chance of surviving as a healthy industry in the supplying of programs.

In addition to our need here for the principle of exclusivity, there is without question in my mind the inconsistency between any legislation which would compel the property owners to make their property available-for example, if a CATV leapfrogs from one station into another area when there is another station, and we are compelled to permit the broadcast of our program from station No. 1 either before we have sold it to station No. 2 in the second area, or after we have sold it to station No. 2, but before we have had an opportunity to sell it for an additional run on an exclusive basis-there is an inconsistency here with all the purposes of the all-channel legislation, Mr. Chairman. I do not think there is any doubt-certainly there was not in Commissioner Ford's mind before he became the spokesman for the CATV industry-that any grant to CATV which would permit them to purchase programs under those circumstances on a more favorable basis than a local broadcaster would ultimately mean the end of local broadcasting. Certainly it would retard such local broadcasting. When Commissioner Ford was a member of the Commission in 1964 he made the following statement:

Finally I would like to discuss the competitive impact which CATV could have on television. For example, in single station markets, which for the most part. are relatively small markets, a CATV system may bring into the urban area as many as 10 program choices to compete with the television station for viewers. It is contended that only about 10 percent of the station's listeners are involved. However, it does not take much imagination to visualize this 10 percent growing much larger. If other communities in the station's service area are wired, and if advertisers in those communities stop buying advertisements on the local station, the economic consequences to the local station are obvious. Ultimately the ability of the station to adequately service the public or even survive could. become questionable.

So that what the Congress is being asked to do here is quite inconsistent with all of the emphasis the Congress placed on the encouragement of local programing when it enacted the all-channel legislation. I see I have overstepped my time, Mr. Chairman. Thank you. Senator BURDICK. I want to thank you for your testimony. It is very helpful.

Just one quick question. Your thesis is that copyright is a property right, and there is no basis at this time for making any exemptions? Mr. KRIM. That is right, sir.

Senator BURDICK. Mr. Nizer, would you care to testify?

STATEMENT OF LOUIS NIZER, GENERAL COUNSEL, MOTION PICTURE ASSOCIATION

Mr. NIZER. Out of appreciation for your graciousness for hearing us under these emergency conditions, I feel a responsibility to be very brief. And I shall, sir.

I represent the Motion Picture Association of America, Inc., whose members include the companies generally known by the following trade names: Allied Artists, Columbia, MGM, Paramount, 20th Century-Fox, United Artists, Universal, and Warner Bros.

I also speak for the Association of Motion Picture & Television Producers, Inc., of Hollywood, Calif., whose member companies are as follows: Ashland Productions, Mayberry Enterprises, Three F

Productions, Thomas-Speling Productions, Bing Crosby Productions, Columbia Pictures Corp., Desilu Productions, Inc., Four-Star Television, Jack Chertok TV, Inc., Metro-Goldwyn Mayer, Inc., Paramount Pictures Corp., 20th Century-Fox Film Corp., Universal Pictures Co., Inc., Universal City Studios, Inc., Walt Disney Productions, Warner Bros. Pictures, Inc., and Wrather Corp.

In addition, I represent a number of independent production and distribution companies, many of whom are members of the association. but some of whom are not, including: Danny Thomas Enterprises. Inc., Embassy Pictures Corp., Independent Television Corp., Seven Arts Productions, Inc., and Wolper Productions, Inc.

The purpose of the Copyright Act, Mr. Chairman, has always been to protect the creator of those works which emanate from the mind and skills of artists, which are ephemeral in that they very often are not packaged, but are in terms of words, art, depiction. And ever since 1909, whenever an attempt was made, as it is here made now, to limit that protection, it has been defeated, I would say, uniformly. Every court has protected the copyright stringently. Every interpretation has been to strengthen the copyright, not to defeat it as it is here attempted to be done by an exemption.

Indeed, even though the Copyright Act of 1909 was passed at a time when the various arts were not in existence, such as motion picture, radio, television, and now CATV, whenever the argument was made that therefore the Congress could not have intended to protect this particular art, and we should have an exemption from the act, the Court, the U.S. Supreme Court uniformly, in a series of decisionswhich I have set forth in my statement before the House committee, and which I ask permission to incorporate into this record, as you have given permission to Mr. Krim to do so-the courts have uniformly extended by "interpretation" the statute so that the philosophy of the statute is effectuated.

Now, a revision of that

Senator BURDICK. At this point, Mr. Nizer, the courts have made no exception to what the Congress has done itself, is that true?

