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inclined to go to the owner of a copyrighted work and buy something that is shown in one of these isolated areas?
What I am trying to project to you very inartfully is that it seems to me there is a difference betweeen local advertising and regional and national advertising, and that to the extent that national advertisers blanket an area, they deny to a copyright owner the opportunity to sell his work to a local advertiser. Have I made that point clear?
Mr. RAILSBACK. Will the gentlemen yield?
Mr. RAILSBACK. Oak Park Savings and Loan carry ball games and they come into my area, and they come in with local advertising, or Koons.
Miss DA COSTA. I'm not familiar with those.
Mr. RAILSBACK. His point is—if the gentleman will yield furtheryou may not always have a regional advertiser.
Miss Da Costa. Let me just explain to you how that works, starting with the national advertiser. A national advertiser presumably has national distribution, and his product can be bought across the country. Therefore, any advertising that he buys in one market, or an accumulation of markets, his advertising is worth putting it on that station because his product is everywhere.
A regional advertiser has a similar situation within the region area that they have product distribution.
As far as the local, the truly local advertising that you are describ ing, sir, that advertiser feels, when he is investing money on a television station within his market that the medium is strong enough to get him customers, even though he pays a 10-percent premium for those homes that are not potentials for him.
Mr. WIGGINS. Well, perhaps that's so. Your illustration mentioned New York City and Oswego, I believe. I would think there is a possibility at least that a used car dealership in Oswego, which might otherwise be in the market to buy a movie, is not going to do so because that movie is being transmitted to New York City. And that to an extent it is true that a copyright owner is deprived of an opportunity to sell his product in Oswego.
Miss Da Costa. But if we examine hard research data that is available to us by county, where we can see the signals and stations that are being viewed by the homes in the county, we see that 10 percent of a county's homes views signals that are imported from as far away as New York. And consequently the potential for that local car distributor is 90 percent of the market.
Mr. WIGGINS. Well, I would like to be exposed to this hard data on which you base your conclusion. I realize the conclusion is stated in the testimony, but suppose that you worked out the figures in support of this and, if you have them, would make them available to the committee. Mr. Chairman, I would appreciate it.
Miss Da Costa. Sir, I did prepare a selected list of counties in which I looked at the actual viewing as it is reported by the Nielsen (0., which is a recognized research organization. This is the kind of information, if you will allow me to just mention it.
For example, in Oneida County, which is in the State of New York, we found that 3.4 percent of the households viewed the WNEW TV station in the course of a whole week.
Mr. KASTENMEIER. The chairman will interrupt to announce this is the second ring for a vote on the House floor.
Mr. DANIELSON. Are we coming back?
Mr. DANIELSON. Mr. Chairman, may I suggest that the pamphlets the witnesses placed on the table—they don't belong in our recordbut may we receive them for our files, for the record?
Mr. KASTEN MEIER. Yes. Any materials that the witnesses have made available.
The gentleman from New York, Mr. Pattison?
Mr. KASTEN MEIER. On behalf of the committee, we thank you, Mr. Bresnan, Miss Da ('osta, and your associates, for appearing here today.
The Chair will announce that tomorrow at 9:30 the subcommittee will convene, first to hear briefly the news archives issue with two witnesses, and then, at 10 o'clock witnesses generally supporting section 111, more particularly from the broadcasting industry.
Until that time, the subcommittee will stand adjourned.
[The prepared statement of William J. Bresnan follows:] STATEMENT OF WILLIAM J. BRESNAN, SENIOR VICE PRESIDENT AND PRESIDENT,
CABLE Division, TELEPROMPTER (ORP. Good afternoon, I am William J. Bresnan, Senior Vice President of Teleprompter Corp., and President of our Cable Division. Teleprompter is the nation's largest cable television company, having approximately twice as many cable television subscribers as the second largest company.
On my right is Jay Ricks, a partner in the firm of Hogan & Hartson. On my left is Jacqueline Da Costa, Director of Media Information and Analysis at Ted Bates & Co., and to her left is Barry P. Simon, Teleprompter's Vice President and General Counsel.
Teleprompter's position on copyright is straightforward. We believe cable television systems should not be required to pay ANY copyright fee for the car. riage of broadcast signals.
To understand this position, it is necessary to understand a basic fact about the broadcast industry-a fact which makes that industry unique among all other distributors of copyrighted materials. The broadcaster, unlike the movie producer or the book publisher, does not sell a copyrighted product. What the broadcaster sells is the attention of the viewers. The purchaser is the advertiser. The more viewers the broadeaster can deliver to the advertiser, the more the advertiver will pay. And the more the advertiser pays, the more money is available for the broadcaster to pay the copyright owner.
