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More specifically, section 111 (c) should be amended to add a subsection (5) which would state as follows:

“(5) Notwithstanding any other provisions of this section, the secondary transmission to the public by a cable system of a primary transmission made by a broadcast station licensed under the laws of a foreign nation that is a party to the Universal Copyright Convention of 1952, and embodying a performance or display of a work, is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, and no such transmission shall be subject to the compulsory licensing provisions of this section."

In addition, section 602(a) of s. 1361 should be amended to state that the italicized portion is the suggested amendment] :

“(a) Notwithstanding any other provision of this Act, except as set forth in subsections (1), (2), (3) and (b) below, the importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work or any other literary, dramatic or musical work in the form of motion pictures or other audiovisual format that have been acquired abroad is an infringement of the exclusive right to distribute or perform the work under section 106, actionable under section 501. ..."

It is important to emphasize that we are not asking for more protection than is available to other U.S. stations. Indeed, if the Commission had sought to limit the carriage and distribution of foreign signals as it has in teh case of Englishlanguage stations (see pages 2-4, supra), additional relief might not be required here. The Commission, however, has not seen fit to treat U.S. foreign-language stations on a par with English-language stations and thus we are left with no protection at all.

RICHARD H. DUNLAP,

Los Angeles, Calif., December 20, 1971. Mr. BEN F. WAPLE, Secretary, Federal Communications Commission, Washington, D.C.

DEAR MR. WAPLE: This letter is submitted on behalf of Azteca Films, Inc.. a California corporation, having its head office in Los Angeles, California, and with four other regional offices. The business of Azteca Films is the distribution within the United States of Spanish language feature motion picture films most of which are produced in the Spanish language within the Republic of Mexico. Such films are licensed to theatres within the United States catering to Spanish speaking persons and to domestic television stations serving the large Spanish speaking communities within the United States.

A substantial portion of such Spanish speaking communities are located within the states adjoining the Republic of Mexico, i.e. : Texas, New Mexico, Arizona and California. Each of these states contain large populations of Spanish speaking Americans of Mexican descent.

For many years Azteca Films has served the Spanish-American populations in this market by licensing its Spanish language films to theatres and to television stations within the said border area. Owners of domestic Spanish language television stations—in particular the small UHF stations catering to the Spanish language communities-have advised Azteca Films that the mainstay of their Spanish language programming consists of Spanish language Mexican-produced films they license from Azteca Films.

It has recently come to the attention of Azteca Films that the Commission has permitted, and by letter to Congress dated August 5, 1971 proposes to continue to permit, community antenna television systems to import without resrictions the signals of Mexican-based Spanish language television stations into markets not within the top 100 markets and into the top 100 markets with some limitations,

It is the considered opinion of Azteca Films that said unrestricted importation of Spanish language signals, particularly the unrestricted importation of Spanish language feature films hy CATV systems into the U'nited States, will destroy the independent Spanish language television broadcasting industry in the United States. Such a policy cannot serve the public interest inasmuch as the United States Spanish American population is certainly entitled to be served by a healthy and effective United States-based television industry attuned to the needs and aspirations of the Spanish-American communities in the United States,

Spanish-language television programs originating in Mexico are created for and directed to the Mexican people in Mexico and the broadcasting stations are closely controlled by the Mexican government. The program content is supervised by the

Mexican government and the Mexican television stations are required to broadcast Mexican government originated programs imbued with Mexican government points of view on a daily basis. Some portion of this material may be assumed to be of less interest and of less benefit to the Spanish-American populations within the United States than Spanish language material selected by, and broadcast by, United States-based television stations.

Inasmuch as the decisions of the Commission in respect to the carriage of signals by its licensees, including CATV operations, are based upon the public interest, Azteca Films believes that a brief analysis of the effect of the unrestricted permission granted to CATV operations to carry into the United States foreign language programs originating in the Republic of Mexico is in order.

As illustrative of general conditions along the Mexican-United States border, Azteca Films directs the attention of the Commission to the situation existing in the Southern Rio Grande River Valley in Texas.

