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Market 13 .es
Rock Is.-Moline 111
vi:scnvilic, 111 5
10. ucisini illc, ?ia.
. ?55 m. :circiniici, Calo---20:1,
is. Ezeano, Calif.
158 m. Washington, D.C.
San Francisco-Sal 08:.arsino-
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Durham, N.C. Page 6
77. Jackson, viss. 78. Chattanooga, Tenn.
Tvo Nearest Top 23 markets living room
Cities in each Kark.ct.
Hartford-Yew laven-Xew Britain-
351 m. Houston, Tex.
353 . Atlanta, Ga.
Cincinnati Ohio-Newport, 223 m.
Los Angeles-San Bernardino
Corona-Fontana, Calif. ES5
145 m. Washington, D.C.
280 m. Baltimore, ma
79. Youngstown, Chio
22. Fort Wayr.c-Roanoke, 3
50. 3cc rena
... -3. :cozia, 111
Cities in eac! Hacket
Sur, Tex. 89. Duluth-Superior,
99. ecling, W.Va.
29 rey, Rel.
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licy city, X.D.
2) Coraco, Ark.
carket includes a foreign station
STATEMENT OF GEORGE J. BARCO, GENERAL COUNSEL, PENNSYLVANIA CABLE
Mr. Chairman, Members of the Subcommittee, I am George J. Barco. For the past 17 years, I have served as General Counsel of Pennsylvania Cable Television Association. Pennsylvania is the state in which the cable television industry started, and there are some 300 CATV systems operating in over 1,100 communities—more than in any other state in the nationserving over 2,000,000 television viewers. It has been my privilege to serve as National Chairman (then known as President) of National Cable Television Association, and I was a member of its Board of Directors for 15 years. For the past year, I have served as member of the NCTA Coypright Committee. Also, for the past 20 years, I have been, and still am, a part owner and the president of several cable television companies.
By way of further introduction, I believe I should state a disclaimer, for the benefit of NCTA, and for the information of the Committee, that while I have been an active participant in the affairs of NCTA over the years, the views I am about to express on the copyright issue are my own, and in many respects do not correspond with the officially adopted views of NCTA as an organization. At the same time, let me state that I believe my views reflect those of many, many cable operators all over the country. There is no single matter which has concerned the CATV industry for the past 7 to 8 years more than copyright. Over this period, I have talked on a person-to-person basis with literally hundreds of cable operators and virtually every industry leader on the subject.
Let me state finally by way of introduction that I view my task today as awesome and the situation for the cable industry as critical, if not desperate. In the circumstances, I can only state the situation as I see it fully and frankly to the Committee, without regard to certain existing predelictions, interests and objectives among the forces interacting on the copyright issue, within and without NCTA. I am very appreciative for this opportunity of doing so.
In October, 1968, the Board of Directors of the Pennsylvania Association, following a careful consideration of the copyright issue, adopted what has been termed as the “Pennsylvania Position” on copyright. Its underlying principle is simply that television signals received “off-the-air” should not be subject to the payment of copyright fees so long as similar payments do not apply to reception by conventional antennas. The Position recognizes that copyright fees should be payable for copyrighted programs received by microwaving or similar long distance transportation, and that such microwaving should be subject to regulation in view of its impact on television broadcasting, copyright property rights, and the interrelated market patterns of both.
While recognizing the legitimate interests of many who are interested in providing direct television program services, and a variety of other communication services in the metropolitan area by cable, the Pennsylvania Position urges that the television reception function for "off-the-air" signals by CATV should not be colored by the possible future developments of cable television, nor should the inherent rights in such reception be traded as a part of any compromise between the conflicting interests concerned in large city cable television development.
