, there exists either clear error or manifest injustice that would support granting of PTV's request for rehearing. [ 298 ]

The PTV Motion also seeks rehearing with regard to the Judges' application of what the Judges identified as “Adjustment C” in the Initial Determination. By this Adjustment, the Judges substantially increased the value of certain PTV stations, and thus PTV's share of royalties. However, PTV maintains now that the Judges should have used “Adjustment C” to increase its share even more. PTV Motion at 1-2.

By way of background, the Judges found in the Initial Determination that “the dramatic increase in the number of minimum fee-only CSOs ( i.e., those with no distant retransmittals and those with some distant retransmittals but with `excess capacity') renders regression analyses that include those CSOs less reliable and thus can be accorded only very limited economic evidentiary weight.” Initial Determination at 21. In so holding, the Judges rejected PTV's argument (proffered through the testimony of its economic expert, Dr. John Johnson) that the Judges should find predominant “economic significance in the choices of a CSO `to retransmit a distant signal to particular subscriber groups' despite the fact that the CSO pays the minimum fee . . . .” Initial Determination at 13 (emphasis added) (explicitly rejecting the argument in PTV PFF ¶ 58 that “[t]he decision of a CSO paying the minimum fee to retransmit a distant signal to particular subscriber groups shows the CSO's preference for distantly retransmitted programming without the effect of the statutory royalty, which is an economic context that more closely resembles the hypothetical marketplace.” (citing, inter alios, at n.83 therein, Dr. Johnson's hearing testimony)). [ 299 ]

In contrast with the Judges' misgivings as to Dr. Johnson's regression testimony, they agreed with his argument that, ceteris paribus, the record contained sufficient evidence to increase PTV's allocation. In this regard, the Judges found that—although certain PTV stations were only retransmitted by Minimum Fee-paying CSOs—these CSOs had previously retransmitted PTV stations when such retransmissions had been combined with retransmissions of WGNA, the most retransmitted local station, thereby triggering a CSO royalty obligation above the Minimum Fee. As Dr. Johnson testified, there was evidence that CSOs' immediately prior retransmissions of PTV stations that triggered an incremental royalty cost revealed an incremental value in those retransmissions and that it was reasonable to conclude that the PTV stations continued to have incremental value when they were uncoupled from WGNA (and thus generated only the Minimum Fee). PTV made this specific argument in its post-hearing PFF and post-hearing brief. See PTV PFF ¶ 60 (and record citations therein); PTV Post-Hearing Brief at 27-28. The Judges were persuaded that this WGNA-related evidence reflected “ongoing marketplace value,” notwithstanding the general principle that Minimum Fee royalty payments did not otherwise disclose actual economic decision making or reveal the preferences of CSOs. Initial Determination at 143-144.

To calculate PTV's upward adjustment based on this point, the Judges identified evidence and testimony proffered by a JSC statistical expert, Mr. R. Garrison Harvey. Mr. Harvey testified as follows: “[T]he number of PTV Only systems increased after the WGNA conversion from 44 at the end of 2014 to 173 by the end of 2017. PTV Only Systems that had carried WGNA and PTV in 2014 account for three-fifths of that increase.” Harvey WDT ¶ 106.

The Judges found that that Mr. Harvey demonstrated that 44% of the PTV stations that were identified as retransmitted by Minimum Fee-paying CSOs after the WGNA conversion had been transmitted pre-conversion and generated Base Fee royalties. That is sufficient evidence of ongoing marketplace value. Moreover, Mr. Harvey supported this testimony with reference to specific data, citing to his underlying workpapers, which were not called into question or contradicted at the hearing. Harvey WDT ¶ 106 n.86. Accordingly, the Judges used that factual finding to increase by 44% the PTV share modification, as set forth in the table for Adjustment C. Initial Determination at 144.

This adjustment substantially increased PTV's allocation of the royalties. Compare Adjustment B Table with Adjustment C Table, Initial Determination at 143-144. The PTV Motion does not challenge the accuracy Start Printed Page 54277 or the credibility of this evidence or Mr. Harvey's testimony in this regard.

But PTV maintains that other testimony indicates that this increased adjustment was insufficient. In this regard, PTV avers that the Judges erred by limiting their adjustment to evidence concerning the specific combination of Public Television signals with WGNA. That is, PTV claims that testimony it had proffered showed that PTV's upward adjustment should have been 55% rather than 44%. PTV Motion at 5.

In support of this argument, PTV points to a single one-paragraph statement in Dr. Johnson's Written Rebuttal Testimony, wherein he claimed, without identifying any underlying workpapers or other evidence:

There were 1,115 CSO-Public Television distant signal combinations in the 2015-2017 period where the CSO paid a minimum fee during those years. For 609 (or 55 percent ) of these combinations, the same CSO also carried the same Public Television distant signal, at a different point in time, when it paid section 111 royalties greater than the minimum fee. In those instances, the CSOs elected to pay incremental royalties for these signals (because they generated more than one DSE). Put differently, the CSOs' carriage decisions indicate that these Public Television signals did have value.

PTV Motion at 6 (quoting Ex. 7303 ¶ 79 (Johnson WRT)) (emphasis added). [ 300 ]

PTV also maintains that Mr. Harvey's testimony, quoted above, refers to the number of CSOs ( systems ) that continued to retransmit PTV stations after WGNA was unavailable, rather than the number of PTV stations retransmitted after the WGNA conversion. PTV Motion at 5 n.4.

On these bases, PTV invokes two aspects of the standard for rehearing. Specifically, PTV contends that “the Judges' `Adjustment C' reflects a clear error that must be corrected to prevent manifest injustice. ” PTV Motion at 5 (emphasis added).

In their Joint Response, CCG, Program Suppliers, and SDC assert that PTV's argument regarding this rehearing issue, like the others, fails to satisfy the requisites for granting a rehearing, particularly the assertions of “clear error” and “manifest injustice” levied by PTV with regard to “Adjustment C.” Joint Response at 1-3. More particularly, these parties assert that:

1. The WGNA conversion was a “supply-side phenomenon” inapplicable to PTV + non-WGNA commercial station combinations.

2. Record evidence suggests that CSOs retransmitting PTV stations may have been indemnified by the latter for any royalties paid above the Minimum Fee.

3. PTV acknowledges that it presented these very facts and arguments at the hearing (citing PTV Motion at 6), and PTV's failure to persuade the Judges to apply these facts and adopt this argument at the hearing preclude PTV from using the rehearing process to get a “second bite at the apple.” (citing 2010-2013 Rehearing Order at 2.).

Joint Response at 4, 7-8.

In its Reply to the Joint Response, PTV argues:

1. The Joint Response wrongly concludes, without explanation, that the issues relating to, inter alia, Adjustment C, “could have been `address[ed] . . . during the hearing' ”, despite the fact that “it was impossible to anticipate that the Judges would apply [ inter alia ] their Adjustment[ ] C to Dr. Tyler's sensitivity limited to Above Minimum Fee CSOs.” Thus, PTV maintains, the rehearing process constituted the first occasion for it to litigate this issue, and the rehearing motion thus is not an impermissible attempt to “re-litigate” a matter considered at the hearing. PTV Reply at 1-2.

2. The Joint Response wrongly maintains that the Judges acted “well within their discretion by limiting Adjustment C to “PTV + WGNA” combinations, because the Judges did not account for their differentiation of “PTV + non-WGNA combinations that also generated a base fee royalty . . . .” PTV Reply at 10-11 (quoting 17 U.S.C. 803(c)(3) (“A determination of the Copyright Royalty Judges shall be supported by the written record and shall set forth the findings of fact relied on by the Copyright Royalty Judges.”). PTV Reply at 10.

In its separate response, JSC argues that PTV's request for rehearing regarding “Adjustment C” should be denied because:

1. Any initial royalty obligation for the CSO above the Minimum Fee is subject to offset via indemnification;  [ 301 ]

2. Adjustment C “fails to account for the must-carry issue,” an issue which uncouples continuing carriage of PTV signals after 2014 from any finding of “CSO's revealed willingness to pay for those signals;”

3. More broadly, Adjustment C wrongly relies on data from Minimum Fee-only CSOs; and

4. Adjustment C treats similarly situated parties differently because some Minimum Fee-only CSOs in 2017 also carried commercial signals that “generated base fee royalties” in 2014.

JSC Response at 4-7.

In its Reply to the JSC Response, PTV argues:

1. JSC's criticism of Adjustment C as arbitrary is wrong, because this adjustment is “necessary to mitigate the unreasonably low estimates of [PTV's] shares” as set forth in the Tyler Model's analysis of only “Above Minimum Fee CSOs.” PTV Reply at 6.

2. JSC's criticism of Adjustment C for supposedly treating different parties differently is an incorrect criticism because the Judges explained that the “Above Minimum Fee-Only” version of the Tyler Model disproportionately ignored circumstantial evidence demonstrating post-2014 PTV value through the continuation of PTV retransmittals in that period after the retransmittal of a combination of “WGNA + PTV” signals became moot (with the WGNA conversion to a cable system). By contrast, no other program category suffered from a similar loss of share value because of the WGNA conversion. PTV Reply at 9-10.

In its separate response to the PTV Motion, CTV maintains that there is no basis to find that the Judges' adoption of Adjustment C was incorrect or incomplete—let alone “clearly erroneous” or that it caused PTV “manifest injustice”. CTV Response at 5-6. In support, CTV argues the following points:

1. PTV wrongly asserts that the Judges committed clear error in the way they applied Adjustment C to the share allocations, because the Judges articulated in the Initial Determination a proper rationale for applying Adjustment C; and

2. The Judges were within their authority to adopt Mr. Harvey's record testimony and evidence, rather than Dr. Johnson's record testimony, to calculate Adjustment C, particularly because Adjustment C focused on PTV's specific argument “regarding demonstrated willingness to pay” by CSOs for a PTV signal after the WGNA conversion.

CTV Response at 2, 5-6.

In Reply to the CTV Response, PTV maintains:

1. Instead of offering a substantive argument, CTV incorrectly argues that, as a matter of law, the Judges may adopt whichever percentage (Mr. Harvey's or Dr. Johnson's) they deem “most appropriate”; and

2. The Judges do not have such discretion; rather, their findings “may not be arbitrary[,] must be supported by substantial evidence” and shall be the product of a “reasoned decision.”

PTV Reply at 10. Start Printed Page 54278

As an initial matter, the Judges find that—for several reasons—PTV's basis for a requested rehearing regarding the Adjustment C issue fails to satisfy the “manifest injustice” standard. First, the Judges agree with the Joint Respondents that the concept of “manifest injustice” is “exceptionally narrow,” requiring a showing of not only “clear and certain prejudice” to the movant, but also a harm to the movant that is “fundamentally unfair.” Joint Response at 3 (citing Leidos, Inc. v. Hellenic Republic, 881 F.3d 213, 217 (D.C. Cir. 2018); Mohammadi v. Islamic Republic of Iran, 947 F.Supp.2d 48, 78 (D.D.C. 2013). Here, PTV maintains that even though the Judges recognized that their primary regression model (the Tyler Model for above-Minimum Fee CSOs) failed to adequately reflect a revealed preference for PTV signals—and accordingly increased PTV's share substantially—other evidence indicated that the PTV share should have been increased even more. The Judges detect neither “fundamental unfairness” nor “prejudice” (let alone “clear and certain prejudice”) arising from the fact that PTV's increase was not as great under the evidence relied upon by the Judges (44%, pursuant to Mr. Harvey's calculations) as it would have been had the Judges instead relied on PTV's witness, Dr. Johnson.

In applying the above D.C. Circuit test for “manifest injustice,” a district court noted that “a dollar-and-cents comparison” serves to “undercut[ ] the significance of the “manifest injustice standard.” Fraenkel v. Islamic Republic of Iran, 326 FRD. 341, 345 (D.D.C. 2018), rev'd on other grounds 892 F.3d 348 (D.C. Cir.). (abuse of discretion in applying a statute). [ 302 ] The Judges agree, especially where, as here, the movant is complaining of “manifest injustice” because a substantial upward adjustment in its favor should have been even greater. [ 303 ]

With regard to a specific point made by JSC, the Judges reject JSC's argument for eliminating Adjustment C en toto on the basis that this adjustment is itself erroneous because it purportedly treats similarly situated parties differently. JSC Response at 6-7. Although the Judges address this argument, and the opposition thereto, in the section of this order denying JSC's Motion seeking to eliminate Adjustment C en toto, the Judges here take specific note of an important concession by JSC in its Response. Although JSC claims that categories of programming other than PTV might have benefitted from the same pre- and post-WGNA conversion analysis of CSO retransmissions, JSC concedes, in a footnote, that, no witness, including its witness, Mr. Harvey, “analyze[d] whether these CSOs were carrying the same non-WGNA signals in 2017 as they were in 2014.” JSC Response at 7 n.2. So, not only did no party other than PTV make the argument that this analysis might favor its particular programming, the evidence cited does not permit an allocation among other program categories based on this argument.

Pursuant to the Judges' rules, the statutory “exceptional case” requirement for rehearing—based on an allegedly “erroneous” factual aspect of a determination—is satisfied only if that factual finding is “without evidentiary support in the record.” 17 U.S.C. 803(c)(2) ; 37 CFR 353.1 -.2; see also Order Denying Motion for Rehearing at 1, In re Distribution of 2000-03 Cable Royalty Funds, Docket No. 2008-02 CRB CD 2000-2003 (Phase II), (Aug. 7, 2013). Further, pursuant to D.C. Circuit precedent, when the movant's asserted factual predicate for the assertion of “clear error” relies on the uncredited testimony of its expert, a Rule 59(e) motion  [ 304 ] must be denied if the expert's testimony does not provide sufficient “factual . . . reasons for [the expert's] conclusion.” Martin v. Omni Hotels Mgmt. Corp., 321 FRD. 35, 40 (D.D.C. 2017) (citing New York State Ophthalmological Soc. v. Bowen, 854 F.2d 1379, 1391 (D.C. Cir. 1988)), aff'd, 409 F. A'ppx 362 (D.C. Cir. 2011).

Moreover, a request for rehearing based on a judge's reliance on a “specific factual determination[ ]” does not satisfy the “clear error” test if (1) the evidence which the motion challenges is “sufficiently reliable to credit” or (2) if the evidence on which the movant relies is inconsistent with “the entire evidence,” and thus the court is “left with the definite and firm conviction that a mistake has been committed.” Obaydullah v. Obama, 688 F.3d 784, 792 (D.C. Cir. 2012) (emphasis added).

Applying these standards, PTV's motion for rehearing with regard to Adjustment C must be denied. First, the Judges' Adjustment C is based on evidence in the record, i.e., the testimony of JSC's statistical expert witness, Mr. Harvey, and the documentation on which he relied. Moreover, this testimony and evidence was not challenged, either at the hearing or on rehearing. On this basis alone PTV's motion for rehearing fails to demonstrate any error, let alone clear error.

Second, PTV relies upon the testimony of its own economic expert, Dr. Johnson, which PTV maintains is superior to the testimony of Mr. Harvey on this issue. However, this argument fails the second “clear error” standard cited above, because Dr. Johnson's testimony, on which PTV relies to seek, via rehearing, a 55% Adjustment C increase in its royalty share (instead of the 44% Adjustment C increase provided by the Judges) does not provide sufficient factual reasons for his conclusion. Specifically, Dr. Johnson's opinion regarding the 55% increase sought by PTV is not supported by any record evidence cited by PTV. See PTV Rehearing Motion at 6; Johnson WRT ¶ 79. [ 305 ]

Additionally, PTV does not maintain that Mr. Harvey's analysis that led to the Judges' 44% upward adjustment in favor of PTV was erroneous; rather PTV argues that it is Dr. Johnson's opinion which would favor a 55% adjustment which “best comports” with the Initial Determination. PTV Motion at 10. However, the Judges' exercise of their discretion in deciding which of two (or more) alternative factual approaches to follow cannot constitute “clear error” (or any error at all) when the party seeking rehearing itself simply maintains merely that its preference is better. Moreover, for the reasons articulated below, the Judges had good cause to rely on Mr. Harvey's testimony over that of Dr. Johnson.

As the Judges have noted previously, a motion seeking rehearing based on, inter alia, assertions of “manifest injustice” or “clear error,” shall be rejected if the movant has “merely restate[d] . . . evidence that was presented during the proceeding.” Order Denying Motions for Rehearing at 2, In re Digital Performance Right in Sound Recordings and Ephemeral Recordings, Docket No. 2005-1 CRB DTRA ( Webcasting II ) (Apr. 16, 2007). It is in such context that the movant seeks rehearing—over an issue that was raised and determined in the Initial Determination. This principle has been aptly described by the Judges, and other tribunals, as an improper attempt to seek “a second bite at the apple”:

[When] the Judges consider whether there exists . . . a need to correct a clear error or prevent manifest injustice[ ] . . . the Judges must subject the rehearing arguments to a strict standard, in order “to dissuade repetitive arguments on issues that have already been fully considered . . . .” Order Denying Motions for Reh'g, Docket No. 2005-1 CRB DTRA, at 1-2 (Apr. 16, 2007). Under this strict standard, a rehearing motion does not provide a litigant with a “second bite at the apple,” allowing it “to re-litigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment.” Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (quoting C. Wright & A. Miller, Federal Practice and Procedure § 2810.1 (2d ed. 1995)).

Order Denying Program Suppliers' Motion for Rehearing . . . at 1, Distribution of Cable Royalty Funds, Consolidated Proceeding Docket No. 14-CRB-0010-CD (2010-13) (Dec. 13, 2018).

Here, PTV is seeking the metaphorical “second bite at the apple.” In this regard, it has not escaped the Judges' notice that PTV does not meaningfully attempt to counter the “second bite” problem—but rather simply avoids it. Perhaps that is because the Judges explicitly did take note in the Initial Determination that Dr. Johnson had made this precise claim. See Initial Determination at 13-14 (citing and quoting Johnson WRT ¶ 79). Clearly, PTV's rehearing argument regarding Adjustment C is—to say the least—complicated by the fact that the Judges were fully aware of Dr. Johnson's relevant testimony—yet did not adopt that testimony in the Initial Determination. [ 306 ]

As made clear in the Initial Determination, the Judges had substantial problems with regard to Dr. Johnson's testimony and analyses, which should have made obvious their unwillingness to credit his testimony on which PTV relies for its objection that the Judges' 44% Adjustment C in favor of PTV is too low. To make this point explicit, the Judges recount their difficulties in connection with Dr. Johnson's hearing testimony, as expressed in the Initial Determination.

First, the Judges were troubled by Dr. Johnson's reliance on the modeling of a witness in a prior proceeding because the testimony and modeling of that witness had been called into serious question. Initial Determination at 36. [ 307 ] Second, and relatedly, the Judges were stunned when Dr. Johnson claimed at the hearing that he had “never received” the satellite case documents calling into question the modeling and testimony on which Dr. Johnson had relied, which SDC's counsel had produced (as voluntary discovery) to PTV's counsel (and to all counsel). [ 308 ] Third, and also relatedly, PTV's counsel never volunteered whether it had in fact transmitted that important discovery to Dr. Johnson, or whether PTV's counsel had (intentionally or otherwise) not transmitted that material. Initial Determination at 36 n.39. Thus, the Judges were unable to determine whether the failure to consider and address this important evidence was the fault of Dr. Johnson, PTV's counsel, or Start Printed Page 54280 both. For these three related reasons, the Judges gave “diminished weight” to Dr. Johnson's testimony. Id. at 38.

