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Would you please come forward.
Mr. VANDERSTAR. My name is John Vanderstar. I'm an attorney in Washington for the firm of Covington & Burling representing the National Football League, and I'm appearing here on behalf of Commissioner Rozelle.
Mr. Kuhn. And my name is Bowie Kuhn. I am commissioner of baseball, and here I'm representing the professional baseball.
Mr. Ruck. My name is Don Ruck. I'm vice president of the National Hockey League, and I'm representing the member clubs of the National Hockey League.
Mr. HOCHBERG. My name is Phillip Hochberg. I am counsel to the National Hockey League.
Mr. KAUFMAN. My name is Robert M. Kaufman. I'm a member of the firm of Proskauer, Rose, Goetz & Mendelsohn, counsel to the National Basketball Association, and I represent the commissioner of the National Basketball Association.
Mr. BRENNAN. Commissioner, do you wish to be the first man at bat?
Mr. Kuhn. I would like to. I appreciate the idiom you use, Mr. Brennan.
Mr. BRENNAN. I'm surprised there is no designated pinchhitter from the two leagues.
Mr. Kunn. He is doing so well we left him in the stadium and they sent me here alone.
STATEMENTS OF BOWIE KUHN, COMMISSIONER OF BASEBALL,
BASEBALL LEAGUES; DON V. RUCK, VICE PRESIDENT, NATIONAL HOCKEY LEAGUE; JOHN VANDERSTAR, COUNSEL, NATIONAL FOOTBALL LEAGUE; ROBERT M. KAUFMAN, COUNSEL, NATIONAL BASKETBALL ASSOCIATION; AND PHILLIP HOCKBERG, COUNSEL, NATIONAL HOCKEY LEAGUE
Mr. Kuhn. Let me say first, Mr. Chairman, I am delighted to be here with you and to give my views to your committee. We have submitted an extensive statement to the subcommittee.
Senator McCLELLAN. Your statement will be printed in the record in full, and you may highlight it.
Do you have others who have statements?
Senator McCLELLAN. Each of the witness' statements may be printed in full in the record, and you make your presentation by highlighting your statements and your position as you choose.
Mr. Kuhn. Thank you, Mr. Chairman. I'll just take a few minutes and try to highlight and give some perspective on the statement we have submitted. I'm speaking on behalf of not only Major League Baseball and its 24 clubs, but on behalf of Minor League Baseball and 127 clubs in the 17 leagues in the United States.
We support the copyright revision bill as it has been prepared, and particularly we support section 111 of that bill. I say that for this reason, Mr. Chairman, we feel that the control, which the bill as proposed, would give to professional sports and professional baseball, for whom I speak—is vital to the health of our professional game, and to these 151 cities where we present baseball to the United States.
As you know, I believe, Mr. Chairman, we sell our broadcasting rights on both a national and local basis. We sell a package to the National Broadcasting System for the World Series, the National All Star Game, the Saturday Game of the Week and the Monday Game. We also sell 24 separate local packages. Each major club sells a local broadcasting package to stations or sponsors.
This is a very important part of our business, 25 percent of our revenue, approximately, over the years has come from broadcasting, and I would anticipate that this percentage may very well increase.
It is vital to us that this revenue be protected, and I say that for some very practical reasons, that we in professional baseball are faced with. Today, the overall position of our major league industry is in a loss position financially and has been so for several years. I am hopeful, of course, that this will be changed, but that is a difficult fact that we are presented with today.
Over one-half of our clubs are losing money today in their present operations. They exist and operate because they are operated by men who have a very strong sporting instinct, who are devoted to our game, and who want to be a part of it.
Senator MCCLELLAN. Why are they losing money?
Mr. Kuhn. I am coming to that. What I'm going to say, Mr. Chairman, let me jump ahead and say this.
Senator McCLELLAN. All right. You may proceed. I would just like to have some comment about it.
Mr. Kuhn. All right.
The 127 minor league clubs that exist throughout the United States could not exist, and this is a critical part of the answer to your question, Mr. McChairman, without the subsidy provided by the major leagues. The cost of player development
Senator McCLELLAN. In other words, it is maintaining the farm team that is where the great emphasis
Mr. Kuhn. Yes; that is correct.
