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And I want to observe that Mr. Bradley is the first of six witnesses. We have already been in session for about an hour.

Mr. DANIELSON. If you would give me a comment, I would invite it, please.

Mr. BRADLEY. Well, as we both agree, it's very complicated. There are members of our association, our industry, that feel that we should pay copyright only for those imported signals, and there is certainly a lot of logic to that, and we agree to the logic.

The difficulty that we encounter is trying to develop a formula for determining the payment on those signals; it results in copyright payments by a selected few portions of our industry, and the rest of us are paying nothing.

Mr. DANIELSON. Well, I don't have any solution, but I'm seeking it wherever I can find it; I don't have any solution.

I'll make one gratuitous comment, though. I would think cable should look forward, without reluctance, to being classified in something of the nature of a public utility. You are really in an in-between zone here. You are allowing local governments to franchise you and regulate your rates. The FCC says you must carry a local signal, whether you want to, or not. You have no choice, no discretion, if the local TV station puts out “Deep Throat," you are going to have to show it; I guess the same would be true of "The Longest Day," or whatever that show was.

You are subject to the whims of local regulatory agencies, local ratesetting agencies. You have very properly stated that local ratesetting agencies are not sophisticated enough to properly reflect your cost basis.

I think since you are handled more or less as a utility, you ought to relax and enjoy it. [Laughter.]

I think that some of the problems could be resolved--that's free. Thank you.

Mr. KASTENMEIER. The gentleman from Massachusetts, Mr. Drinan. Mr. DRINAX. Thank you, Mr. Chairman.

Mr. Bradley, I'm sorry I had to go to another subcommittee, but I did read your paper and I compliment you on it.

On page 60 you indicate that opinion within the industry is deeply divided, and I wonder if you could tell us how many people feel that no copyright liability should attach at all to cable. You indicate the positions range from that, and I assume that's a minority. I wonder if they could justify that position on the basis of the CBS-Teleprompter decision.

Mr. Bradley. I don't know how many there are. We think it is a minority. I really don't know.

Mr. DRINAN. Well, is that minority going to fight for their particular view that copyright liability should not attach?

Mr. BRADLEY. I believe so, yes. Mr. DRINAN. They will justify it? Mr. BRADLEY. Yes, sir; they will attempt to justify it, I'm sure. Mr. DRINAx. But I take it from your testimony that you feel that copyright liability, rightly or wrongly, will in fact attach.

Mr. BRADLEY. Yes, sir. Mr. Drinan. What does the Supreme Court opinion mean on the Teleprompter decision?

Mr. BRADLEY. Well, in the case of the Supreme Court decision the court was rendering a decision with respect to the 1909 Copyright Law. And, of course, when that law was written there was no recognition of some of the modern technologies, including cable. I believe in their remarks the members of the court indicated that they were disturbed about having to apply a 1909 law to the present day.

So, it is our feeling that the public opinion is such, and that the rights of copyright holders are such, in certain instances, that they are entitled to payment, and we are willing to pay. Although, if in its wisdom the Congress decides there should be no payment for copyright, we would be tickled to death. (Laughter.]

Mr. DRInAn. Well, I would like to get some reasons why that might be so. In the Teleprompter case there is a basis for that, and you say here the FCC has gone almost contrary to the Supreme Court opinion.

Well, I had several other questions, but my colleagues here, I want them to question and comment; and I look forward to your colleagues. Thank you very much.

Mr. KASTENMEIER. The gentleman from New York, Mr. Badillo.

Mr. Badizio. If you agree that there should be a copyright payment, why must we in Congress fix the amount; why can we simply not say that there shall be a copyright payment, and then leave it to the normal market forces to say what the payment should be?

Mr. BRADLEY. The amount of payment is something that in the interest of equity to both the copyright holders, and to our industry we would like to see fixed. We would like to avoid the possibility of having an unknown amount established without a real control by us. And, as I mentioned, the adverse impact on the financial community is something that is of great concern to us.

Mr. Badiio. But anybody in business, or in life for that matter, doesn't have everything fixed; electricity might go up, rent might go up, why should this be fixed! What you really mean, you would like it fixed at a lower amount, we are not talking about, obviously, you would like a fixed amount at a certain level.