Valley Cable TV, Harlingen, Texas, directly and through microwave connections, operates its CATV systems in the Texas communities of Pharr, McAllen, Mission, Edinburg, San Juan, Alamo, Westlaco, La Feria, Donna, Mercedes, Harlingen, San Benito, Raymondsville and Brownsville, all of which contain a high percentage of Spanish-speaking persons and homes. Said Valley Cable TV presently is importing and providing to its subscribers the following full time Spanish language signals from Mexico:

XHAV-TV-Matamoros, Mexico
XHX-TV-Monterrery, Mexico
XET-TV-Monterrery, Mexico

XESB-TV-Monterrery, Mexico. In addition said Valley Cable TV carries, only on a part time basis, the signals of your licensee, KWEX-TV, San Antonio, Texas, a Spanish-language station, belonging to Spanish International Broadcasting Company. Southwest CATV, Inc., a company affiliated with Valley Cable TV and the licensee of the CARS system which services the said communities, on December 10, 1970, requested the Commission to renew its Community Antenna Relay Station licenses indicating that it desired to continue to provide the above described signals to its subscribers.

From written information Azteca Films has obtained, and which it believes to be true, it appears that Valley Cable TV is experiencing a surging growth, much of which is believed to be the result of the importation of the Spanish language signals from the Mexican stations in Monterrey, Mexico.

The effect of the different business entities affected by said unrestricted importation of signals in the Spanish language from Mexico is commented upon immediately below.

1. Valley Cable TV. There would seem to be no doubt but that said permission presently benefits the stockholders of Valley Cable TV.

Two of the Monterrey, Mexico stations picked up by Valley Cable TV broadcast the programs of the two existing Mexican nation-wide television networks and the third Monterrey station broadcasts the best franchised independent material available in Mexico. Said Mexican-originated signals include many feature motion pictures in the Spanish language each week, the same feature motion pictures for which the exclusive exploitation rights for the United States have been acquired by Azteca Films for licensing within the United States.

It is the belief of Azteca Films, based upon its own experience and upon interviews with other owners of right to exploit Spanish language films in the United States, that Valley Cable TV makes no arrangements for the use of said Spanish language motion picture films, but, in fact, transmits them to its subscribers via microwave at no cost to itself for said material and without seeking or obtaining permission for such use.

At this point it is pertinent to point out vital differences between a domestic CATV system's use of domestically broadcast literary property and a domestic CATV system's unauthorized and unlicensed use of literary property broadcast from Mexico.

When a domestic CATV system carries literary property originating with a domestic station, the owner of said laterary property has licensed the use of said material to the domestic station. The owner can have access to the public records concerning the broadcast range of the said station, including its CATV connections, and can negotiate a license fee commensurate with the extent of the use. In the case, however, of a domestic CATV system carrying literary property originating from a Mexican station far into the United States to its subscribers, the owner of the United States exploitation rights to said material, is deprived of his property without compensation. Said owner cannot protect even its United States licensees, to which it may have previously licensed the exclusive right to perform via televiison, the same property which the domestic CATV system now brings into the market from outside the United States, free of cost and without license.

With the unrestricted permisison given by the Commission to Valley Cable TV to import as many Spanish language signals from Mexico as it may elect, there is small or no incentive to Valley Cable TV to carry domestically originated Spanish language signals.

Azteca Films has in its possession written information, dated January 29, 1971, to the effect that Valley Cable TV was carrying the San Antonio, Texas Spanish language television station, KWEX-TV, on a full time basis only in the towns of Alice and Falfurrias among the fourteen, or more, communities it was serving with Spanish language signals. It seems quite apparent that Valley Cable TV has been largely by-passing the Spanish language programs transmitted by the San Antonio station in favor of the Mexican originated signals. Valley Cable TV seemingly has elected to completely by-pass Spanish language signals originating from other domestic stations which are available to it.

