also the writers, actors, directors, musicians and other artists and craftsmen who create these programs and whose compensation is determined by the income which the producer can derive from uses of the program. The CATV industry and Subcommittee #3 recognize that (with the exception of a local program exemption) copyright owners are entitled to be paid when their works are used by CATV systems. However, both the industry and the Subcommittee propose that in some instances permission to use be made automatic, and the copyright owner's fee be established under a system of compulsory licensing. We submit that compulsory licensing is unworkable and unfair. The CATV proposal envisions statutory fees. No statute could provide a schedule of fees that could account for the difference in value of a Bridge On the River Kwai and a 1935 Western Movie, or between a two hour documentary and an animated cartoon, or between a current, highly successful situation comedy and an unsuccessful "pilot" film shown on a summer replacement program. No statutory licensing scheme could determine the reasonable compensation for each work in each marketplace-the fee charged a system with 200,000 customers would be too high for a system with 5,000 customers, and vice versa. Subcommittee #3's "white-black-and-gray" plan envisions a form of compulsory licensing in the “gray" area which would make programs available for CATV use (in that area) without permission, leaving the fee to be determined by litigation in each instance. We do not think this is a desirable approach. It would produce a flood of litigation-with both producers and users choosing to sue or be sued, rather than capitulate to the other's demands, for different tactical considerations. It leaves the determination of fees to District Court judges without providing them with the necessary business expertise to deal with the various factors that enter into the determination of a reasonable fee. In balance, we think that the plan would induce users not to pay voluntarily. In many CATV markets the reasonable fee will be modest-the costs of bringing suit heavy (especially since the producer will usually have to sue in a foreign jurisdiction-and recovery limited to three times the reasonable fee. Faced with these odds, producers will have to reduce fees, even though eminently reasonable, rather than carry the heavy burden of suing for small fees (especially with the risk of losing everything if a District Court judge disagrees with their estimate of reasonableness). Moreover, the Subcommittee's plan would deny copyright owners the right of determining whether a CATV system should, or should not, be permitted to use a program broadcast by a "distant station." This would prevent the copyright owner from granting an exclusive license to a television station to broadcast its program in a given area-which might, in turn, deny it the opportunity of granting any license in that area. The CATV proposal makes a limited adjustment to take account of this difficulty-but not one that gives the copyright owner the same rights he now possesses, or requires. The CATV proposal on exclusive licenses would not, for example, allow the creator of a sports program-a football or baseball game-to prevent its retransmission from a "distant station" into a blacked-out television market; it would not allow the author of a play to prevent the retransmission of a telecast into the blacked-out television market where the play was being performed live. In many instances, given the choice between losing a live audience or withholding his work from television altogether, the copyright owner would be forced to make the latter choice. We submit that compulsory licensing is not necessary to assure that CATV systems will have an adequate supply of program materials. Existing statutes, as recent decisions have demonstrated, serve that purpose. We submit that compulsory licensing cannot produce reasonable prices for the great variety of television materials; indeed, it can only establish a ceiling (which would be frozen into the law for years) below which CATV systems will be free to bargain and their bargaining power will continue to increase as they capture more and more of the television market. We submit that the licensing of television programs in the CATV marketplace can be accomplished most fairly and easily under a free enterprise approach. Subcommittee No. 3 accepts the free enterprise approach for its "black" market area. The CATV industry proposal accepts the free enterprise approach for retransmissions to areas that are not "underserved". We believe the free enterprise approach should be adopted in all market areas. Various systems could be worked out by the CATV industry and producers of television programs under which price and clearance information for each program would be collected and made available to the CATV industry and under which licenses could be granted automatically in most, if not all, situations. The Authors League is grateful for this opportunity to present its views to the Committee. STATEMENT OF DIRECTORS GUILD OF AMERICA, INC., August 4, 1966 The Directors Guild of America, Inc. is an organization consisting of over 3,300 members who perform services in connection with the production of theatrical motion pictures and motion pictures designed for television broadcasting. For those members of the Subcommittee who may not be