Cable television affects this relationship only by enlarging the audience avail. able to the broadcaster. In many cases this actually increases the advertising revenues available to pay the copvright owner. In no case does it deprive the copyright owner of anything to which he is entitled.
This is easily demonstrated by two examples.
First, imagine a television station located in a community, part of which is in a valley where television reception is poor. Imagine also that a cable television system offers its service to the people of this community. The people who live in the valley have three choices: (1) they can install a tall rooftop antenna to watch the programs broadcast by the television station, (2) they can subscribe to the cable television statem and thereby get the benefit of the antenna tower erected by the cable television system or (3) they can do neither and simply not watch the TV station's programs. As the Supreme ('ourt has twice recognized. choices 1 and 2 are functionally identical. Since no copyright liability attaches when the viewer erects his own antenna, why should there be any liability when the viewer avails himself of the antenna tower erected by the cable televi. sion station? It is no answer to say that the cable television system makes (or at least tries to make) a profit out of providing its service for clearly the antenna manufacturer (like the television set manufacturer and numerous other third parties in television related businesses) also seeks to make a profit.
Before going on to the second example, let's pause for a moment to consider alternative (3)-where the prospective viewer neither buys the tall antenna oor subscribes to the cable service but simply doesn't watch the programs broadcast by our hypothetical television station. If this happens, what is the result? The station has a smaller audience and therefore its advertising spots are less attractive to potential advertisers. So the station gets less money. And this means there is less money available to the station to pay the copyright owner. From this we can see that cable television, far from stealing from the copyright owner, by increasing the size of the broadcaster's audience actually increases the monies paid to the copyright owner.
Now consider a second situation. In this case imagine a television station in New York City whose programs are imported—via microwave hops-hy a cable system and retransmitted over the cable to the cable television system's subscribers in Oswego, New York who otherwise would not be able to view the New York City station.
Is this situation really any different from our first example? Is the copyright owner somehow damaged by the action of the cable station? Is he, perhaps de prived of the ability to exploit his creation in Oswego after it has been seen there on the cable?
The answer to all these questions is, no. Because of the nature of broadcast enonomics, the copyright owner cannot be injured by the cable system's importing the New York City station into Oswego. And this is true even without considera. tion of the complicated FCC exclusivity rules which seek to give added proter. tion to the copyright owner and which may require the cable system to delete programming so as to allegedly protect the copyright owner's markets,
As in the first example, by showing the imported programs in Oswego the cable system increases the audience of the New York City station. And this is not just a theoretical increase. The rating services--Nielsen and ARB-spend large sums of money to keep track of cable subscribers with the result that every single cable subscriber is accounted for in their surveys and so finds his way into some television station's rate base. Thus, by simply checking in Nielsen we find for example, that
In San Luis Obispo County, California, 30% of the television homes view the Los Angeles independent and network stations on a regular basis
In Grant County, New Mexico, 51% of the television homes view the El Paso network stations on a regular basis,
In Chemung County, New York, 19.5% of the television homes view the New York City independent stations on a regular basis,
In Lane County, Oregon, 20% of the television homes view the Portland independent and network stations on a regular basis, and
In Sweetwater County, Wyoming, 81% of the television homes view the Salt Lake City network stations on a regular basis. In these cases, and in countless others, such coverage would be impossible without cable television
This fact has not been lost on the broadcasters. For example, the literature put out by the Association of Independent Television Stations, in text accon. panying these illustrations in which the white areas show the reach of inde pendent stations as enhanced by cable television, states
"The accompanying illustrations show how cable television can dramatically increase the physical coverage area of independent stations ... expanding their influence far beyond the perimeters of the local television market. ..
"Advertisers on cable-connected independent stations share in this expanded TV coverage ... reaching a bonus audience of consumers as valuable to the national/regional advertiser as those situated within the defined local market area."
As a further illustration of this point, I have here a stack of promotional brochures put out by television stations. Each one takes pains to point out that its audience includes cable subscribers in distant markets. So we find that,
KTLA, an independent station in Los Angeles, claims a greater potential audience than any other Los Angeles station, network or independent. The station credits its "significant penetration by way of CATV stations."
WGN, an independent station in Chicago, claims substantial viewing far beyond the reach of its signal by virtue of cable systems. The rate card of KSL, a network affiliate in Salt Lake City, shows coverage by KSL of “Mountain America"-even extending, thanks to cable television, as far as northern Wyoming.
tions, in tert accompanying these illustrations in which the white
Mr. Simon. In New York, for example, it's right here,
Mr. BUNAN. The black line represents the perimeter of the local telesinion market as defined by the ination of Independent Broad ra-ters. I would like to quote from the text that accompanies those drawing
"The accompanying illustrations show how cable television can dramatically in to the physcal coverage area of independent sta tions, expanding their intuener far beyond the perimeters of the local television market.
