Full opinion text
MEMORANDUM OPINION AND ORDER JOYCE HENS GREEN, District Judge. In these consolidated cases, plaintiffs, two cable television program services and trade associations representing cable program services and cable television system operators, assert antitrust claims against the defendant, Broadcast Music, Inc. (“BMI”), in connection with music performing rights licenses issued by BMI. BMI, in turn, along with several affiliates, counterclaims against the two program service plaintiffs for copyright infringement. These matters were heard by the Court in a bench trial comprising three weeks of live testimony, several additional hours of videotaped witnesses, as well as thousands of documentary and videotape exhibits. Based on the findings of fact and conclusions of law set forth below, the Court enters judgment against plaintiffs and for defendant and counterclaim plaintiffs. I. BACKGROUND This suit was brought by the National Cable Television Association, Inc. (“NCTA”), Community Antenna Television Association, Inc. (“CATA”), Black Entertainment Television, Inc. (“BET”), and The Disney Channel (“TDC”) against Broadcast Music, Inc. (“BMI”). Collectively, plaintiffs represent the different components of the cable television industry. NCTA is the principal trade association of the cable television industry, whose members consist of cable program services and cable system operators. CATA is also a trade association for the cable television industry whose members include cable system operators and cable program services as well; its membership overlaps with NCTA’s. TDC operates a pay cable television program service that, inter alia, acquires, markets, and transmits cable programming. BET operates a basic cable television program service that, like TDC, also acquires, produces, markets, and transmits programming. Defendant and counterclaim-plaintiff BMI is a nonprofit corporation formed in 1939 by radio broadcasters that is a music performing rights licensing organization within the meaning of the Copyright Act, 17 U.S.C. § 116(e)(3). Along with its major competitor, the American Society of Composers, Authors and Publishers (“AS-CAP”), and other smaller entities, most notably the Society of European Stage Authors and Composers, Inc. (“SESAC”), BMI licenses the performing rights in the copyrighted musical compositions of its affiliated composers, songwriters, and music publishers. BMI has more than 110,000 affiliates and its repertory comprises over two million copyrighted musical compositions. Pursuant to form affiliation agreements, BMI affiliates grant to BMI the non-exclusive right to license the performing rights in their existing and future copyrighted musical compositions and to sue on their behalf for infringement of those rights. In return, BMI monitors the use of affiliates’ music and pays them royalties. A. Historical Background Music performing rights societies were formed as a means of dealing with the difficulties of composers in obtaining compensation for the use of their music and in enforcing their copyrights. “[TJhose who performed copyrighted music for profit were so numerous and widespread, and most performances so fleeting, that as a practical matter it was impossible for the many individual copyright owners to negotiate with and license the users and detect unauthorized uses.” Broadcast Music, Inc. v. Columbia Broadcasting System, Inc. (“BMI v. CBS”), 441 U.S. 1, 4-5, 99 S.Ct. 1551, 1554-55, 60 L.Ed.2d 1 (1979). At issue here is the legality of what is known as “blanket licensing,” the practice of BMI (as well as ASCAP and SESAC) whereby the licensee obtains the right to unlimited use of all the compositions in the BMI repertory for a specific period for a specific fee, the latter usually based on a percentage of the licensee’s gross revenue. Thus, the license fee does not directly depend on the amount or type of music used, or the way in which the music is used. Blanket licensing has been the subject of antitrust litigation for nearly sixty years, beginning with a criminal complaint filed against ASCAP in 1934. In 1941, the United States brought suit against ASCAP’s blanket licensing — at that time, exclusive licensing — charging that it was an illegal restraint of trade and that ASCAP constituted an illegal copyright pool. As a result of the litigation, a consent decree was imposed in 1941. United States v. ASCAP, 1940-43 Trade Cas. (CCH) ¶56,104 (S.D.N.Y.1941). The consent decree was substantially amended in 1950, largely as a result of complaints by the emerging television industry and a successful challenge by motion picture theaters. J1 (United States v. ASCAP, 1950-51 Trade Cas. (CCH) ¶62,594 (S.D.N.Y.1950)). The amended consent decree allows ASCAP to obtain only nonexclusive performing rights from its members, and requires ASCAP to grant any user a nonexclusive license to perform all ASCAP compositions either for a specific period or on a per-program basis. Furthermore, ASCAP may not demand that a user obtain a blanket license. BMI has been similarly subject to the constraints of a consent decree. See United States v. BMI, 1940-43 Trade Cas. (CCH) ¶59,096 (E.D.Wis.1941); J2 (United States v. BMI, 1966 Trade Cas. (CCH) ¶71,941 (S.D.N.Y.)). The consent decrees do differ in some material respects. Most significantly, AS-CAP’s decree provides for a “rate court”: if ASCAP and an applicant for a license disagree as to a fee, the applicant may petition the rate court (the United States District Court for the Southern District of New York) for a determination of a reasonable fee. ASCAP must then grant a license at the court-determined rate. BMI has no such rate court, nor any other compulsory licensing mechanism. See generally BMI v. CBS, 441 U.S. at 11-12 & n. 20, 99 S.Ct. at 1558 & n. 20. BMI has asked the U.S. Department of Justice for an amendment to its consent decree to provide for a rate court, but its request was denied. See J8, J4. Apart from the consent decrees entered into with the United States, BMI’s and ASCAP’s blanket licenses have suffered but ultimately survived a number of antitrust challenges by private litigants. See Columbia Broadcasting System, Inc. v. American Society of Composers, Authors and Publishers, 400 F.Supp. 737 (S.D.N.Y.1975), rev’d, 562 F.2d 130 (2d Cir.1977), rev’d sub nom. Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979) (“BMI v. CBS”), on remand 620 F.2d 930 (2d Cir.1980) (“CBS Remand”), cert. denied, 450 U.S. 970, 101 S.Ct. 1491, 67 L.Ed.2d 621 (1981); Buffalo Broadcasting Co. v. American Society of Composers, Authors and Publishers, 546 F.Supp. 274 (S.D.N.Y.1982), rev’d, 744 F.2d 917 (2d Cir.1984), cert. denied, 469 U.S. 1211, 105 5. Ct. 1181, 84 L.Ed.2d 329 (1985). In BMI v. CBS, the Supreme Court held that the issuance by ASCAP and BMI to CBS of blanket licenses at negotiated fees is not a per se restraint of trade in violation of the Sherman Act, and remanded to the Court of Appeals to assess the practice under the “rule of reason.” The Second Circuit accordingly examined whether, on the record presented, the blanket license, on its face and as applied, was a restraint on trade. Upholding the district court’s finding that proof of a restraining effect was lacking, the court concluded that the blanket license did not violate § 1 of the Sherman Act. 620 F.2d at 938-39. In Buffalo Broadcasting, a challenge brought by local television stations to ASCAP’s blanket license, the Second Circuit reversed the district court’s determination that the blanket license was an unreasonable restraint on trade in that context, holding that it was not such a restraint where there were realistically available alternatives. B. The Cable Industry and Music Use To understand the contentions in this litigation requires, in addition to historical background, an examination of the different components of the cable television industry and how it acquires and uses copyrighted music. 