Fourth, as explained in the Initial Determination, the Judges were also “troubled” that PTV appeared to have created two different “teams” within Dr. Johnson's firm, Edgeworth Economics (“Edgeworth”), in order to allow Edgeworth to use a so-called “consulting team” which excluded Dr. Johnson, in order for PTV to provide him with deniability about specification searching and to withhold discovery of such dubious activity. [ 309 ] More particularly, the Judges explained that, “when the `consulting team' is created within[ ] the same firm of economists who are also preparing testimony and actually testifying, there is the risk that work by the `consulting' team will be utilized as a screening device for work that should have been undertaken by the `testifying' team . . . [and] the use of a `consulting' team can allow a party to also cloak from discovery expert work by claiming the protection of the work-product rule.” Id. In this regard, the Judges took particular note that

an email that was withheld from Dr. Johnson as “consulting” team material contained a link to CDC distant signals with the caveat: “these data files are being shared for consulting purposes only and should not be shared with John”). It is difficult to fathom why raw data regarding distant signals would be withheld from the testifying expert.

Initial Determination at 39 n.43.

Additional detailed facts only further undermined the credibility of PTV and Dr. Johnson:

Moreover, the soundness of the “wall” between the “consulting” team and the “testifying” team was questionable, given that the “consulting” team was led by Drs. Michael Kheyfets and David Colino, but they also were the senior members of the “testifying” team that reported to Dr. Johnson, along with dual team members Dr. Stephanie Cheng and Esther Yan. . . . . . Additionally, when PTV first produced documents to SDC, it did not also provide a privilege log describing the Edgeworth documents otherwise withheld because of an assertion of a privilege relating to a consulting team. (After SDC'[s] motion to compel, PTV provided a privilege log, but, after [ordered to produce the documents,] PTV produced virtually all of the previously withheld material.)

Initial Determination at 39. The Judges thus determined that not only was there evidence that PTV attempted to avoid discovery of its alleged specification searching, but that this attempted concealment “ serves to diminish the Judges' reliance on the Johnson Model . . . .” Id.

Fifth, when evaluating the substance of the work undertaken by Dr. Johnson, the Judges were further concerned by the absence of “any sufficient basis in the record to explain [the] correlation between sequential regression runs and the growth of PTV's allocation share,” and PTV's failure to present a “sufficient basis to rebut SDC's charge that data changes should not consistently be correlated with the growth of PTV's share allocation, as opposed to a randomized effect on share percentages.” Id. Thus, the Judges agreed with SDC's economic expert, Dr. Daniel Rubinfeld, finding that Dr. Johnson's work demonstrated “an appearance . . . of practices that ran counter to sound empirical research practice . . . .” Initial Determination at 39-40. For these reasons alone, the Judges decided to “give reduced weight” to the work undertaken by Dr. Johnson on behalf of PTV. Initial Determination at 40.

Sixth, the Judges were frustrated by PTV's failure to produce important evidence with regard to another issue. Although PTV claimed royalties for multicast programming and must-carry stations, PTV failed to produce sufficient proof in that regard. [ 310 ] As the Initial Determination explains:

[T]here was evidence available to be produced by PTV, namely the PBS-NCTA agreement as well as the number of entities it represents that would provide significant marketplace evidence . . . . But . . . PTV did not produce either this agreement or the number of entities bound by it as evidence, although its own expert witness testified as to some of the agreement's contents.

Thus, the Judges were deprived of full knowledge of the terms of the agreement, the parties' fulsome testimony as to the meaning of its provisions and the number of entities signing on to the agreement. Moreover, PTV opposed the admission of that agreement into evidence. . . . Accordingly, the Judges . . . find that PTV bore, but failed to discharge, the burdens of production and persuasion with regard to the details of the agreement and the extent of its coverage.

Initial Determination at 53.

Regarding the “Must Carry” issue, PTV's failure to carry its burdens of production and persuasion are especially instructive, because they are juxtaposed against the testimony of Mr. Harvey, as in the rehearing issue pertaining to Adjustment C. Mr. Harvey identified 15.5% of PTV distant signals as having been retransmitted in compliance with these must-carry rules. Initial Determination at 40. But, as the Judges noted, “PTV takes issue with the entirety of Mr. Harvey's approach to designating `must-carry' stations.” Id. The Judges rejected PTV's argument, chastising PTV for failing to satisfy its burden of proof to provide affirmative evidence and for instead attempting to cast doubt on Mr. Harvey's otherwise credible testimony and analysis. As the Initial Determination states:

The Judges agree with JSC and CTV, based on the case law cited by JSC, that PTV, whose clients include the public television stations that are in fact subject to must-carry requirements, bore the twin burdens of proof—the burden of producing evidence and the burden of persuasion —regarding which stations were subject to the must-carry provisions and which were not. Further, because PTV is seeking a determination including must-carry station data in the regression, those burdens are apportioned to PTV as a matter of statute. See 5 U.S.C. 556(d) .

But rather than produce such evidence or prove its significance, PTV elected to attack Mr. Harvey's attempt to estimate the number of must-carry stations. Those attacks are insufficient. . . . Mr. Harvey engaged in a reasonable attempt to estimate this number, which PTV could have set forth in its submissions, but did not.

Initial Determination at 47 (emphases in original). [ 311 ]

Seventh, and finally, as noted at the outset of this discussion of PTV's rehearing request vis-à-vis Adjustment C, Dr. Johnson's rebuttal testimony on Start Printed Page 54281 which PTV relies does not include a reference to documentation on which he relied to support that testimony. The Judges are hesitant (to say the least) to grant rehearing based upon an expert's testimony when the party relying on that testimony fails to cite to any underlying documentation of factual analysis or support for that opinion. Moreover, when the Judges consider the absence of such documentation in the cumulative context of the assorted problems with PTV's failures to meet its evidentiary burdens and Dr. Johnson's lack of knowledge of critical facts and evidence (as cataloged supra ), their reluctance to grant the “exceptional” section 803 relief of rehearing is reinforced.

The foregoing analysis makes it clear that the Judges had—and continue to have—serious questions regarding the credibility, reliability, and sufficiency of the evidence and testimony put forth by PTV and Dr. Johnson. Each of the Judges' findings and conclusions in these multiple areas is sufficient grounds for the Judges' election to rely on the testimony and evidence provided by JSC's expert statistician, Mr. Harvey, rather than PTV's Dr. Johnson, regarding the basis for, and size of, Adjustment C. Moreover, when the foregoing seven points calling into question the testimony of Dr. Johnson and PTV's position are considered as a whole, the Judges' decision to rely on Mr. Harvey's testimony instead of that of Dr. Johnson, most certainly did not constitute an error, let alone clear error that could serve as a basis for rehearing.

For these reasons, the Judges agree with the Joint Respondents that the Judges acted within their discretion in making Adjustment C as set forth in the Initial Determination. [ 312 ]   [ 313 ]

The PTV Motion noted errors in the Adjustment B Table for 2014, observing that “typographical errors result in total 2014 shares that do not equal 100%.” PTV Motion at 4 n.2. PTV argued that, in order to correct the 2014 shares, “Program Suppliers' share should be changed from 28.8% to 26.8%, JSC's share should be changed from 37.5% to 37.48%, and CTV's share should be changed from 11.39% to 11.38%.” Id. [ 314 ]

The Judges have reviewed the Adjustment B calculations questioned by PTV and agree that they are erroneous as a consequence of a typographical error. PTV's proposed correct shares adjust for this error. The Judges grant the motion for rehearing regarding the identified typographical errors, finding that there is a need to correct a clear error or prevent manifest injustice. Having found the Motions for rehearing and related filings a sufficient rehearing record from the participants, the Judges correct the typographical errors for 2014.

Further, the Judges correct mathematical errors, not only in 2014 but in all years, that affected the shares reported in the Adjustment B Table. PTV, JSC, and CTV note that PTV's share of 19.09% reported in the Adjustment B table for 2017 is in error. [ 315 ] PTV Motion at 4 n.3; JSC Motion at 9 n.4; CTV Response to PTV Motion at 6. The Judges grant the motion for rehearing regarding these arithmetic errors, finding that there is a need to correct a clear error or prevent manifest injustice. Having found the Motions for rehearing and related filings a sufficient rehearing record from the participants, the Judges correct the arithmetic errors. [ 316 ]

All of these corrections are applied in Adjustment B Table below:  [ 317 ]

Adjustment B Table

Year	Program suppliers (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)
2014	26.80	37.48	11.38	13.36	4.33	6.55
2015	47.67	2.44	13.14	11.78	11.28	13.70
2016	40.75	1.69	17.32	15.32	10.81	14.12
2017	44.07	0.67	13.23	15.96	10.41	15.66
The Must Carry adjustment in Bennett WRT fig. 52 was based on the PTV shares of all CSO royalties, whereas the Judges are applying this adjustment to the shares of CSO royalties attributable to shares generated by CSOs paying above the Minimum Fee (subject to the prior adjustment for CCG, discussed ). So, for 2014, the percentage point adjustment to the PTV share is the percentage point adjustment in Bennett WRT Fig 52. For 2015-2017, the percentage point adjustment to the PTV share is calculated for each year by: (1) finding the percentage of PTV shares reflected by the PTV shares from Tyler/WRT fig. 6.3 ÷ PTV's shares from Tyler WRT fig. 3.2; (2) multiplying that percentage by the percentage point adjustment in Bennett WRT fig 52; and (3) subtracting that product from the PTV share from the table above. Start Printed Page 54282
The shares of the other claimants are adjusted upward by: (1) calculating the percentage each category represents of all the categories' shares except PTV; (2) multiplying each percentage by the Bennett Must Carry adjustment (reduced as set forth above); and (3) adding that product to the shares of each claimant category.

The Judges recalculate the Adjustment C Table to reflect the corrections to the Adjustment B Table:

Adjustment C Table

Year	Program suppliers (%)	JSC (%)	CTV (%)	PTV (%)	SDC (%)	CCG (%)
2015	44.87	2.30	12.37	16.96	10.62	12.90
2016	37.51	1.56	15.94	22.06	9.95	13.00
2017	40.39	0.61	12.12	22.98	9.54	14.35
The Judges recalculated the shares of the other five claimant categories by: (1) calculating the percentage each category represents of all the categories' shares except PTV; (2) multiplying each percentage by the increase in the PTV share generated by adjusting to reflect WTP of CSOs that maintained PTV carriage after WGNA conversion; and (3) subtracting that product from the shares of each claimant category.

As discussed in the Initial Determination, the Judges allocated shares of the Basic Fund to each party based on their review and weighting of the record evidence. ID at 197-198. The corrected Basic Fund and 3.75% Fund allocations incorporate the corrections discussed above.

For each year, the aggregate sum of the share allocations did not sum to 100% for the Basic Fund. In 2014, the allocations summed to marginally greater than 100 percent and, in 2015-2017, marginally less than 100 percent. The Judges therefore adjusted the allocated shares proportionally to achieve an aggregate allocation of 100%; in 2014 shares this process required a modest downward adjustment and, in 2015-2017, this process required a modest upward adjustment in shares. The resulting corrected Basic Fund and 3.75% Fund  [ 318 ] allocations are as follows:

Basic Fund Royalty Allocations

	2014 (%)	2015 (%)	2016 (%)	2017 (%)
CCG	6.19	14.59	14.60	15.77
CTV	20.55	19.78	17.36	17.50
JSC	36.13	11.42	10.72	12.36
Program Suppliers	21.21	28.29	25.53	23.29
PTV	11.07	19.18	24.78	25.25
SDC	4.85	6.74	7.01	5.83

3.75% Fund Royalty Allocations

	2014 (%)	2015 (%)	2016 (%)	2017 (%)
CCG	6.96	18.05	19.41	21.10
CTV	23.11	24.48	23.08	23.41
JSC	40.63	14.13	14.25	16.53
Program Suppliers	23.85	35.00	33.94	31.16
SDC	5.45	8.34	9.32	7.80

For the foregoing reasons, PTV's motion for rehearing is granted in part and denied in part and JSC's motion for rehearing is denied .

The affected parties shall file a joint proposed redacted public version of this Order for public viewing within ten days .

So ordered.

Dated: March 21, 2024.

1.  The program categories at issue 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; “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; “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. Order Lifting Stay and Adopting Claimant Categories (Apr. 5, 2021). The categories are mutually exclusive and, in aggregate, comprehensive.

2.   See Initial Determination of Royalty Allocation (Corrected and Redacted) at 1.

3.   See Order on Rehearing at 83 n.63 (“To the extent that corrections set forth in this Order might be construed to reach beyond those identified in the Motions for rehearing or the rehearing authority in 17 U.S.C. 803(c)(2) , the Judges also make such corrections under their authority to correct technical or clerical errors in 17 U.S.C. 803(c)(4) . For this reason, the Judges set forth the analysis herein also as a written addendum to the Initial Determination, which is distributed to the participants of the proceeding via this Order and will be published as part of the Final Determination, pursuant to 17 U.S.C. 803(c)(4) .”)

4.  Prior to enactment of the Copyright Royalty and Distribution Reform Act of 2004, which established the Judges program, royalty allocation determinations under the section 111 license were made by two other bodies. The first was the Copyright Royalty Tribunal, which made distributions beginning with the 1978 royalty year, the first year in which cable royalties were collected under the 1976 Copyright Act. Congress abolished the Tribunal in 1993 and replaced it with the Copyright Arbitration Royalty Panel (“CARP”) system. Under this regime, the Librarian of Congress appointed a CARP, consisting of three arbitrators, which recommended to the Librarian how the royalties should be allocated. Final distribution authority, however, rested with the Librarian. The CARP system ended in 2004. See Copyright Royalty Distribution and Reform Act of 2004, Public Law 108-419 , 118 Stat. 2341 (Nov. 30, 2004).

5.  The Judges last adjudicated an allocation (Phase I) determination for royalty years 2010 to 2013. See Final Allocation Determination, Distribution of the 2010 to 2013 Cable Royalty Funds, 84 FR 3552 (Feb. 12, 2019) (2010-13 Determination).

6.  Second Reissued Order Granting in Part Allocation Phase Parties' Motion to Dismiss Multigroup Claimants and Denying Multigroup Claimants' Motion for Sanctions Against Allocation Phase Parties, Docket No. 14-CRB-0010-CD (2010-13) (Apr. 25, 2018). The Judges discontinued use of the terms Phase I and Phase II and use the terms Allocation Phase and Distribution Phase instead. Id. n.4. This determination addresses the Allocation Phase of the proceeding.

7.  “Form 3” cable systems, so named because they account to the Copyright Office for retransmissions and royalties on “Form 3.” The Form 3 filing is required because they have semiannual gross receipts in excess of $527,600. These systems must submit an SA3 Long Form to the US Copyright Office. They are the only systems required to identify which of the stations they carry are distant signals. Royalty payments from Form 3 systems accounted for over 90% of the total royalties that cable systems paid during 2014-2017. Expert Report of Christopher J. Bennett, Ph.D., Amended Corrected, Trial Ex. 7203, ¶ 11 n.2 (Bennett ACWDT).

8.  The cable license is premised on the Congressional judgment that large cable systems should only pay royalties for the distant broadcast station signals that they retransmit to their subscribers and not for the local broadcast station signals they provide. However, cable systems that carry only local stations are still required to submit a statement of account and pay a basic minimum fee. See Distribution Order, Distribution of the 2000-2003 Cable Royalty Funds, 75 FR 26798 n.2 (May 12, 2010) (2000-03 Distribution Order).

9.  FCC regulation of the cable industry was impacted by passage of the 1976 Copyright Act that created the compulsory license for cable retransmissions codified in section 111. See Report and Order, Docket Nos. 20988 & 21284, 79 F.C.C. 663 (1980), aff'd sub nom. Malrite T.V. v. FCC, 652 F.2d 1140, 1146 (2d Cir. 1981).

10.  In 1989, in response to changes in the cable television industry and passage of the Satellite Home Viewer Act of 1988, the FCC reinstated syndicated exclusivity rules. The reinstated rules differed from the original syndex rules, giving rise to a petition to the CRT for adjustment or elimination of the syndex surcharge. See Final Rule, Adjustment of the Syndicated Exclusivity Surcharge, Docket No. 89-5-CRA, 55 FR 33604 (Aug. 16, 1990). The CRT held that “the syndicated exclusivity surcharge paid by Form 3 cable systems in the top 100 television markets is eliminated, except for those instances when a cable system is importing a distant commercial VHF station which places a predicted Grade B contour, as defined by FCC rules, over the cable system, and the station is not “significantly viewed” or otherwise exempt from the syndicated exclusivity rules in effect as of June 24, 1981. In such cases, the syndicated exclusivity surcharge shall continue to be paid at the same level as before.” ( Id. See Final Rule, Cable Television Services; Program Exclusivity in the Cable and Broadcast Industry, 54 FR 12913 (Mar. 29, 1989), aff'd sub nom. United Video, Inc. v. FCC, 890 F.2d 1173 (D.C. Cir. 1989); 47 CFR 73.658(m)(2) (1989); 47 CFR 76.156 (1989). The present proceeding deals only with allocation of those royalties among copyright owners in the various program categories.)

11.  The CRB last adjusted cable Basic, 3.75%, and Syndex rates in 2021, for the period January 1, 2020, through December 31, 2024. See Final Determination, Adjustment of Cable Statutory License Royalty Rates, Docket No. 20-CRB-0008-CA (2020-2024), 86 FR 72845 (Dec. 23, 2021). This adjustment was pursuant to a negotiated agreement.

12.  Notice . . ., Distribution of Cable Royalty Funds, Docket No. 16-CRB-0009-CD (2014-17), 84 FR 2930 (Feb. 8, 2019); Notice . . ., Distribution of Satellite Royalty Funds, Docket No. 16-CRB-0010-SD (2014-17), 84 FR 2931 (Feb. 8, 2019). The CRB received Petitions to Participate from Broadcast Music, Inc. (“BMI”), the American Society of Composers, Authors and Publishers (“ASCAP”), and SEASAC Performing Rights (jointly, the “Music Claimants”); Canadian Claimants Group (“CCG”); Global Music Rights; Public Broadcasting System (“PBS”) on behalf of Public Television Claimants (“PTV”); Settling Devotional Claimants (“SDC”); Joint Sports Claimants (“JSC”); Major League Soccer (“MLS”); Multigroup Claimants; Commercial Television Claimants represented by the National Association of Broadcasters (“CTV”), National Public Radio for NPR Joint Claimants (“NPR”); David Powell; and the Motion Picture Association of America for MPAA-represented Program Suppliers (“Program Suppliers” or “PS”). Subsequently, MLS filed a notice that it would not participate separately in the allocation phase, eCRB no. 26935, and Mr. Powell was dismissed as a participant, eCRB. no. 22314. Multigroup Claimants expressed an intention to participate in the allocation phase, eCRB no. 25455, but did not file a written direct statement and did not participate.

13.  In this proceeding, the Judges distinguish between “ relative values” (to describe the allocation shares), and absolute “fair market values.” Because the royalties at issue in this proceeding are regulated and not derived from any actual market transactions, they do not correspond with absolute dollar royalties that would be generated in a market and thus would not reflect absolute “fair market value.”

14.  The Judges discuss the relative marketplace value standard in more detail, infra, as applied to the facts of this proceeding.

15.  “Form 3” systems are cable systems with semiannual gross receipts in excess of $527,600 that are required to submit an SA3 Long Form to the US Copyright Office. They are the only systems required to identify which of the stations they carry are distant signals, and they account for over 90% of the total royalties paid by all cable systems during 2014-2017.

16.  “Fee-generation,” discussed elsewhere in this determination, is a method proffered to identify relative marketplace value. Id. at 26804 (the “fee generation approach should be accorded deference, not as the methodology to determine the relative marketplace value but as a methodology to determine that value.”). Other approaches proffered more recently have been advanced in order to apply the present standard, “relative marketplace value.” See 2010-13 Determination at 3556 (identifying [r]egression analyses, CSO survey results, viewership measurements, a changed circumstances analysis, and a cable content analysis” as approaches to estimate relative marketplace value).