Mr. Kuhn. The minor league clubs? They do here and there, yes; but in the main they do not. An exceptional operation may be profitable but in the main they do not because they exist, again because in 127 or the better part of 127 cities around the country you have as you do in the major leagues, sports-minded people who want to see professional baseball presented in their towns.
And I may say with respect to those 127 minor league towns that in most of them professional baseball is the only professional sport presented, and forms a critically important part of the entertainment for the citizens of those communities. And I would emphasize here the importance of the entertainment.
Senator McCLELLAN. They are not supported by gate receipts alone. are they?
Mr. Kuhn. No; they are not. They're supported by basically two things or perhaps basically three things. They are supported by gate receipts in part. They are supported by concession receipts, which are really important in the minor league, and they are supported by the subsidy provided by the major league clubs to the minor league clubs.
Senator McCLELLAN. And in some instances, they are supported also by public subscription, aren't they?
Mr. Kuhn. Yes, sir. They certainly are, and by what might be referred to as the charity of the men who finance the clubs, which is another public subscription.
I think there is a very great danger to professional baseball, if we have uncontrolled telecasting of baseball. The vital part of our broadcast picture at the major league level is this local package that each club sells, that I described a moment ago. These are sold on an exclusive basis, and their value unquestionably is greatly hinged on the ability of the local club, whether it's the Phillies, the Yankees, or whoever, to sell exclusively in their market territory.
If there is a prospect, as we think there is, a dangerous prospect of an infusion of distant signals carrying other baseball broadcasts to these markets, surely the value of these exclusives is going to be greatly diminished. And I might say, Mr. Chairman, that when we telecast our games locally, the main part of our telecasting is away games, about 75 percent of the games that we telecast are our away games, not our home games.
Therefore, we are concerned with the protection of that exclusive of both the away games we telecast as well as the home games we telecast. And we are further concerned, and this is where we see a great danger at both the major- and minor-league levels of the effect on the home games. At both levels, it is the sincere opinion of our operators, and of myself that if there is uncontrolled television coming into the market, our ability to sustain our home gates, as we now sustain our home gates, will be greatly diminished. In other words, it will be a form of competition for home gates.
Now, in the comments I have heard earlier today there was a great emphasis on football, which has the wonderful situation of having largely sold its ballparks at the major league level. That is not true in professional baseball. While our attendance is enormous, we are not able to day-after-day sell our entire ballparks.
And it is of vital importance to us that we maintain the protection of our home gate, and we feel this uncontrolled television coming in would have a very adverse effect upon our home gate. We think the evidence that this is a real danger is quite dramatic from what we have submitted. We have been given some new information that we have developed recently, and the burden of that is this:
Since the new FCC regulations, in the year ended April 1, 1973, 304 CATV permits have been granted by the FCC in major league territories; 304 in major league territories and of those 304, 171 are right in major league cities.
Let me take some specific examples which point up the danger that we think affects it. Take Milwaukee where the Brewers play, and telecast a great many of their games; unless the copyright revision bill is passed with section 111, it will be possible under present regulations to have 277 games now being telecast by the Cubs and the White Sox in Chicago made available for telecast in Milwaukee.
The Chicago Cubs are on WGN. The White Sox are on WSNS. They are both independent stations. The Cubs do 148 of their games annually, the White Sox, 129; 277 total. All of these will be available to go into Milwaukee.
I cannot believe there would be any broadcasting rights of value left in Milwaukee if this should happen. The same thing is true of Minnesota, where the Twins play. All of those 277 games from Chicago would be available to go into Minnesota with a devastating effect, in my judgment, on the operation.
Senator MCCLELLAN. Do you have a blackout now against those games?
Mr. Kuhn. No; we do not. These are local games. With our local games, Mr. Chairman, there is no blackout provision at all.
To give you a further example, the Boston Red Sox and the Philadelphia Phillies are on either side of the New York market. Both New York teams telecast on independent stations. Their games would be available to go into both Philadelphia and Boston.