1. Structure of the Cable Industry There are two tiers of the cable industry represented in this action: cable program services (also referred to herein as programmers) and cable system operators. The cable program services represented here are: First, TDC, a pay cable program service, which means that it usually does not carry commercial advertisements. Its services (programming) are sold to subscribers by cable system operators for a monthly fee (in addition to the basic cable fee subscribers pay to cable system operators for basic cable services). Like all pay cable program services, TDC’s sources of revenue include a share of the cable operators’ monthly charges, i.e. subscription fees charged by system operators to home viewers for the pay service. The second cable programmer represented here is BET, which is a basic cable program service. Basic cable program services do transmit commercial advertisements as part of their programming. Basic cable programming is sold by cable system operators to subscribers as part of the subscription fee for receipt of a package of cable television services — in other words, without additional charge. Basic cable program services obtain their revenue from advertisements and from a certain portion of the subscription fees paid by the cable system operators for carrying the basic services’ programming. The other component of the cable industry represented here consists of cable system operators. They transmit programming from four principal sources: broadcast television stations, distant broadcast television stations furnished via satellite (known as superstations), local origination programming (programming produced by the system operators), and basic and pay cable program services. Cable system operators obtain their revenues from their share of subscription fees as well as from the leasing of access to their systems for programming and advertising from local origination programming and basic cable services. Many of the thousands of local system operators are part of larger multiple system operators (“MSOs”). Cable television transmission is accomplished as follows. Cable program services transmit programming regionally or nationally via satellite or overland microwave. The programming reaches viewers (subscribers) in one of two ways. The majority of cable television appears on the screen via satellite transmission from the program services to cable television system “head-ends” owned by cable system operators. The system operators then retransmit the programming to subscribers on the same lines (wire or fiber optic cable) through which they transmit broadcast television and their own (local origination) programming. A very small percentage of subscribers receive the cable program services directly on their own home dish antennas (and pay fees directly to the program services). These two methods of transmission are used by both pay cable services and basic cable services. 2. Program Production and Music Licensing Virtually every type of programming shown on cable television uses music in some manner. Such music is of three types: theme music, used either to introduce or close a program; background music, used to complement the visual action; and feature music, music that is the principal focus of a program, e.g., in a music variety show. J.S. ¶ 40; Tr. at 1734-36. See generally Buffalo Broadcasting, 546 F.Supp. at 281; CBS Remand, 620 F.2d at 933. To use music as either theme, background, or feature in programming, producers must obtain the rights from the composers and publishers of the music. Producers either engage a composer to write original music for the program (arrangements known as “composer for hire” agreements), or obtain a license to preexisting music from a music publisher or its agent. The music composer or the composer’s agent negotiates the price of a bundle of music rights; mechanical rights (the right to make a mechanical reproduction of the music), print rights (the right to publish the sheet music), grand performance rights (the right to hold dramatic performances of music such as operas and musicals), and, most relevant here, synchronization rights, the right to record or synchronize the music with the visual image or other aural aspects of the program. These rights are granted (usually as a package) to the producer for a negotiated fee. The one right that is not granted to producers (other than producers of motion pictures for theatrical performance) is the non-dramatic performing right (hereinafter “performing right”), that is, the right to publicly perform the music. The performing rights to music owned by BMI affiliates are generally licensed through BMI and not to the producer but to the ultimate “performer,” such as a broadcast or cable television entity. This distinction means that while the price of all other music rights is negotiated directly between the producer and the composer and entails the granting of those rights from the latter to the former, performing rights most often are separately obtained from BMI— usually through the blanket license at issue here. 3. Programming Two main types of programming are carried by cable program services: original programming and syndicated programming. Original programming is that produced by the cable service itself or by independent producers specifically for the service. Most cable program services, including TDC and BET, transmit some original programming. These programs range from full-length movies to regular programs to promotional announcements and commercials. Approximately 25% of TDC’s programming consists of such original materials. With regard to this component of programming, then, the program service acts as a producer and thus selects the music content. Syndicated programming includes any pre-recorded theatrical motion picture, videotape, or other recorded work (such as broadcast television series and music videos) offered for sale or license by third-party distributors, producers, or syndicators. This previously produced programming comprises the majority of programming carried by cable program services such as plaintiffs TDC and BET. Several of plaintiffs’ witnesses testified that the quantity and quality of the syndicated programming they transmit is critical to effective competition with other cable program services. What plaintiffs are challenging here is the blanket licensing system that is applied to syndicated programming on cable television, and, in particular, the time in the process when music performing rights are acquired. Virtually all syndicated programming contains copyrighted music, a large percentage of which is in the BMI repertory. The music is selected by the producer of the syndicated program and synchronized in the program soundtrack at the time the program is created. Accordingly, when the syndicated program is sold or licensed to the cable program services, the music is “in the can,” i.e. indelibly part of the program. That means that cable program services do not play any role in the selection of or negotiation over the bundle of music rights described above concerning syndicated programming. Most standard form agreements entered into between syndicators (or other preexisting program producers) and cable program services provide that the programmers cannot alter any aspect of the syndicated product. E.g., P 50D ¶ 7 (TDC agreement with MGM/UA Telecommunications, Inc., Jan 15. 