17.  The Judges focus on the Bortz Survey infra.

18.  Attributed to John Maynard Keynes. See, e.g., https://graciousquotes.com/​john-maynard-keynes/​ (last accessed August 28, 2023).

19.  SDC's counsel's argument was in line with the D.C. Circuit's understanding that the Judges must by necessity engage in “rough justice” in these allocation proceedings, but he protested that any rough variant of justice that relied on one or more of these regressions would not constitute “rough economic justice.” Id. (emphasis added). The Judges disagree, as do their predecessors who have relied on these models, and as do the economists/econometricians who have proffered regression-based models in this and prior proceedings. In this regard, the Judges were struck by a warning given by SDC's counsel that, if the Judges “adopt[ed] the Tyler [M]odel on a theory of “rough economic justice” without discarding the “relative market value” standard, [they] would inhibit the parties' ability to present top-shelf economists . . . ” SDC PHB at 64 (emphasis in original). The Judges agree with Program Suppliers' counsel who rightly took umbrage at the “not-so-subtle condescending posture of this remark . . . ” Program Suppliers PHRB at 41. The expert witnesses certainly do disagree among each other, but the experience and education of the economists/econometricians who have proffered their regression approaches belie the ad hominem argument by SDC's counsel.

20.  In fact, footnote 17 cited by CCG does not address this minimum fee issue.

21.  The minimum fee is a fixed (sunk) cost. A CSO that pays only the minimum fee has a marginal royalty cost to retransmit a signal equal to zero. Thus, a minimum-fee-paying CSO's decision not to retransmit any signal indicates that the net value of retransmittal is zero for that CSO (and may even be negative given transmission and/or opportunity costs).

22.  CCG maintains that these non-transmitting CSOs also cannot be utilized in the Bortz Survey.

23.  In a following colloquy with Judge Strickler, Dr. Tyler acknowledged that, by contrast, where the base fees calculated by CSOs were well below the minimum fee ultimately paid, their base fees provided “less economic content.” 4/19/23 Tr. 5525 (Tyler).

24.  This argument is misleading. As described infra, the SDC, JSC, and CTV, through their experts, all relied on the large number of minimum-fee-only CSOs as a basis to throw out the regressions entirely for the 2015-2017 period (and the SDC and JSC also reject the minimum-fee-only data for 2014 as part and parcel of their wholesale rejection of the regression approach).

25.  Program Suppliers also note that the Bortz Survey likewise considers the stated preferences of survey respondents whose systems pay only the minimum fee. PS PFF ¶ 328.

26.  This nuanced position is not an inconsistent economic argument. Rather, it is an argument regarding data differentiation and the concomitant weighing of evidence. CTV and Dr. Marx assert that, as a matter of “degree,” too high a percentage of the number of CSOs paying only the minimum fee (and/or too high a percentage of all royalties paid by minimum-fee-only CSOs) will render the incorporation of the retransmission decisions of those CSOs (and/or the royalties they paid) fatal to a fee-based regression. However, they assert that when those minimum-fee-only CSOs and their royalties are only approximately half of the CSOs and royalties paid, as in the 2010-2013 period, and when they principally apply to CSOs with only one subscriber group (and thus are excluded anyway from the Crawford-style regression), their inclusion is too small to preclude use of a fee-based regression. See generally CTV PFF at 20 et seq. (“The lack of informative data renders any fee-based regression inappropriate and unreliable for 2015, 2016 and 2017.”).

27.  However, JSC also acknowledges that the Bortz Survey, on which it relies, likewise “decided to adopt Base [Fee] + 3.75% Fee . . . weighting “[o]nce Bortz realized that many . . . systems were paying the Minimum Fee. . . .” JSC RPFF ¶ 105.

28.  More particularly, in the years 2016-2017, only 3.2% of CSOs calculated a base fee + 3.75% Fee that “met” (rather than “exceeded) the minimum fee. JSC PFF ¶ 54 (citing Harvey CWDT tbl.14).

29.  It is hardly clear that Mr. Harvey was justified in removing reported carriage of WGNA in 2015. The record reflects the existence of SOAs filed for 2015 that reported such carriage, and there is uncertainty as to whether those SOAs were erroneous or whether there was residual WGNA carriage as WGNA transitioned from a broadcast channel to a cable station. But see Kent Gibbons, WGN America Converts to Cable in Five Markets, Broadcasting & Cable (Dec. 14, 2014) (“Tribune Media Co. said its WGN America is debuting on cable television systems in Chicago, Boston, Philadelphia, Seattle and Washington, DC, starting Tuesday, as it begins converting from a superstation to a cable network . . . on Comcast systems [with] more launches and conversions . . . happening on distributors this month and throughout 2015. ”) (emphasis added).

30.  Evidence that provides “rough guidance” is useful evidence in these proceedings. As noted elsewhere in this determination, the D.C. Circuit has acknowledged that the nature of this statutorily-mandated, but statutorily standardless, allocation process can require a measure of “rough justice,” in the face of inevitable mathematical imprecision.

31.  This finding is consistent with a broader point made by the economist Ronald Coase, who won the Nobel Prize for his foundational work on transaction costs, regarding an overemphasis on what he coined “blackboard economics.” As Dr. Coase explained: “[When] [t]he policy under consideration is one which is implemented on the blackboard [and] [a]ll the information needed is assumed to be available and the teacher plays all the parts . . . there is no counterpart to the teacher within the real economic system . . . no one who is entrusted with the task that is performed on the blackboard.” R. Coase, The Firm, the Market, and the Law 19 (1990). Substitute “expert witness” for “teacher” and “in the testimony” for “on the blackboard” and Dr. Coase's point applies here.

32.  Specification searching (also known as “data fishing.”) is defined as “the practice of searching numerous research methodologies—including different models, design components, analytical methods, and hypotheses—and selectively reporting only those that produce significant or otherwise favorable results. H. Bavli, Credibility in Empirical Legal Analysis, 87 Brook. L. Rev. 501, 509 (2022).

33.  A pernicious aspect of covert specification searching is that it masks from the reader (whether Judge, adversary party, journal editor or academic referee) conduct that bears importantly on the regression ultimately produced. The classic example of a simple hidden specification search is the following: “[Although] the probability of flipping a coin and obtaining heads in ten consecutive flips out of ten tries is almost zero. . . . if 15,000 individuals attempt this, it is virtually certain that one or more will succeed.” M. Klock, Finding Random Coincidences while Searching for the Holy Writ of Truth: Specification Searches in Law and Public Policy or Cum Hoc Ergo Propter Hoc, Wis. L. Rev. 1007, 1010 (2001). An experimenter who “searches” for, and reports only, the 1 out of 15,000 times the experiment generates ten consecutive heads, and who conceals the 14,999 times this result did not occur, is misrepresenting his or her work and the usefulness of the result.

34.  Dr. Johnson testified he never received Dr. Crawford's workpapers unearthed in discovery in the 2010-13 satellite proceeding on which the SDC relies for its specification search allegation (despite the production of those documents by the SDC to all counsel, including PTV's counsel, in this proceeding.).

35.  It is important to note here that the SDC is mischaracterizing Dr. Johnson's specific testimony. He clearly did not say the correlation was a mere coincidence or explainable as a data issue. Rather he claimed in his testimony that the increase in PTV shares was coincidental with and caused by the inputting of additional and correct data, and that it was the data that generated PTV's higher share. See 3/22/23 Tr. 738 (Johnson) (“ I completely refute . . . that it's a coincidence. The reason that this happened is . . . tied to specific data issues . . . [and] the data is what it is.”) (emphasis added).

36.  A JSC expert statistical witness, Mr. Harvey, likewise concluded that Dr. Johnson had engaged in a specification search. However, the JSC did not emphasize this point, maintaining instead that “it is unnecessary to conclude that Dr. Johnson intentionally searched for a specification favoring PTV in order to find his model untrustworthy [because] the selection of data inputs and specifications” was improperly undertaken. JSC PFF ¶¶ 195-196 (and record citations therein).

Program Suppliers' expert economic witness, Dr, Tyler, also concluded that the work by Dr. Johnson and/or his team “provides evidence that, rather than letting the facts of the industry guide the modeling decision, [they] tested many different models, and then sought to justify certain specifications with economic theory.” PS PFF ¶ 377 (and record citations therein). Further, Program Suppliers maintain that “[t]he evolution of Dr. Johnson's calculated shares for PTV over time provides evidence that data mining [ i.e., specification searching] and/or overfitting occurred.” Id. Further, Program Suppliers find it problematic that, in this context, “[o]ut of the many regression specifications that Dr. Johnson ran, he selected for his baseline model one in which the PTV share is substantially higher than the median results from the models considered . . . .” Id. at ¶¶ 377-378 (and record citations therein).

37.  The Judges also take note of Dr. Marx's awkward position as to this issue. As SDC notes, she is a partner at Bates White, an economic and econometric consulting firm (in addition to her position as an economics professor at Duke University's Fuqua School of Business). Dr. Crawford likewise is a partner at Bates White (as is another CTV testifying expert in this proceeding and in the 2010-13 proceeding, Dr. Bennett). Further, Dr. Crawford testified in the prior proceeding on behalf of CTV, whereas Dr. Marx is the economic expert now testifying on behalf of the same party, CTV.

38.  Courts have long been concerned with whether what appears facially to be procedural is in actuality outcome-determinative. See Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). The Judges in the present case expected the same concern from the economic experts in the context of their analysis.

39.  As the Judges noted in that prior proceeding:

`Degrees of freedom' are defined “[i]n multiple regression analysis, [as] the number of observations minus the number of estimated parameters.” [citation omitted] Accordingly, statisticians understand “degrees of freedom' to be measures of how much can be learned from a regression, with the quality of knowledge improved by increasing the number of observations, reducing the number of estimated parameters, or by some combination of both that serves to widen the difference between the number of observations and parameters. [citation omitted] . . . [A] `phantom degree of freedom' can be generated when the modeler reduces the number of parameters by his or her rejection of other models that would have added a greater number of parameters—nothing more has really been learned but the explicit number of degrees of freedom appears larger, as an artifact (a ` “phantom') arising from the econometrician's rejection of models containing additional parameters. [citation omitted].

2010-13 Determination at 3566 n.63.

40.  Although the following is a summary, with citations omitted, the Judges adopt in full herein their reasoning in Order 24.

41.  The record does not reflect whether PTV's counsel ever provided copies of these materials to Dr. Johnson.

42.  The SDC also convincingly explained that whatever it was that Dr. Crawford was doing, it did not qualify as a “sensitivity” test. Settling Devotional Claimants' Proposed Reply Findings of Fact and Conclusions of Law ¶ 2. The Judges agree. A sensitivity test is “[t]he process of checking whether the estimated effects and statistical significance of key explanatory variables are sensitive to inclusion of other explanatory variables, functional form, dropping of potential out-lying observations, or different modes of estimating.” 2010-13 Determination at 3562 n.48 (citation omitted). But the same authority quoted in note 34 situates the “sensitivity analysis” as occurring after the econometrician has estimated his or her original model, not during the specification process. Wooldridge, Introductory Economics 687 (3d ed. 2006). To engage in what would otherwise be a sensitivity analysis in order to search a model places the cart before the horse, and may be a telltale sign of “data mining,” i.e., specification searching. See Wooldridge, supra, at 688 (The “inclination . . . to try different models, different estimation techniques, or perhaps different subsets of data until the results correspond more closely to what was expected [is] data mining[which] violates the assumptions we have made in our econometric analysis.”).

43.  Whether those particular differentiations from the Crawford Model were appropriate is likewise discussed elsewhere in this determination.

44.  In Order 24, the Judges noted that, although they look to the Federal Rules of Civil Procedure for guidance, they are bound on this issue by 37 CFR 351.10 (e) , regarding the production of documents relating to an expert witness's methodology, and that this rule also applies to the production of documents in discovery pertaining to expert methodology.

45.  The Judges take particular note of the fact that an email that was withheld from Dr. Johnson as “consulting” team material contained “a link to CDC distant signals [with] the caveat: `. . . these data files are being shared for consulting purposes only and should not be shared with John'.”. Rubinfeld SWRT at 6. It is difficult to fathom why raw data regarding distant signals would be withheld from the testifying expert.

46.  Rather, the Judges perceive from the facts that PTV and its experts took a very aggressive litigation posture, one that SDC successfully challenged, leading to the issuance of Order 24.

47.  The Judges are less concerned with SDC's assertion that proof of PTV's specification searching is supported by evidence that PTV's goal was to maximize PTV's share. The Judges are not naïve, and they recognize that experts will work to produce the best results for the party on whose behalf they provide testimony. Rather, the Judges are concerned with whether the evidence suggests that experts may have engaged in any inappropriate or questionable acts in the course of attempting to maximize the return to the party on whose behalf they give testimony.

48.  The Judges define and discuss “multicast streams” infra.

49.  But note Dr. Marx's point that must-carry stations that were distantly retransmitted by CSOs paying only the minimum fee would not generate a CSO royalty obligation, mooting the need for a royalty indemnification payment. Marx WRT ¶ 79.

50.  It might be reasonable to assume that a consumer would prefer an automobile with these safety features over an automobile lacking them, or the protection of health insurance rather than the risk associated with its absence, but without a structure for monetizing such preferences, the measure is only ordinal in nature, rather than cardinal. PTV alludes to this problem when, as noted supra, it notes that these are items that purchasers “may” value. But that implies that they may not value them in a context where there is an associated out-of-pocket or opportunity cost.

51.  The definition of multicasting is not in dispute. Basically, it refers to “a type of national television service designed to be broadcast terrestrially . . . on their digital subchannels . . . by the conversion from analog to digital television broadcasting, which le[aves] room for additional services to be broadcast from an individual transmitter . . . .” Digital multicast television network, Wikipedia, https://en.wikipedia.org/​wiki/​Digital_​multicast_​television_​network (last visited Aug. 9, 2023). The exempt/non-exempt nomenclature is somewhat confusing; “exempt” means CSOs do not pay section 111 royalties, and “non-exempt” means CSOs shall pay section 111 royalties (unless, by agreement with the copyright owners, section 111 royalty payments are waived).

52.   See Order 41 Denying as Moot Public Television's Motion for Reconsideration of Order 33.

53.  Program Suppliers are essentially in agreement with CCG in this regard. See PS PFF ¶ 387 (citing Tyler WRT ¶ 71 for the assertion that “non-exempt signals are part of the question studied and properly included in the analysis.”).

54.  The fact that Charter changed some PTV multicast stations from exempt (non-royalty-bearing) to non-exempt (royalty-bearing) after acquiring certain CSOs is anecdotal evidence that suggests these PTV multicast stations were generating royalties, but anecdotes are not substitutes in this context for more comprehensive data. (And some of these royalty-bearing PTV stations may also have been retransmitted by CSOs with excess capacity, thereby not actually generating any revealed preference information for the retransmitting CSOs.)

55.  As explained infra, among the regression approaches, the Judges rely on the Tyler Model's allocation of shares based upon CSOs that actually paid the base fee (not the minimum fee). But although Dr. Bennett's testimony (Bennett WRT fig.52) provides evidence for a downward adjustment of PTV's share to reflect the Must Carry issue discussed supra, the Judges see no clear evidence in the record to identify how much of a downward adjustment should be made to the PTV share to reflect the Multicast and Duplicative Programming issues. However, because the PBS-NCTA agreement indicates that CSOs would carry up to three Multicast stations as Must Carry stations, i.e., without a net royalty obligation, the Judges find that their application of Dr. Bennett's downward adjustment for Must Carry stations essentially embodies any Multicast adjustment, including any duplicative programming within those Multicast channels.

56.  Dr, Marx was received by the Judges as an “expert economist and econometrician with experience in statistical methods and measurements.” 4/11/23 Tr. 4109 (Marx).

57.   See also Marx ACWDT ¶ 101 (“Bayesian regression is a well-accepted tool in economic and scientific research that is well-suited to situations in which the researcher has a `prior belief' about the distribution ( e.g., mean and variance) of parameters of interest and wishes to use additional data in order to update conclusions about the parameters.”).

58.  In her Bayesian model, Dr. Marx adopted Dr. Crawford's model that had removed simultaneous “duplicated minutes” ( i.e., minutes of distantly retransmitted programming that were also transmitted on local stations), opining that CSOs would not realize incremental value from offerings of duplicative programming. 4/11/23 Tr. 4213 (Marx). In this regard, Dr. Marx's approach deviated from the Judges' prior determination in which they found a problem with Dr. Crawford's duplicated minutes analysis and elected instead to rely upon his nonduplicated minutes analysis. See 2010-13 Determination at 3562. Dr. Marx's specific change in this regard does not materially affect the Judges' consideration of her Bayesian approach in this proceeding.

59.  In her rebuttal testimony, Dr. Marx coined the apt phrase “excess capacity CSO” as an identifier of a CSO that distantly retransmitted less than one Distant Signal Equivalent (DSE), had the capacity to distantly retransmit one or more additional distant signals without increasing its royalty obligation above the minimum fee, and yet chose not to make any such additional retransmissions. Marx WRT ¶¶ 6, 13. The Judges adopt this phrase throughout this Determination.

60.  The minimum fee issue is separately discussed elsewhere in this determination. It is referenced in this section discussing the experts' models to provide a more complete context.

61.  Dr. Marx testified that the other regression experts essentially agreed with her opinion that the Crawford-style fee- based regression would suffer from an absence of sufficient data on SG variations within a CSO. She identified such agreement in the testimonies of Drs. George, Johnson and Tyler by their relaxation of the number and types of “fixed effects” used by Dr. Crawford to isolate the correlation of category minutes and royalties which his regression seeks to identify. However, as discussed in more detail infra, Dr. Marx criticizes the removal of some or all of these “fixed effects” by these other experts as introducing “omitted variable bias” into their regressions, thus compromising their usefulness in this proceeding. See Marx WRT ¶¶ 14, 20 & 37; 4/11/23 Tr. 4179, 4181, 4255 (Marx) (removing “fixed effects” in order to introduce into the model different variations across CSOs and across time to address the problem of fewer subscriber groups is improper because it generates a new problem—the introduction of “omitted variable bias,” which metaphorically was adding “garbage” into their regressions). The Judges consider the alteration of “fixed effects” by these other experts, and the criticisms of that decision infra, in their consideration of those proffered regression models.

62.  In her Bayesian regression for 2014, Dr. Marx adjusted the valuation analysis for PTV by addressing certain alleged anomalies in the PTV minutes, including those arising from the presence of PTV “must carry” stations, the transition of PTV stations from exempt (no royalty paid) to non-exempt (royalty paid) and the indemnification of CSOs for royalties paid to transmit PTV signals. The figures reproduced in the text, supra, from Dr. Marx's WRT embody Dr. Marx's conclusions in these regards. The Judges consider these PTV-specific issues elsewhere in this Determination.

63.   See Bennett ACWDT figs.1 & 2.

64.  In the 2010-13 Determination, the Judges adopted Dr. Crawford's model that included duplicate minutes because the duplicated minutes calculation was more accurate than the unduplicated minutes calculation. See 2010-13 Determination at 3565. Dr. Marx calculates coefficients (and thus shares) under both scenarios, noting that there is minimal difference between the two approaches. Marx ACWDT ¶ 38.

65.  In the 2010-13 Determination, the Judges explained that the concept of “derived demand” was applicable to “[t]he demand for programming at each step in the [distribution] chain . . . all the way to the television viewer,” although, with regard to distant retransmissions of local stations, this derived demand is impacted by “the role of bundling and `niche' programming” that can affect “the premium that certain categories of programming fetch in an open market” that would impact “value among disparate program categories” in these allocation proceedings. 2010-13 Determination at 3600.