Why should this be different from rent, electricity, paper clips, or anything else you have in business?

Mr. BRADLEY. Well, in the case of the other things that you mentioned, there are certain options which are usually available. If the rent goes up too high you can move to another location, or build your own building. And in the case of these other things, the moderating effect of the marketplace, the competitive forces in the country tend to keep the figures from going totally out of sight. In this case, there is no such pressure.

Mr. Wiggins. Would the gentleman yield?
Mr. Badili. Sure.

Mr. Wiggins. Isn't the real reason that largely you don't originate grams and there is an infringement before you have any reason to negotiate.

Mr. BRADLEY. Yes, sir.

Mr. WIGGINS. In other words, they are carrying a signal originated by somebody else, and there is an infringement before there is any reason to start talking about a fee.

Mr. BRADLEY. Yes, sir.

Mr. Badillo. So, then, if you agree there should be a copyright payment, and there has to be regulation, why should ('ongress be the

one to fix that amount. Isn't it better at all times to have the determination made by a tribunal who can listen to the arguments on both sides, a tribunal who can conduct an investigation of the financial circumstances of the parties involved, and make a reasonable decision, based upon the circumstances as they come up from time to time!

Mr. BRADLEY. In a setting of rate by a tribunal, in addition to the uncertainty that worries us, there would be some pretty significant pressures brought to bear by some of our opponents in this worldMr. Badillo. There are no pressures brought on Congress, I gather. Mr. BRADLEY. I know that, sir. (Laughter.]

But, there are more of you, and we have great confidence in your ability to set the rate.

Mr. BADILLO. I have no further questions.
Mr. KASTENMEIER. The gentleman from New York, Mr. Pattison.

Mr. Pattison. Relative to this exemption, this $100,000 gross income exemption, isn't it true that that exemption, if enacted, would cover most of the rural stations which pick something out of the air, don't import very much by microwave and other means, and are primarily the people you can make the best argument about that should not pay copyright fees, as opposed to the local person who picksthe CATV who picks local signals off the air, and where you get a reasonably good signal anyway?

Mr. BRADLEY. Yes. This $100,000 figure would-in round numbersexempt systems that have 1,500 subscribers or less, small systems that have 2,000, or so. But, at least that takes care of the very small one, the one that is rendering a master antenna system type of service in the pure sense.

Mr. Pattison. How would you handle the problem where this $100,000 exemption would provide an incentive to small systems-or big systems, for that matter-to become a series of small systems!

In other words, you take a situation where you have a variety of systems in the suburbs that are all served by one head-end and are owned by the same company, but could be owned by different companies?

Mr. BRADLEY. I believe the bill now has a definition of "system" in it, that would prevent that. That definition includes all the area served by one head-end of a cable system.

Mr. PATTISON. But there could be a breakpoint where a system could say, "Well, it's better to install a couple of other head-ends and get the exemption."

Mr. BRADLEY. I believe that the cost of installing head-ends would prevent that, because it's substantial.

Mr. PATTISON. OK. Now, another subject. You talk about the blackout of the nonduplication rule. When you black out a distant signal because a local system has that particular program on, can you later broadcast that particular program? What is the practice?

Mr. BRADLEY. No. We cannot rebroadcast it. When a program is being blacked out, in all but one area of the country it's blacked out simultaneously with the broadcast which the viewer will see. Now, this has to do with the network exclusivity. There are two types of black-outs. One I just mentioned is network, when an imported network signal is showing the same program as the local station, you black out the imported one and show the local one.

The other type of exclusivity is syndicated exclusivity, where a television station has purchased the right to a particular movie or program. That station has the right to prevent us from showing that same program when it's imported from another signal, even though he may not have shown it.

Mr. Patrison. Would you elaborate a little on that, I missed that.

Mr. BRADLEY. Yes, sir. When television stations buy program rights to a particular movie, or syndicated program, they frequently have an exclusive right in that area. That exclusive right exists even though they may not have shown that program; and it conceivably even exists if they may never show that program.

So, that same program being imported from a distance cannot be shown under the exclusivity rule.

Mr. Patrisox. Any time!

Mr. BRADLEY. Any time during the period of the contract arrangement.

Mr. Danielson. Will the gentleman yield?
Mr. Patrison. Yes.