"divertimer on cable connected independent stations share in this erpanded TV coverage reaching a bonus audience of consumers as aluable to the national regional advertimes as theme situated within the defined local machetarea."
de a further illustration of this point I have here a stack of bro. chures; these are promotional brochures put out by the television stations. Each one takes pains to pomt ont thint it audience includes cable criterinstant markets. So we find that:
KTLI, an independent station in Lan Angeles, claims a greater potential audience than other las 11: station, network, or independent. The station crediteit mutant penetration by way of (Iltnt1012."
WGX, an independent station in (hago claims atletantial viewing far lyond the prach of itu dignul lor virtue of (ATV-rutems.
Ile rate of KL. A Teork aflate in Sale Lake City show coverage bir ki of Vfonntun Arropa Pren attending, thanks towelle teles1011, Au fir 10pabern Wyomilik
The list could go on and on. But rather than blabor the point, I will simply aubmit the boro burst helps to the committee
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1. Skr to state that the consensus agreement, in my op
ry, in my opinion, by the White House. If you like,
M KLIFUFiER. I'm sorry, did you say that you were p
To allow the copyright holder to be compensated again--this t.me directly by the Oswego cable system--would be giving him the #14 fall of an undeserved second payment. This is a windfall that th: .: the cable television industry nor the 15 percent of the American"). holds, which are cable television subscribers, can atford.
You make a consistent point that regular broadcasters benefit, as is advertisers, and potentially the copyright owner, by virtue of the ali. tional audience that cable television provides. To the broadanjem agree to that, or do they dispute that fact?
Mr. Bressan. I will be submitting to you the brochures fronti broadcasters who claim all of these additional market arran Tirme two charts are the work of the Association of Independent Telesis 1 Broadcasters. Now, there may be times when they claim one t. and at times another, but when they construct the rate chart, tims do claim these territories.
(The material referred to is in the files of the subcommitter!
Mr. KASTEN MEIER. I am only asking for the purpose of auerta :: ing whether that is a point in dispute, or whether the broaden agree to that, that this includes your subscribers, in terms of tir: sold audience.
Mr. BRESSAN. I'm not sure I understand the question clearls. Tv is no dispute that broadcasters claim coverage of the CAVito scribers who are provided the signals by the CATV system.
I have been advised by Miss De Costa on my left
Mr. KASTEN METER. Yes, I thought perhaps Mis De (oma n. 21 know more precisely, as a matter of technical expertie, wliettur l's is correct. It is a matter of fact rate cards are built on the base of cable audiences, as well as normal audiences. Do the broad aster dispute that!
Miss DE ('osta. Vo. As a matter of fact, they look towania t... audience to increase the size of their delivery.
Mr. BRENAN, Miss De (osta bas aduisd me, Mr. Charmant to her knowledge every single cable television customer tindahan *! into a broadcaster's rate base.
Mr. KAMEN MEIER. Does the Teleprompter Corp. have a nue? of different types of syntens! That is to say, do it hase which retransmit only, and other intellis which originate, 11* I... waves predominantly? What sort of states do you have!
Mr. Brinnar. Our company is a pretty good cross stition of a". tipe of cable sistems, from count to eat, from large to very 1.37 We originate in some, and in other we do not. It is a good crom 1997 of the industry.
Mr. KANDID MER. Were you a party to the consensus ante, or were you present at that time; or on the town of lit:toll, d. you absent your lf!
Mr. BEN. I am glad you anked that bayan-that matte con miti-law agnement came up quite a but today, and I do have wonde pitit! orosz fitling about it.
The coinn-12. Agnement come about at a time si urtly after the t?* taitisompi luwen with merged into 1. le propripisat.dl. promputers til manne helt pretty that catred the lovil. Al!? I was on the 1.1 land Indiese I wisdorchairman Wle foto.at
loss. I was present at the NCTA board meeting.
ME KANTEN HIER. And you said it was "shoved down the t
M. Btw. I doubt that they had too little to be unenth
Rim!.ft the freeze on cable television, and things st
;* Ariat of 1971 the then Chairman of the FCC sent
.:1, cable television industries were invited to ?
!"The net result of that meeting was that the ca
bralked at these changes. They were told in no u
withing, the White House would see to that.
w Lue voted against it; but it was a pretty sad
5t:on might take a position on, but particularly t
!nales of intent stated that it believed it shoul:
fr'low cable operators coming to an agreei
mis reading between the lines of what you 1
artint did produce some concessions for
";ms of the consensus agreement; or at least other