66.  Dr. Marx's “directional” analysis is akin to the testimony of television industry witnesses discussed infra. In fact, Dr. Marx opines that her “directional” analysis is consistent with the testimonies of five industry witnesses—Mr. Singer, Mr. Warren, Ms. Witmer, Mr. Hartman and Ms. Alany. 4/11/23 Tr. 4234 (Marx).

67.  Dr. Marx relies on local viewing data generated by the Nielsen audience research firm. The probative value, vel non, of viewership data, and local viewership in particular, as a proxy for changes in the relative marketplace value of distantly retransmitted local stations, is discussed infra.

68.  Dr. Marx focuses on these three categories because her data source only contains one Canadian station, and because the small size of the SDC category renders it less reliable and impactful. She also testifies that “sports content is more challenging to evaluate with this [Nielsen] data due to geographic and temporal variation in ratings driven by factors unrelated to the growth of streaming,” and that she understood “streaming of [JSC] content was limited during the 2014-2017 period.” Marx ACWDT ¶ 84 n.66.

69.  Dr. Erdem was received as an expert in the fields of economics, econometrics, and data analysis. 4/5/23 Tr. 3395 (Erdem).

70.  The SDC's other econometric expert, Dr. Rubinfeld, criticizes Dr. Marx's use of a fee-based regression in her Bayesian approach for the same reasons he criticizes fee-based regressions writ large, and those criticisms are addressed elsewhere in this determination. But the Judges note here that Dr. Rubinfeld found Dr. Marx's “directional” analysis for 2015-2017, relating to the growth of streaming as impacting relative share values, as proof that “the regression specification put forth by Dr. Crawford was not robust or informative [because] the model does not adequately characterize the changing U.S. video distribution marketplace.” Rubinfeld WRT ¶ 95.

71.  Dr. Tyler was received as an expert in the fields of economics, data analysis, and econometrics. 4/19/23 Tr. 5428 (Tyler).

72.  To be clear, Dr. Tyler does not criticize Dr. Marx's application of a Bayesian approach to the 2014 allocation issue.

73.  Dr. Tyler's criticisms of Dr. Crawford's work are set forth at Tyler ACWDT ¶¶ 106-127 tech. app. A. The Judges discuss elsewhere in this determination the impact of the criticism of Dr. Crawford's work on the fee-based regressions proffered in this proceeding.

74.  The Judges received Dr. Gray as an expert in the fields of economics, statistics, and econometrics. 4/13/23 Tr. 4850 (Gray).

75.  The Judges received Dr. Johnson as an expert in the fields of economics and econometrics. 3/21/23 Tr. 362 (Johnson).

76.  The Judges received Dr. George as an expert in the fields of economics, with experience in econometrics, media markets, and industrial organization. 4/18/23 Tr. 5111 (George).

77.  Dr. George acknowledges that relaxing Dr. Crawford's “fixed effects” in this manner risks the introduction of bias from omitted variables created by industry and system changes over time left unobserved by the regression, but she believes this trade-off is acceptable. George WRT at 18. By contrast, Dr. Marx maintains that allowing for the introduction of potential “omitted variable bias” would invite application of the metaphor “garbage in, garbage out.”

78.  None of the JSC witnesses levied substantive criticisms of Dr. Marx's 2014 Bayesian regression or her 2015-2017 “directional” analysis. This is perhaps unsurprising, because a JSC expert witness, Dr. Majure, does not take issue with the results of Dr. Marx's 2014 Bayesian regression or with her “directional” analysis.

79.  The Judges also note that Dr. George herself pooled data from 2014 with the 2015-2017 data, where the data distinction was dramatic, having arisen from the WGNA conversion.

80.  The Judges understand that Dr. Tyler found it necessary to include this qualifier because in a majority of instances in the 2015-2017 period, CSOs paid the minimum fee rather than the “base fee” calculated on a subscriber group basis. See Tyler ACWDT ¶ 67 (tacitly acknowledging that where the minimum fee is binding, a fee-based regression does not provide the CSOs' actualized revealed preferences, but rather only “ insight into how the CSOs would actually value these program categories in an unregulated market.”).

In this regard, the Judges discuss elsewhere in this determination the distinction in evidentiary value between instances where the CSO actually pays the calculated subscriber group base fee, and instances where the CSO actually pays the minimum fee (not the calculated subscriber group base fee).

81.  The word “actual” in this context is rather Orwellian. For the 2015-2017 period, a substantial majority of the CSOs in which the subscriber groups are situated “actually” paid the minimum fee. A Base Fee was “actually” calculated, as required by the regulations, but not “actually” paid, because the Minimum Fee bound. Dr. Tyler's misleading semantic use of the adjective “actual” does not assist the Judges in deciding whether any or all of the Base Fee calculations have objective evidentiary weight.

82.  The use of weights in hedonic regressions has support in the economic literature. See Tyler ACWDT ¶ 88 n.72 (citing sources). (Dr. Tyler also includes a sensitivity analysis in which he shows the results of his model without weights Tyler ACWDT § VI.G. (tech. app. C)).

83.  Dr. Erdem opined that the inclusion of fixed effects obscured the more impactful predictive effects of other independent variables on the royalty-based related dependent variable.

84.  The experts' treatment of issues relating specifically to the Canada Zone is set forth infra in this determination.

85.  This is a reprise of the overarching criticism that Dr. Erdem made in the 2010-13 Determination, which was rejected by the Judges.

86.  More technically, Dr. Rubinfeld (like Dr. Erdem) finds the “hammer-shaped pattern of residuals violates the classical zero conditional mean of the disturbance assumption for the OLS estimator to be unbiased.” Erdem WRT ¶ 93. This means that the residuals exhibit non-random data points, whereas a well-specified regression would contain have random error terms. In (perhaps) somewhat less technical terms, Dr. Rubinfeld is agreeing with Dr. Tyler that the unexplained portions of the Crawford Model are actually correlated with one or more omitted independent variables.

87.  Another SDC expert witness, Mr. John Sanders, likewise does not “endorse” Dr. Tyler's modeling, but relies on Dr. Tyler's critiques to discredit the fee-based regressions proffered by other experts. See, e.g., Sanders WRT ¶ 3 nn.4, 9, & 20. Mr. Sanders also notes the divergence of Dr. Tyler's estimated share for PTV and, respectively, SDC content, from the results of other fee-based regressions as, in his opinion, indicative of the unreliability of such regressions in these proceedings. Sanders WRT ¶¶ 11, 18.

88.  Although Dr. Bennett does not state here why the sample is so truncated, the Judges understand this point to be based on the growing number of CSOs, without any distant retransmissions and thus no subscriber groups, which Dr. Bennett indicates increased over the 2015-17 period.

89.  To be clear, figure 6 generated by Mr. Harvey shows that the share allocations arising from the proffered Tyler Model were neither higher than all the Program Supplier shares nor lower than all the JSC shares generated by the sensitivity tests. Moreover, Mr. Harvey does not state why the sensitivity test results should have led Dr. Tyler to alter his share allocations, nor does Mr. Harvey state why Dr. Tyler should have abandoned the Tyler Model merely because the shares differed in the sensitivity test, albeit not in a manner that even Mr. Harvey avers had called into question the model's robustness.

90.  The Judges' analysis and findings in this section are separate and apart from their analysis and findings on the specific issues considered in separate sections of this determination.

91.  Dr. Tyler provides an empirical example of the varying subscription rates among a CSO's subscribers. Tyler WRT ¶ 44.

92.  Dr. George was received as expert witness in the “field of economics, with experience in econometrics, media markets, and industrial organization.” 4/18/23 Tr. 5111 (George).

93.  The Judges must emphasize here the fact that the SDC provided to CCG (and all of the other participants), in voluntary discovery in the present proceeding, promptly after the filing of written direct statements, copies of materials from the 2010-13 satellite allocation proceeding that at the least suggested Dr. Crawford may have engaged in inappropriate specification searching in the development of his regression framework. However, neither Dr. George nor any other CCG witness specifically addressed in written rebuttal testimony the discovery from the 2010-13 satellite proceeding suggesting Dr. Crawford's potential specification searching. (However, Dr. George more generally explained how she was able to evaluate Dr. Crawford's regression work, even though she did not address the discovery suggestive of Dr. Crawford's specification searching and of dissembling in his testimony before the Judges in the 2010-13 proceeding. See George WRT at 50-54.)

94.  Technically, the “natural log” (shorthand for logarithm) is “[a] mathematical function defined for a positive argument; its slope is always positive but with a diminishing slope tending to zero,” and it “is the inverse of the exponential function X = ln(ex).” James H. Stock & Mark W. Watson, Introduction to Econometrics 821 (3d ed. 2015). Practically, for purposes of applied econometrics, using the logarithmic functional form, which shows the percentage changes in the variables, may be more practical.

95.  The Judges understand that the usefulness of this greater precision is that the increased types of fixed effects limit the variation in the regression to variation caused by the difference in programming category minutes, whereas Dr. George prefers to obtain additional data points in order to observe more variation, notwithstanding that relaxing fixed effects in these manners opens the door for bias, in the form of variations caused by unobserved variables otherwise captured by the fixed effects. The Judges discuss this tradeoff in greater detail elsewhere in this determination.

96.  Another SDC Expert, Mr. Sanders, essentially echoes and refers to the critiques by Drs. Erdem and Rubinfeld. But Mr. Sanders also notes that Dr. George's approach is remarkable when compared with other fee-based regressions proffered in this proceeding, in that “the various regressions yield significantly divergent results which raise[] the questions not just of which ones are wrong but whether any of them could be right,” and he particularly notes the divergence among the SDC share across the fee-based regressions. Sanders WRT ¶ 18.

97.  The criticism of the George WDT by the two other JSC expert witnesses, Drs. Majure and Asker, relate to broader themes common to the fee-based regression, discussed separately in this determination. Mr. Harvey also raises the broad-based criticisms that are discussed separately herein.

98.  For a definition of “multicollinearity,” see 2010-13 Determination at 3562 n.47.

99.  Mr. Harvey also administered two other sensitivities to address this multicollinearity: (1) adding a control variable for non-compensable minutes to the model and (2) including compensable claimant minutes in the regression and dropping the number of permitted and distant stations. In both tests, he reports that the multicollinearity fades, and the share allocations also change, with JSC shares again increasing compared to the JSC shares in the George Model. Harvey WRT ¶¶ 185-187.

100.  The Judges' analysis and findings in this section are separate and apart from their analysis and findings on the specific issues considered in separate sections of this determination.

101.  Dr. Johnson was received as an expert in “economics and econometrics.” 3/21/23 Tr. 362 (Johnson).

102.  However, Dr. Johnson testified that he did not review—or even have access to—Dr. Crawford's underlying regression workpapers from the 2010-13 satellite allocation proceeding (regarding the same regression model as in the 2010-13 cable allocation proceeding), even though PTV's counsel had received those workpapers in voluntary disclosures made by the SDC. 3/21/23 Tr. 340-41 (Johnson). (The hearing record does not indicate whether or not PTV's counsel provided those workpapers to Dr. Johnson.). See also 3/21/23 Tr. 617 (Johnson) (Dr. Johnson acknowledging that he also never saw designated testimony filed in the present proceeding by the SDC comprising their experts' testimony in the satellite proceeding, with Dr. Crawford's documents attached).

103.  Note that the Johnson Model includes far fewer control variables than the George Model. See text following this footnote.

104.  To be clear, in the 2010-13 proceeding, the Judges found that Dr. Crawford's use of these fixed effects and other controls did not “diminish the Judges' reliance on Professor Crawford's regression analysis.” More particularly, the Judges explained that Dr. Crawford's “use of “system-accounting period fixed effects” was the “result of a tradeoff,” necessitated by Dr. Crawford's use of a “subscriber group analysis [which] reduced the number of observations in [Dr.] Crawford's data set.” Although this decision could result in an “overfitting” of the model (see 2010-13 Determination at 3565 defining “overfitting”), his use of data from the entire population of Form 3 CSOs provided him with a wealth of data that mitigated a potential problem with regard to potential overfitting arising from sampling that provided too little data relative to the number of parameters.” 2010-13 Determination at 3566-67 & n.65. The Judges discuss elsewhere in this determination the impact of the decision by Dr. Johnson (and Dr. George) to make a different trade-off in their regression models through their handling of this specific fixed effects issue, particularly in the context of the purpose of these fee-based regressions as “explanatory” of an isolated “effect,” rather than “predictive” of the total royalties paid.

105.  That is, if the lagged variable control was included despite the unavailability of data for the second accounting period of 2013, the model would not have generated results in a consistent manner for the first accounting period of 2014, and one accounting period reflects 1/8 of the eight six-month accounting periods in the four-year 2014-2017 period.

106.  Dr. Johnson also discarded controls from the Crawford Model “for whether a CSO lies in the area where it is permissible to carry Canadian signals (“Canada zone”).” The Judges consider the Canada zone issues separately, infra.

107.  This “control group” is alternatively denominated by the experts in this proceeding as a “numeraire,” a “reference group,” and a “benchmark.” The Judges discuss the use of this device to stablish coefficients in their Analysis, infra.

108.  Dr. Johnson also asserted that he performed two “other sensitivities,” on missing CCG programming data and program descriptions that were ambiguous as to the claimant category to which they belonged, respectively. Johnson WDT ¶ 49 n.64 & ¶ 50 n.68. But although he tried to categorize these tests in this manner, by his own acknowledgement, the “purpose of those tests [was to] assess[ ] the effects of different approaches to treating the imperfections in the available data.” Johnson WDT ¶ 68 n.102.

109.  Dr. Johnson does not report share allocations for minimum-fee-only CSOs in his WDT. However, in response to criticism of his direct testimony, Dr. Johnson included in his WRT figures showing a close relationship between: (a) the allocation shares based on the subscriber group Base Fees calculated (but not paid) by these minimum-fee-only CSOs on an annualized (unpooled) basis for 2014-2017; and (b) the allocation shares in his proffered baseline model (presented on an unpooled basis) for all CSOs considered in his analysis. Johnson WRT app. D, figs.D-6 and D-7.

110.  The coefficient for JSC content in the 2015-2017 period remained high, but was not statistically significant. Johnson WDT ¶ 70 & fig.14.

111.  An overarching procedural critique of the manner in which Dr. Johnson generated his model—alleging that he engaged in improper econometric activities, in the form of what is known as “specification searching” and George WRT at its related questionable activities, “data mining” and “p-hacking”, is separately discussed elsewhere in this determination.

112.  For example, Dr. George notes that FCC data indicates that cable subscription prices (and thus royalties) are lower in less wealthy markets. Likewise, Dr. Crawford showed in 2010-2013 that “top MSO's earned higher revenues per subscriber than other systems, suggesting that large MSO's are able to charge higher prices for cable packages.” George WRT at 28.

113.  In addition to the specific criticisms by Dr. Erdem of the particulars of the Johnson Model, Dr. Erdem criticizes Dr. Johnson for engaging in the improper process of specification searching (also described as “data mining” and “p-hacking”). The Judges consider that issue separately in this Determination.

114.  The Judges' analysis and findings in this section are separate and apart from their analysis and findings on the specific issues considered in separate sections of this determination.

115.  The irony of this criticism is that Dr. Johnson relied on the Crawford Model as a “starting point” for his modeling, deemphasizing the need to develop an independent economic theory, and ignored the potential specification searching in Dr. Crawford's modeling, but removed the feature of the Crawford Model (“fixed effects”) that was the positive basis for the Judges' elevation of the regression approach to a position of evidentiary primacy in the 2010-13 Determination.

116.  In the 2010-13 Determination by contrast, as Dr. Marx has explained, the Judges found there was a sufficiently high percentage of CSOs paying above the minimum fee and thus making decisions with an economic (royalty) impact that served as a strong evidentiary basis for allocating shares.

117.  One might fairly ask: Why rely on Dr. Crawford's specification decisions now, after raising the concerns about his potential specification searching? The answer is that Dr. Crawford's detailed and persuasive explanation for adding this additional control variable in the course of specifying his model was a reason why the Judges did not agree with the SDC in the 2010-13 proceeding that it was evidence of inappropriate specification searching. The troublesome facts were generated subsequently, in the discovery phase of the companion 2010-13 satellite proceeding.

118.  Nothing in the prior determinations precludes the Judges from considering what appear to be new arguments by Dr. Erdem, because the Judges' (and their predecessors') reliance on fee-based regressions constitutes a factual finding, not a legal conclusion, and thus there is no “precedent” that precludes a new line of factual expert argument. See 2010-13 Determination at 3557 & n.26 (distinguishing “legal precedent” from the oxymoronic concept of a “factual precedent.” See also 17 U.S.C. 803(a) (directing the Judges to act on the basis of both: (1) “a written record” which includes record evidence; and (2) prior “determinations and interpretations” of identified judicial and administrative entities.).

However, factual matters that the Judges decided in the 2010-13 Determination need not be fully revisited in this proceeding, in the absence of any new persuasive argument to the contrary. Such factual matters include: (1) the rejected sweeping claim that fee-based regressions do not embody economic principles such as profit maximization ( see 2010-13 Determination at 3560), (2) the rejected characterization of fee-based regressions as merely “volume analyses” ( see id. at 3560-61), (3) the rejected argument that it was wrong for fee-based regressions to ignore distant local signals that CSOs chose not to carry ( see id. at 3563), and (4) the rejected argument that the fee-based regressions used the wrong form for the control variable for number of subscribers ( see id. at 3563-64).

119.  It is not lost on the Judges that Dr. Erdem uses the phrase “fair market value” here, rather than the actual standard of “relative marketplace value.” In the 2010-13 Determination, the Judges explicitly distinguished the two concepts. 2010-13 Determination at 3555 n.17 (“Because the royalties at issue in this proceeding are regulated and not derived from any actual market transactions, they do not correspond with absolute dollar royalties that would be generated in a market and thus would not reflect absolute “fair market value.”) See also the Judges' discussion of the “relative marketplace value” standard, supra.

120.  Elsewhere in his testimony, Dr. Erdem offers a more sinister conclusion from his “eight-model” analysis: “[A]s I will show, it is precisely these modeling choices that allow the analyst to select a model based on expected or desired results.” Erdem WRT ¶ 51. Thus, his argument is that the very structure of the fee-based regressions provides all the expert witnesses, not just the two he singled out, Drs. Crawford and Johnson, with the opportunity to engage in specification searches.

121.  The Judges discuss elsewhere in this determination the concept and label of a hedonic regression and their significance in this proceeding.

122.  Dr. Erdem states that to test the hypothesis of a positive correlation, on average, between royalties and minutes, he would need to “control[] for appropriate variables.” Erdem WRT ¶ 52. However, there is no sufficient indication in the record that Dr. Erdem applied control variables, or any other controls through fixed effects with regard to his Model 1.

123.  Again, Dr. Erdem does not indicate whether he applied control variables, and, if he did, what they were.

124.  The Judges note Dr. Tyler's testimony, discussed elsewhere in this determination, that there is no data identifying the number of subscribers in a subscriber group, in the course of his positive differentiation of the Tyler Model from the other regression models (which unlike the Tyler Model, must estimate the number of such subscribers in an inaccurate manner). It is not apparent from the record that Dr. Erdem had estimated the number of such subscribers in an accurate manner.

125.  Note that when discussing Model 7 considered infra, Dr. Erdem admits that “inclusion of a variable for subscribers . . . could be justified as a volume-based control.” Erdem WRT ¶ 69.

126.  To be clear, Dr. Erdem does not lodge this criticism at Dr. Tyler's model.

127.  CCG and Dr. George, among the other regression experts and parties, were the ones who responded to Dr. Erdem's testimony, apparently because Dr. Erdem's pedagogical modeling was based on “Dr. George's methodology and production.” Erdem WRT ¶ 51 n.23.