1990) (“You will not authorize any third party to, nor will you yourselves, cut, edit, delete from, add to, or alter the Film without our consent.”); P 51E 1111 (BET agreement with Columbia Pictures Television, Aug. 28, 1985, for a television series) (“BET shall telecast each episode in its entirety____”). These contracts also contain representations and warranties that the copyright rights attached to the programs elements have been obtained by the producer or distributor, and the latter thereby indemnify the licensee against any claims based thereon — except for music performing rights. E.g., P 50D 117 (“We warrant that we own or control all rights (except ... nondramatic musical performing rights) in the Film____”); P 51E ¶ 7(b) (Contractor represents and warrants that “the Series licensed herein do not, and that the exercise by BET ... of the rights herein granted will not [] infringe upon the common law rights, or the copyright, or the literary, dramatic, music or motion picture rights of any person____”). As for music performing rights, the agreements provide that the music performing rights controlled by a music performing rights society must be paid for by the acquirer of the programming. E.g. P 50D 117; 51E 119. The relationship between cable program services and system operators is governed by similar contractual terms. System operators, usually at the MSO level, enter into affiliation agreements with programmers for the right to exhibit that service’s programming. These agreements generally prohibit system operators from editing, deleting, or altering any of the programming content. E.g., P 53C II 6(b) (TDG-Adelphia Communications, 1983); P 53 E 1! 6(b) (TDC-Cablevision Industries, Inc., 1983); P 54G 114(c) (BET-American Television & Communications Corp., 1989); P 54 L ¶ 4(c) (BET-Falcon Cablevision, 1989). See generally Tr. at 426-27; 682-83; 747-751; Whalen V.Tr. (J16) at 24-28. The agreements also have standard representations and warranties indemnifying the system operators against any claims of infringement concerning the program elements in programming, but in most instances, these provisions do not include music performing rights. E.g. P 53C 118(a); P 53A Art. 8.01; P 54G 118(d)(ii); P 54L II 8(d)(ii). It is evident that without music performing rights, cable television cannot lawfully transmit programming containing copyrighted music. In addition to original and syndicated programming carried by the cable program services, cable system operators also transmit their own programming (local origination programming), as well as public access programming. Local origination programming carried by cable system operators represents only a fraction of the total programming operators offer. It consists primarily of local news shows, talk shows, and other programs that use little or no music. Like cable program services’ original programming, system operators’ control of local origination programming is such that they can select the music they use and can acquire the applicable music performing rights independent of BMI. The salient fact derived from this structure, according to plaintiffs, is that cable program services (and cable operators) have no control over the music in the vast majority of the programming they transmit as part of their service. The prevailing industry practice is that music performing rights are not conveyed and must be obtained from the copyright holder or his or her agent in order to perform the music in the program. In addition, cable program services do not obtain the right to alter or delete the music in syndicated programming. As a result, under the copyright laws, cable program services cannot lawfully transmit any syndicated programming containing music from the BMI repertory without a license from BMI. Without the licenses, then, syndicated programing would be commercially valueless to cable program services. The gravamen of plaintiffs’ argument is that cable program services are forced to obtain the blanket license from BMI in order to transmit syndicated programming, the mainstay of their program offering. Cable system operators as well must have some sort of license to transmit copyrighted music. Interestingly, as to noncable program service programming, these matters are taken care of in different ways. Broadcast television networks and local stations (whose programming is often transmitted by cable operators) have licenses governing music performing rights. Furthermore, by statute, cable system operators receive compulsory blanket licenses at fees set by the Copyright Royalty Tribunal for distant broadcast (superstation) transmissions. 17 U.S.C.A. § 111(d) (West Supp.1991). As for the remaining two types of programming, local origination and cable program services (or networks), licensing is unresolved, and it is the failure of BMI and the cable industry to reach agreement on the issue that led to this litigation. The focus of plaintiffs’ challenge is BMI’s demand for a blanket license for syndicated programming on cable television; they do not challenge the license with respect to local origination programming or programming made expressly for first exhibition on cable television. C. Music Licensing History of the Cable Industry To understand the posture of this case, and the contour of the Court’s inquiry, a review of the history of music licensing in the cable industry is helpful. Until December 31, 1989, licenses granted by BMI to cable program services were “through to the viewer,” covering both the services’ satellite and microwave transmission to system operators and home dish owners, and the retransmission of the programming by system operators to subscribers. Under this licensing regime, cable system operators did not need their own licenses for BMI music contained in programming obtained from cable programmers because their performances of that music were covered by the programmers’ licenses. During the 1980s, the cable industry expanded and matured. For example, from 1985 to 1990 subscriptions grew from 32 million to approximately 53 million households; between 1984 and 1989 total cable television subscriptions rose by 35.5%, and the average revenues per subscriber increased from $19.87 to $26.36. U.S. General Accounting Office, Telecommunications: Follow-Up National Survey of Cable Television Rates and Services (Report to the Chairman, Subcommittee on Telecommunications and Finance, Committee on Energy and Commerce, House of Representatives GAO/RCED-90-199, June 13, 1990), at 57, 59 (D 596). As of the mid-1980s, BMI had entered into blanket license agreements with five major pay cable program services (including TDC), three basic cable program services owned and operated by MTV Networks, Inc., and a variety of smaller cable networks. The fees for these licenses were either