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afraid to submit them to an arbitration tribunal. Moreover, NCTA specifically agreed that the fees would be fixed by arbitration as part of the consensus agreement.

As a result of that consensus, the cable industry has been enjoying the benefit of permissive new FCC rules on the importation of distant broadcast stations for over a year and a half. It ill-behooves NCTA to back away from the consensus now.

NAB and MST reluctantly accepted that consensus and agreed to support a limited compulsory license for CATV only because of our belief that the consensus limitations on the scope of the compulsory license would be implemented. Provided that those limitations are implemented, we continue to support the consensus despite the recent decision of the second circuit holding that all CATV use of distant signals is subject to normal copyright liability.

Without such limitations, the unfair subsidy which compulsory licenses exact from broadcasters would undermine the economic viability of free television broadcasting, thus depriving the public of free programing they now receive and impairing the principal source of the revenues to program producers necessary to stimulate program creation and development.

Specifically, NAB and MST submit that compulsory licenses for CATV systems should cover only CATV retransmission of local broadcast stations and such programs from distant stations as are contemplated under the FCC's 1972 CATV rules.

An openended compulsory license—one for example that covered all CATV retransmission of distant stations which the FCC may hereafter authorize—would be a sweeping delegation to four or fewer members of the FCC to change and even radically revise the copyright law at any time in the future.

We strongly oppose any such openended compulsory license. We assume, in view of the letter of January 31, 1972, from the chairman of this subcommittee to Chairman Burch and the fact that the current hearings are not focusing specifically on the critical question of the terms and conditions of the compulsory license, that this subcommittee does not have doubts about the approach agreed to by NCTA, the copyright owners, NAB, and MST when they accepted the 1971 con

If there are doubts, we urge that such hearings be held. In any event, because the question of the scope of the compulsory license is of paramount importance, we plan to submit a supplemental written statement on that subject, together with suggested statutory language.

Although broadcasters have not been invited to participate in the hearings this afternoon on copyright treatment of sports events, broadcasters fully support normal copyright liability for cable retransmission of sports events not available to a local station as proposed in S. 1361. We also plan to submit a supplementary statement which will deal with this vital question.

Let me close, Mr. Chairman, by saying on behalf of NAB that, while the record is not being opened with respect to section 114 of S. 1361, NAB and broadcasters generally are steadfastly opposed to the creation of a new proprietary right in the form of copyright recording right for record manufacturers and performers.

Thank you vey much for inviting me to appear today.

sensus.

Senator McCLELLAN. Very well.
Any questions, Senator?

Senator BURDICK. Well, the sense of your testimony, or the essence of it, is, you are willing today, to abide by the consensus agreement.

Mr. WASILEWSKI. Yes, sir. On an all together basis.

Senator BURDICK. That seems to be the essence on your testimony. I have no further questions.

Mr. WASILEWSKI. Yes, sir. That is.

Mr. BRENNAN. Mr. Wasilewski, could you indicate whether or not you support the position taken by the subcommittee previously on the sport provision of section 111 ?

Mr. WASILEWSKI. As contained in the present bill?
Mr. BRENNAN. As contained in the present bill.
Mr. WASILEWSKI. Yes, sir. I did say that we support that position.

Senator McCLELLAN. You indicate that you had not been invited. I wonder if you felt that you should participate?

Mr. WASILEWSKI. I just wanted to point out, sir, that I was testifying on behalf of something that was not part of this morning's hearing, and we do not necessarily want to come in this afternoon. We would like the opportunity to rebut.

Senator McCLELLAN. If you wanted to appear, I was going to consider your interest and give you the opportunity. That was all I wanted to be sure of.

Mr. WASILEWSKI. I said all that I wanted to say about it.
Senator McCLELLAN. All right.
Thank you very much.
Call the next witness.
Mr. WASILEWSKI. Thank you.
[The prepared statement of Mr. Vincent T. Wasilewski follows:]

JOINT STATEMENT ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS

AND THE ASSOCIATION OF MAXIMUM SERVICE TELECASTERS BY VINCENT T. WASILEWSKI, PRESIDENT, NATIONAL ASSOCIATION OF BROADCASTERS, BEFORE THE SUBCOMMITTEE ON COPYRIGHTS, PATENTS, AND TRADEMARKS, SENATE COMMITTEE ON THE JUDICIARY

Mr. Chairman, I appear here both in my capacity as President of the National Association of Broadcasters and also on behalf of the Association of Maximum Service Telecasters. With me today are John Summers, NAB's General Counsel, and Ernest Jennes, MST's General Counsel, NAB and MST are making a joint presentation because of the very limited amount of time allocated to broadcasters. There is no difference in their positions on CATV copyright.