128.  This high-level “General Criticism” also responds specifically to Dr. Erdem's Model 4 discussed supra, regarding “geographic” effects, which are “key” elements of Dr. Erdem's general critique of fee-based regressions. See 4/6/23 Tr. 3643-44 (Rubinfeld) (identifying “changes in the number or size of subscriber groups” as a “key issue.”).

129.  All the economic experts in this proceeding agree that the initial step in building a regression model is to identify “a theory that describes the variables to be included in the study.” American Bar Association, Econometrics, Legal, Practical and Technical Issues 8 (1st ed. 2005) (“ ABA Econometrics ”). See also Stock & Watson, supra note 92, at 282 (“ First, a core or base set of regressors should be chosen,” which includes the “variables of primary interest” and the “control variables” suggested by, inter alia, “economic theory.”) (emphasis added); Kennedy, supra, at 391 (identifying as “Rule 1” of applied econometrics: “Use common sense and economic theory. ”) (emphasis added).” Perhaps even more pertinent here is Professor Kennedy's “Rule 2,” which states that an econometrician must avoid attempting to “produce[ ] the right answer to the wrong question.” Id. at 391.

130.  CCG misidentifies this point as within Dr. Erdem's Model 4. CCG RPFF ¶ 24.

131.  As noted supra regarding CCG's and Dr. George's “General Criticisms” of Dr. Erdem's pedagogical modeling, they dispute his assertion in Model 4 that fee-based regressions do not reflect the category-by-category preferences of CSOs as revealed by the minutes of program categories retransmitted.

132.  Moreover, Dr. George pointed out that, at first, Dr. Tyler made the same mistake as Dr. Erdem, neglecting to include or address this reference category when critiquing the Crawford Model. When he realized his error, Dr. Tyler withdrew his attempted replication of the Crawford Model. See George WRT at 31-32; see also Bennett WRT ¶¶ 127-134.

133.  Dr. George had the opportunity to express this criticism in her WRT because Dr. Erdem had made this particular criticism in his amended direct testimony (which he later incorporated it into his eight-model exercise.)

134.   See, e.g., 4/11/23 Tr. 4141-42 (Marx) (referring to “the Big 3 network programming”—which is already available on local affiliates in the CSO system and therefore has the lowest coefficient—as the “numeraire” that allows for the six category values coefficient values to be positive in relationship to those “numeraire”/”reference category” minutes.)

135.  The Judges find no merit in the allegation that Mr. Harvey may have “cherry-picked” which “validity tests” to produce. The issue here is the importance, vel non, of his validity tests. In that regard, the Judges find that the tests he discussed in his WRT, including but not limited to the ones highlighted here, all suffer from the problems inherent in de-composing the regression results. Moreover, because Mr. Harvey is a JSC witness, it was incumbent upon JSC to bear the burdens of production and persuasion regarding the impact of these de-composed sub-categories on the regression results, burdens which they have not satisfied.

136.  For example, consider the grade point average (GPA) of a college student for a semester, where the student received 3 As in English Literature, World History, and Economics, and one C in biology. Assuming an A = 4.0 points and a C = 2.0 points, the student has a GPA of 3.5. This is the relevant data point if one wants to know generally whether the student is performing well. But if the question is whether the student is showing an aptitude to perform well in medical school, the de-composition is more appropriate, because the 2.0 in biology is the more relevant data point. Here, there is no reason why the paid programming or the NFL data points should be separated out, when the purpose of the regression is to obtain the average.

137.  It appears that there would be no change. A simple thought experiment is instructive. Assume the Program Suppliers category consists of two types of programs: (1) situation comedies and (2) paid programming. For simplicity, assume equal subscriber minutes for both categories and that each situation comedy has the same value to a CSO as any other situation comedy, and each Paid Programming segment has the same value as another such segment to a CSO. Also assume a reality, such as Mr. Harvey has not unreasonably posited, that all paid programming has zero value to a CSO.

Because the regression is constructed to correlate royalties with minutes of programming, none of the minutes attributable to paid programming would correlate with royalties because it is assumed CSOs do not value paid programming. So, all the royalties attributable to Program Suppliers would have been generated by the situation comedies. However, the total subscriber minutes would include both situation comedy and paid programming minutes, reducing the per minute coefficient value (and diluting (by 50%) the value generated by the situation comedies).

Consider some hypothetical numbers: Situation comedies and paid programming each accounted for 262,800 minutes (50% of the 525,600 minutes in a year). The regression, de-composed, gives situation comedies, hypothetically, a .0005 coefficient. But paid programming gets a zero coefficient. The average coefficient across both categories is .00025 which, when multiplied by the number of annual programming minutes (as the regressions do) of 525,600, yields 131.4, and that is the figure that would be compared to the figure similarly computed for the other claimant categories.

What if we excluded paid programming from the regression? There would be 262,800 minutes of situation comedy programming, with a coefficient value of .0005, as assumed. What would be the figure to be used for allocation purposes? It would be 262,800 × .0005, which also equals 131.4. Thus, there is no reason to assume zero-value paid programming is inflating the value of the category in which it is situated if the validity/reality assumption of zero value is correct. (Economists will recognize this result as analogous to the point made by Nobel laureate George Stigler in his explanation of block-booking of movies by a studio to a theatre. See G. Stigler, United States v. Loew's Inc.: A Note on Block-Booking, 1963 Sup. Ct. Rev. 152 (1963)).

138.  If paid programming indeed contributes little or nothing in royalties, the Program Suppliers' representative may address that in the distribution (Phase II) process, but that is of no moment in this proceeding.

139.  For an overview of the general concept of regressions, see 2010-13 Determination at 3556.

140.  The Judges use these monikers interchangeably in this determination.

141.  By contrast, the survey approach, as in the Bortz Survey proffered in this proceeding, asked each CSO-employed survey respondent, for a given year: “What percentage, if any, of [a] fixed dollar amount would your system have spent for each category or programming?” Bortz Survey, app. B, attached to Trautman WDT (emphasis added).

142.  Typically, the dependent variable has been a functional form of royalties, see 2010-13 Determination at 3557 n.27, but in this proceeding, Dr. Tyler specifies a different dependent variable, the SGRP.

143.  An “independent variable” serves to explain the dependent variable and is therefore also described as an “explanatory” variable. 2010-13 Determination at 3567.

144.  Multiple regression analysis “is the technique used in most econometric studies, because it is well suited to the analysis of diverse data necessary to evaluate competing theories about the relationships that may exist among a number of explanatory facts.” 2010-13 Determination at 3556 (citing ABA Econometrics, supra note 127, at 4).

145.  Dr. Marx utilized a Bayesian regression (described in detail infra ) for 2014 that builds upon the multiple regression work done by Dr. Crawford for 2013.

146.  For the definition of a “control variable” see 2010-13 Determination at 3558 n.33.

147.  For the definition of “fixed effects,” see 2010-13 Determination at 3563 n.52. Graphically, the inclusion of “fixed effects” generates different intercepts, such that “a” in the example supra would have a different value for each “fixed effect.” (Econometricians sometimes describe “fixed effects” as a type of “control variable,” but they are more often specifically characterized as “indicator” or “dummy” variables. See 2010-13 Determination at 3562 n.45.

148.  “MSO” is an acronym for a “multi-system operator,” for example Verizon, 3/21/23 Tr. 347 (Johnson), and refers to “an operator of multiple cable or direct-broadcast satellite television systems [and is] usually reserved for companies that own multiple cable systems, such as Altice USA, Charter Communications, Comcast and Cox Communications . . . .” List of Multiple-System Operators, Wikipedia, https://en.wikipedia.org/​wiki/​List_​of_​multiple-system operators (last visited Aug. 10, 2023).

149.  The WGNA conversion also (1) substantially reduced the number of CSOs paying the base fee (and concomitantly increased the converse, the number of CSOs paying only the minimum fee) and (2) drastically reduced the number of JSC subscriber-minutes distantly retransmitted.

150.  This bias is particularly pertinent vis-à-vis the cleave between 2014 and the 2015-2017 period, given the WGNA conversion that shook the distantly retransmitted sector. Moreover, Dr. George (like Dr. Johnson) “pooled” her data and applied it to generate one set of coefficients spanning the entire four-year (2014-17) period. By relaxing the fixed effects to obscure the impact of changes over time, the George Model failed to appropriately address the WGNA-conversion effect.

151.  Critics of the Tyler Model maintain that by avoiding the fixed effects problem in this manner, the Tyler Model throws out the baby with the bathwater, in that it fails to correlate the royalties paid with the discrete categories of program minutes, which is the entire point of the exercise. That is, the Tyler Model allegedly fails to uncover the variation in royalties associated with different categories of programming minutes. (And, as some econometric critics of the Tyler Model have testified, it merely “reproduces the statutory formula.”). As explained infra, the Tyler Model, like the other regression approaches, multiplies its derived coefficients by the number of program minutes associated with each of the six program categories, generating allocation shares on a per-program category basis.

152.  The Judges discuss the minimum fee issues separately and in depth elsewhere in this determination.

153.  This point also applies to CSOs that distantly retransmitted some local stations, but had excess capacity, i.e., the capacity to distantly retransmit more of these stations and still not pay more than the minimum fee.

154.  Ms. Hamilton's point would tend to explain more than why some CSOs do not retransmit any signals. It may explain, for example, why Bortz Survey respondents have a myriad of job titles, and why the respondents are not consistently the same from year-to-year ( i.e., that no one is really dedicated to this function). Her point would also seem to explain why the CSO decisions from 2010-13 and from 2014 were so consistent: because concomitant with Ms. Hamilton's de minimis argument is her point that the CSOs focused on preserving existing subscribers whose subscription decisions might turn on the continued presence of niche programming from distantly retransmitted stations. Indeed, Ms. Hamilton seems to have been prescient: After 2014, the abandonment of all distant retransmissions by CSOs that had only distantly retransmitted WGNA is consistent with her emphasis on legacy carriage. (That is, viewers who had valued WGNA enough to subscribe to a CSO on that basis were no longer legacy viewers who could be retained once WGNA converted.)

The Judges are also struck by the absence of evidence that would be compelling, to wit, the absence of evidence that any CSO has marketed its service to any subscribers who might be induced to remain or become subscribers based on the program offerings by out-of-market stations they distantly retransmit. The Judges decline to take administrative notice that CSOs (or their subscribers) actually contemplate these offerings when considering subscription decisions; in fact, the Judges' own “reality filter” would suggest that the opposite presumption would be more realistic.

155.  It is not entirely correct. As noted by Dr. Tyler, discussed infra, the calculated-but-unpaid base fees of CSOs that ultimately pay the minimum fee would have some probative weight as those base fees approach the minimum fee, given the uncertainty, ex ante royalty payment, as to whether the base fee or the minimum fee would ultimately bind. However, the record does not provide the Judges with disaggregated data sufficient to analyze the minimum-fee-paying CSOs on this basis.

156.  These non-royalty costs include, but are not necessarily limited to, (1) the physical cost of retransmittal and (2) the transaction costs and opportunity costs associated with expending effort making retransmittal choices regarding distant local stations that had de minimis value (the choices, if not the stations and programming themselves) relative to the other decision-making undertaken by CSOs.

157.  That is, a zero value for all retransmitted programming is invariant and thus uninformative of relative value, and an absence of a revealed value fails to provide absolute value as well as relative value.

158.  Dr. Marx noted that the 52.5% of CSOs not covered in the Crawford Model included many that had only one subscriber group and would have been excluded from Dr. Crawford's regression anyway, so 80% of all the CSOs eligible for inclusion in the Crawford Model (and their programming and royalty data) were in the regression. There are two problems with this point. First, because only 80-85% of the CSOs were covered, even then the evidentiary weight of the decision-making of those CSOs should have been discounted proportionately, if proportionality is relevant. Indeed, in this proceeding, Dr. Marx testified that, in her opinion, whether to consider the revealed preferences of some CSOs should be a matter of “degree,” which is distinct from treating some proportion as a tipping point sufficient to be used en toto. Second, the reason why “only” 47.5% of the CSOs were included in the Crawford Model is not really relevant to the question of why this minority cohort should generate the entirety of revealed preference value for regression purposes.

159.  Dr. Marx also equates a CSO paying above the minimum fee with a CSO that “pays the minimum fee with no capacity for carrying additional signals.” Marx WRT ¶ 64. The Judges disagree. Such a minimum-fee-paying CSO is not revealing a preference in the same manner as a CSO paying above the minimum fee, but rather is taking full advantage of the zero-marginal-royalty cost feature of the minimum fee obligation. The Judges find it more appropriate to treat such minimum-fee/no-excess-capacity CSOs in the same manner as an excess-capacity CSO because the actual marginal cost of their respective retransmittal preferences is zero.

160.  Even information from data that includes CSOs paying only the minimum fee has an evidentiary purpose, as noted infr a regarding an adjustment to the allocations based on the Tyler Model.

161.  As noted supra, the Judges will discuss infra the evidentiary weights they apply, in combination with the evidentiary weights they give to all of the probative evidence.

162.  The Judges also find it telling that there is no evidence in this proceeding, nor apparently in any other allocation proceeding, that any CSO has solicited subscriptions by touting its distantly retransmitted lineup. That this dog has not barked speaks loudly as to the de minimis impact of the distant retransmission market. Also absent from the record is any evidence that there is a derived-demand effect at play. That is, there is no evidence that consumers make subscription decisions based on the programming content of distant retransmissions. In this regard, a corollary to the need for identifying an economic theory from the record evidence to guide this Determination is the concomitant need for a “reality filter,” by which the Judges can address the reality that the market in question is relatively miniscule (although substantial royalty dollars are most certainly at stake!).

163.  The loss of WGNA should be contrasted with the loss years earlier of TBS, another sports-based superstation that had been distantly retransmitted. That loss did not eliminate all such sports-based-superstation retransmittals, because WGNA remained available. But after WGNA transformed itself into a cable station, there was no other sports-based superstation to substitute in order to satisfy legacy viewers of such programming. (Also, recall that the JSC is simply a representative of the major professional sports leagues and the NCAA, and the record does not reflect that they suffered any economic loss because of the reduction of subscriber minutes distantly retransmitted. Indeed, the Judges take administrative notice that their games have been aired on ESPN and other cable stations, national networks, and regional sports networks. The Judges decline to assume that these leagues and associations voluntarily abandoned local broadcasting and thereby deprived themselves of profits, but rather they assume these sports leagues and associations moved to these more lucrative distribution methods.)

164.  The Judges examined two of the expert witnesses at the hearing regarding the concept of the “budget line” as it relates to the estimation of section 111 royalties. See 3/23/23 Tr. 1080-86 (PTV's Johnson); 4/3/23 Tr. 2671-73 (JSC's Majure). Dr. Johnson found the concept applicable to the regressions at issue, but Dr. Majure disagreed.

165.  Dr. Bennett also accounted for the fact that the George Model “assigns too much weight to the minutes within the Canada Zone . . . because [the George Model] bases [its] weights on the minutes within [its] non-representative regression sample (which is over-representative of the Canada Zone) instead of on the contribution that each zone makes to the aggregate royalty pool.” Bennett WRT ¶ 54. See also id. ¶ 50 & fig.17.

166.  The Judges note CCG's argument that in prior proceedings, including one applying the fee-generation approach, the Judges and their predecessors did not make this geographic distinction. See CCG PFF ¶ 567-568 (and cases cited therein). But those cases either did not involve regression analysis or did not rely on the regression approach (Dr. Rosston's model) as anything other than corroboration. In the regression context, the Judges find it too speculative to assign value by correlating royalties to distant minutes that were never retransmitted. Moreover, although the Tyler Model, on which the Judges place the most evidentiary weight among the regression models, resembles a fee-generation approach, it is not a fee-generation approach, as discussed supra. As the Judges have also noted supra, a benefit of the Tyler Model is that it better looks at the actual nature of the market and uses the evidence available over the years in question. To allow for value to be estimated by consideration of hypothetical programming retransmission outside of the Canada Zone would be inconsistent with this “real-world” rationale for crediting the Tyler Model. Additionally, because the regression approach, unlike the constant sum survey approach, is based on what CSOs actually retransmitted, in order to identify their market-based revealed preferences from those actual decisions, a grafting of the hypothetical retransmission of Canadian signals onto that approach appears inconsistent to the Judges. However, the Judges emphasize that these critiques apply only to the regression models of relative marketplace value, and are not intended to address any other adjustments that have been proffered in connection with the Bortz Survey, or with any other evidence, in this proceeding.

167.  The Judges also considered variations proffered by Drs. Johnson and George on their preferred models in their direct and rebuttal testimonies. Although some of those iterations mitigated certain problems in their models, none of them was sufficient to overcome the Judges' preference for the Tyler Model.

168.  Dr. Tyler at times appears to describe his approach as a “hedonic” regression, see Tyler ACWDT ¶¶ 10(e), 85, perhaps on the mistaken belief that such a label was necessary to enhance his approach.

169.   Cf. Final rule and order, Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III), 84 FR 1918 , 1947-48 , 1950 (Feb. 5, 2019) (the Judges relied in part upon an economic model that was admittedly not an established model (the Shapley Model), but rather was a Shapley-“inspired” model), vacated and remanded on other grounds sub nom. Johnson v. Copyright Royalty Board, 969 F.3d 363 (D.C. Cir. 2020).

170.  The negative JSC number at the higher confidence intervals may be the consequence of the lower number of minutes in the regression after the full WGNA conversion. As noted supra with regard to small sub-categories of programming, when there are very few minutes in the regression, the estimates can be inaccurate.

171.  CTV, through its counsel, proposed an alternative method for allocating the 3.75% Fund in its RPHB at 64-65. However, this proposed alternative was not linked to any portion of the record, directly or indirectly. Factual assertions cannot be made after the close of evidence and, in any event, cannot be made by counsel. The Judges therefore do not consider CTV's alternative 3.75% Fund proposal. See Johnson v. Copyright Royalty Board, 969 F.3d 363, 383 (D.C. Cir. 2020) (rejecting the Judges' reliance on a party's proposal made “for the very first time after the evidentiary record was closed.”).

172.  This testimony is consistent with the Judges' findings in prior distribution proceedings 2010-13 Determination at 3590 (“CSO executives' valuations reflect their conclusions regarding the extent to which the category of programming contributes to the return on that investment; i.e., helps the cable system attract and retain subscribers.”).

173.  Given the low value of retransmitted stations, a CSO might rationally emphasize the value of “legacy carriage” as a heuristic (without further analytical effort), assuming as Ms. Hamilton implies, that eliminating a distantly retransmitted legacy station and its programs is more likely to cause a loss in subscribers than a change in station lineup is likely (without further and costly analytical effort) to increase the number of subscribers.

174.  At the same time, several of the same JSC experts conceded that there is a relationship between price, or willingness to pay, and quantity of live team and professional sports games. 4/3/23 Tr. at 2798-99 (Singer); 4/05/23 Tr. at 3317, 3318 (Warren); 4/10/23 Tr. at 4072-73 (Witmer).

175.  JSC also asserted that regression analysis was unreliable as it overvalued certain content types in relation to JSC content, pointing to valuations of paid programming, devotional content, and public television content. JSC PFF at 60-65 and record citations therein

176.  Asker WRT at 45 (“It is standard practice in econometric research to test the external validity of findings whenever alternative methods are available to answer the same question.”); Harvey WRT at 38-41; 3/28/23 Tr. 1910:3-1911:3 (Harvey) (agreeing with Judge Strickler that “validity test” is synonymous with “reality filter”); 4/18/23 Tr. at 5168:8-5169:8 (George) (urging that the reality filter should reflect the relevant marketplace being considered/measured), See also, CCG PPFCOL at 31 and record citations therein.