Mr. DANIELSON. How would you prevent this? If it's coming in by cable, or microwave, how do you black out this program?

Mr. Pattison. I think it's done by notification. The local station has notified the local CATV and says, “We have bought Bambi

Mr. DANIELSON. Or "I Love Lucy."
Mr. Pattison. But “Bambi" is more likely. (Laughter.)

I know you wanted to buy "Deep Throat"-(Laughter.] And then they can't show it, I guess.

I'm interested in what your proposal is, that you really eliminate the nonduplication rules, if we passed the copyright law.

Mr. BRADLEY. Yes, sir.

Mr. Patrison. Now, the normal argument, transmission or communications argument about that--without regard to copyrightwould have a very serious effect on the local transmission, the fractionalization of the local market. Particularly it would effect, for instance, the news programs that are produced locally. That is just about the only thing that is produced locally by local affiliates besides the “Dialing for Dollars" thing they have in the morning. The whole effort of the local affiliate is really in producing news, and that's about it; is that correct!

Mr. BRADLEY. Yes, sir; that is essentially correct.

Mr. PATTISON. Well, wouldn't there be a communications effect-never mind the copyright effect--wouldn't there be a communications effect if, in fact, the nonduplication rule were eliminated so you can always show things while the local news program is on? Wouldn't that have an effect on the local advertiser that usually sponsors local news?

Mr. BRADLEY. If I understand your question correctly and I hope I do—there is currently no prohibition against bringing in programs of an entertainment, or other nature, which compete with the local news.

Mr PATTISON, I see.

Mr. BRADLEY. And certainly, I would admit that if the local news is not as attractive to the eyes of a viewer as something else, he is going to look at something else.

I think there might be a beneficial effect in this type of competition, it will sharpen up the local station so that he will make the news more attractive.

Mr. Parrison. Well, my point is, if you are going to show a duplicating program-not a news program, but "I Love Lucy,” which is a duplicating program which will be precluded from showing during the local news time, I mean

Mr. BRADLEY. I understand now, I did not understand your question.

Yes. The answer I gave, I guess, would apply here. Mr. PATTISON. My point is, isn't that basically, fundamentally, a matter of communications policy, as opposed to copyright policy; couldn't we leave that to the FCC?

In other words, we shouldn't be determining here in this committee whether local news is going to be heard and therefore, all you get is Walter Cronkite and John Chancellor, and the rest of the people. That is not really our area, and shouldn't that be left with the FCC?

Mr. BRADLEY. Well, I think, sir, that your question poses a theoretical possibility. In our efforts throughout the years to determine an instance of actual damage to a broadcaster we haven't found the first one; and we repeatedly asked for that. So, while there is some theoretical possibility, I think it's probably not a very real one.

I think, too, that we have stood in the past on the position that if there is a demonstrated harm, we would like to know about it, and we are willing to talk about it and reason.

Mr. PATTISON. I just have one other question, and that relates to the whole issue of translators, dealt with on page 19 of your statement. I would just like to have you enlighten us a little bit more about that. I don't really understand the whole mechanism of that, how that works.

Mr. BRADLEY. A translator is a repeating device that is established in areas where there are holidays in the signals of the broadrasting station.

Mr. Pattison. And the translators are installed by whom?

Mr. BRADLEY. Well, they are variously owned. In some instances they are owned by the broadcasting station. In other instances they are owned by a group of local citizens; and in other instances by a government agency.

Mr. Pattison. And how does that affect

Mr. BRADLEY. Well, our point there, is that the bill does not now assess copyright liability to government-owned translators and we suggest that they are no different from anybody else.

Mr. PATTISON. What would the government own a translator for? Mr. BRADLEY. That would be a local government which would own

it.

Mr. Patrison. Oh, I see, just to improve the signal for the local people.

Mr. BRADLEY. Yes, sir.
Mr. PATTISON. Or CATV could own a translator, couldn't it?
Mr. BRADLEY. I don't think so. I think the FCC would prohibit it.
Mr. PATTISON. OK. I have no further questions.

Mr. KASTEN MEIER. Mr. Bradley, I want to thank you on behalf of the committee for your contribution this morning, the excellent presentation of your association.

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