Broadcasters have at least two different interests in CATV copyright. First, broadcasters themselves have ownership interests in some copyrighted material that CATV systems continue to take from broadcast stations without payment and sell to the public for a fee. Second, CATV systems are in direct competition with broadcast stations for viewers, listeners and advertising revenue. This competition is increasing and will continue to increase. Indeed, leading CATV spokesmen state repeatedly that they hope and intend that cable television will largely, if not entirely, replace free broadcast television.

A law that confers a compulsory copyright license on cable television inherently gives CATV an unfair competitive advantage over free broadcasters, who must bargain for copyrighted material they use. CATV would have this unfair advantage even if it had to pay as much as broadcasters for copyrighted material. In fact, it is clear that CATV would pay much less for the same material, not only under the low CATV fee levels proposed in S. 1361 but even under the levels supported by the copyright owners. For example, FCC figures show that the typical television station pays 34 percent of its total revenue for its non-network program material.

20-344-73—25

Despite the inherent unfairness, NAB and MST have been willing to support limited compulsory licenses in accordance with the terms of the November 1971 "Consensus Agreement” which was also accepted by NCTA and the copyright owners. We believe that, as provided in that Consensus, the fee levels for such compulsory licenses should be determined by an independent arbitration tribunal, and not by statutory fiat. Such a tribunal would have both the time and the expertise to sort out the conflicting claims of the interested parties and the complex and elaborate economic data advanced in support of these claims. Traditionally Congress delegates such complex questions to a body equipped to examine them in detail. If the claims of the CATV industry to a very minimal fee are valid, the industry should not be afraid to submit them to an arbitration tribunal. Moreover, NCTA specifically agreed that the fees would be fixed by arbitration as part of the "Consensus Agreement." As a result of that Consensus, the cable industry has been enjoying the benefit of permissive new FCC rules on the importation of distant broadcast stations for over a year and a half. It ill behooves NCTA to back away from the Consensus now.

NAB and MST reluctantly accepted that Consensus and agreed to support a limited compulsory license for CATV only because of our belief that the Consensus limitations on the scope of the compulsory license would be implemented. Provided that those limitations are implemented, we continue to support the Consensus despite the recent decision of the Second Circuit holding that all CATV use of distant signals is subject to normal copyright liability. Without such limitations, the unfair subsidy which compulsory licenses exact from broadcasters would undermine the economic viability of free television broadcasting, thus depriving the public of free programming they now receive and impairing the principal source of the revenues to program producers necessary to stimulate program creation and development.

Specifically, NAB and MST submit that compulsory licenses for CATV systems should cover only CATV retransmission of local broadcast stations and such programs from distant stations as are contemplated under the FCC's 1972 CATV rules. An open-ended compulsory license one for example that covered all CATV retransmission of distant stations which the FCC may hereafter authorize-would be a sweeping delegation to four or fewer members of the FCC to change and even radically revise the copyright law at any time in the future. We strongly oppose any such open-ended compulsory license. We assume, in view of the letter of January 31, 1972, from the Chairman of this Subcommittee to Chairman Burch and the fact that the current hearings are not focusing specifically on the critical question of the terms and conditions of the compulsory license, that this Subcommittee does not have doubts about the approach agreed to by NCTA, the copyright owners, NAB, and MST when they accepted the 1971 Consensus. If there are doubts we urge that such hearings be held. In any event, because the question of the scope of the compulsory license is of paramount importance, we plan to submit a supplemental written statement on that subject, together with suggested statutory language.

Although broadcasters have not been invited to participate in the hearings this afternoon on copyright treatment of sports events, broadcasters fully sup port normal copyright liability for cable retransmission of sports events not available to a local station as proposed in S. 1361. We also plan to submit a supplementary statement which will deal with this vital question.

Let me close by saying on behalf of NAB that, while the record is not being opened with respect to Section 114 of s. 1361, NAB and broadcasters generally are steadfastly opposed to the creation of a new proprietary right in the form of a copyright recording right for record manufacturers and performers.

Thank you very much for inviting me to appear today.

Mr. BRENNAN. We now have a joint presentation by the three performing rights societies, ASCAP, BMI, and SESAC.

Mr. Herman Finkelstein, would you make your presentation ? Could you identify

Mr. CRAMER. Mr. Counsel, Mr. Chairman, my name is Edward M. Cramer. I am president and chief executive officer, of Broadcast Music, Inc. Seated on my far left is Albert F. Ciancimino, counsel for SESAC, Inc., and to my immediate left is Herman Finkelstein, general counsel for ASCAP. In order to conserve the time of this comThank you.

mittee, we have agreed upon a joint presentation, where all of us will be available subsequent to the presentation to answer your questions.