177.  Mr. Singer asserted that games are particularly valuable cases of retransmission to geographic areas with deep affinity to specific teams. Singer WDT at 17-18. Several examples of such transmissions were cited to by JSC. JSC PFF at 28-30 and record citations therein. This assertion was disputed by Program Suppliers as merely anecdotal. PS PFF at 43-44 and record citations therein.

178.  SDC offered a similar view of PTV content. See SDC PPFCOL at 112, record citations therein.

179.  PTV's witness Ms. Alany acknowledged duplication as an issue, suggesting that local public television stations may adjust programming schedules in order to avoid or minimize duplication, but did not offer any evidence of such adjustments having taken place. Alany WDT at 21; 3/27/23 Tr. 1557:20-25 (Alany).

180.  JSC also noted that in a prior proceeding the Judges noted that it is not unreasonable to think that CSOs have maintained an institutional memory of the requirements of these proceedings. JSC RPFF at 32 and citations therein.

181.  The reference to lots of “corner cases” represents the use of an engineering term indicating a situation that occurs outside normal operating parameters. See Corner Case, Wikipedia, https://en.wikipedia.org/​wiki/​Corner_​case (last visited Aug. 28, 2023).

182.  Regarding faulting the survey for excluding PTV-only CSOs from the 2014 through 2017 surveys received in this proceeding, the Judges address and account for the issue infra/supra (addressing application of adjustment).

183.  2010-13 Determination at 3557 citing 1998-99 Librarian Order at 3613-14.

184.   See, e.g., Harvey CWDT ¶ 7. (Distant signal carriage patterns in 2014 closely resembled those from the 2010-2013 period. By contrast, starting in 2015, following the conversion of WGNA from a superstation to a cable network at the end of 2014, CSOs significantly decreased their use of the section 111 license, with the vast majority of systems electing to carry far fewer distant signals.); See also, Marx WRT ¶¶ 6, 60; Marx ACWDT at 16, 20-26, ¶ 43; Bennett ACWDT at 11.

185.   See, e.g., Marx ACWDT ¶¶ 76-77, pp.28-29.

186.   See, e.g., Witmer WRT ¶ 33, p.14; Costantini WDT ¶ 20, p.7; Alany WDT at 12.

187.  See 2 004-05 Distribution Order.

188.   See 2010-13 Determination at 3552, 3582.

189.   See, e.g., Order 27 Granting in Part and Denying in Part PTV Motion to Compel JSC to Produce Documents (Feb. 15, 2023); Order 30 On Public Television's Order to Enforce Order 27 (Mar. 31, 2023); Order 31 Further to Order 30 on Public Television's Motion to Enforce Order 27 (Apr. 12, 2023).

190.  The Judges entered a Protective Order on February 17, 2022, pursuant to a Joint Motion filed by all participants. Order No. 27 created a subset of further restricted information consisting of the identities or other personally identifiable information (PII) of Bortz Survey respondents for the years 2014-2017. See Order 27 at 5 n.6, 57.

191.  JSC presented the Bortz Survey in documentary form in a report, entitled “Cable Operator Valuation of Distant Signal Non-Network Programming: 2014-17” (Bortz Report). During the hearing, the Bortz Report was received into evidence as Trial Ex. 7101. 3/20/2023 Tr. 305, 316.

192.  JSC offered the first Bortz Survey to the CRT in 1983. 4/3/2023 Tr. 2824-25 (Trautman); Bortz Rep. app. A; 2010-13 Determination at 3582.

193.  Prof. Papper was qualified as an expert in broadcast and digital journalism. 4/11/23 Tr. 4370 (Papper). He was retained by the National Association of Broadcasters on behalf of CTV ( i.e., the CTV claimants in this proceeding). Papper WDT at 1.

194.  The RTDNA survey was conducted for at least two decades before Prof. Papper began to administer it in 1994. 4/11/23 Tr. 4367 (Papper).

195.  Dr. Nancy Mathiowetz was called by JSC as an expert witness at the hearing, and was qualified as an expert in survey research methodology, questionnaire design and statistics. Dr. Mathiowetz has testified before on behalf of JSC. 4/10/2023 Tr. 3828, 3835 (Mathiowetz); Mathiowetz CWDT; 2010-13 Determination at 3587.

196.  Dr. Mathiowetz testified that she treated each of the Bortz Surveys for 2015 through 2017 as a sample rather than a census. She testified that while the Bortz Survey goal was to include each eligible CSO, there is a different expectation with respect to those Bortz Surveys and the data collection effort compared to, for example, that of the decennial census in the United States in which the goal is to measure absolutely every single person in the country. 4/10/2023 Tr. 3842-47 (Mathiowetz). Thus, when Dr. Mathiowetz made computations of standard errors for the Bortz Survey for 2015 through 2017, she treated each survey as a sample. 4/10/2023 Tr. 3844 (Mathiowetz).

197.  Specifically, Bortz Media used two survey instruments for the 2014 cable operator survey. There was one form for survey respondents whose cable systems carried distant signals in addition to, or other than, WGNA. Appendix B (entitled “Survey Instruments”) to the Bortz Report contains the additional distant signals (ADS) questionnaire that was used with those survey respondents. There was a second form for respondents whose cable systems carried WGNA as their only distant signal (also included in the Bortz Report, app. B). When using the second form, respondents were provided with specific information about (and asked to value only) the compensable programming on WGNA. For the years 2015 through 2017, only the ADS questionnaire was used because WGNA was no longer a distant signal. Bortz Rep. at 24-25. Similarly, changes were made to the Bortz weighting and projection approach for 2015-2017 to account for the changes to the distant signal landscape in that time period. See id. at 21 (citing Bortz Rep., Section II).

198.  As indicated by Dr. Mathiowetz in her written direct testimony, pursuant to section 111 of the Copyright Act, cable systems are classified into three tiers based on the level of gross receipts that they receive from their subscribers for the retransmission of over-the-air broadcast signals. Small-sized and medium-sized systems pay a flat royalty fee. With respect to large cable systems (that use “Form 3” when filing their SOAs at the United States Copyright Office), royalties are calculated as a percentage of their gross receipts based on the distant signals they retransmit. Yet, without regard to what (if any) distant signals a system retransmits, all Form 3 systems must pay at least a minimum royalty fee. See Mathiowetz CWDT at 6-7 (citing 2010-13 Determination at 3553 and 17 U.S.C. 111(d)(1)(B)-(C) ). See also United States Copyright Office, Statement of Account, SA3 (Long Form), https://www.copyright.gov/​forms/​sa3.pdf (current) (for use when a system's “semiannual gross receipts for secondary transmissions (the figure you give in space K of the form) is $527,600 or more. . . .”); United States Copyright Office, Old Cable Statement of Account Forms, https://www.copyright.gov/​licensing/​saold.html .

199.  The WGNA questionnaire used for 2014 had differences in wording specific to carriage of WGNA. See Bortz Rep. at 83-86.

200.  The Bortz Report notes that in the 2010-13 Determination, the Judges stated that the reference to expense in Question 3 “muddled the concepts of cost and value” and that “[t]his may have injected some confusion into the respondent's estimation of relative value.” Bortz Rep. at 27 n.38 (quoting 2010-13 Determination at 3590); 4/3/2023 Tr. 2895 (Trautman); 4/5/2023 Tr. 3466 (Trautman). Mr. Trautman, on behalf of Bortz Media stated in the report that he respectfully disagrees with this criticism, and did not find any evidence of confusion in the 2010-13 Bortz surveys, or in the 2014-2017 Bortz surveys. In any event, the 2010-13 Determination was not available until October 2018, when the 2014-2016 surveys had already been completed, and the 2017 questionnaires were in the field. Thus, there was no opportunity for Bortz Media to evaluate potential changes to this survey question. Id.

201.  For each of questions 2, 3 and 4, respondents that reported carrying more than eight distant signals were only asked about their eight most widely carried distant signals. This approach was also followed in the 2010-2013 surveys. Bortz Rep. at 25 n.35; 2010-13 Determination at 3587 (“In the Bortz Survey, interviewers asked respondents about a maximum of eight distant signals even if their systems carried more.”).

202.  The seven categories, which could be tailored for each respondent, were: (1) Movies; (2) Live, Professional and College Team Sports; (3) Syndicated Shows, Series and Specials; (4) News and Other Station-Produced Programs; (5) PBS and All Other Programming Broadcast by Noncommercial Station(s) ____; (6) Devotional Programs; and (7) All Programming Broadcast by Canadian Station(s) ____. Bortz Rep. at 32 & app. B at 79. These categories were intended by Bortz Media to correspond with the program category definitions adopted by the Judges. Id. at 26, app. C (“Program Category Definitions”).

203.  For example, for 2014, Question 2b of the survey instrument reads: “Now, I'd like to ask you how important it was for your system to offer certain categories of programming that are carried by these stations. When you consider this, please exclude from consideration any national network programming from ABC, CBS and NBC. I've grouped the non-network programming on these broadcast stations into seven categories. I will read these seven categories to you to give you a chance to think about their relative importance (READ EACH CATEGORY BELOW, STARTING WITH THE CATEGORY MARKED BY THE NUMBER “1”). Considering only the non-network programming on these broadcast stations, please rank these seven categories in order of their importance to your system in 2014, with one being the most important category and seven being the least important category. What is your ranking of importance for the 2014 (READ FIRST CATEGORY, AS MARKED BY THE NUMBER “1”) programming on the broadcast stations I listed. (REPEAT FOR ALL SEVEN CATEGORIES, IN ORDER LISTED BELOW. ENTER NUMERICAL RANK ON TABLE BELOW.)”

Bortz Rep. app.B at 79.

204.  To prevent ordering bias, for each questionnaire, the interviewer was provided with a preset, computer-generated random order in which to read the program types, in order to prevent ordering bias. Bortz Rep. at 29.

205.  For Question 4, the categories, among other things, incorporated the survey year, and other slight variations to the categories listed for Questions 2 and 3. The possible seven categories, to be identified by the interviewer, were: (1) Movies broadcast during (survey year) by the U.S. commercial stations I listed; (2) Live professional and college team sports broadcast during (survey year) by the U.S. commercial stations I listed; (3) Syndicated shows, series and specials distributed to more than one television station and broadcast during (survey year) by the U.S. commercial stations I listed; (4) News and public affairs programs produced by or for any of the U.S. commercial stations I listed, for broadcast during (survey year) only by that station; (5) PBS and all other programming broadcast during (survey year) by U.S. noncommercial station(s) ____; (6) Devotional and religious programming broadcast during (survey year) by the U.S. commercial stations I listed; and (7) All programming broadcast during (survey year) by Canadian station(s) ____. Bortz Rep. at 28, app. B (7101 at 81) (2014 survey instrument). These categories were intended to correspond with the program category definitions adopted by the Judges. Id. at 28, app. C (“Program Category Definitions”).

206.  For the 2014, the survey period was 8/11/15-4/7/16; for 2015, the survey period was 8/11/16-4/23/17; for 2016, the survey period was 10/06/17-4/26/18; and for 2017, the survey period was 7/01/18-6/26/19. Bortz Rep. at A-16.

207.  For 2014, the response rate was 53.8% (170 surveys completed); for 2015, the response rate was 54.3% (197 surveys completed); for 2016, the response rate was 57.7% (199 surveys completed); and for 2017, the response rate was 54.6% (179 surveys completed). Bortz Rep. at A-16.

208.  Bortz weighted survey results for 2014 based on the royalties paid by responding systems in the first half of 2014, and applied those results to the universe of Form 3 system royalties (consistent with the weighting approach used in all prior Bortz surveys). For the 2015 through 2017 surveys, inasmuch as most systems carrying distant signals had become Minimum Fee Systems, the methodology was changed to weight the results based on the Base-plus-3.75 fees attributable to the actual signal carriage of the Form 3 systems, and to apply the results using signal carriage-based fee calculations rather than actual royalties paid. Bortz Rep. at 21-24, A-18.

209.   See JSC WDS at 12-13 (“Claim of JSC”); but see JSC PHB at 82 (“the evidence demonstrates that the adjusted Bortz survey results are the most accurate and reliable basis for allocating the 2014-17 cable royalty funds”), 84.

210.  In her testimony during the 2010-2013 proceeding, Ms. McLaughlin explained the adjustment, as follows: Q. In order to do your augmentation of the Bortz survey, what were your initial assumptions? A. I assumed that the systems that I was adding back in would have to answer the survey in the same way it was asked for the other people, and that is they were only allowed to respond to the category they are carrying and they are supposed to split up their value among the categories they are carrying. So they would have to say 100 percent for PTV, if that's all they carried. And if all they carried was Canadian signal, they'd have to say 100 percent for Canadian. And if they carried both, they'd have to say something between, you know, zero for one and 100 to the other or 100 for one and zero to the other. Q. How about with regard to response rate? Did you make any assumptions about that? A. Oh, when I added them in, I—I followed the same response rate. If you look at the—some of the highlighted numbers, so in the final eligible sample for the year that we're looking at, 2010, in all the strata together, there were 288 cable systems but only 163 of them completed the surveys. So the response rate, 163 over 288, or, you know, maybe that's, you know, 60 percent, say, 50, 60 percent. So I used that same response rate and I did it actually by strata and applied that to the omitted signal. So I didn't assume that all 16 were included. I only assumed, you know, approximately half of the 16 were included.

Oral Testimony of L. McLaughlin (2010-2013), Trial Ex. 7017, at 27-29.

211.  Professor Ringold has previously testified, or otherwise given evidence, in proceedings before the CARP, and the CRB. See CCG PFF 601; 2010-13 Determination at 3585. In this proceeding, Prof. Ringold was called to testify by CCG, and was qualified as an expert in survey research methodology. 4/17/2023 Tr. 4950-51 (Ringold).

212.  Bortz Media's Adjustment One is referenced in some of the parties' post-hearing filings as Adjustment 1. See, e.g., SDC PHB at 85; CTV PFF 434.

213.  In Adjustment One, systems that carried both PTV and Canadian distant signals (but no U.S. commercial distant signals) are weighted in the same manner, but with the fees allocated equally among the PTV and Canadian categories. Bortz Rep. at 43 n.45.

214.  The Adjustment One results for 2014 are nearly identical with Mr. Trautman's calculation of the 2014 Bortz results when subjected to the McLaughlin Adjustment. See JSC Production Materials, Trial Ex. 3049 (discussed in detail later in the main text).

215.  Mr. Trautman did calculate a McLaughlin Adjustment, which he does not recommend. The table he prepared in that regard is set forth infra.

216.  Dr. Majure was qualified as an expert in economics and industrial organization, including their application to the cable industry. 3/30/2023 Tr. 2551 (Majure).

217.  Mr. R. Garrison Harvey was called to testify by JSC, and was qualified as an expert in statistics and applied mathematics. 3/28/2023 Tr. 1772, 1777-78 (Harvey).

218.  Professor Asker was called to testify by JSC, and was qualified as an expert in economics, industrial organization, and econometrics. 3/30/2023 Tr. 2390-91 (Asker).

219.  Mr. John Sanders was called to testify by SDC and was qualified as expert in the valuation of media assets, including television programs. 4/6/2013 Tr. 3694 (Sanders).

220.  Professor Marx was called by CTV and was qualified as an expert economist and econometrician with experience in statistical methods and measurements. 4/11/2023 Tr. 4109 (Marx).

221.   Cf. Commercial Television Claimants' Post-Hearing Reply Brief in Support of Proposed Royalty Allocations at 63-64 (CTV RPHB) (referring to the adjustments proposed by Bortz Media).

222.  Dr. Tyler was called by PS, and was qualified as an expert in the fields of economics, data analysis, and econometrics. 4/19/2023 Tr. 5423, 5428 (Tyler).

223.  Professor Boyle was called by PTV and was qualified as an expert in the field of survey research and design. 3/27/2023 Tr. 1400, 1410-11 (Boyle).

224.  The number of PTV-only systems grew substantially in 2015-2017. In the second accounting period of 2014, there were 44 PTV-only systems, but that number increased to 173 in the second half of 2017. This increase occurred in large part because systems that previously carried both PTV and WGNA became PTV-only systems when WGNA converted to a cable network at the end of 2014. Indeed, between 50 and 55 percent of the PTV-only systems in 2016-2017 had carried WGNA in 2014. Bortz Rep. at 10-11; Harvey CWDT tbl.32.

225.  This decline in Form 3 CSOs carrying distant signals was largely the result of systems that had previously carried only WGNA electing not to carry any distant signals. Out of the 275 systems that carried WGNA as their lone distant signal in 2014, only 15 (5.5%) of these systems carried a non-WGNA distant signal from 2015-2017. Bortz Rep. at 8.

226.  Additionally, Bortz Media's Adjustment Two addresses the question of whether PTV signals transmitted within their DMA should be treated differently. It also attempts to address the exclusion of Canadian-only systems. As already described in the main text, Adjustment Two accepts (while not agreeing with) the McLaughlin assumption of attributing 100 percent of value to either the PTV or Canadian category when that is the only category the system carries distantly, even for systems that became PTV-only by default as result of the WGNA conversion. However, PTV-only systems that only carried distant PTV signals within those signals' originating DMAs are excluded. Bortz Rep. at 43. Adjustment Two, therefore, does not accept the definition of a distant signal imposed by statute, and may also create a gap in compensation for copyrighted programming within a DMA. Furthermore, no party presents its requested allocation based on implementation of Adjustment Two, or made an adequate record concerning this potential adjustment.

227.   See, e.g., CCG PHB at 50-51; CCG RPFF at 40-41, 47-48.

228.  A review of the parties' filings shows that incentive compatibility was addressed primarily, if not entirely, only by PTV and JSC.

229.  PTV's reply brief and reply proposed findings provided more substance to its argument than PTV provided in its initial briefing. See PTV RPHB at 39-40, 44-45; PTV PRFF ¶¶ 252-63.

230.   See 3/27/2023 Tr. 1419-21, 1453-54, 1492-512 (Boyle).

231.  Dr. Stec was called to testify by PS, and was qualified as an expert witness in economics and survey research. 4/19/2023 Tr. 5641 (Stec).

232.  Dr. Stec, citing to an article on willingness to pay at the point of purchase, opines “research studies show that, when controlling for question formats, the hypothetical bias in consumer-intent type measures, like willingness-to-pay, can be substantial with the hypothetical willingness to pay exceeding the real willingness to pay. Even in the absence of any other flaws, by not accounting for this hypothetical bias, the Bortz Survey likely measured willingness to pay, in the form of budget percentages, inaccurately.” Stec WRT at 26 (footnote omitted); PS PHB at 70-71; PS PFF ¶¶ 527, 529. The relevancy of this consumer-intent, point of purchase opinion to the Bortz Survey remains unclear, especially in view of a dearth of testimony on the subject.

233.  As Dr. Majure testified, Question 4 is essentially a budget-setting exercise, and as such it is his opinion that importance and expected cost are relevant to the value of distant signal programming, as they are to forming a budget. 3/30/2023 Tr. 2616 (Majure).

234.  Even after the WGNA conversion in 2014, small numbers of cable systems continued to report carriage of the signal. The reasons for doing so may be varied on the part of the cable systems, but in any event remain unclear. See Trautman WRT at 2-3; Bortz Rep. at 7 n.6. As discussed, supra note 27, there may have been some residual WGNA carriage as WGNA transitioned from a broadcast channel to a cable station.

235.  In his written rebuttal to Dr. Mathiowetz's written direct testimony, Prof. Boyle questions Dr. Mathiowetz's use of Census regions when reviewing cable system responses, opining that her investigation might have been appropriate if one were doing a survey of the population but not for a survey to provide input to cable royalty revenue allocations. Boyle WRT at 43-44.