There is another reason why Valley Cable TV elects to import said Mexican originated signals instead of carrying domestically originated Spanish language programs. The two Mexican television network stations in Monterrey, whose signals are imported and carried by Valley Cable TV, include among their programs very new and important Mexican feature motion picture films. Azteca Films has been informed that Valley Cable TV has imported from Monterrey and carried to its subscribers, Mexican motion picture films of such recency of production that they have not yet been exhibited even in the numerous Spanish language theatres in the United States, operating within the communities served by Valley Cable TV. Motion picture films of this recency would not be licensed by the owners thereof for broadcast by domestic United States Spanish language television stations for, perhaps, two to three years following the theatrical exhibition of the same in the United States, which is a policy similar to that common within the greater English language motion picture film market.

The consequence is that Valley Cable TV is attracting subscribers in the Spanish language community by offering to such subscribers feature motion pitcure films obtained from Mexican originating signals, before such motion pictures have been made available to Spanish language moton pictures in theatres along the border and before such motion pictures are available for licensing by the United States-based Spanish language television stations.

It is worth remarking that the Commission's rules in this area permit the Spanish language subscribers to the Valley Cable TV service to obtain benefits that no English language community obtains from direct, or cable, television. Such unforeseen benefit consists of the availability of feature motion pictures films via cable before those films are available to the community in theatres or by direct television transmission. The above mentioned inducements to Valley Cable TV, and other similarly situated border CATV systems, to utilize Mexican signals rather than domestic Spanish language signals, causes irreparable damage to both the owners of the United States rights to the literary property (motion pictures and other filmed material) which are imported by the border CATV systems and to the domestic television stations attempting to serve Spanish American communities with domestically produced programs. 2. United States based television stations transmitting in the Spanish language

It has been stated above that Valley Cable TV, and similarly situated border CATV systems, have no incentive and small interest in carrying the signals of domestic television stations broadcasting in the Spanish language when they are permitted to import from Mexico all of the Mexican network signals as well as The best Mexican franchised Spanish language programs.

The domestic Spanish language television stations must license Spanish language filmed material, including Spanish language feature motion picture films, from the owners of the rights to exploit the same in the United States. They must pay a license fee, and they must await availability of the feature motion picture films until those films have been exhibited in the Spanish language theatres in the community.

The result is that the border CATV systems supply to their subscribers recent Spanish language films, and other taped programs, the signals of which are imported from Mexico without payment or permission (other than that granted

by the Commission's rules), while the domestic stations cannot program the same films and other material until some later time and after having paid a license fee for such material to the owners of the rights.

It follows that such border CATV systems increasingly will ignore the carriage of domestic Spanish language stations to the economic damage of said domestic stations. 3. Owners of rights to exploit in the United States Spanish language filmed and

taped material Azteca Films is one of several companies that have spent millions of dollars to acquire the rights to exploit within the United States theatrically and by means of television Spanish language motion picture films principally from the Republic of Mexico. It has spent a very substantial additional sum in making negatives and prints of said films. It maintains a large organization to license the rights to exploit such films.

The principal licensors of such films for television are the VHF and UHF stations within the states of Texas, New Mexico, Arizona and California which broadcast in the Spanish language. Such said stations obtain such films from Azteca Films, and from other owners of rights to exploit Spanish language films in the United States, by paying a negotiated license fee to Azteca Films and to others. Azteca Films has invested in the said rights for the United States to such said films under the belief that the market for such product was stable and was increasing. Azteca Films has considered that the number of Spanish language domestic stations, both VHF and UHF, would increase substantially to cover areas within said border states not yet covered by Spanish language programming, and that the economic strength of such stations would improve as service improved.

Azteca Films believes that the Commission's present regulations, permitting CATV systems, with microwave connections, to import signals from Mexican stations and to carry such signals to subscribers will bring to an end any prospect of the growth and of the economic strengthening of domestic Spanish language stations. This, of course, will greatly inhibit the possibility of Azteca Films of recovering its investment, and will also bring to an end the purchase by Azteca Films, and others, of rights to exploit Spanish language films in the United States. In this event the domestic Spanish language stations no longer will be able to obtain licenses for the Spanish language films that are today a vital part of their Spanish language programming. Such will have a substantial economic impact as well on the entire Spanish language motion picture industry of Mexico which depends to a considerable degree on patronage by Spanish language communities within the United States for recovery of the production costs of its motion picture films. 5. SummaryThe Public Interest

It is the opinion of Azteca Films that the Commission has not taken into comsideration to a sufficient degree the substantial damage occasioned by the Commission's rules permitting border CATV systems to pick up, import and disseminate to its subscribers within large areas of the United States broadcast signals from Mexican stations carrying filmed and taped material intended for the Spanish speaking communities in Mexico itself. Without commensurate benefits, the following harm can be described.