flat dollar sums or, in the case of some pay cable program services, calculated at the rate of $0.12 per subscriber, never amounting to more than 0.3% of the pay cable services’ revenues. The majority of cable programming services (and all cable operators) are unlicensed at this time. BMI characterizes these license fees as “start-up” rates. BMI’s Vice President and General Counsel, Marvin Berenson, testified that BMI believed that these rates were not keeping up with the types of revenues the cable industry is garnering. Tr. at 2284-85. BMI accordingly sought higher fees. During 1988 and 1989, BMI offered through-to-the-viewer blanket licenses to BET and three other cable program services at a fee equivalent to one percent of each service’s annual revenues. A more important point of contention between the cable industry and BMI that hampered their ability to reach agreement was what BMI offered as an “alternate method of licensing”: dual or split licensing. Under this' approach, cable program services and cable system operators would have to obtain separate music performing rights licenses for the transmission of programming containing BMI music. (The system operator’s license would also cover the system operator’s non-program service programming.) In other words, a license would be required for both the transmission of the cable programming from the programmer to the system operator, and from the system operator to subscribers. The rationale for this splitting of fees was twofold: Primarily, BMI was attempting to capture a share of the greater earnings in the cable industry, that obtained by operators. E.g., Tr. at 2334-35, 2349. And, it was attempting to obtain compensation for what it argues are the two separate public performances that occur in cable transmissions: from the cable programmer to the system operator, and from the system operator to the subscribing public. E.g., Whalen V.Tr. (J16) at 98-99. BMI first introduced the approach in December 1989. It is undisputed that BMI actively sought to institute this new form of licensing and that it would prefer to license the cable industry in that manner thenceforth. E.g., P 178 at 4 (BMI President’s Report, Apr. 2, 1990). As the Director of Legal Affairs of The Disney Channel recalled from a meeting with BMI in January 1990, BMI was adamant on this point and intended to obtain such licenses from all cable programmers. Whalen V.Tr. (J16) at 62-63. HBO had a similar experience, as reflected in notes of a meeting between BMI attorneys and HBO, where the former intimated to the latter that BMI would not be giving through-to-the-viewer licenses. P 9L at 8. BMI also threatened to sue programmers for infringement unless they acceded to BMI’s demands. E.g., P 4H (BMI letter to Arts & Entertainment Cable Network, Feb. 2, 1989); P 6E at 2 (BMI letter to CBN The Family Channel, Mar. 21, 1989). At the same time, in early 1989, BMI proposed to the NCTA licensing committee a blanket license fee for system operators, at a fee of one percent of revenues, to cover their transmission of local originator and public access programming, as well as programming from unlicensed cable services. J.S. ¶ 84. NCTA refused. BMI’s Berenson testified that both this type of license, as well as a through-to-the-viewer license at a 1% rate, were sought from programmers. Tr. at 2334-35, 2472. Specifically, through-to-the-viewer licenses would be offered if they “encompassed the entire revenue stream.” Id. at 2469. BMI notes that it asked TDC, for example, to make a counterproposal, id. at 2472, but TDC never did so. Id.; Whalen V.Tr. (J16) at 107. BMI, for its part, refused to go to arbitration to settle these disputes. P 6E at 2. In any event, the program services balked at these demands, refusing to pay above 0.25% of their revenue for a through-to-the-viewer license, Tr. at 2328-29, and rejecting the split licensing approach entirely. It was clear that BMI was seeking substantial increases in license fees, no matter the type of license. E.g., Tr. at 2471. After the negotiations broke down, BMI sent letters to several program services indicating that unless license agreements were entered into, BMI would sue for infringement of their affiliates’ copyrights for the programmers’ unauthorized performance of BMI music. BMI subsequently instituted a number of copyright infringement actions against unlicensed program services. These included cases against Rainbow Programming, Lifetime Television, and the Christian Broadcasting Network. In an antitrust case brought against it, BMI counterclaimed for infringement, as it has done here. The most significant action BMI brought was against Home Box Office (“HBO”) and Manhattan Cable Television, Inc. {“HBO case”) in December 1989 after the failure of HBO to agree to the terms of renewing HBO’s license on either a dual or through; to-the-viewer basis. In that suit, BMI claimed copyright infringement and sought an injunction preventing HBO from continuing to transmit programming containing BMI music. The suit was settled a year later, well after the instant litigation began. BMI never sued BET, although it did send the programming service a “cease and desist letter” indicating that unless BET successfully negotiated a license, BMI would sue for infringement. P 3M; Tr. at 764. BET and other programmers did offer to have the appropriate fee determined by a neutral third party and to pay interim license fees while the final license terms were decided, but BMI was not interested. Tr. at 765, 767, 769, 2306; P 6E at 2. TDC’s through-to-the-viewer license agreement with BMI expired on December 31, 1989. During negotiations for renewal in later 1989 and early 1990, BMI pushed for a split license arrangement, but did offer to consider a proposal for a through-to-the-viewer license, although at a substantially increased fee. On January 30, 1990, TDC and the other plaintiffs instituted this action. II. THE ANTITRUST CLAIM Section 1 of the Sherman Act forbids “[ejvery contract, combination ... or conspiracy in restraint of trade or commerce.” 15 U.S.C. § 1. Despite the literal wording, however, the statute prohibits only unreasonable restraints of trade. Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). Thus, plaintiffs must show that a restraint exists; once such a showing is made, a “rule of reason” analysis is conducted to determine if the restraint is unreasonable and therefore unlawful. This inquiry encompasses “all of the circumstances of the case,” Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 723, 108 S.Ct. 1515, 1519, 99 L.Ed.2d 808 (1988), and entails weighing the anticompetitive effects of the challenged practice against its procompetitive effects — its impact on competitive conditions. National Society of Professional Engineers v. United States, 435 U.S. 679, 691, 98 S.Ct. 1355, 1365, 55 L.Ed.2d 637 (1978); Continental T.V, Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49 n. 15, 97 S.Ct. 2549, 2557 n. 15, 53 L.Ed.2d 568 (1977). As expressed by Justice Brandéis in a frequently quoted passage, To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918). Portraying the blanket license as a facial restraint on competition, plaintiffs urge the Court to apply a full rule of reason analysis to BMI’s blanket licensing of music in syndicated programming and the dual licensing proposed by BMI in the negotiations that led to this