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Mr. SIMON. Here is the dark line, the primary viewing line again. Mr. DANIELSON. And this is from San Francisco.
Mr. SIMON. That's correct, San Francisco stations.
Mr. BRESNAN. The white area goes all the way up to Oregon, and east into Nevada.
Miss Da Costa advises me that, not only do the broadcasters from San Francisco claim this coverage-and therefore ultimately moneys filter back to the copyright area-but she says also, that the syndicators will at the same time be selling programs in the Sacramento, Reno and Redding markets, also; they are selling them again to those markets. And what they are proposing to do now in the case of CATV, is to sell them a third time in many cases.
Mr. DANIELSON. Now lastly, it's my understanding that the owner of a copyrightable item, let's say the film of Bambi, may sell the right to use it to, say, a Boston TV station for their regular broad
Suppose that the same film has been sold by the copyright owner, leased, licensed, what have you, to a TV station in the city of New York for its use. And through cables they picked it up and disseminated the program within the city of Boston, let's say, a month in advance of the showing in the city of New York.
Does not this diminish the value of the Boston licensee in using the film?
Mr. BRESNAN. Sir, if the copyright owner-the owner of the product-didn't recognize when selling that product, in this case, the Bambi film to the New York station, didn't recognize that that signal would go up into the Boston area, he is a fool because the coverage area of these stations, as you will see when you examine the brochures that I am going to leave with you, is clearly depicted. This is no secret. It's no surprise-it shouldn't be a surprise because it's stated in the advertising literature how far out that station's signal goes because of CATV.
Mr. DANIELSON. OK. Are you, sir, or any of you in your group able to tell me, or do you have any expertise, how are the negotiations carried on between a copyright owner-the owner of Bambi, for example and the station?
I don't know anything about that. Do you advertising people do that kind of work?
Miss DA COSTA. Well, generally the syndicator is the one that sells programming to individual stations within markets. They negotiate and take that into account, the number of homes that are delivered to that particular station and that particular market.
Mr. DANIELSON. I think we have a word of art here. You said "syndicators," are they the people who sell the films, and so forth
Miss DA COSTA. Yes, sir.
Mr. DANIELSON [continuing]. To broadcasting stations?
Miss DA COSTA. There is some company that does that, although there are some originating producers that do their own selling.
Mr. DANIELSON. But in that connection, the sale includes whatever is the copyright royalty, that is in the package.
Miss DA COSTA. That is a total package, yes.
Mr. DANIELSON. Now, some of the Teleprompter stations originate their own programs, I am sure I heard you say that.
Mr. BRESNAN. Yes, sir.
Mr. DANIELSON. Now, in those instances you do pay royalties, do you, for the copyrighted materials that you use?
Mr. BRESNAN. Yes, and we agree with the principle of that.
Mr. DANIELSON. Now, do you negotiate with the copyright owner, or with one of those syndicators?
Mr. BRESNAN. We buy the program generally from a distributor of the program.
Mr. DANIELSON. Can you tell me if the word "distributor" as you use it is similar to "syndicator"?
Mr. BRESNAN. Yes.
Mr. DANIELSON. Thank you, that's all the questions I have.
Mr. KASTEN MEIER. The gentleman from California, Mr. Wiggins. Mr. WIGGINS. If I understand you correctly, when you are selling time to a large market, you can extract from an advertiser a greater fee because of his access to that market.
Do you have any data showing that the copyright owner shares in that?
Mr. BRESNAN. The copyright owner negotiates with the broadcaster for the fee which he will receive for the carriage of his program. The copyright owner has available to him the advertising brochures of the station, showing the coverage area.
I have no reason to believe that the copyright owner wouldn't take advantage of such material in his negotiations. I have never sat in on those negotiations, I'm not sure what goes on there.
Mr. WIGGINS. Does anybody at the table have personal experience in this?
Miss DA COSTA. I don't think that anyone can really determine what portion of the rate they are charging, if it's just a copyright, or just the time, or the use of the program. I think the syndicator establishes the rate that will include some copyright fees. And also, in negotiating with the station he will hopefully get what he feels the program is
Mr. WIGGINS. But at least you are representing to us as a fact that the negotiated fee is based upon the the total market to be served.
Miss DA COSTA. That is taken into consideration, yes, sir.
Mr. WIGGINS. Now, you have experience, Miss Da Costa, with national and regional accounts. I gather your agency does not handle local advertisers.
Miss DA COSTA. We have one that we call a local advertiser, the Chase Manhattan Bank.
Mr. WIGGINS. Well, I was thinking more about Joe's Used Car Lot. [Laughter.]
Mr. WIGGINS. It seems to me that local independents are constantly barraged by auto dealers selling their cars-I don't understand that a local used car lot is really appealing to those large market areas. My feeling is that such a local car dealer would be unwilling to pay for that kind of expanded coverage because it's beyond his normal service
If that is the case, isn't it likely that commercial operators similarly situated would be denied the market of their own, and would not be
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. WIGGINS. Yes.
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 describing, 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 Co., 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. KASTENMEIER. No, we are not 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. PATTISON. Well, I had some, but we are not going to have time. 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 carriage 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 broadcaster can deliver to the advertiser, the more the advertiser 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 available to the broadcaster. In many cases this actually increases the advertising revenues available to pay the copyright 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 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 Court 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 television 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 nor 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-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, deprived 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 economics, 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 consideration of the complicated FCC exclusivity rules which seek to give added protection 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 independent 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
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.