Mr. NIZER. And Congress has by and large made no exceptions, rather, it has strengthened the fact. For example, the new revision

Senator BURDICK. The jukebox, for example.

Mr. NIZER. The only two compulsory licenses as Mr. Finkelstein, as I understood, explained, so I will not go into the Apollo caseindicate the danger of hastily improvised exemptions in circumstances which did not foresee the developments. And indeed it is significant that the Copyright Office through Mr. Cary, the Deputy Register, has now recommended that the jukebox exemption be eliminated from the present revision, on the ground that there is no justification for it, and that they ought not to be in a better position than other music producers.

This is, I think, an illustration of what happens when one goes contrary to the real philosophy of the act.

Now, there has been a 10-year study made of the revision, again, to enlarge the purpose of the protection. For example, it is now proposed that the term "copyright" be extended to 50 years after the death of the proprietor, which really make 75 years approximately

instead of 56 years as previously. And there have been extensive studies made as to how to secure the protection of authors and artists without leaving any loopholes. Chairman Celler of the House Judiciary Committee said that all of the material of these studies, collected in five parts and published by the Copyright Office, together with the copyright law revision studies which preceded the Register's report of July 1961, represent all together almost 10 years of work and serve as the basis for the preparation of H.R. 4347 and its companion bill, S. 1006. There have been 35 studies by panels composed of many experts-none of them recommending gray or white areas or anything of the kind-and there were hearings before the Subcommittee of the Judiciary of the House of Representatives for 22 days, at which 142 statements were submitted, and over 100 witnesses testified.

Now, after a judicial determination of one of the basic legal questions involved, an attempt is made to carve out of that immense work of attempted revision to strengthen the act, a special statute to exempt one entire segment.

You are being asked as the Senate to undertake a task which is contrary to the entire history and philosophy of the act.

Why did all this come about? Why the hasty attempt to get a special statute instead of going through the revision of a 10-year study of the main act?

Well, because this was a determination by the Court after 5 weeks of trial, and 2 months of consideration by the judge to write an opinion. And I ask leave to file that opinion with you, Mr. Chairman, and the committee. But I just want to make one or two observations about that opinion orally.

The Court said, "community antenna" is a misnomer, it is neither a community venture nor is it a passive antenna. This is a wire service for commercial purpose and profit, and the Court equated by careful analysis CATV with TV and found that it competes with the local TV stations, whether UHF or VHF, and is just another broadcasting medium. There is no community service involved at all. Indeed in the case we tried, Mr. Chairman, you will be interested to know that there was one local TV station called WBOY in Clarksburg, W. Va., and that station could not stand the competition of the CATV and was ultimately absorbed by the CATV company in that very case.

And the Court went further to indicate that the CATV company understood its property right-when somebody tapped its wire and took its transmission to obtain a criminal conviction, it went after that little fellow and got him convicted. And the Court referred to that fact on page 21 of its opinion. And the CATV also protested when the local TV station became a subscriber to CATV and rebroadcast the signal of another station's programs carried on the CATV and said, "You have no right to do it, you are limited to that one exhibition." So they understood their property rights. And the Court made a full analysis of it.

We are not dealing here, Mr. Chairman, with some poor undernourished enterprise. Mr. Krim has made clear that if that were the consideration, we also understand the public interest, and there is no company that can be an enlightened industrial enterprise today that ignores it. We would cooperate, even with free licenses in those areas. That is not what we are involved with here. That little Clarksburg

station, the testimony showed, had 665 miles of cables, in that little town, and had $1 million of reproduction cost value without the headend equipment. And in the new application made in Philadelphia recently, one applicant said it would invest $37 million. This is no passive antenna on a rooftop. And the largest companies in America, which are very responsive people, are going, quite properly, into this enterprise, and incidentally, I believe, recognizing that they want to go into it properly. They say they want to pay a license fee as every other station does. And indeed, if they do not, Mr. Chairman, we are sounding the death knell of many small local TV stations which cannot compete with a competitor that brings in 12 channels, and now they are going into 20 channels, and at the same time they wish some special exemption from you so that they get a special compulsory license while the competitor bargains at the table in the regular way.

There is an appeal pending from the decision, Mr. Chairman. And it has been traditional that the Congress does not act on a matter sub judice anyhow. But I would not base our objection to this effort of the CATV companies on the basis of that technical ground.