too familiar with the motion picture industry or with the function of a Director, I will read the definition of a Director contained in Article III of our Constitution and ByLaws: Article III, Section B provides in part as follows: "Definition of a Director: A Director is a creative individual engaged in the making of motion pictures, television programs * * * or other units of entertainment or information which may be photographed and recorded in celluloid, or tape, or any other medium, and projected on various screens, or may be performed on television or on any other new instrument of communication and exhibition now known or hereafter devised ***". The Director's professional function called "Directing" or "Direction" is unique and all-embracing. He preconceives the particular entertainment or information form as it will appear in its entirely and vitally participates in all the phases of its preparation and execution. He is closely associated with all other creative talents and crafts involved in the production of the unit and one of his major aims is to extract the utmost values from these talents and crafts and to present them to the public at their very best. He works directly with all of the elements which constitute the variegated texture of a unit of entertainment or information: story, acting, dialogue, movement, music, song, dance, camera, photography, sound recording, scenery, costumes, props, make-up, etc. The Director's task is to contribute creatively to all these elements and to guide, mold, and integrate them into one cohesive dramatic and aesthetic whole. The Director's main concern is with spiritual values like: story, characters, moods, ideas and emotions. His purpose is to enlighten, uplift, entertain, inform, and give high pleasure to the audience. And, finally, the measure of a Director's achievement is the extent to which any form of entertainment or information directed by him appeals to the heart and the mind of the audience and, thus, through tears or laughter, enriches and ennobles the spectator's spirit. While Director members of the Directors Guild are not necessarily copyright proprietors, their creative and artistic endeavors contribute in no small way to the finished theatrical and television motion pictures to which copyright protection is granted. The artistic and creative efforts of Directors which are necessarily included in the finished product which is the subject of copyright protection, make it essential for the Guild to oppose any change in the copyright laws of the United States designed to permit commercial entrepreneurs to pirate the results of such artistic and creative efforts without the payment of any copyright license fee whatever. The position of CATV operators in requesting exemption from the copyright laws is basically inequitable in that it involves an enterprise established for the sole purpose of picking up television signals and transmitting them to areas where the signals could not have otherwise been received, for substantial economic benefits. CATV operators would gain substantial profits for themselves without paying any license fee whatever to the copyright proprietor of the artistic material which in effect is being pirated. Director members of the Guild have a substantial economic interest in this matter as well as their interest from the creative and artistic standpoint. Under the Collective Bargaining Agreement negotiated by the Directors Guild with the producers of theatrical motion pictures, a percentage of the receipts realized by the distributor from licensing a copyrighted motion picture for exhibition on television is paid by the distributor directly to the "Directors Guild of America, Inc.-Producers Pension Plan" which is managed jointly by trustees designated by the Directors Guild and trustees designated by representatives of the motion picture and television industry. Payments from the Plan are, of course, made to qualified retired members of the Directors Guild and are also made in certain instances to the surviving spouse and/or dependent children of deceased members of the Directors Guild. The pickup by CATV Systems of telecasts of copyrighted motion pictures made by a television station which has paid the requisite copyright license fee to telecast the same and the transmission of such motion pictures by CATV operators to paying subscribers without the payment of a copyright license fee would thereby deprive the Plan and its beneficiaries of substantial funds. Not only the Plan but also individual members of the Directors Guild would be deprived of substantial funds by CATV transmission of theatrical and television motion pictures without the payment of a copyright license fee. Directors of films made primarily for television exhibition are, under all collective bargaining agreements, entitled to additional compensation each time the film is rebroadcast. Compensation from reruns can aggregate up to an additional 165% of the Director's initial fixed compensation. Moreover, many Directors enter into individual employment contracts with producers of theatrical and television motion pictures whereby in addition to their fixed compensation, the Directors also receive a percentage of the profits or of the gross receipts realized from exhibition of the film, including television exhibition. An additional 5% of such rerun fees and, subject to certain limitations, an additional 