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SUMMARY OF PLANNED HOME AND AWAY GAMES TELECAST, BY TEAM, 1973

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The decision by each team to authorize a given number of telecasts takes into account a variety of considerations, including the possible impact of telecasts on home attendance. Many teams have elected not to authorize telecasts of their home games because of the impact on gate attendance." In fact, it appears that the trend is to telecast even fewer home games to protect the gate and increase the telecasts of away games.

Moreover, where a "network" station is located in the community of a Minor League team, most teams will not clear their game telecasts into that market when a telecast would conflict with a home game of the Minor League team.

2. The Importance of Telecasting Revenues to Baseball. Baseball's established pattern of television would be seriously disrupted by unrestricted cable transmission, with the most serious potential adverse effect upon the existing property rights in live Baseball telecasts.

These rights are extraordinarily valuable to Baseball; indeed, I believe they are indispensable to the continued economic viability of Baseball. The contract for the sale to NBC of rights to the Game of the Week, the Monday Night Game, the All-Star Game, the two League Championship Series, and the World Series for the years 1972 to 1975 will result in payments of over $70 million to Baseball. The keystone of these network contracts is, of course, the degree of sponsor exclusivity which Baseball can now assure NBC.

Moreover, the contracts negotiated by individual teams with local television stations, and in many cases local and regional networks, for exclusive broadcasts of their home and away games (with radio rights) are estimated at an additional $23,000,000 for this year.

It is clear that revenues from the sale of such rights are a principal underpinning of Baseball's structure; any diminution would simply compound the critical economic problems which Baseball now faces at both the Major and Minor League levels.

A substantial number of Major League Clubs operate below or very near the economic break-even level; decreases in television revenues and home game attendance, which could be caused by unrestrained cable activity, could be fatal. Significantly, broadcast rights at the national and local levels provided more than 25 percent of Major League Baseball's total operating revenues in 1969. Ex

14 Three-fourths of the telecasts of home games are in two cities-New York and Chicago-where experience has shown that the market is so large, etc., that such telecasts have a minimum impact upon the home gate.

hibit B shows the dollar value of and contribution to operating revenues of broadcast rights for all Major League teams. These financial data demonstrate that broadcast revenues are absolutely essential to Baseball's survival. The most recent study of Baseball's financial results, prepared by Arthur Anderson & Co., for the year 1969, indicated that 13 of the 24 Major League Clubs suffered losses, some of them very substantial. The aggregate results for all 24 clubs in 1969 showed total losses in the millions. Thus, with these bleak operating results, any diminution of Baseball's broadcasting revenues could threaten the very continued existence of the sport.

3. Indiscrimate Cablecasts Could Seriously Impair the Revenues That Baseball Receives From Television. To give cable systems a compulsory license to telecast distant baseball games would assuredly have an immediate impact upon the price which a broadcaster or sponsor would be willing to pay for the broadcast rights to a given Club's games. To illustrate, the broadcaster pays the Club for the rights to telecast a certain number of the Club's games. The broadcaster can sell the games to sponsors on the basis that these telecasts will be the primary source of televised Baseball entertainment in a particular community during the regular season. If, however, a cable system can provide thousands of the city's residents with literally hundreds of other distant Baseball games from distant communities, the broadcaster and the sponsor naturally will pay far less for the rights to the home team's games than would otherwise be the case. This loss of revenue could have the most serious consequences, as outlined above.

Furthermore, the ultimate effect of unlimited cable transmissions could be so severe that independent stations would no longer be considered by Baseball Clubs to be eligible for the purchase of broadcast rights. In order to secure the protection which Baseball needs, all teams may be forced to deal only with network-affiliated stations.15 However, this decision itself could have serious consequences; independent stations today provide a strong source of competition for television rights. The removal of this competition can have only an adverse effect upon potential revenues.

V. PLIGHT OF THE MINOR LEAGUES

The Proliferation of Cablecasts Could Cause the Death of the Minor Leagues. Baseball has a special interest-separate and distinct from that of copyright owners generally and other professional team sports-in protecting its Minor League system against unwarranted intrusion from telecasts of Major League teams.

