The effect of the proposed amendment, as interpreted by Acting Chairman Kastenmeier in his letter to Congressman Staggers, would be to destroy the ability of the owner of a copyrighted TV film program effectively to grant an exclusive license covering such program to a TV station whose Grade A contour is overlapped by the Grade B contour of a TV station already licensed, or which he hopes to license to show the same program. For, exclusivity encompasses the right to present a program to the audience in the licensee's Grade A contour area without its being presented by any other (whether TV or CATV) in such area for whatever period of time may be agreed upon. It is not, however, for one or both of the reasons indicated above, considered an impingement on a licensee's Grade A contour exclusivity that the program may possibly be picked up in the Grade B contour overlap of another licensee.

But, any retransmission of the latter's broadcast of the program, and the possibility that it might be retransmitted expressly for reception by CATV subscribers who are members of the audience in the former's Grade A contour area, in large measure theretofore unable or unlikely to watch programs broadcast by the latter, would be wholly incompatible with the former's enjoyment of exclusivity.

Exclusivity is a very important factor in television broadcasting, and TV stations will pay substantially more for exclusive licenses than they will for nonexclusive licenses, if, indeed, TV stations will buy non-exclusive licenses at all. The proposed amendment, as interpreted by Acting Chairman Kastenmeier, would thus be very costly to producers and distributors of copyrighted TV film programs. It would be wholly inequitable to make it lawful, and not an infringement, for CATV, without permission of the copyright owner, to retransmit a copyrighted TV film program for reception in any part of the Grade B contour of the TV station broadcasting the program, that overlaps the Grade A contour of any TV station in another community constituting a separate market area. A similar problem is raised by the proposed amendment when there is overlapping between the Grade A contours of TV stations in different communities, each of which is a separate market area. In such instances, the audience tends generally to become divided into two groups, each favoring the program of the station in the community, normally the closer, with which they have their respective economic and social ties. In any such case, and for the reasons given above, CATV should not be exempted from infringement where, without the permission of the copyright owner, it retransmits a copyrighted TV film program for reception outside the metropolitan area of the TV station broadcasting it. Conclusion. This proposed amendment to H.R. 4347 would permit commercial CATV to profit by the exploitation of copyrighted TV film programs, without any compensation to the copyright owner. It would deprive the copyright owner of substantial rights under present law, and would unjustly enrich CATV. The exemption provided by this proposed amendment should be expressly and clearly limited to retransmission by CATV of a TV station's broadcast where-

Such retransmission is made for reception solely within such portions of the geographic area within its Grade A contour as are not:

A. Reached effectively by such TV station's signal because of terrain, structures, or other physical or technical barriers; and are not

B. Within the Grade A contour area of a TV station broadcasting from a community other than that from which the TV station whose signal is being retransmitted broadcasts, unless such retransmission is for reception only at locations within the metropolitan area of the community in which the TV station whose signal is being retransmitted broadcasts, and such retransmission was requested by the TV station whose signal is being so retransmitted.

IV

There is, of course, no objection to exempting secondary transmissions by bona fide common carriers. However, the broad language of the proposed amendment which would grant such exemption, gives some cause for pause in view of the traditional CATV contention that it has "no direct or indirect control over the content or selection of the primary transmission", and the possibility that it might contend that it “has no direct or indirect control * * * over the particular recipients of the secondary transmission", particularly where state statutes or municipal franchises require them to serve all members of the public in their cable areas without discrimination. The proposed amendment, in its present form, might well induce CATV to reverse its traditional position that it is not a common carrier, and to encourage the insertion of provisions in state statutes and municipal franchises calculated to bring it within the category of common carriers as defined in the proposed amendment.

Apart from all else, the feature which distinguishes CATV retransmissions of TV programs, from their carriage by common carriers, is that CATV retransmits such programs for direct reception by members of the viewing public, while common carriers do not. For purposes of clarification, this criterion should be included in the proposed amendment.

Conclusion. This proposed amendment should be expanded by deleting the period after the word "others", substituting a comma therefor, and adding the following words:

"and do not include any further transmission of such secondary transmission by it to the public."