236.  Dr. Simonson was called by PTV, and qualified as an expert in an expert in the fields of survey methodology, marketing, and managerial decision-making. 3/23/2023 Tr. 1170-71 (Simonson).

237.   See, e.g., PS PHB at 63 (“Since Mr. Trautman only reached between 5.9% and 9.0% of his intended target population, there should have been a process for qualifying respondents who were not the intended targets.”).

238.  The survey instrument instructs interviewers, when introducing themselves, to ask to speak with the listed respondent, and if unavailable to confirm he/she is the person most responsible for programming carriage decisions for the system and to arrange for a call back; and if not, then to ask to speak with the person most responsible for programming carriage decisions for the system. In addition, Question 1 on the survey instrument is: “Are you the person most responsible for programming carriage decisions made by your system during [year] or not?” If the response is negative, the interviewer is instructed by the survey instrument to ask to speak with the person most responsible for the system's programming carriage decisions for the subject year, and then to repeat the introduction and Question 1. See Bortz Rep. app. B; 4/5/2023 Tr. 3220-21 (Trautman).

239.  Mr. Singer was called by JSC, and qualified as an expert in the operation of cable systems and cable networks, including the valuation of television programming in the cable industry. 4/3/2023 Tr. 2738, 2745 (Singer).

240.  Ms. Witmer was called by JSC, and qualified as an expert in the operation of cable systems, including the valuation of cable and broadcast television programming. 4/10/2023 Tr. 4035 (Witmer).

241.  Ms. Costantini was called by PTV, and qualified as an expert in the cable television industry and valuation of television programming. 3/27/2023 Tr. 1583, 1588 (Costantini).

242.  There is an email in which Mr. Trautman asks his contractor running the interview process to make sure interviewers do not record titles short- hand form. While Mr. Trautman was doing the due diligence of quality control, there is no proof of actual error. See 4/10/2023 Tr. 3967-68 (Mathiowetz).

243.  Bortz only used a separate, one-page training document for these surveys in the late 1980s to early 1990s, when it worked with a large contractor whose interviewers were not as clearly experienced in executive interviewing. 4/4/2023 Tr. 3168-69 (Trautman).

244.  With respect to satisficing, during the hearing, Dr. Mathiowetz quoted from the Encyclopedia of Survey Research Methods, as follows: “Satisficing has been posited to at least partly explain several response effects, including acquiescence effects, non-response order effects, no opinion option effects, and non-differentiation in answering batteries of rating scales.” 4/10/2023 Tr. 3856 (Mathiowetz).

245.  Even before the production of more detailed information, as originally produced, the redacted Bortz data contained anonymized respondent identifications showing every time the same individual responded on behalf of multiple systems in a given survey year. 4/10/2023 Tr. 2922-24 (Mathiowetz). It appears, therefore, that early in this proceeding any party could have used such information to track potential satisficing.

246.  Such occurrences are indeed few in number, but not to be ignored. Specifically, for 2014 through 2017, 90 respondents overall, four in 2014, 33 in 2015, 24 in 2016, and 29 in 2017, provided relative value allocation to compensable programming that they did not carry. See PS PFF 541 (citing Stec WRT at 41).

247.  Dr. Conrad was called by CCG, and qualified as an expert in survey methodology with specialization in questionnaire design and data collection. 4/13/2023 Tr. 4796-97, 4806 (Conrad). He expressed concern over Question 3, and its order in the survey. See Written Rebuttal Testimony of Frederick Conrad, Ph.D., Trial Ex. 7405, at 4 (“The cost question (Q3) was intended as a warm-up but the information respondents used to answer it was almost certainly salient and particularly accessible in their working (short-term) memory when they answered the value question (Q4) immediately afterward, allowing the cost information to dominate the valuation process; if the order of these two questions had been reversed, i.e., if Q4 had been asked before Q3, cost information would less likely be the central consideration in the valuation process. This pattern, if observed, would be what survey researchers call a question order effect—considered a type of measurement error”) (emphasis added).

248.  The AAPOR is a leading organization on survey research standards, and its past presidents include JSC's expert witness Dr. Mathiowetz. In 2015, she was awarded the AAPOR Award for Exceptional Distinguished Achievement. See Mathiowetz CWDT at 1-2; 4/10/2023 Tr. 3943-44 (Mathiowetz).

249.  Dr. Simonson testified that he never heard the term “establishment survey” before testifying, and had never heard of a business or organization survey obtaining a response rate of 50% without offering compensation (and did know of any compensation for respondents in connection with the Bortz Surveys). 3/23/2023 Tr. 1248-51 (Simonson).

250.  PTV's Proposed Finding of Fact 270 contains the statement: “Ms. Grossman and her team were financially incentivized to meet Mr. Trautman's quotas because their compensation was a product of keeping the study going, and the time and effort needed to do so. Ms. Grossman and her team required, inter alia, more money, resources, longer time in the field.” PTV PFF at 96 (footnotes omitted) (emphasis added). An examination of the evidence cited in supporting footnotes ( i.e., 4/4/2023 Tr. 3195-202 (Trautman)) confirms that the financial incentives involved were, as indicated in PTV's proposed finding, only in the nature of compensation for the time, effort and resources needed to keep the study going and to exceed expectations.

251.  CTV, based on the written testimony of Prof. Papper, argues that there has been a steady increase on the amount of news broadcasts by station, including an increase in the amount of local news from 5.3 hours in 2014 to 5.7 hours in 2017; and the amount of local news also went up on the weekend, from an average of 2 hours per Saturday in 2014 to 2.1 hours in 2017, while the amount of local news on Sunday rose from 1.9 hours in 2014 to 2.1 hours in 2017. Further, it is argued, the number of stations running local news rose from 1026 in 2014 to 1062 in 2017, and as television stations continued to increase their local news budgets during the four-year period, they added more local newscasts to their lineups in the 4 p.m. to 7 p.m. time slots, and the 5 a.m. to 7 a.m. time slots. See CTV PHB at 5; CTV PFF ¶¶ 10-11.

252.  CTV argues that in support of the value of their own content, Program Suppliers continue to rely on reports that are like those they find objectionable from Prof. Papper, and the articles Prof. Papper writes that in part rely on the RTDNA Survey. Specifically, CTV argues that Program Suppliers relies on the content of the Nielsen Year in Sports Media Report, U.S. 2017. It is argued that this Nielsen Report, which includes and relies on a variety of sports media data, studies and survey results, is no different from Prof. Papper's articles and opinions that are informed, in part, by results from the RTDNA Survey. CTV RPHB at 53 n.267 (citing PS PHB at 13).

253.  Dr. Bennett was called by CTV, and qualified as an expert in statistical methods and measurement. 4/12/2023 Tr. 4497, 4504-05 (Bennett).

254.  To the extent that any criticism of, or deficiency in, the record evidence was not discussed, it is because said criticism or deficiency does not change the outcome of this determination.

255.  An attempt to re-litigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment, is colloquially referred to as an improper attempt at “a second bite at the apple.”

256.  In determining whether to grant motions for rehearing, the Judges have also previously relied on Fresh Kist Produce, LLC v. Choi Corp., 251 F. Supp. 2d 138, 140 (D.D.C. 2003), which involved a Rule 59(e) motion in a case relating to economic rights. See, e.g., SDARS III Order at 2, 7. In view of the facts in Fresh Kist, the district court held that “[a]lthough the court disapproves of parties raising arguments that they could have advanced earlier, the court recognizes that the interests of justice and fairness support reviewing the plaintiff's motion.” Fresh Kist, 251 F. Supp. 2d at 141. Accordingly, the Judges recognize a tension between the proscription against using a rehearing motion to obtain a “second bite at the apple” and the need to prevent an unfairness that constitutes a “manifest injustice,” which can be addressed on a case-by-case basis.

257.  As also noted supra, a “negative” requirement for a proper rehearing motion is that the motion cannot simply attempt to relitigate matters that were addressed at the hearing (the so-called “no second bite at the apple” requirement) or to raise issues that the movant could have presented at the hearing but did not.

258.  JSC does cite 17 U.S.C. 803(c)(2) and 37 CFR 353.1 , which provide parties with the right to seek rehearing, but those mere citations are not enough. The Motion must attempt to tie the movants' substantive arguments regarding the challenged aspects of the determination to specific rehearing standards.

The Judges also note that JSC does attempt to tie its arguments to actual standards in its Reply. However, the Judges are highly reluctant to permit new arguments to be made for the first time in a Reply, because such delinquent assertions sandbag the adverse parties, who had already filed their permitted Responses and are unable to address the delinquent arguments in the Reply.

In any event, the Judges' discussion infra rejecting JSC's arguments makes it clear that, even had JSC made a timely attempt to identify allegedly applicable specified standards for rehearing and attempted to connect its factual arguments to those standards, the JSC Motion would nonetheless be denied (in part). (In this regard, the Judges note that, in its Reply, JSC cites the Judges' order in the 2010-13 allocation proceeding which noted the rehearing standard in 37 CFR 353.2 , requiring a movant to state why it believes the determination is “without evidentiary support in the record or contrary to legal requirements.” JSC Reply at 2. JSC makes no allegation of legal error and, as discussed infra, there is abundant evidentiary support for the factual findings with which JSC takes issue.)

259.  The paucity of cases in which a party even attempted to rely on the appellate issue of whether a decision was “arbitrary and capricious” is indicative of the inapplicability of that issue in the context of a Rule 59(e) type of motion. But see Arias v. DynCorp, 752 F.3d 1011, 1016 (D.C. Cir. 2014) (“We have squarely held that a party must preserve an issue for appeal even if the only opportunity was a post-judgment motion.”); see also Jones v. Horne, 634 F.3d 588, 603 (D.C. Cir. 2011) (same). The Judges perceive JSC's “arbitrary and capricious” arguments as potentially prophylactic measures intended to preserve this issue on appeal, rather than a proper basis for rehearing pursuant to statute, regulation, and the Judges' prior rulings regarding rehearing, which are expressly patterned on Fed. R. Civ. P. 59(e).

Further, JSC relies on a case which does not involve a Rule 59(e) motion, but rather addresses the standard by which the D.C. Circuit reviews a district court's entry of summary judgment. See N. Cent. Airlines, Inc. v. Cont'l Oil Co., 574 F.2d 582, 587 n.14 (D.C. Cir. 1978) (cited in Reply at 2). But in the same breath, JSC acknowledges the narrower Rule 59(e) standard. Reply at 2 (citing School for Arts in Learning Public Charter School v. Barrie, 810 F. Supp. 2d 52, 55 (D.D.C. 2011) for the narrow standard, as “routinely” held by courts (and CRB Judges), that Rule 59(e) motions are not vehicles for (1) rearguing facts and theories upon which a court has already ruled or (2) for raising new issues that could have been raised previously, and that such motions are disfavored and granted only upon a showing of “extraordinary circumstances”). Additionally, JSC relies on another case, Dyson v. Winfield, 129 F. Supp. 2d 22 (D.D.C. 2001), in which the district court found an error regarding a question of law, rendering that decision inapposite. But again, the broader defect is that JSC afforded Respondents no opportunity to address the JSC Reply's application of these prior decisions.

Accordingly, the Judges understand JSC's Reply as setting forth the same standards that the courts in the D.C. Circuit routinely apply to Rule 59(e) motions and, as stated in the prior footnote, consider the JSC Motion on that basis.

260.  In the footnote, PTV argues, “That said, the differences between Exhibit 3049 and Exhibit 3105 appear relatively small, although the record evidence does not explain the basis for those differences.” PTV Response at 5 n.1.

261.  Exhibits 3049 and 3105 were received into evidence with no objection and no argument. See 4/4/23 Tr. 3099.

262.  In the Initial Determination, the Judges stated, “To see the figures obtained when the McLaughlin adjustment is applied to the Bortz Survey initial results at issue in this proceeding, the Judges are referred to a chart taken from a spreadsheet prepared by Mr. Trautman, originally for Bortz Media's internal use (Ex. 3049, duplicated above). Fortunately, no party has challenged the figures contained therein as accurately reflecting application of the McLaughlin adjustment to the Bortz Survey initial results . . . .” ID at 178.

263.  The Judges also remain concerned by the fact that Mr. Trautman twice stated in his testimony in this proceeding that he initially generated a version of the original McLaughlin Adjustment “to see what the outcome would be.” 4/3/2023 Tr. 2881-2882 (Trautman). But an expert generating his prior preferred approach in order “to see what the outcome would be” (here, what the allocations would be) undermines his role as an objective expert, who should first identify the elements of his or her methodology and then disclose—for better or worse—the results of that action. Here, Mr. Trautman acknowledged that he ran his prior McLaughlin Adjustment “to see what the outcome would be” and then abandoned it in favor of making other adjustments (increasing the JSC share), which, as PTV stated, indicates that “Mr. Trautman . . . embarked on a multi-year quest `to conjure up' additional adjustments.” Initial Determination at 176. Indeed, Mr. Trautman's sequential modeling of the McLaughlin Adjustment resembles the revisionary work of other experts, which the Judges criticized as evidencing improper “searches” for an allocation model that would increase the allocations of the parties by whom they were engaged. See Initial Determination at 39 & n.45 (“Also troubling was the fact that, over a prolonged period, successive testing by [the expert] was highly correlated with a steady rise in PTV's allocation shares” . . . “[T]he Judges are concerned with whether the evidence suggests that experts may have engaged in any inappropriate or questionable acts in the course of attempting to maximize the return to the party on whose behalf they give testimony.”).

264.  JSC argues, “With proper weighting, the Bortz Survey results with the McLaughlin adjustment estimate shares for PTV that are within 4 percentage points of the Judges' final award to PTV in each year 2015-17.” JSC Motion at 6 n.1.

265.  In the omitted footnote, PTV's response directs the reader to representative portions of the hearing transcript. See PTV Response at 6 n.2 (“Tr. 3150:15-20 (Q. `[T]he analysis there would have applied the McLaughlin adjustment but then would have weighted systems that carried only Public Television distant signals differently from all the other systems? Is that Right?' A. `My recollection is that's correct.'); Tr. 3153:4-14 (Q. `So you then considered other adjustments that could be combined with the new weighting approach, correct?' A. `Broadly, I think that's correct.' Q. `Those included assigning various values of less than 100 percent to Public Television for systems that carried only Public Television distant signals, right?' A. `Well, certainly my two adjustments do employ that approach based on the particular characteristics of some of the PTV-only systems.')”).

266.  In view of the hearing that JSC has already received, PTV argues that “the Judges should deny JSC's motion for rehearing, to the extent that the prospective rehearing would rehash which weighting methodology should be applied to the Bortz Surveys . . . .” PTV Response at 10.

267.  JSC's argument, noted supra, seeking to justify rehearing by analogy to the Judges' analysis of the impact of the Minimum Fee CSOs on the regression methodology, is discussed separately, infra.

268.  This specific argument cannot be rejected under the “second bite at the apple” proscription because JSC's claim of inconsistency is based on a comparison of two aspects of the Initial Determination. However, as explained infra, this argument fails to support JSC's request for rehearing for other reasons.

269.  JSC's use of the word “actual” here is misleading, in the manner previously described by the Judges. See Initial Determination at 69 n.79 (“The word “actual” in this context is rather Orwellian. For the 2015-2017 period, a substantial majority of the CSOs in which the subscriber groups are situated “actually” paid the minimum fee. A Base Fee was “actually” calculated, as required by the regulations, but not “actually” paid, because the Minimum Fee bound. . . . [M]isleading semantic use of the adjective “actual” does not assist the Judges in deciding whether any or all of the Base Fee calculations have objective evidentiary weight. . . .”).

270.  The Judges discuss infra at footnote 28 JSC's problematic use of the word “weighting” to characterize its application of the Bortz Survey allocations. For clarity, the Judges defer that discussion until after they have explained the error in JSC's argument that the Judges should have treated the Bortz Survey results and the regression analyses in the same manner vis-à-vis the Minimum Fee royalties.

271.  The Joint Respondents did not address this issue and, as noted supra, CTV did not file a response to the JSC Motion.

272.  As noted supra, JSC described the Judges' finding as to this (and all other) rehearing issues as “clear error” for the first time in the JSC Reply.

273.  To be clear, the Judges' analysis and findings as to this issue do not rely on PTV's argument, noted supra, that the testimony of the Bortz Survey witness, Mr. Trautman, in the prior 2010-13 proceeding, precluded or diminished JSC's ability to assert its “inconsistency” argument.

274.  The models may be supported by the testimony of industry witnesses and industry documents. Parties who eschew formal modeling may elect to rely solely on industry-based evidence and testimony (as did CTV through the “directional analysis” undertaken by its expert witness, Dr. Leslie Marx, for the 2015-17 period. See Marx ACWDT ¶ 83).

275.  The existence of competing models in economic litigation is hardly uncommon. As the Judges have previously explained: “Benchmarks, Shapley and Nash models, surveys and experiments are all models, in that a model is a representation of something beyond itself being used as a representative of that something, and in prompting questions of resemblance between the model . . . and their target systems.” Initial Ruling after Remand at 87 n.125, in Final Determination after Remand at App. A, Phonorecords III (June 22, 2023).

276.  As the Judges noted in the Initial Determination, the D.C. Circuit has approvingly noted that there is no reason to require that assumptions or findings applicable to one type of economic model addressing an issue necessarily apply to a different type of economic model attempting to address the same issue. See Initial Determination at 48 (citing NRBNLMC v. CRB, 77 F.4th 949, 971 (D.C. Cir. 2023) (affirming the Judges' finding in their Web V Determination declining to apply the “opportunity cost” value in one economic model (a Shapley Value model) to an economic model (a benchmarking model) with different assumptions)). Of course, the assumptions in each economic model must be internally consistent. See J. Schlefer, The Assumptions Economists Make at 29 (2012) (an economic model “provides a check on thinking: it restricts us to at least consistent economic worlds . . . .”) (emphasis added).

277.  Also, there is no record evidence that survey respondents took into account—or even knew—whether their CSO employer had paid the Minimum Fee or the Base Fee for such programming.

278.  Dr. Majure offered the same opinion with regard to the 3.75% Fund as he did regarding the Basic Fund, testifying that “the 3.75 royalty fee . . . after 2014 . . . explains only the Congressionally-mandated framework . . . .” Majure WRT ¶ 80.

279.  PTV also argues that JSC's experts “mined” this and other “weighting scheme[s]” to “increase[] JSC's allocation.” PTV Response at 3. In rejecting this rehearing argument, the Judges need not and do not inquire into the motives of JSC's experts.

280.  As noted supra, an economic model's assumptions need to be internally consistent. See Schlefer, supra.

281.  One might question why the Judges criticize JSC for making an inconsistent argument, when the Judges used Dr. Tyler's above-Minimum Fee data but found two instances in which it was necessary and appropriate to utilize his full set of calculated Base Fee royalty data. But the Judges did not engage in an inconsistent analysis. Rather, there were unique fact-based reasons, as described in this Order and in the Initial Determination, which made the above-Minimum Fee data an incomplete measure of regression-based value, to an extent, for PTV and CCG. The needed adjustments that followed did not demonstrate inconsistency, but rather a careful parsing of the record evidence. By contrast, JSC's position is inconsistent at the conceptual level—it first argues (as explained supra ) that the statutory royalty fee structure does not provide evidence of value and that the survey method is the appropriate valuation tool—only to then alter course and adjust the royalty shares by relying on that very statutory fee structure it discredits as a value metric.

Alternately stated, it would be contrary to the evidence for the Judges to ignore the divergent marketplace impact of the WGNA conversion on Minimum Fee royalty payments. In this regard, the Judges are mindful of the aphorism that a “ foolish consistency is the hobgoblin of little minds.” See generally R.W. Emerson, Self-Reliance and Other Essays 24 (Dover unabridged ed. 1993) (emphasis added).