At this time, there are 17 Minor Leagues in the United States comprised of 127 individual United States teams. In 1971, there were more than 7,300 Minor League games played before approximately 11,000,000 fans. Minor League Clubs are the principal source and proving ground for Major League players in addition to being an important source of entertainment for millions of Americans. No other professional sport operates a player-development system of even remotely comparable magnitude. Indeed, the Minor Leagues exist only because of the direct subsidies provided them by the Major League Clubs and the working agreements which have evolved between Minor League teams and Major League Clubs. In 1969 alone, more than $31 million (or 25 percent of operating revenues) was expended by Major League Baseball on player development, the majority of which went to the major league. Unlike professional football, which utilizes the nation's universities and colleges as its proving grounds for players, Baseball must spend these substantial amounts to ensure to the fans a steady flow of talent.

As noted above, virtually all of the smaller and medium size communities which have Minor League teams have cable systems in operation, franchises outstanding for cable systems, or a franchise application pending under active consideration. Thus, these communities are open for the wholesale importation of sports broadcasts by local cable systems.

There is persuasive evidence that such unregulated expropriation of live Major League games by cable systems could seriously affect Minor League attendance. An inquiry regarding potential cable impact upon Minor League operations produced the following comments: 16

15 Professional Football, which sells all of its rights on a package basis to the national networks, does not, of course, confront the same problem Baseball does. Particularly in the metropolitan market where "adequate service" is already provided, cable systems cannot bring in distant network stations with competing football telecasts.

16 See Exhibit C for a collection of responses from Minor League teams.

"I definitely feel that CATV would kill practically all of our fans we have left."

"It is my definite opinion that telecasts [by] cable [of] league games into this area would definitely hinder our attendance. I do not have to remind you that attendance in Minor League Baseball parks is a nationwide problem and any further infringement of telecast baseball broadcasts would probably make it impossible for most minor league clubs to continue a successful operation. It is too easy even now to stay at home and watch television than to go out and support your own local activities whether it be baseball, hockey or basketball— and we have all three in Salem."

"Again, in my opinion, CATV in this area would come close to being the death knell of Minor League Baseball in Rochester. We are trying by every promotional means possible to keep AAA baseball in Rochester for the benefit of the entire community and are attempting in every way possible to provide wholesome recreation for families and youth in Rochester. I feel it is about time we had help instead of hindrance."

"If we were to be exposed to this type coverage, there would be no doubt in our minds that it would affect our attendance seriously.

"Obviously, if such telecasts were to reach our city, our attendance would suffer drastically."

A reduction in gate attendance at Minor League games with a corresponding reduction in revenues would pose a dilemma for the Major Leagues which do not have available additional resources to keep the Minor Leagues in operation.

VI. CONCLUSION

In summary, I believe there are sound legal, public policy, and practical reasons why Baseball must maintain control over the dissemination of its games to the viewing public. The Federal Communications Commission's new regulatory scheme for cable television will permit the development of cable in such a way that it could completely undermine Baseball's orderly telecasting patterns and, hence, seriously dilute the value of Baseball's gate receipts and broadcasting rights.

While Baseball is anxious to experiment with the promises of the new cable technology, it is fundamental for Baseball to have complete control of the rights to its games in order to strike an appropriate balance between Baseball's traditional commiment to over-the-air broadcasting and any experimentation with cable television.

EXHIBIT A

See the attached black binder for the complete survey, with a covering memorandum, commissioned by the Commissioner of Baseball to study the effects of the first year of the Federal Communications Commission's new regulatory structure for cable television.

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EXHIBIT C

REPRESENTATIVE COMMENTS OF MINOR LEAGUE BASEBALL TEAMS ON THE IMPACT OF CATV UPON THEIR ATTENDANCE

"I definitely feel that CATV would kill practically all of our fans we have left." "There is no doubt as to the fact that this WOULD HURT our attendance TREMENDOUSLY, as do ALL telecasts against our HOME games. This is the very thing that can and will put us all out of business, but quick."

"It is my definite opinion that telecasts [by] cable [of] league games into this area would definitely hinder our attendance. I do not have to remind you that attendance in minor league baseball parks is a nationwide problem and any further infringement of telecast baseball broadcasts would probably make it impossible for most minor league clubs to continue a successful operation. It is too easy even now to stay at home and watch television than to go out and support your own local activities whether it be baseball, hockey or basketball-and we have all three in Salem."

"Again, in my opinion, CATV in this area would come close to being the death knell of minor league baseball in Rochester. We are trying by every promotional means possible to keep AAA baseball in Rochester for the benefit of the entire community and are attempting in every way possible to provide wholesome recreation for families and youth in Rochester. I feel it is about time we help instead of hindrance."

"Cable TV does hurt our attendance when we play at home. Most every night of the week you are able to get either the Mets or Yankees games when they play at night. Sometimes you can get both the Yankee and Met games. On holidays it kills our attendance when we play at night."

