COPYRIGHT LAW REVISION-CATV THURSDAY, AUGUST 4, 1966 U.S. SENATE, SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS OF THE COMMITTEE ON THE JUDICIARY, Washington, D.C. The subcommittee met, pursuant to call, at 9:45 a.m., in room 1318, New Senate Office Building, Senator Quentin N. Burdick presiding. Present: Senator Burdick (presiding). Also present: Thomas C. Brennan, chief counsel; Edd N. Williams, Jr., assistant counsel; Stephen G. Haaser, chief clerk, Subcommittee on Patents, Trademarks and Copyrights; and George S. Green, professional staff member, full committee. Senator BURDICK. This morning we are a little bit pressed for time because of an unusual situation on the floor. And therefore I would ask all witnesses to be as brief as possible. If they have prepared statements they will be made a part of the record in full. Our first witnesses this morning are Mr. Louis Nizer, general counsel of the Motion Picture Association, and Mr. Arthur Krim, president of the United Artists Corp. You gentlemen may proceed in any order you wish. STATEMENT OF ARTHUR KRIM, PRESIDENT, UNITED ARTISTS CORP. Mr. KRIM. Thank you, Mr. Chairman. I am Arthur Krim, and I am president of the United Artists Corp. We have a subsidiary which is known as United Artists Television Corp. which produces programs for television, and therefore has a deep interest in the subject matter before this committee. I am grateful to you for giving me this opportunity to testify. And I apologize to the committee for not having a prepared statement at this time. But we do want our statement when it is submitted to be responsive to the statement made by Commissioner Ford 2 days ago. And so I ask your permission, Mr. Chairman, to file that statement in the near future. Senator BURDICK. Your statement may be made a part of the record when filed. 167 (The statement of Arthur Krim follows:) Hon. QUENTIN N. BURDICK, UNITED ARTISTS CORPORATION, Acting Chairman, Subcommittee on Patents, Trademarks, and Copyrights, Committee on the Judiciary, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: During my testimony before your subcommittee on the morning of August 4, 1966, I requested the opportunity to submit a prepared statement at a later date. You were gracious enough to consent. Now upon reading the transcript of my testimony and that of Louis Nizer, I feel that we have been substantially responsive to the statement offered by Commissioner Ford on August 2, 1966. Since that was the chief purpose of my I do not feel that any addi request for permission to file a prepared statement. tional prepared statement is required at this time. Under those circumstances I hope I may be permitted under your previous consent, after the resumption of the hearings, to submit such additional statement as may then be appropriate. I am grateful to you and the staff of the subcommittee for the opportunity to testify and for the courtesies which have been shown to us. Sincerely yours, Mr. KRIM. Thank you, sir. ARTHUR B. KRIM, President. At this time I would like to incorporate into this record, in order to avoid duplication, the statement which I made before the House subcommittee of the Judiciary Committee on June 24, 1965, which appears at pages 1332 to 1353 of the record of those proceedings. Senator BURDICK. Without objection it will be included in the record. (The statement referred to follows:) Mr. KASTEN MEIER. The last witnesses today will be represented by two very eminent Americans, Mr. Arthur B. Krim, and Mr. Louis Nizer, both eminent in their own fields, in behalf of the motion picture industry and television producing companies. Gentlemen, you are both, together with your colleagues, welcome to this committee. STATEMENT OF ARTHUR B. KRIM, PRESIDENT, UNITED ARTISTS CORP.; ACCOMPANIED BY JOHN SINN, PRESIDENT, UNITED ARTISTS TELEVISION, INC. Mr. KRIM. Thank you, Mr. Chairman and members of the committee. I am Arthur Krim, president of United Artists Corp. We operate a wholly owned subsidiary in the television field, United Artists Television, Inc. The president of that subsidiary is at my right here, Mr. John Sinn, and he will be available for such questions as I may not be in a position to answer. I represent, for this purpose only, a group of companies engaged in the production of films for television and, in a subsidiary way, engaged in the sale to television of feature films which had originally been made for exhibition in theaters-but the principal business of these companies insofar as my appearance here on their behalf is concerned is that of producing films directly for television transmission. Those companies are: Allied Artists Television Corp.; Danny Thomas Enterprises, Inc.; Desilu Productions, Inc.; Embassy Pictures Corp.; Independent Television Corp.; Metro-Goldwyn-Mayer, Inc.; Wolper Productions; Screen Gems, Inc.; Seven Arts Productions, Inc.; Twentieth CenturyFox Television, Inc.; United Artists Television, Inc.; Universal Pictures, Inc.; Walt Disney Productions, Inc.; and Warner Brothers Pictures, Inc. I think, gentlemen, that this group of companies which, as you can see, numbers 14, represents in excess of 75 percent of the copyrighted material which is going over the airwaves today. I would venture the further guess that if we were to add to these 14 another number, certainly not more than 14, and of course including the three networks, we would cover so close to 100 percent of the copyrighted material which is going over the airwaves that the exceptions would be relatively minor in nature. I think you will recognize that this has some significance to a number of the problems that have been raised as specters, which have to do with the difficulty of bargaining for these rights. We are here to support the administration bill. We ask for nothing other than that the bill be passed as recommended to this subcommittee. But we feel that in doing that we are not in any sense asking for a change in the law. Mr. Poff had some questions before about the lawsuits that are testing this issue. We are clear enough in respect to those cases to say that there is no doubt about the fact that the law has covered transmission through CATV in these past few years-not even deep down in the hearts of the CATV operators themselves-so that we are not asking for a change in the law. Naturally there have been technological differences, television among them, since the 1909 bill, and naturally there is some need for new language, but if it weren't for this extraordinary request of the CATV people for an exemption, which violates every tradition of American property ownership, we wouldn't have to spend this day here today on this unusual mission to fight against this kind of a trespass on our clear property rights. All we are asking for is a very simple thing, that people who now take our property for nothing, pay for it. We are trying to stop piracy and I don't think there is any lesser word to describe it. I think there are harsher words which would fit it. I have a rather lengthy memorandum