lawsuit. Defendant, on the other hand, insists that the Court follow the shorter path traversed by the Second Circuit in both CBS Remand and Buffalo Broadcasting and ultimately end its journey at an earlier point, by determining that the blanket license constitutes no restraint at all. BMI is confident that the Court will find, as the Second Circuit did in those two contexts, that no restraint exists because there are “realistically available alternatives” to the blanket license. See CBS Remand, 620 F.2d at 936; Buffalo Broadcasting, 744 F.2d at 925, 933; see also F.E.L. Publications, Ltd. v. Catholic Bishop of Chicago, 214 U.S.P.Q. 409, 415 (7th Cir.1982). It is true that virtually any agreement or contract may restrain trade; “read literally, § 1 would outlaw the entire body of private contract law.” Professional Engineers, 435 U.S. at 688, 98 S.Ct. at 1363. And while “trade is restrained ... where rights to use individual copyrights or patents may be obtained only by payment for a pool of such rights,” CBS Remand, 620 F.2d at 935-36, here there is no explicit agreement or contract restraining the sale of music performing rights or otherwise prohibiting their sale outside of the blanket license. As explained supra, the music performing rights granted by the music’s composers and publishers to BMI are nonexclusive. Composers and publishers explicitly retain the right to license users directly. Plaintiffs, moreover, do not allege any tacit conspiracy on the part of defendant or its affiliates to deny the granting of those rights by the affiliates to the cable industry. Rather, they assume that the existence of BMI (the pooling of these rights) by itself automatically constitutes a restraint. Plaintiffs also imply that the Supreme Court virtually declared that the blanket license is a restraint. The opinion does not so hold. That was not the question before the Court; what it considered, and rejected, was the legal proposition that the blanket license was per se illegal under the antitrust laws. That conclusion might be read, in light of the remand to the Second Circuit to conduct a rule of reason analysis, to encompass a subsidiary finding that the blanket license was a restraint because it should be examined under that rubric. However, the opinion is vague on this point, its holding does not depend on such an assumption, and conclusions about implicit findings in Supreme Court opinions cannot be lightly reached. Indeed, were the Court to engage in delving for implication, there is language in the opinion suggesting that the blanket license is not a restraint. For example, the Supreme Court noted that “ASCAP is not really a joint sales agency offering the individual goods of many sellers, but is a separate seller offering its blanket license, of which the individual compositions are raw material.” 441 U.S. at 22, 99 S.Ct. at 1564. The Court further observed that “[t]he individual composers and authors have neither agreed not to sell individually in any other market nor use the blanket license to mask price fixing in other such markets,” id. at 23-24, 99 S.Ct. at 1564, implying that their actions do not constitute a restraint on the music-licensing market. Indeed, in a later gloss on its holding, the Supreme Court noted that “there was no limit of any kind placed on the volume that might be sold in the entire market and each individual remained free to sell his own music without restraint.” National Collegiate Athletic Association v. Board of Regents (“NCAA”), 468 U.S. 85, 114, 104 S.Ct. 2948, 2967, 82 L.Ed.2d 70 (1984). The cases plaintiffs rely on for their contention that a restraint exists (and that the Court should therefore immediately turn to a rule of reason inquiry) do not support their cause. In fact, the significant Supreme Court cases employing or expounding this doctrine arose out of agreements that were unmistakable restraints; the focus was on whether the particular restraints involved were lawful. In Continental T.V., the Court concluded that a limit on the number of franchises granted for any given area and a requirement that each franchisee sell the respondent’s products only from the locations at which he was franchised — vertical restrictions contained in franchise contracts — should be examined under the rule of reason. 433 U.S. at 59, 97 S.Ct. at 2562. In Professional Engineers, the Code of Ethics provision at issue affirmatively forbade competitive bidding for engineering services, thereby preventing engineers from soliciting and submitting price information to prospective clients until after the client had chosen an engineer. 435 U.S. at 683-84, 98 S.Ct. at 1361. And in NCAA, the object of the Court’s scrutiny was a college athletic association’s plan for televising college football that constituted horizontal price fixing and an output limitation on its face. “There can be no doubt that the challenged practices of the NCAA constitute a restraint of trade in the sense that they limit members’ freedom to negotiate and enter into their own contracts.” 468 U.S. at 98, 104 S.Ct. at 2958-59; see also id. at 99, 104 S.Ct. at 2959. In FTC v. Superior Court Trial Lawyers Association, 493 U.S. 411, 110 S.Ct. 768, 107 L.Ed.2d 851 (1990), a boycott by court-appointed lawyers — a facial prohibition on trade — was found to be a per se restraint. In Arizona v. Maricopa County Medical Society, 457 U.S. 332, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982), the court considered whether horizontal agreements among doctors fixing maximum prices — a clear restraint — should be subject to the per se rule or a rule of reason inquiry. Indeed, the Supreme Court used the blanket license examined in BMI v. CBS as a means of distinguishing the practice challenged in Maricopa County. In contrast to the medical services there, “the ‘blanket license’ was entirely different from the product that any one composer was able to sell by himself. Although there was little competition among individual composers for their separate compositions, the blanket-license arrangement did not place any restraint on the right of any individual copyright owner to sell his own compositions separately to any buyer at any price.” 457 U.S. at 355,102 S.Ct. at 2479 (footnotes omitted). That those cases invoked the rule of reason (or rejected it) has no bearing on the threshold question here, where there is no facial restraint. This Court refuses to assume that a restraint exists and, accordingly, examines whether the blanket license is, in the first instance, a restraint at all. Plaintiffs claim that BMPs blanket license, by its very nature, is a de facto restraint of trade as applied to syndicated cable television programming with regard to both the programmers’ transmission to cable operators and the cable operators’ transmissions to subscribers. They highlight facts stipulated to or adduced at trial that purportedly lead to this conclusion: that BMI offers its repertory on an “all or nothing” basis, that the fees for the licenses do not reflect the quantity or quality of the compositions used, and that the fee “is not set by competition among individual copyright owners.” See BMIv. CBS, 441 U.S. at 23, 99 S.Ct. at 1564. Plaintiffs also emphasize that all other rights pertaining to music use in syndicated programming are conveyed at the time of production and are done so in a competitive marketplace where negotiations