Further, even if JSC's approach somehow could be construed, like the Judges' approach, as not internally inconsistent, it was hardly error, let alone “clear error,” for the Judges to exercise their fact-finding duty and their discretion by adopting the approach they found reflects the record evidence and the relative marketplace value standard—and reject one (JSC's approach) they found to be logically questionable and insufficiently probative of marketplace value. (That is, even if the general “logic” of JSC's argument were correct, the Judges were under no duty to adopt it.)

282.  As stated in footnote 16, supra, the Judges' foregoing analysis indicates why JSC's use of the word “weighting” can be misleading in the context of its shift away from its former weighting method. One common meaning of “weighting” is an “allowance or adjustment made in order to . . . compensate for a distorting factor.” https://en.bab.la/​dictionary/​english/​weighting . (For example, weighting is often used to correct for perceived inaccuracies in “unweighted” values—as when an election survey has failed to poll a representative sample of voters from a political party or other sub-set of the population of voters.) Here, JSC/Bortz are not changing the weighting of the survey results to correct for a factor that, in their own experts' opinions, is not only non-distorting, but wholly irrelevant (as discussed in detail, supra ). That is, JSC and its expert economic witnesses acknowledge that the Bortz Survey methodology, unlike the regression modeling, is not distorted by the nature of the statutory formula for royalty fees.

283.  CTV did not file a response to the JSC Motion for Rehearing or otherwise oppose it in any other filing.

284.  These are the three adjustments (Adjustments A through C) in the Initial Determination.

285.  More specifically, Dr. Asker opined that a rational CSO would calculate the actual “price” of an above-Minimum Fee retransmission of a local station as the difference between: “(1) the total fees that would bind, which may have been the minimum fee, without retransmitting that local station, and (2) the total base fees that would bind (the minimum fee having been exceeded) if that local station was distantly retransmitted.” Initial Determination at 20.

286.   See id. at 22 n.29 for the Judges' application of the economic criticism of unrealistic “blackboard economics.”

287.  JSC premises its argument on the fact that far fewer CSOs paid royalties at above-Minimum Fee levels in the years 2015-17 than in the pre-WGNA conversion period of 2010-2014 (which straddles this and the prior allocation proceeding). See Initial Determination at 18-20. As explained in the Initial Determination, and recounted elsewhere in this Order, the Judges did not dispute this point, and therefore accorded Dr. Tyler's above-Minimum Fee results less evidentiary weight than when more CSOs paid above-Minimum Fee royalties, but they declined to adopt JSC's argument that the Judges therefore should give zero weight to the evidence of CSO decision-making by CSOs that did pay above-Minimum Fee royalties. Id. at 131 (“there is `good' evidence from the CSOs who did retransmit enough programming to trigger the base fees of their subscriber groups, and the Judges do not ignore that data.

Accordingly, the Judges will give due weight to the minority of CSOs that, in the 2015-2017 period, paid above the Minimum Fee and thus revealed their preferences by paying an additional royalty in order to retransmit one or more additional stations.”).

288.  Imagine that—the other experts preferred their own models over another expert's opinion: Quelle surprise.

289.  JSC's “adjustment” argument comes in two varieties. First, JSC objects to “Adjustment C” in the Initial Determination which increased PTV shares. Second, JSC objects to the adjustment of the shares allocated by the Initial Determination to CCG and PTV for 2015-17, in comparison to their share percentages in the prior years of 2010-13 (in the prior allocation proceeding) and 2014 (in this proceeding.) JSC does not object to “Adjustment A” in this proceeding that lowered CCG's allocation share, or to “Adjustment B” in this proceeding that lowered PTV's share. Alternately stated, JSC claims error by the Judges in the adjustments that reduced their royalty allocation, but assert no error in adjustments that increased JSC's royalty allocation. (JSC's argument pertaining to Adjustment B does identify a computational error in the Initial Determination that the Judges acknowledge and correct infra. )

290.  Although JSC does not seek rehearing on Adjustment A regarding CCG, that adjustment is relevant to this discussion because it is part and parcel of the Judges' derivation of the CCG share that JSC claims to be too high relative to prior years. The deficiency in JSC's argument in that regard is best understood by including in the text following this footnote a summary of the reasoning for Adjustment A.

291.  It is also noteworthy that CCG has not sought rehearing to challenge this significant downward adjustment in its 2015-17 share of the royalty pool nor to criticize the wider application of the above-Minimum Fee Tyler Model.

292.  In addition to the specific points discussed infra regarding the CCG and PTV adjustments, it is important to remain mindful that the Judges are ascertaining relative values, not absolute values. That is, the WGNA conversion significantly scrambled CSOs' retransmission decisions, which the record reflects changed the relative value of program categories. This does not necessarily indicate that, in an absolute sense, any one program category became more or less valuable.

293.  As explained in the section of this order denying PTV's request for rehearing, to adjust for this increase in PTV's relative value, the Judges found probative the analysis and testimony by a JSC expert statistical witness, Mr. Harvey. His analysis and testimony indicated that 44% of the PTV stations that were identified as being retransmitted by Minimum Fee-paying CSOs after the WGNA conversion had also been transmitted pre-conversion jointly with WGNA and thus generated Base Fee (above-Minimum Fee) royalties. The Judges adopted this testimony via Adjustment C, increasing PTV's share of the royalties.

294.  These final totals are changed marginally via the correction of a mathematical error in the Initial Determination, as discussed infra.

295.  Implicit in JSC's argument is that JSC should not suffer such a loss in royalty revenues compared to past years. But no implied assumptions regarding a JSC loss in royalty revenues arising from these lower shares is warranted by the record. Rather, the record indicates that “JSC sports content has been migrating from broadcast stations to other platforms, including cable networks like TNT, TBS, and ESPN, regional sports networks, and pay-TV platforms.” See Program Suppliers PFF ¶ 237 (citing witness testimony, including the testimony of JSC expert Allan Singer). Further, the record reflects that such migration “has increased significantly for the past several years, resulting in corresponding decreases of distantly retransmitted JSC programming volume” [indicating that] [t]he significantly low 2014 through 2017 JSC programming volumes are consistent with a continuing migratory pattern. Id. ¶¶ 239-40.

Thus, as the Judges explained in their Initial Determination, there is no reason to assume that the reduction in JSC shares caused JSC to lose revenue realized from the transmission of JSC content formerly on WGNA. That is, there is no record evidence to support an assumption that JSC had irrationally sought out less profitable distribution outlets than distantly retransmitted local stations after the conversion of WGNA to cable station status. See Initial Determination at 135 n.161 (“[T]he JSC is simply a representative of the major professional sports leagues and the NCAA, and the record does not reflect that they suffered any economic loss because of the reduction of subscriber minutes distantly retransmitted.”)

296.  The Judges also do not credit PTV's invitation for the Judges to “amend[] the Initial Determination to award [PTV] shares for the 2015-2017 royalty years based on or adjusted upward from either the conventional McLaughlin-adjusted Bortz Surveys or Dr. Tyler's primary regression model . . . .” PTV Response at 10. PTV's representation that it would be amenable to this alternative is little more than the statement by a party that it supports an approach that increases its allocation. Obviously, such argument based on naked self-interest does not support a rehearing or amendment of the Initial Determination.

297.  Dr. Bennett's adjustments are based upon Mr. Harvey's identification of stations likely carried pursuant to the must-carry provision. See Bennett WRT at 57. Furthermore, as the Judges observed, “Mr. Harvey engaged in a reasonable attempt to estimate this number, which PTV could have set forth in its submissions, but did not.” ID at 47.

298.  PTV's Reply raises concerns regarding indemnification, in relation to value of must-carry signals. The Judges point to section VII.A.5. of the Initial Determination “The Judges' Analysis & Conclusions regarding the `Must-Carry' Issue” and the Judges' undisturbed and valid analysis and conclusions as to why must-carry signals lack objective and measurable value. See Initial Determination at 47-49.

299.  The Judges also declined to rely on Dr. Johnson's analysis (including his broad Minimum Fee and above-Minimum Fee arguments) and PTV's case, because of certain decisions regarding methodological approaches and decisions which the Judges found troubling, as discussed infra.

300.  In their Motion, PTV also cites to Johnson WRT ¶¶ 76-78 as attribution for this quote. PTV Motion at 6. However, no portion of the quote is contained in those paragraphs, and none of those paragraphs support this rehearing argument. Moreover, paragraph 78 sets forth as an example a PTV station that had been retransmitted by an Arizona CSO together with WGNA and continued to be retransmitted after WGNA was no longer a broadcast station that could be distantly retransmitted. This example supports the Judges' increase in PTV's share for the reason set forth in Adjustment C in the Initial Determination, and in no way supports PTV's rehearing argument for a more lucrative adjustment.

301.  This argument echoes the argument made in the Joint Response, as noted supra.

302.  The D.C. Circuit reversed because the district court misconstrued a statute by finding that relatives of a person with American citizenship murdered by terrorists should be lower if the murder victim had dual Israeli citizenship and was targeted for death because of his latter citizenship. Fraenkel, 892 F.3d 348 (D.C. Cir. 2018). That holding is clearly not analogous to the present issue of “manifest injustice.”

303.  PTV's reliance on the Judges' order on rehearing in SDARS III is misplaced. There, the Judges found that “it would be manifestly unjust to maintain a royalty rate . . . not based on the . . . calculation that prevailed at the time the record was closed,” and the alternative methodology could change the royalty obligation by $150 million. SDARS III Order at 7-8. The Judges' reference to the potential royalty dollars at issue, standing alone, was not the dispositive basis for finding potential manifest injustice; rather manifest injustice would be the consequence of the use of a calculation methodology not prevailing according to the extant record. The reference to the $150 million disparity underscored the importance of the manifest injustice of using an improper methodology. By contrast, in the present case, the differing methodologies for calculating PTV's upward adjustment (Mr. Harvey's or Dr. Johnson's) both are in the record, and they are discussed infra.

304.  As noted supra, the Judges pattern their rehearing analysis pursuant to the standards applicable to motions under Fed. R. Civ. P. 59(e).

305.  Although PTV also cites to Johnson WRT ¶¶ 76-78, which are irrelevant as to the Adjustment C rehearing issue, the Judges note that those paragraphs likewise do not cite to or provide any documentary support for Dr. Johnson's opinion. (By contrast, Mr. Harvey's testimony, on which the Judges relied, was supported by documentary evidence, in the form of Mr. Harvey's cited workpapers. Harvey WDT ¶ 106 n.86. Moreover, Mr. Harvey's testimony was not subject to challenges that the Judges found sufficient to call into question his testimony, unlike the case with Dr. Johnson's testimony, as discussed in the text immediately following this footnote.)

306.  The Judges recalled Dr. Johnson's testimony in this regard, even though it was not set forth expressly in PTV's Proposed Findings of Fact or Conclusions of Law (or PTV's replies to other parties' post-hearing submissions). In fact, in both of its post-hearing filings regarding proposed factual findings, PTV only expressly referenced this issue in connection with CSOs retransmitting PTV + WGNA, and failed to argue for the wider application it now seeks via rehearing. See PTV PFF ¶¶ 60, 126; PTV RPFF 136 & n.188. That failure on PTV's part alone would have sufficed for the Judges to have disregarded PTV's argument. See 37 CFR 351.14 (“A party waives any objection to a provision in the determination unless the provision conflicts with a proposed finding of fact or conclusion of law filed by the party.”). Although PTV claims that “it was impossible to anticipate that the Judges would apply their Adjustment[ ] . . . C to Dr. Tyler's sensitivity limited to Above Minimum Fee CSOs,” PTV Reply at 1, a crucial theme of Dr. Johnson's testimony was that the Minimum Fee data should have been used en toto to establish value. Thus, it was incumbent upon PTV to make this point by including it explicitly in its post-hearing submission.

But nonetheless the Judges, sua sponte, recalled, referenced, and quoted testimony as to this issue, rather than deem PTV's upward adjustment argument to have been waived. However, the Judges did decline to credit Dr. Johnson's testimony (as discussed in the following text), adopting instead the substantial 44% upward adjustment indicated by the testimony of JSC's statistical expert, Mr. Harvey. PTV's argument strikes the Judges as a fine example of chutzpah, or as Joint Respondents' put it, “looking a gift horse in the mouth,” by characterizing only a 44% upward adjustment as “manifest injustice” and “clear error.” See Joint Response at 7.

In this vein, PTV also takes issue (when assuming arguendo the correctness of Mr. Harvey's analysis) with the Judges setting of PTV's Adjustment C share percentage increase by 44%, rather than setting the adjustment at 44.5%. PTV Motion at 5 n.4. The Judges disagree with PTV's argument as to this issue. An agency has the discretion to truncate a value expressed in decimal form. See North Carolina v. E.P.A., 531 F.3d 896, 915-916 (D.C. Cir. 2008 (“[W]e cannot say that EPA's decision to truncate rather than round . . . was arbitrary. . . . Without a rule mandating any particular method, EPA is free to round or truncate the numbers it is comparing . . . as long as its choice is reasonable.”). Here, there was no regulation guiding the Judges. Moreover, given the uncertainties generated by PTV's failures, as discussed elsewhere in this order, to proffer sufficiently credible evidence and to meet its evidentiary burdens regarding which PTV signals among the CSO systems were must-carry, multicast or subject to royalty indemnification—truncating the percentage to 44% continues to strike the Judges as a reasonable decision, and certainly not one that generated “manifest injustice” or “clear error,” as those standards are described in this order. (It should be noted that PTV has not argued on rehearing that the Judges should have rounded the percentage increase to 45%, rather than truncate the increase to 44%, nor did PTV argue that the Judges are bound by a mathematical convention to do so.)

307.  To recount, these materials revealed “compelling” evidence of “potential specification searching and [of] dissembling” by the expert econometric witness on whose testimony the Judges had relied in the 2010-13 cable allocation proceeding (before serious questions were raised in the companion satellite proceeding). Initial Determination at 33. That prior testimony and modeling served as a starting point for Dr. Johnson's econometric work in the present proceeding. Id. at 27. The Judges thus found in this proceeding that, inter alios, Dr. Johnson—in order to support his testimony—was “obligated,” yet failed, “to adequately address the impact of Dr. Crawford's workpapers, as well as the assertion that they demonstrated he lied in his testimony in the prior proceeding.”); Id. at 36.

308.   Id. (“[S]tartlingly, Dr. Johnson testified that he never received the satellite case documents that SDC's counsel produced to PTV's counsel . . . or the [relevant] testimony . . . [from] the satellite proceeding that was designated as evidence [in the present proceeding . . . .”]).

309.  A bona fide “`consulting team' of experts can be utilized by a party's law firm, to allow for work product confidentiality in connection with the law firm's evaluation of the facts.” Initial Determination at 38.

310.  “Must Carry” stations were those PTV stations which CSOs were legally obligated to transmit, potentially belying any assertion that the value of such stations was demonstrated by their carriage. See Initial Determination at 47-49; see also id. at 40, 42-43.

311.  PTV also questions the use of Mr. Harvey's analysis because it identifies the number of “systems” ( i.e., CSOs) that continued to retransmit a PTV signal after the WGNA conversion, rather than the total number of PTV stations retransmitted by these CSOs. PTV Motion at 5 n.4. The Judges do not agree with this criticism. Recall the problems (discussed supra ) related to PTV's failure to meet its evidentiary burdens related to “must carry” and multicast signals, as well as to indemnified transmissions. The Judges find it prudent to rely on Mr. Harvey's “system” calculation, which is equivalent to establishing one PTV signal per CSO as retaining in the 2015-2017 post-WGNA era its pre-2014 value, as evidenced by its above-Minimum Fee carriage in that year. Utilizing PTV's per station approach would require the Judges to assume that the retransmission of all PTV stations in 2015-2017 were generating royalties, regardless of whether they were “must carry” or multicast signals, or whether they were subject to indemnification of any royalties due. As noted supra, the Judges declined to adopt PTV's arguments regarding the number or percent of “must carry” stations (for which no net royalty obligation exists), because of PTV's failure to meet its evidentiary burdens in those regards (a point unaddressed in the PTV Motion). As the D.C. Circuit has noted, the daunting factual nature of the statutory task of allocating royalties necessitates a measure of “rough justice,” which the Judges find to be well-administered as to this issue by making allocation decisions dependent in part on whether a party had met its evidentiary burden. See Initial Determination at 9 (and citations therein).

312.  PTV appears to implicitly argue that the “second bite at the apple” argument is not applicable because it did not know that the Judges would apply Dr. Johnson's opinion in favor of applying the Minimum Fee royalty data as an adjustment (Adjustment C). PTV Motion at 1 (arguing it was “impossible to anticipate that the Judges would apply their Adjustment[ ] C to Dr. Tyler's sensitivity limited to Above Minimum Fee CSOs.”). This argument is meritless. PTV argued emphatically for the Judges to utilize Minimum Fee royalty data to establish program values and allocation shares in this proceeding. The Judges did use Minimum Fee evidence in making Adjustment C in PTV's favor —just not the Minimum Fee evidence that PTV prefers, nor as extensively as PTV had sought. As noted supra, the D.C. Circuit has held, the Judges are “not . . . strictly limited to choosing from among the proposals set forth by the parties” and, like all agencies, “have the authority to modify proposals set forth by the parties, or to suggest models of their own.” Johnson v. Copyright Royalty Bd., 969 F.3d 363, 381-82 (D.C. Cir. 2020). See also SoundExchange, Inc. v. Copyright Royalty Bd., 904 F.3d 41, 50-51, 57 (D.C. Cir. 2018) (upholding the Judges' decision to modify a party's proposed rates in light of the Judges' application of the relevant statute); Ass'n of American Publishers, Inc. v. Governors of USPS, 485 F.2d 768, 773 (D.C. Cir. 1973) (when a rate-setting agency partially disregards two experts in connection with “suggested adjustments . . . [the] rate-making body may fashion its own adjustments within reasonable limits.”).

313.  The Joint Respondents' argument that the PTV Motion as it relates to Adjustment C should be denied because the analysis of WGNA + PTV transmissions is a “supply-side” scenario and thus differentiated from PTV pairing with other signals is moot in light of this order.

314.  When computing the allocation shares in the adjustment tables, the Judges necessarily rounded figures. When such rounding was applied it was done consistently across parties and years. Due to rounding, the sum of allocation shares may not equal exactly 100% for a given year.

315.  PTV and CTV describe the error as an arithmetic error.

316.  The first arithmetic error corrected was in the calculation of the proportional increase to other claimants' shares relating to the reduction in the PTV share due to the presence of “must-carry” stations. The second arithmetic error corrected was in the calculation of the PTV share for 2017 to account for this “must-carry” issue.

317.  To the extent that corrections set forth in this Order might be construed to reach beyond those identified in the Motions for rehearing or the rehearing authority in 17 U.S.C. 803(c)(2) , the Judges also make such corrections under their authority to correct technical or clerical errors in 17 U.S.C. 803(c)(4) . For this reason, the Judges set forth the analysis herein also as a written addendum to the Initial Determination, which is distributed to the participants of the proceeding via this Order and will be published as part of the Final Determination, pursuant to 17 U.S.C. 803(c)(4) .

318.  For years 2015 and 2017, the calculated allocation shares did not equal 100%. In the case of 2015, the total calculated shares were just below 100%. To achieve the full 100%, the Judges reviewed the results and provided an increase to the claimant whose share was the closest to being rounded up at the second decimal place. In 2017, the total calculated shares were just above 100% and the Judges did not round up the claimant whose share was the closest to not being rounded up at the second decimal place to achieve a 100% allocation.

BILLING CODE 1410-72-P

BILLING CODE 1410-72-C

[ FR Doc. 2024-13597 Filed 6-27-24; 8:45 am]

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