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Mr. KASTEN MEIER. 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. KASTENMEIER. 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 Costa, 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 CORP.
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 broadcaxter sells is the attention of the viewers. The purchaser is the advertiser. The more viewers the broadcaster can deliver to the advertiser, the more the adver. tiver 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 rerenues available to pay the copyright owner. In no ca se 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 pople 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 system 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 inanufacturer (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 por 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 at. tractive 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 Yew York City whose programs are imported—via microwave hops-by 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 eronomics, 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 accompanying 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.
The list could go on and on. But rather than belabor the point, I'll simply submit these brochures themselves to the Committee.
What do the extra viewers that cable adds to the audience of these stations mean to the relationship between station and advertiser? It means that the xtation time is more valuable and so the advertiser pays more. Listen to what Miss Da Costa, who is in charge of all media related research at Ted Bates, the nation's fifth largest advertising agency, says:
*Viewing occurring on CATV systems has been included in surveys for quite some time in the total audience reported for individual stations. The industry has generally used these total audience figures to establish rates and corresponding cost efficiencies. This practice compensates stations for all viewing including that which takes place within CATV homes (both inside and outside the range of the station's off-air reception)."
To go back to our example, we see that the copyright owner whose creation is broadcast by the New York City station and imported, by cable to viewers in Oswego, has not been deprived of the chance to earn money by showing his production in Oswego. For the advertising revenues to be derived from showing the program to the cable subscribers in Oswego have already been derived by the New York ('ity station. And, as a result, the New York City station will pay the copyright owner more than if the station were unable to reach the Oswego audience.
To allow the copyright holder to be compensated again this time directly by the Oswego cable system-would be giving him the windfall of an undeserved second payment. This is a windfall that neither the cable television industry nor the 15% of the American households which are cable television subscribers can afford.
(Whereupon, at 2:55 p.m., the subcommittee adjourned, to reconvene at 9:30 a.m., Thursday, June 12, 1975.]