as to these right are characterized by price competition. In other words, plaintiffs assert that in a world without the blanket license, music performing rights would be negotiated in the same competitive setting, via producer source licensing. In particular, the fact that syndicated programming, which the record establishes is critical to the commercial viability of both cable programmers and operators (especially from major studios), involves music “in the can,” and the agreements between programmers and the producers or distributors of syndicated programming prohibit the deletion of the music contained therein, restrains plaintiffs from obtaining performing rights by any means other than blanket licenses. Because BMI’s practices leave them with no choice they violate the antitrust laws. This superficially appealing argument does not survive a close scrutiny of the record evidence. Ironically, plaintiffs, in presenting the facts as proving their lack of choice, in essence are urging the Court to determine whether a choice exists. This brings the Court to the analysis plaintiffs claim is incorrect and should be bypassed, that employed by the Second Circuit in CBS Remand and especially Buffalo Broadcasting, where the Court emphasized that the important question was whether “there are no realistically available alternatives” to the blanket license. 744 F.2d at 933. Although not binding on this Court, and although based on a significantly different trial record, the Buffalo Broadcasting decision is instructive and warrants brief review. That case, it may be recalled, was a challenge by local broadcast television stations to blanket licenses for music performing rights. According to the Second Circuit, the appropriate inquiry was “whether the plaintiff had proved that it lacked a realistic opportunity to obtain performance rights from individual copyright holders.” Id. at 926. The trial court there had considered three alternatives — per program licenses, direct licenses, and source licenses — and had found each wanting. The Court of Appeals found the trial court’s conclusions wrong as a matter of law. As to per program licenses, the court of appeals declared that transactions costs (e.g., tracking down individual composers) and the burdens involved in monitoring had not been shown to be excessive in an objective sense. Id. at 926-27. As to direct licensing, the court found that plaintiff had failed to prove that it lacked sufficient market power to have the realistic opportunity to secure such licenses, particularly because no evidence was offered that the local television stations had attempted to obtain such licenses and because they were able to obtain direct licenses for their own local programming. Id. at 929. Finally, as to source licensing, the court found that plaintiff had not proved the inability to obtain licenses from producers of syndicated programming who “could, if so inclined, convey music performing rights.” Id. In this regard, the court observed that “notably absent from all of the correspondence” concerning offers by the local television stations to obtain music performing rights from producers “tendered by plaintiffs is the customary indicator of a buyer’s seriousness in attempting to make a purchase — an offer of money.” Id. at 930-31. The court thus concluded that plaintiffs had not presented “evidence that the blanket license is functioning to restrain willing buyers and sellers from negotiating for the licensing of performing rights to individual compositions at a reasonable price.” Id. at 932. Of course, the fact that local broadcast television stations did not prevail in their antitrust case challenge to the blanket license does not mean that plaintiffs here necessarily fail in their parallel quest. Antitrust questions are always fact-specific. The plaintiffs before this Court are different, especially because they represent two distinct sets of players in the market (programmers and system operators). The evidence presented at trial is not the same as that in Buffalo Broadcasting, That being said, however, plaintiffs here have failed to carry their burden. It is clear from the record that there are realistic alternatives available — that plaintiffs, especially the cable programmers, do have a choice when it comes to obtaining music performing rights for the syndicated programming they transmit. These options are examined in turn below, first with regard to cable programmers, then with regard to cable system operators. A. Alternatives Available to Cable Program Services 1. Source Licensing Much of the time at trial was devoted to “supplier source licensing” or source licensing. In fact, this is the relief plaintiffs seek — to have music performing rights bargained for at the time producers select music for their syndicated product. They claim that suppliers of syndicated programming do not have the performing rights to convey, and that even if they do, the existing practice is not to pass on those rights because of the disincentive created by the blanket license. a. Preexisting Music Several form and actual synchronization licenses governing rights to preexisting music issued to producers of motion pictures (a significant segment of syndicated programming acquired by cable services) were introduced into evidence that contain clauses limiting the music performing rights to U.S. theatrical exhibition. These licenses typically provide that television performance of the motion picture by anyone not licensed for such performing rights by ASCAP or BMI is subject to clearance of the performing right either from publisher or ASCAP or BMI or from any other licensor acting for or on behalf of publisher, and requires an additional license fee therefor. See, e.g., P 39D 116 (Blackwood Music Inc. form). Similarly, a form pay/cable synchronization license used by the music publisher, the Goodman Group, for non-theatric release syndicated programs states that it does not permit any use other than synchronization or recording, “it being understood that performing rights licenses must be secured from any performing rights society or other entity having the legal right to issue such licenses as the owner of such rights.” P 4011 II3. It has clearly been the practice in the industry not to convey performance rights along with synchronization rights. Tr. at 391, 637-40; Rider V.Tr. (P 375A) at 35-36. Nonetheless, publishers do offer licenses for preexisting music that obligate the publisher to issue separate music performing rights licenses to cover unlicensed television exhibition. Tr. at 563-72; see D 667 118(a), D 985 II 2(b)(i). These contingent direct licenses, known as “back-up” licenses, commonly provide for a mandatory performance license to be granted to any television exhibitor unlicensed by BMI, the fee therefor to be negotiated between the producer and exhibitor (or by arbitration). For example, a synchronization and performance license for the composition “You Are My Sunshine,” granted by the publisher to Walt Disney Studios, provides: With respect to the exhibition of said motion picture in the United States ... if any television exhibitor is not licensed to perform the musical composition by a blanket license issued by the performing rights society (if any) having the performing rights thereto ... Publisher shall, or shall cause said performing rights society to, license