Mr. BRENNAN. Counsel thanks all three societies for their cooperation and hopes it will continue.

Senator MCCLELLAN. Have you submitted your statement ? Mr. CRAMER. Yes. Mr. BRENNAN. Yes, Mr. Chairman. Senator McCLELLAN. They will be printed in the record in full. You may proceed.

STATEMENT OF HERMAN FINKELSTEIN, GENERAL COUNSEL,

ASCAP; ACCOMPANIED BY: EDWARD M, CRAMER, PRESIDENT, BMI; ALBERT F. CIANCIMINO, COUNSEL, SESAC, INC.

Mr. FINKELSTEIN. Mr. Chairman, in accordance with the committee's request, this statement, as Mr. Cramer pointed out, is being presented jointly on behalf of the three American organizations which make it possible for all users of musical works, including operators of cable televisions systems to obtain licenses to perform publicly in nondramatic form, any musical composition required in their operations.

These organizations, the Ameriacn Society of Composers, Authors, and Publishers, commonly known as ASCAP; Broadcast Music, Inc., commonly known as BMÍ; and SESAC, Inc. are well known to the Chairman and members of this committee. Each is filing a separate statement, but all three join in this statement, following the suggestion of counsel for this committee.

We shall briefly summarize the reasons supporting our position that there is no need for a statutory license for the music

embodied in these three repertories because there is already adequate assurance of the availability of all music they require at fair and nondiscriminatory prices; and that if any price control is necessary, it is already available by resort to an impartial body—the courts or arbitration. As our respective supporting statements indicate:

(1) Music performed in nondramatic form is unique among copyrighted works in that it is all available to everyone, including CATV, on a nonexclusive basis without any problems of clearance or complicated negotiations for individual works, or fears of prices being arbitrary, unreasonable or discriminatory.

(2) Music has been available to all users through this simple method of licensing for decades.

(3) The assurance that prices will be fair, reasonable, and nondiscriminatory is a matter of public record. In the case of ASCAP, it is embodied in a decree of the Federal Court entered in 1950 on the consent of the U.S. Government and ASCAP.

The Federal Court is available to any user, including CATV, who questions the reasonableness of rates quoted by ASCAP. Several proceedings to determine reasonable rates have been brought by broadcasters, wired music operations and others. In fact, proceedings to determine reasonable rates brought by the national broadcasting networks and by Muzak operators and others are pending at this time.

BMI and SESAC, Inc. have tendered arbitration to the CATV representatives and will continue to do so.

(4) The distance of the station from which music is picked up does not raise any problems. Under the prevailing licensing system, all music is equally available to CATV whether it comes from distant sources, from local sources, or even when it is originated by the cable system itself.

5. We have heard a great deal about the keeping of records of uses and seeing that payments are apportioned among those whose works are used. This is undertaken by the licensing organizations; it does not present a problem to the CATV operator.

6. The music licensing organizations have met with representatives of the cable television industry and have not had any problem as to the method of licensing and the availability of all music used in nondramatic form to all CÂTV operators for all purposes.

Figures requested by cable television to assist in reaching agreement as to rates for all their music were given to CATV by these organizations several months ago. There is every reason to believe that agreement can be reached with the CATV industry, as it has been with other industries, considering all the safeguards available to CATV.

In conclusion, we submit that there is no necessity for a compulsory license for musical works if those works are available on the following basis:

First, the works are part of a total repertory made available to cable television under a single license agreement without requirement of separate negotiations for individual works or individual uses;

Second, the works are available on a nonexclusive basis on fair and nondiscriminatory terms.

Third, the agreement makes the works available for a substantial period of time. Agreements are made available to broadcasters for a period of 5 years.

Fourth, in the event of dispute as to the reasonableness of the rates quoted, the rates can be determined by resort to a U.S. district court or to arbitration.

Fifth, provision is made for payment to the licensor for distribution to the parties entitled to the amounts collected so as to avoid any disputes between the licensees—that is, individual cable systems-and individual copyright owners.

As we have previously indicated, section 111 could be framed so as to exempt musical works from a compulsory license if they are voluntarily made available on the basis I have outlined; or it could specifically require that all musical works be licensed to cable television for retransmission on that basis.

If a work does not meet those requirements, it could, of course, be made subject to a compulsory license on the same basis as other material.

In sum, the music licensing organizations have tendered licenses that meet all problems of the cable television industry. These problems have been solved by a system that insures a maximum of availability and a minimum of accounting and negotiation. Equal treatment of all is assured without preference to anyone.

The only item for discussion is price, and if that cannot be agreed on, there is an impartial outside body—a court or arbitration available to insure reasonableness.

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