which, with your blessing, Mr. Chairman, I would like to incorporate in full without reading any part of it, if I may at this time be permitted some general observations. Mr. KASTEN MEIER. Without objection your statement will be received and made part of the record, and you may proceed. (The memorandum referred to follows:) "STATEMENT OF ARTHUR B. KRIM "My name is Arthur B. Krim. I am president of United Artists Corp. United Artists Television, Inc., a wholly owned subsidiary of our parent company, produces and distributes copyrighted television programs on film, here and abroad. Mr. John Sinn, the president of that company, is here with me today. "I am here not only as president of United Artists, but also as the spokesman for a group of other producers and distributors of copyrighted television film programs who have a common interest in the copyright revision bill insofar as it affects community antenna TV systems. The producers and distributors for whom I am authorized to speak, in this limited area, are: Allied Artists Television Corp. Danny Thomas Enterprises, Inc. Embassy Pictures Corp. Independent Television Corp. Metro-Goldwyn-Mayer, Inc. Wolper Productions, Inc. Screen Gems, Inc. Seven Arts Productions, Inc. Twentieth Century-Fox Television, Inc. United Artists Television, Inc. Universal Pictures, Inc. Walt Disney Productions, Inc. Warner Bros. Pictures, Inc. "I am grateful to the committee for the privilege of testifying today and for the opportunity to state the position of copyright owners. "Our position, simply stated, is as follows: "We strongly support the proposed copyright revision bill, H.R. 4347, insofar as it concerns CATV. We believe that CATV operators should pay a fair compensation for the privilege of using our copyrighted property in their business for profit. There is no valid reason for carving out of the basic U.S. copyright statute a special exemption for commercial community antenna systems. "The only reason we are here today is the claim by the National Community Television Association (NCTA) that CATV should be given such an exemption. They argue that a CATV system does nothing more than improve the television reception of home TV viewers; they maintain that the royalties paid by television stations for copyright licenses already include compensation for anticipated transmission to CATV subscribers; and finally they contend that a notice and clearance system would be difficult to administer. "Each of these claims is without merit. "1. THE OPERATIONAL FACTS "CATV is not a passive rooftop or ‘rabbit-ear' antenna. It is, on the contrary, a highly sophisticated electronic system that not only receives but also transmits. In some instances, it even converts the signals into different channels. The antenna is a relatively unimportant part of a complex arrangement for amplifying, feeding, piping, distributing and converting the original signals. As you will see from the brief Mr. Nizer will submit to you today, both the Federal court and the Federal Communications Commission have found that there are essential differences between CATV and the passive antenna. "The plain fact of the matter is that CATV receives the broadcast and then pipes it by wire to its customer's home for a price and at a profit. The result is essentially the same as if CATV were to pipe its broadcast to a theater and charge admission there to see a show. Commercially, CATV republishes and sells our copyrighted products. There is no reason why CATV or any other exploiter for gain of a copyrighted work, should not be required to secure the copyright owner's license, and to pay him compensation for the use of his property. "When CATV began, its purpose was to serve towns far distant from the site of television stations or isolated by mountainous terrain. By building high towers or locating its antennas on high locations, CATV systems sought originally to reach out to obtain signals in fringe areas and in locations normally outside the contour boundaries allocated by the FCC to the television station. Later, by using microwave and other relay facilities, they brought programs from even more distant television stations. "CATV has now proliferated into a vast and powerful industry. It operates even in areas where TV stations are already in existence or where the population is large enough to support them. For example, an application is currently pending in Philadelphia for the creation of a CATV system which proposes to bring to that city the programs of the three independent New York TV channels. If this were to be carried to its logical conclusion, the multiple channels of New York and Los Angeles could be relayed and piped into any television set in the country. Yet the license agreements entered into between the copyright owners and television stations in all parts of the country, including Philadelphia, provide for exclusivity in each geographical area. As I shall explain, the continued growth of CATV, if not subject to copyright, would upset the nationwide FCC system of contour area allocations, make a mockery of the exclusive license agreements between copyright owners and television stations and seriously damage the property interests of both. "Unlike the typical rooftop or 'rabbit-ear' device, unlike the master antenna atop an apartment building, CATV serves the same function as the local television station; to distribute entertainment to the public in any area where signals telecast from the other television stations cannot be received. Local television stations do no originate most of their own programs; they relay most of them from networks or other originating stations. In this respect CATV is like the local television station but with one highly significant difference: the TV station must pay for its programs and CATV is asking this committee to recommend a statutory exemption by which it would be relieved of this obligation. "2. THE ECONOMIC FACTS "CATV charges a price, calculated to produce a profit, for the distribution of television programs to its customers. Except for the fact that the TV station collects its revenue from advertisers rather than from its audiences, here again it resembles the local TV station. The fact that the programs are distributed by wire rather than through airwaves cannot change the basic function of CATV as a distributor of programs, many of them the copyrighted works of the companies for whom I speak today. "Nor is CATV a small factor in the communications picture. The Copyright Office has testified that there are already about 1,600 such systems and that their number is growing rapidly. They now bring the programs of more than 400 television stations to well over a million and a half subscribers. The revenue of the CATV industry was reported last year to be in excess of $100 million. In individual cases, CATV systems serve larger numbers of viewers than local television stations. The recent CATV application for a franchise in Philadelphia reveals that the installation would involve an initial investment |