such television exhibitor ... for a reasonable performance fee to be negotiated ... or ... such fee shall be determined by a neutral arbitrator____ D 667 118(a). An identical clause is present in a form used by Warner Brothers — one of the largest studios producing syndicated programming. See D 646 ¶ 9(a). Indeed, synchronization licenses with these or similar clauses were recently entered into between the Disney Studio and the music publishing company EMI. Boris V.Tr. (D 1111A) at 45-46; see D 1109, D 1110. Form licenses containing contingent direct licensing clauses are also used by music publishers, including Disney’s Wonderland Music company. Tr. at 162. The second-largest music publisher in the world, Warner/Chapell, has used these forms since 1974. See D 14 II 5(c). Despite these contractual provisions to the contrary, plaintiffs rely on the existence of a “uniform expectation” that music performing rights will be licensed through BMI blanket licenses issued to cable programmers. Tr. at 366-67; 105; 1866-67. They also cite certain recent form agreements that explicitly require the licensee to obtain a separate music performing rights license, such as synchronization license forms for broadcast television used by ABKCO Music Inc., P 40A II3, and EMI Blackwood Music, Inc., P 40H 11 6. In any event, they argue that contingent direct licenses are the exception, rather than the rule. Whatever the historic practice in the industry may have been, however, and whether it is a fact that only a minority of licenses for preexisting music provide for such rights, the evidence conclusively established that such licenses exist, in both standardized blank forms and in actual agreements. Furthermore, there was no evidence provided that any cable entities had attempted to utilize the contingent direct license clause. Indeed, there was evidence that no cable television programmer had ever contacted Wonderland Music, a large music publisher, concerning the clause in their form licenses. Borgeson Dep. at 37-38. The economic realities of the industry further belie plaintiffs’ claims. It is stipulated that the negotiation of synchronization and theatric performing rights licenses for preexisting music in syndicated films and programs is characterized by price competition. J.S. ¶ 115. In determining license fees for the right to use preexisting music, the music publisher usually obtains from the producer information on the intended use of the music (e.g., theme or background). The resulting fee proposal is then subject to negotiation, and the producer in most instances can reject the offer if the fee is believed to be too high. Tr. at 1097-99, 1165-67. Producers, moreover, commonly solicit quotations for several different preexisting compositions from different publishers, so that the producer can select the composition after receiving proposed fee rates. Tr. at 1098-99; 1833-34. Therefore, to survive in this competitive marketplace, publishers would grant contingent direct licenses to producers if they were demanded — even where current contracts do not allow for such licensing. Tr. at 1841. Plaintiffs also point to the contractual arrangements between composers and their publishing companies as providing proof of the impediments that exist with regard to preexisting music in syndicated programming. These “songwriter agreements” govern the publisher’s administration of the copyrighted compositions in the publisher’s catalog, including the rights acquired by the publisher from the composer. These agreements vary both within a catalog and among publishers, but plaintiffs offered evidence of songwriter agreements with music publishing companies that prohibit the publisher from giving direct licensing without the composer’s consent and that require composers’ performing rights royalties to be licensed and received through BMI. See Tr. at 1863-65,1908-10; P 45A 114(j); P 45J 1T 5.01; P 45L II 4(k); P 45HH II 4(k). Plaintiffs did not show, however, that composers would not give their permission for such licenses. Further, these contractual provisions are not necessarily immutable. For example, songwriter Richard Sherman testified that, if pressed, he would grant his performing rights to the producer. Tr. at 2014. As with the other contract language discussed in this case, this language is amenable to change in response to market forces such as demand and in response to the right price. b. Original Music Plaintiffs also sought to prove that producers of programming containing “original music” (music specifically created for that programming) were unable to obtain the performance rights from the composer and publisher, and thus are precluded from granting licenses for performing rights even if requested to do so. The majority of music in syndicated programming is original music. Rights to original music are generally governed in the industry by “work-for-hire” agreements. These are producer-generated standard form contracts, in which the only term that is negotiated is the price. Tr. at 319-20, 1743-44, 1943-47. Pursuant to these contracts, the composer usually receives an initial (“upfront”) fee and, sometimes, agrees to a further compensation formula that would permit him or her to retain the right to receive royalties from public performance of the work and for any market sales of the music that may occur. The parties stipulated that work-for-hire agreements typically transfer from the composer to the producer “nearly all rights” to the original music. Plaintiffs introduced evidence showing that these agreements often do not grant the producer the right to perform or to authorize others to perform the music nontheatrically, without the producer obtaining express consent or an additional license from the composer. They then attempt to transform this evidence into the factual conclusion that music performing rights are not included in such agreements. Such a determination, however, would require viewing the evidence through an opaque screen. Plaintiffs largely rely on the standard work-for-hire agreements formulated before or during the early the 1980s. These form agreements contain language identical or substantially similar to the following excerpt: [T]o assure the Artist of participation in the revenue which may be derived from performances of the Compositions ... Producer will, and it does hereby, transfer and assign the world-wide Performing Rights ... in and to the Compositions to the Artist and a publisher of the Producer’s choice____ P 35E, Exh. A 113 (1987 agreement between Patrick Williams and Twentieth Century Fox); see also P 33F, Sched. B 113 (1980); P 33A, Sched. A 113 (1990); P 35 A, Exh. A 113 (1982). These clauses result in the composer receiving compensation for nontheatric public performances of the music only from BMI (or ASCAP or SESAC). Further, composers testified that they understood these types of contracts to mean that producers would not or could not assign music performing rights to any third party. Tr. at 1792-94; 1982-83; 2012-13. Yet other (and generally more recent) work-for-hire standard forms do provide for the transfer from the composer to the producers of all rights to the original music. One example of such forms provides as follows: Notwithstanding any provisions to the contrary contained herein, if at any time any television network, television station or other company (‘Television