An improvised statute is being asked for here. And the nature of its improvisation is clear from the fact that its proponents differ with each other, because it is so hastily done. hastily done. One provides that there should be no exclusivity. Commissioner Ford, out of a larger knowledge of the industry, admits in his statement, as I read it, that there must be exclusivity.

The variations and the variance of the compulsory license are stupendous. May I just indicate, even under the brevity of these circumstances, a few of the considerations. A compulsory license would completely discourage excellence. There is no reason to make a better motion picture or a better program if there is going to be the same license fee paid under a complsory license. It also would discourage considerations of prime time and nonprime time. It also would ignore the variations of population receptivity. A western may be good in one part of the country, and a social drama better in another part of the country. And if all this is attempted to be solved by a series of escalating variables, which is the ultimate result of this kind of an adjustment, of a patchwork of sudden solution to a specialized problem of CATV, the result would be an administrative headache the like of which we have never seen before. Who would administer all these variables in a compulsory license arrangement such as is suggested? And then, of course, there would be resort to the courts. And the courts would be flooded with a subject matter which ought not to clog the calendars. And further than that, the difficulties that can be envisioned in such an arrangement are infinite. The technology is improving. A satellite kind of broadcast transmission may come about which may change all A and B contour areas and change the entire distribution system. How would we go about to do this? I call your attention, Mr. Chairman, to the time when Congress was attempting to fix railroad rates and found soon enough what an impossible burden this was, an encroachment on its normal duties. There is no reason, therefore, for such a revolutionary technique as has here been suggested.

Where the parties bargain, as they can here, as is normal, they will reach a more normal price, a fairer arrangement than can be imposed by Government fiat, or by legislative imposition of compulsory licenses.

It goes against the entire American tradition and experience to attempt to fix prices in any way, and to undermine the free competitive forces and the tug and pull of buyer and seller. Here we have anxious sellers. Mr. Krim has only touched upon the fact that this is a losing phase of the industry. They cannot recoup their costs in many instances, while at the same time, mind you, the people who are asking an exemption, according to testimony quoted in our House of Representatives testimony, are making 35 to 40 percent profit. Business Week made a sarcastic comment about "What is it that towers hundreds of feet into the air, mints money, and sells what television stations give away free?" There is testimony that some companies make 400 percent profit. Of course, there is nothing wrong with that if they pay for their program material. It will still be a very profitable business, and it is now attracting General Electric and all the big companies, quite properly.

Senator BURDICK. You disagree with Mr. Ford when he says that to pay fees for this copyright use may affect their business?

Mr. NIZER. I violently disagree with that. First of all, he could absorb that from the profits they are making better than any other enterprise.

Second, it cannot drive them out of business because the large network programs would be given to them almost on a nominal price basis, according to the voluntary statement of the largest networks. Senator BURDICK. The Senate has convened. As you know, we are really setting illegally from this point on. We have to stop. I thank you both for your contribution here this morning, and I assure you the committee will consider this question carefully.

(Subsequently the following was received and by order of the chairman is printed at this place in the record.)

Hon. QUENTIN N. BURDICK,

SEPTEMBER 9, 1966.

Acting Chairman, Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: I am grateful for this opportunity to submit a supplemental statement in response to the testimony given on August 25, 1966, by the Antitrust Division of the Department of Justice. Since we have been informed that a letter along the lines of this testimony has recently been sent by the Department of Justice to Chairman Celler of the House Judiciary Committee, we are taking the liberty of requesting that Committee to incorporate this supplemental statement into its record as well.

Meaningful interest by the Department in competition as it exists in the market place for television programming is, of course, welcome to the copyright owners. We are, after all, sellers in a buyers' market. However, as sensitive as we may be, we are unable to recognize the relevance of the presentation made by the Antitrust Division either to the legislation pending or to the state of the market place as it now functions.

The Department has neither offered nor sought to offer, any evidence that "harmful anti-competitive consequences” would result from continued copyright liability of CATV. Since it is our position that the historic rights protected by present law should remain undisturbed, we are confident that the Subcommittee will agree that it would be inappropriate, if not impossible, for us to undertake to respond to the vague generalities expressed by the Department. It is entirely proper that the Department express its concern about the possible anti-competitive effects of any proposed legislation when there is a factual basis for its concern. If such circumstances were here present, it would, of course, be appropriate for the Subcommittee to reopen the proceedings and to initiate a full exploration of the question. We are certain that our clients and a host of other witnesses would demonstrate to the Subcommittee that the premises on which the Department's hypothesis is constructed, reflect a less than fully informed understanding of the television industry.