"During the 1968 season, the telecasts of Major League games via CATV did reach Elmira and, although it is hard to estimate if these games had any effect on our attendance, I'm sure it did. On nights when there was a so-called 'crucial' game on TV and we were playing home, our game attendance was down. This was also true if the weather conditions were less than ideal."

"In reply to your request for CATV information, the telecasts of the games played by the Mets and Yankees all reached our city in the three years we have been members of the NY-Penn League. These are the years 1966, 1967, and 1968. "While it is most difficult to accurately gauge the effect of the activities without a comprehensive study, I would think they did adversely affect our attendance. One thing is sure . . . they did affect us on the nites which were threatened by inclement weather."

"I did operate the Williamsport Club in 1964 and 1965 and we did have cable TV there. I felt that it did hurt our attendance, since people were less inclined to go out at night and pay to see minor league baseball when they could see one or more major league games at home in the comfort of their living room, at a much lower price, which was next to nothing."

"Should the CATV telecasts of Major League games come to our city I believe we would have to disband baseball. This year the Major League night telecast of baseball cut our attendance about four fifths."

"If we were to be exposed to this type coverage, there would be no doubt in our minds that it would affect our attendance seriously."

"Obviously, if such telecasts were to reach our city, our attendance would suffer drastically."

"I sincerely believe that any telecasts of major league games into our city while we are playing hurts our attendance very much. I do not see how TV games can help the minor league attendance."

STATEMENT OF DON V. RUCK, VICE PRESIDENT, NATIONAL HOCKEY LEAGUE

Mr. Chairman, my name is Don V. Ruck and I am Vice President of the National Hockey League. I am accompanied by counsel, Philip R. Hochberg of Washington, D.C.

We appreciate the opportunity to come before you and testify on your bill, S. 1361, which we fully support. I think there is a consensus that this Subcommittee may be the court of last resort in the copyright area; we welcome the chance to place our case before you.

I would like to second the remarks offered by Commissioner Kuhn. Since hockey and baseball share similar player developmental patterns, we echo his concern for the minor leagues.

The National Hockey League is not the benefactor of ready-made players from the Collegiate ranks. We must develop our own talent. There are, in the United States, five leagues on a minor level. And it is the NHL teams which underwrite the bulk of the cost to operate the minor teams so as to assure the development of young talent.

We, like baseball, are very concerned with the impact that importation of sports signals via cable systems would have on these minor leagues.

More importantly, however, is our concern for the major league of hockey, the National Hockey League. Again, like baseball (and like basketball), the NHL has games scheduled virtually every night of the week. You can well imagine what would be the fate of our new Washington hockey team in 1974 if it faced— on a Washington cable system-the importation of NHL hockey from Philadelphia, New York, and Boston on a nightly basis. The same problem would be faced by our newer teams in Los Angeles, Oakland and Atlanta where hockey has not yet caught on.

And yet the Commission's Rules would afford greater protection to "Pantomine Quiz" and "Bridget Loves Bernie" than they would to professional and amateur sports. Something, I suggest to you, Mr. Chairman, is out of kilter there.

It is indeed ironic that we should be here this week. It was almost exactly two years ago that Chairman Burch, in his Letter of Intent of August 5, 1971, noted that the question of sports programming was a difficult one. He promised expedited consideration of the matter, so that it would be concluded before “the significant emergence of new systems".

And again, a year ago in oral argument on this issue before the Commission, the same fear was voiced. It was stated to the chairman that systems would attempt to sell hookups on the basis of importing distant sports signals.

At one point, he noted that (as of that date) only 13 Certificates had been granted. Today, some 1,100 certificates have been granted and more are being granted daily. Many of the applications and grants are for either the core city contiguous suburban area.

For instance, literally dozens are in the Philadelphia area and four are specifically within the City of Philadelphia itself—including one literally across the street from the Spectrum where these teams play. And this is the very system which has based its appeal for subscribers on distant sports signals! (I am attaching as an Exhibit an advertisement which recently appeared in a Philadelphia newspaper.)

Members of the Commission urged sports to look to Congress as its remedy. Senator Pastore, for one, has indicated his concern with cable systems importing distant sports signals not authorized to the local station. We agree.

It would seem uncommonly logical that the entrepreneurs who have invested millions of dollars to develop the professional sports franchises should quite reasonably, maintain the right to when and where their product will be telecast. Accordingly, we urge the passage intact of S. 1361.

Thank you.

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