Entity’) ... does not or may not hold a non-dramatic performing license from ASCAP, BMI ... or if a Television Entity so require, [Producer] shall automatically have the exclusive right to license to each such Television Entity the non-dramatic performing rights in and to the Music for use in connection with the Show. D 243 § 3 (standard Disney Studio form). See also D 404 (Warner Bros); D 314 (Universal); D 205 (MGM); D 651 (Twentieth Century Fox); P 37A Exh. B 111(d)© (1990 agreement between Michael Kamen and Pathe Entertainment, Inc.); P 30A 11 9(b)(vii) (standard United Artists motion picture form); P 34G It 8(b)(vii). Similar to the above-quoted “automatic performance rights license” is the “grant of rights” clause, such as that in a form used by the Paramount Picture Corporation for composer-for-hire agreements: [I]t is specifically understood and agreed that included in the ownership of all rights of [Paramount] in and to the Compositions is the specific and irrevocable right under any and all circumstances, in perpetuity, to perform publicly for profit, or otherwise, and to authorize others to do so____ P 33A Sched. A ¶ 2; see also, e.g., P 32F 114 (1989 agreement); D 783 118(c)(vii) (Pathe Entertainment, Inc. form); D 990 Exh. A ¶ 4 (Orion form). Again, plaintiffs rely on the historic, prevailing practice in the industry and on what they claim has been the specific, uniform intent in virtually all these instances that compensation for music performing rights on cable television will be determined and distributed by BMI (or ASCAP or SESAC, as the case may be). Great significance is attached to the fact that current forms do not render music performing rights the subject of negotiation — they are subsumed into negotiations over the whole package. Plaintiffs also attempted, through their industry expert, to dismiss the clauses as giving merely “technical” rights. Tr. at 549, 561. Yet a witness for plaintiffs from TDC admitted that it could obtain such rights from the Disney Studio. Tr. at 157-58. Plaintiffs also argued that these clauses are meaningless because the contracts still provide for compensation for public performance rights to be received in the first instance through the performing rights society. But nothing is proven by the observation that these are merely backup provisions. Plaintiffs’ assertions that there are no known instances of producers authorizing unlicensed exhibitors to perform music under one of these provisions, and that BMI composers are “generally unaware” of the existence of these clauses, carry little weight. For no evidence was offered that any cable entity ever attempted to obtain such rights through that mechanism. See Borgeson Dep. at 41-42; Breen Dep. at 57-58. Economic realities of this segment of the music market are that there is, as the parties stipulated, intense competition among composers to be hired to write original music for such programming. Thus, producers are able to select, on the basis of quality and price, from among numerous composers to create music for their motion pictures or other syndicated programming. But plaintiffs dismiss this competition as not entirely relevant because, they claim, there is no price competition among composers regarding the licensing of cable television performing rights to that music. See Buffalo Broadcasting, 744 F.2d at 982. Again, that observation deserves little weight where there has been no opportunity for such competition to arise because it has not been pursued by the cable industry. Finally, very few cable programmers ever attempted to obtain source licensing for syndicated programming. The Senior Vice President for Programming at TDC testified that TDC had never asked suppliers of programming to obtain performing rights. Rider V.Tr. (P 875A) at 37; see also Tr. at 136-37. Those that did — BET, HBO and The Family Channel — did not offer any additional money to obtain the performance rights. Tr. at 731-32; Isakoff V.Tr. (P 376A) at 73-74. A fact further undermining their position is that, notwithstanding their failure to offer additional compensation, source licensing was obtained in several instances. The Family Channel obtained source licensing clauses in a number of syndicated programming contracts acquired from 1987 through 1990. Isakoff V.Tr. (P 376A) at 63-64; see D 286, D 299, D 376, D 379, D 385. HBO has obtained source licensing clauses in approximately 300 agreements concerning syndicated programming since 1984. Cooke V.Tr. (P 377A) at 13-15. Plaintiffs therefore can show no restraint created by blanket licensing impeding that alternative with regard to licensing that type of music in syndicated programming. 2. Direct Licensing With regard to direct licensing, it bears repeating that the blanket license is a nonexclusive arrangement. In other words, plaintiffs could choose to obtain licenses directly from the composers and publishers of the musical works contained in syndicated programming. Therefore, the question is not whether “direct licensing” is an option, but whether it is realistically available. There are hundreds of individual compositions that would have to be cleared with each individual copyright proprietor. And there was testimony to the effect that ascertaining the identity of and then reaching the appropriate copyright proprietors was difficult and costly. Tr. at 439-40; 688-89; 1078-79; Isakoff V.Tr. (P 376A) at 43-44. But even were that feasible, it was clear that for syndicated programming, although the programs are obviously selected and known, the musical content is not specified. Attempts by Home Box Office to obtain direct licensing for all its programming were only partially successful. Plaintiffs insist that so long as the blanket license exists, direct licensing will not be economically feasible because copyright proprietors will want at least as much remuneration as they would obtain from distributions they receive through the blanket licensing system. HBO’s strategy for obtaining direct licenses began with ascertaining what BMI had been paying the copyright proprietors. Clark HBO Dep. at 556-62. Those publishers who were willing to negotiate with HBO demanded at a minimum the same amount as their BMI distributions, and at times, much more. In other words, the blanket license serves as a pricing floor. Tr. at 1844; Boris V.Tr. (D 1111A) at 103-09; P 47T, P 47U, P AA-P DD (HBO-EMI correspondence); P 47FF-P 4711 (Famous Music-BMI-HBO correspondence). BMI points out that the sheer magnitude of the task does not make it impossible, if for no other reason than the fact that its licensing agreements with publishers (as well as composers) are nonexclusive. Furthermore, they emphasize the stipulated fact that few cable program services have attempted to obtain direct licenses for the music in their syndicated programming; in particular, neither plaintiff programming service here (TDC and BET) made any efforts in that direction. J.S. ¶ 126. The Court agrees that the dearth of any evidence in this regard renders plaintiffs’ contentions largely speculative. As for HBO’s efforts, they too do not form a sound basis for any conclusions as to the feasibility of direct licensing. HBO did not begin its direct licensing campaign until after BMI had filed the infringement suit against it, which calls into question the results obtained. Some testimony indicated that publishers found HB