The Pennsylvania Position has received wide support in the industry throughout the nation for it was grounded on the basic concept and fact of CATV performing the community antenna reception function for signals received "off-theair". Further, it seemed incomprehensible that liability to copyright fees should depend on the accident of topography—or in the real life situation of the television viewer—whether he was living in the high area where a conventional antenna did the job, or whether he lived behind the hills or along the river where community antenna service was required or desirable to provide satisfactory television reception. How could there be any justification for requiring the subscribers to make an additional payment to the copyright owner who had already received payment in his contractual arrangements for the broadcasting, paid ultimately by the television viewers—including CATV subscribers—in the advertising costs of purchased products? Besides, until recently the copyright owners made repeated public assurances that they were not interested in par. ments related to such television reception services, but were interested in only the large city markets where distant signals were to be imported.
1 Under the Pennsylvania Position, no copyright fees should be payable on reception provided of three stations, with the three major networks, and one independent station, whether the signal is received "off the air" or by microwave, in the interest of all members of the public receiving minimum television service.
And most important of all, the Supreme Court of the United States in the United Artists case made a determination, in June, 1968, recognizing and establishing in legal terms the concept always understood by cable men in practical terms by the very nature of their operations.
Yet, in the intervening years from 1968, the membership of National Cable Television Association was sharply divided on the copyright issue. One segment considered any payment of copyright fees for signals received "off-the-air" an infringement of very basic rights, for the reasons just mentioned. The other segment viewed payment of copyright "across the board" as the only realistic means for securing importation of distant signals thought to be necessary for the economic viability of cable television for the large cities if and when such system construction occurs.
To fully understand the circumstances of this division, it must be understood that the membership of NCTA is not a homogeneous group; and that while all members of NCTA are in the cable industry, a substantial number of them and particularly some large multiple system owners—also have other interests which are at variance with CATV interests as such, as, for example, television broadcasting and copyright interests. It is not surprising that the persuasions of the copyright payment segment within NCTA have been weighted and influenced by these interests and still are today.
As is well known, the event of decision came in November, 1971, in the context of the Office of Telecommunications Policy Compromise, which was approved by the NCTA Board of Directors because it appeared to represent the only available basis upon which there was any possibility for removing the Federal Communications Commission freeze on cable television development, particularly in the large markets.
Whatever differences there may have been within NCTA over philosophy as related to the regulatory scheme and the payment for copyright, I can state I believe that every possible effort was made by the NCTA Copyright Committee, and others of the CATV industry concerned with the implementation of this decision, to accommodate to the situation. I can state from my own personal knowledge that the attitude, demands and conduct of those representing the movie copyright owners during the sessions which I attended were such that all efforts to deal with them were vigorous exercises in futility.
The representatives of these copyright owners were completely uninformed as to the nature of CATV operations, their financial aspects and the specific current problems facing the industry; and they were evidently determined to maintain their ignorance on these matters. Furthermore, they displayed a callous disregard of the consequences of their exorbitant and totally unrealistic demands. Thus, when they were informed that our industry simply could not pay the demanded 16% fees for movies alone, added to fees proposed for music and other copyright of over 12%, the response was a blatant "pass it on to the subscribers and tell them it is a cost of doing business."
When we attempted to cite the absolute and practical limitations to service charge increases, by way of clearances through the municipalities on whose franchises the operation must depend, and by way of the business fact that subscribers either could not-or would not-make such payments, the blunt rejoinder was "just pass it on to the subscribers anyway."
I must observe that the FCC, in insisting on copyright payment as one of the conditions to the easing of restrictions on CATV growth, placed a perhaps unforeseen, but nonetheless, tremendous pressure on the CATV representatives in the bargaining process. The copyright owners were under no concomitant burden, and, in fact, they maximized their advantage by insisting, in effect, that this condition amounted to a requirement that CATV settle on the terms of the copyright owners. In the end, it was painfully clear to even the most optimistic and the most tolerant of those representing NCTA that fair, realistic and responsible dealing with the copyright owners had been and is an utter impossibility.
Gentlemen, I put aside completely my firm conviction that copyright payment for the reception of television signals received "off-the-air" is wrong in principle and discriminatory in effect. I address myself now to the consequences of the imposition of copyright payments which this industry simply cannot afford to pay on its growth, development, and, yes, its survival. Let me capsulize the difficulties of cable television operations today.
Of course, like all other business, we are plagued with increased costs incident to the inflationary period in which we are living. Substantial basic costs