5% of such profit participation or gross receipt participation payments are payable to the Pension Plan, so the Plan is also being deprived of substantial funds from this source as well. While as pointed out heretofore, the members of the Directors Guild are not necessarily copyright proprietors, they have a vital artistic interest in the motion pictures they create. The copyright laws as they presently exist adequately protect the Director's interest in the completed film. The Directors Guild of America, Inc., therefore desires to go on record against any change in the copyright laws which would create an exemption for operators of CATV Systems which would have the effect of allowing them to utilize the artistic and creative work of others without paying any compensation whatever. STATEMENT OF NATIONAL BROADCASTING CO., INC., ON S. 1006 NBC submits this statement for consideration by the Subcommittee in its hearings on the necessity of special copyright legislation affecting CATV systems. We urge, in general, that the development and growth of CATV systems and the public and private interest in broadcasting will best be served through the negotiation of copyright licenses within the traditional framework of the copyright laws. NBC specifically opposes, therefore, the imposition of compulsory licensing or the grant of any royalty-free statutory exemption from the copyright laws for CATV systems. No necessity exists at this time for such legislation. Creating for one area of CATV operation a royalty-free license and leaving other areas to negotiation or compulsory licensing may result in an artificial and perhaps rigid structure which will adversely affect both the growth of CATV systems and broadcast stations, and their ability to serve the public interest. We believe it fair to say that until recently CATV systems had no serious interest in obtaining licenses for their transmission of copyrighted material. Therefore, copyright proprietors, including networks and stations, had little or no incentive to organize or administer the grant of such licenses. The recent decision of a Federal District Court, in a carefully reasoned and comprehensive analysis of CATV systems and their operations, concluded that under long-recognized copyright principles the use by CATV systems of copyrighted material infringed upon the rights of copyright owners. The right of authors to license for royalties their copyrighted works for CATV performance was, for the first time, specifically and explicitly confirmed. This decision has prompted CATV systems to propose special legislation to grant to the CATV industry complete or partial immunity from the copyright laws. Certainly there is nothing about CATV which would make it more in the public interest for copyright exemptions to be granted in that industry while regular broadcast stations, licensed by the Federal Communications Commission in the public interest and serving many more people than are served by CATV systems, are required to obtain their own copyright licenses. As a practical matter, we believe that if the copyright problems were left to the normal market-place and if CATV systems turned their efforts to negotiating licenses in the same way as other copyright users, an equitable licensing system would emerge. For example, we do not believe that CATV systems will have any difficulty in obtaining licenses to carry the programs of stations within whose regular market areas they are located. Such a license would be in the common interest of the stations and the networks, and within the original contemplation of the copyright owner or program supplier. Similarly, we do not believe there will be insurmountable difficulties for networks, in the normal market-place, to obtain the CATV rights to a large majority of the programs they carry, so as to be able in turn to re-grant those rights to CATV systems which supplement the service of their regular broadcast affiliates. Network program suppliers intend the networks to have the television rights throughout the United States. The problems involved in CATV systems extending the normal market areas of the stations they carry could be solved in much the same way as various other industries deal with such problems-negotiation and agreement. Once the patterns and procedures of obtaining rights and granting licenses to CATV systems are established, licensing will become a normal business practice. For example, a network may grant blanket licenses authorizing carriage of the entire network schedule with stated exceptions for those programs, if any, for which the requisite rights have not been obtained; a station could grant similar licenses for its non-network programs with stated exceptions, if any, for the same reason. The exemption proposals presented to the Subcommittee, including the plan suggested by the House Subcommittee, do not negate the need for development of a licensing system. Although they would exempt CATV systems located in the basic service area of a station, they assume that a licensing plan will work for systems in other areas. We believe that a licensing plan can be developed and made to work more readily and with greater equity if applicable to all CATV systems for all areas rather than if developed just for systems located outside the basic service area of a station. There is no basis, we believe, for the suggestion that licenses for CATV systems