The Mets telecast 112 of their games, the Yankees 69. This is another 181 games that would be free to go into Philadelphia and Boston.
And again, Mr. Chairman, one doesn't need to be a bit sophisticated about this business to know the devastating impact that would have on the broadcast right of the Phillies and the Red Sox if in part or in whole that began to happen, and that it can happen, is demonstrated by a survey that CATV channels are being—the permits are being granted now in these markets, in Boston and Philadelphia. This is not something that we are speculating on, but this is the fact.
And as the CATV grows, and we hope it will, goodness knows where this may go in terms of its total impact; from the point of view of professional baseball, that is a pretty ghastly prospect, unless we are able to control the dissemination of our
broadcast rights, and that is all we ask for.
I think it is clear also to look at the realities that the CATV people readily admit that sports broadcasting is vital to them. There is no pretense that they are going to use some other kind of broadcasting; sports broadcasting is what they are hinging their prospect of success on.
In other words, they have said plainly that they intend to go extensively into sports broadcasting.
Now, I think something important in concluding, I should say, Mr. Chairman, is this: I think baseball has behaved very responsibly in terms of its obligations to the public in making its games available. In the first place between the majors and the minors, as I say, we have maintained this enormous entertainment network of 151 clubs and 151 markets around the country.
We play 2,000 major league games. We play 7,300 minor league games. I cannot tell you how important this entire system is. It draws over 40 million people, by far the largest of anything in professional sports. Over 40 million people are drawn to these events.
If we were difficult in our broadcast policies and didn't telecast a lot of these games, then I could say, I think the chairman should say to me,"Well, what have you got to complain about?” We do broadcast our games by television, very extensively. Of our 2,000 major league games nearly 1,100 are telecast annually, and not telecast over just one station, Mr. Chairman. We are currently telecasting over 173 television stations in and around our local markets through our local broadcasting contracts.
Now, if you will look at our national broadcast contract, there we were telecasting regularly over 190 NBC stations in the United States
covering the country. There was a game every Saturday during the baseball season and a game on 15 Monday nights during the baseball season. NBC carries our all star game as they did last week, our league champion series and our world series. All of these are carried nationally all over the country.
So that literally hundreds and hundreds of thousands of hours of television time are provided today by major league baseball, I think a very responsible performance in our attempts of serving the public with pictures of our games. We feel that this has been a reasonable and fair performance on our part in terms of the public need and interest.
And I think that it is fair to assume that we will look at newly developing technologies and try to use them, given control of our product as we pray we shall be, and try to use them thoroughly in the public interest as we have in the past; as we have, for instance, with our world series games where there is no blackout. We telecast the world series not only in the cities where those games are being played, but all over the country as well. Knowing occasionally we may get a public relations blackeye because you may see a few empty seats here and there because we will televise right in the market, but we do in trying to serve the public interest and we feel we have behaved very responsibly in this way. So we do support the bill, and we very particularly support section 111.
And I thank you for your consideration.
Since hockey and baseball share similar player development problems, we like baseball must develop our own minor league players. We, too, have both our network television contract, extensive local contracts. We will support the remarks made by Mr. Kuhn.
Senator McCLELLAN. Thank you, sir.
Mr. VANDERSTAR. Mr. Chairman, I have submitted a statement on behalf of Commissioner Rozelle of the National Football League. Essentially what it does is warmly endorse and urge the enactment of those provisions in this bill which deal with carriage of sports on cable systems, in particular 111(c) (4) (C).
We have made a record before the committee and also before the Communications Commission about our need for this. We have tried to show that contrary to the comments repeatedly made by the cable industry, the purpose of Congress in 1961 in enacting Public Law 87-331 was to give the professional sports leagues the privilege to sell their games on a pool or joint package basis to a single network.
Congress knew full well then when it enacted that exemption from the antitrust laws, that in allowing, in our case the NFL, to do that, we would be selling games in a fashion that would result in one game being telecast in each market.
Now, with the growth of more teams, with the amalgamation of the two leagues and so on, we are now in a position where in every market in the United States on Sunday afternoon there are two, and in