(a) The domestic Spanish language stations cannot prosper or expand their markets when exposed to the flood of Spanish language television material picked up and imported from Mexico by the border CATV systems and disseminated by microwave over large areas.

(b) United States advertising sponsors are precluded from reaching a potentially wide market by the present rules which induce the CATV systems to utilize Mexican originated Spanish language signals rather than domestic Spanish languag signals. If the CATV systems were precluded from picking up the Mexican signals, such systems would pick up the many available domestic Spanish language stations, the consequence being that the advertisers would reach a much wider audience. In turn this would permit the domestic Spanish language stations to increase their fees and be able to provide better Spanish language programming.

(c) The owners and distributors of Spanish language, Mexican-produced, feature motion picture films have invested very substantial sums in reliance on a United States market for their rights. The unlicensed, free importation of this same material by border CATV systems is rendering these rights worthless. Such owners cannot protect even the domestic television stations to which they have licensed, for a reasonable fee, such material against the prior, free dissemination of such material by the border CATV stations throughout the expanding microwave areas.

(d) The cable television industry is permitted by the present rules of the Commission to receive a free windfall of copyrighted material from a foreign country to the substantial damage of many Mexican and American interests without fulfilling any purpose which could not be fulfilled at this time from domestic sources of Spanish language programs. For example Azteca Films would be willing to license Spanish language films to Valley Cable TV for reasonable license fees.

(e) Under the present rules the Spanish American communities are exposed to a flood of foreign broadcasts from Mexico, none of which is under the surveillance of the Commission and some part of which is designed to politically influence the Spanish speaking audiences for which such Mexican broadcasts are intended. The commercial attractiveness of much of the Mexican-originated signals make it competitively difficult for programs produced and originated by Spanish American groups to be disseminated inasmuch as the border CATV systems show little interest in carrying domestic Spanish language stations.

In summary, it would seem to Azteca Films that the public interest would be served by prohibiting the importation into the United State by cable television of the signals of Mexican based television stations, thereby inducing the border cable television systems to rely on the available domestically based Spanish language programming and feature films. Respectfully submitted,

RICHARD H. DUNLAP, Attorney for Azteca Films, Inc.

RICHARD H. DUNLAP, ATTORNEY AT LAW,

Los Angeles, Calif., December 21, 1971. Mr. HENRY GELLER, Federal Communications Commission, Washington, D.C.

DEAR MR. GELLER: Yesterday I mailed to you a copy of a letter to the Commission on behalf of Azteca Films, Inc., and today I enclose a copy of a second letter, this one on behalf of the Mexican Motion Picture Producers Association.

Both letters attempt to explain the substantial economic harm being done to the Mexican motion picture and television industry, and to the American Spanish language VHF and UHF sations, by the Commission's regulations permitting the importation of Mexican television signals into the United States by border cable television systems.

I hope I have been successful in putting into readable language the fact that a prohibition of such importation would not deprive the border cable television systems of anything other than an inequitable time priority over domestic stations inasmuch as the last named, in fact, license the same material for broadcast at a somewhat later date. Such material is, and would continue to be, available to the cable systems. However the other side of the coin-the damage to all other entities aside from the cable systems—can be corrected only by requiring (by deprivation of the imported product) such cable systems to utilize the domestic Spanish language signals.

It is understandable that Valley Cable TV will use all its resources to continue to enjoy the present unwarranted and unnecessary bonanza ; however I hope that these documents will show that the slight additional benefit to Valley Cable TV made available by such importation permission will be shown to be wholly outweighed by the grave economic injury to all the other entities involved in this problem.

I still appreciate your attentive and courteous consideration of this at the time of our personal conference in your office some weeks ago. Very truly yours,

RICHARD H. DUNLAP.

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