should be treated differently, in principle, under the antitrust laws than those in any other part of the broadcasting industry. In this connection, we take sharp issue with the statement of the Department of Justice. Further, it seems to us beyond question that in light of the service and economic interests of broadcasters in reaching the largest possible audience for their programming, the speculation expressed by the Department of Justice that copyright licenses will be improperly withheld from CATV systems or improperly granted, has no substance. Regulation of CATV systems by the Federal Communications Commission provides no basis for any special treatment of CATV systems insofar as copyright is concerned, just as it has provided no basis for special treatment of broadcast stations. One final fact deserves emphasis. CATV systems have been in operation well over ten years. The number of such systems has reached some 1,700, with ever increasing growth in subscribers and service. Copyright holders have not demonstrated any interest in putting CATV systems out of business or hampering their growth by copyright infringement actions. The fact of the matter is that CATV systems are not threatened with extinction or crippling license proposals. Certainly this Subcommittee does not have before it any picture whatsoever of an industry beset by infringement suits harassed by licensors seeking unreasonable terms or at the point of financial collapse which might otherwise prompt the Subcommittee now to grant some extraordinary legislative relief. We cannot now tell what licensing system or structure may evolve in the course of negotiations, assuming such negotiations go forward on a meaningful basis. But we believe the course of free and unrestricted licensing negotiations will afford the most realistic and desirable approach to providing for the growth of CATV systems and the interests of the public, broadcasters and copyright owners. Until such serious and sustained negotiation attempts are made in good faith and the results of such negotiations are seen, legislation exempting CATV systems wholly or partially from the copyright laws is, we believe, neither necessary nor desirable. INTERCOLLEGIATE CONFERENCE, Senator JOHN L. MCCLELLAN, The views expressed herein represent the position of the NCAA in this matter and on behalf of the Association it would be greatly appreciated if this letter could be included in and considered a part of your subcommittee's hearing record on S. 1006. The NCAA is a voluntary association of more than 625 of the nation's universities, colleges and affiliated organizations. The NCAA is devoted to the sound administration of intercollegiate athletics in all its phases as a vital national resource and as an integral feature of the system of higher education in this country. Through representative devices such as its annual convention and by referendum among the membership, the NCAA from time to time has adopted regulatory programs in various areas such as eligibility, recruiting of prospective studentathletes, and the award of financial aid to student-athletes. One of its most important regulatory programs is in the area of televising football games. As early as 1949 the NCAA recognized the potentially devastating effects of unrestricted televising of its members' football games upon the in-person attendance at college football games which in the main provide financial support for the broad intercollegiate sports programs and related intramural, physical education and recreational activities. Concerns as to these effects were sustained and documented by extensive research, and as a consequence there was instituted in 1951 a series of television control plans developed by, approved by, and operative upon the Association's institutional members. The stated purposes of the current plan, corresponding to like declarations in preceding years, are "to reduce insofar as possible the adverse effects of live television upon football game attendance and, in turn, upon the athletic and physical education programs dependent upon the proceeds from that attendance; to spread television participation among as many colleges as practicable; to seek in all appropriate ways possible the promotion of intercollegiate football through the use of television as a means of advancing the over-all interests of intercollegiate athletics; and to provide football television to the public to the extent compatible with the other objecives." The plan governs all forms of simultaneous telecasts of football contests by NCAA members for the regular football season (in 1966, from September 9 through December 11). Its central feature is the offering by a national network of fourteen college football programs on thirteen specified Saturday afternoons and on Thanksgiving Day. On eight of these dates the programs consist of a single game, carried nationally, and on the remaining six dates the programs include four games, each of which is carried by the network on a regional basis. Provision is made for the geographic diversification of the televised games and rotation of the institutions appearing in the series. The design is to promote college football through nation-wide television exposure, with direct guarantee to television viewers in various parts of the nation of frequent opportunity to see teams from their own territories in action on television. At the same time |