The provisions of the proposed amendments in regard to the notice to be given by copyright owners to CATV operators who have recorded their identities with the Copyright Office, is basically unobjectionable. In most instances, license agreements between owners of copyrighted TV film programs, and TV stations are made far in advance of the showing, and rarely less than ten days prior thereto. Accordingly, the giving of notice to a CATV system which has recorded its identity, and the identities of the TV stations whose programs it restransmits, would not be unduly burdensome. However, when it comes to what information can be included in the notice, and when such notice can be given in terms of the date of CATV's carriage of the programs of a particular TV station, a variety of factors come into play. We recognize that the proposed amendment does not particularize in this connection, but leaves such matters to government by regulations of the Copyright Office. Nevertheless, it would appear appropriate at this time to indicate the problems that would arise if copyright owners should be required to give notice not only that on a certain date a particular program was licensed for a particular period to a specific TV station, but that such program would be broadcast on a certain day at a particular time.

In

When a license agreement is made, the date and hour of the showing of the program by the TV station, is as yet undetermined. In the case of most motion pictures, the date becomes first known to the distribtuor, when the TV station "books" a print, i.e., when it requests the distributor actually to ship the print to it in time to be available for telecasting on a certain date. many other situations, and, in particular, in so-called "library deals", the TV station obtains the print for multiple showings, without any obligation to return the print to the distributor during the intervals between showings. We are advised by one of the largest distributors of copyrighted TV film programs, that approximately 35% of its business is done on the "library deal" basis. In "library deal" situations, the date and time of showing is determined solely by the TV station which does not communicate such information to the distributor. It is, therefore, only the TV station, and not the distributor, who could in present circumstances notify CATV of the particulars in these respects.

It is believed, however, that not many TV stations would be willing to assume the administrative burden of giving such notice to CATV. It is to be noted in this connection that the TV station which would have to give such notice, is not the TV station which is in competition with CATV, and therefore has an incentive to cooperate with the copyright owner, but is, rather, the TV station whose signal is retransmitted by CATV, and which has no economic interest to protect in the other station's exclusivity.

While the giving of specific notice as to the date and time of the broadcast is impracticable for the copyright owner, it is not essential to the protection of the CATV system against innocent infringements. Indeed, all TV stations disseminate as widely as they can, to the public in their areas, information as to the date and hour when particular programs are to be shown by them. Such information is available in local newspapers, and in magazines such as TV Guide. Once a CATV system has received a general notice from the copyright owner that a copyright program has been licensed to a specific TV station carried by the CATV system, it would, on balance, be much easier and quicker for the CATV system, than the copyright owner to become informed as to precisely when the program will be broadcast by such TV station.

It has been suggested, that a TV station having a "library deal" license could notify the copyright owner of the date and hour of the showing, and that the copyright owner could forward such notice to the CATV system. However,

even if the TV station should be cooperative, 10 days specific notice would be impossible. We are informed that the earliest the date and hour of a show is determined by the TV station in regard to "library deal" films, is about two weeks prior to the showing. A mailing of such notice, by the TV station to the copyright owner, and processing and mailing of such notice by the copyright owner to the CATV system, could not possibly be accomplished within 10 days prior to the showing.

The content and timing of the notice to be given are subjects that require further exploration, with the practicalities well in mind. Respectfully submitted.

PHILLIPS, NIZER, BENJAMIN, KRIM & BALLON. Senator BURDICK. We are going to take some statements from those who cannot appear this morning, and who would like to appear personally, we feel this is so important that we will sit another day, and give notice of it before this session is over. We regret that we are caught in this time bind. But for those who want to file statements we will take them this morning for the record.

The statement of Mr. Marlowe will be received for the record. (The statement referred to follows:)

STATEMENT OF JAMES O. MARLOWE, VICE PRESIDENT, SPRINGFIELD TELEVISION BROADCASTING CORP.

My name is James O. Marlowe. I am Vice President of Springfield Television Broadcasting Corp., operators of UHF television stations in Springfield, Worcester and Greenfield, Massachusetts, and Dayton, Ohio.

For two years I managed the company station in Greenfield which served the Greenfield, Mass., Keene, N. H., and Brattleboro, Vermont, areas, which, incidentally, is a mountainous and semi-sparsley populated region.

With me is Martin Firestone, counsel for Springfield Television Broadcasting. For seven years our Greenfield station was operated as a full service local station with local news, inteviews, and full schedule of public service programs and announcements. That is all over now. We were squeezed right out of business by a number of factors, all attributable to the splintering of our potential audience by CATV. Some 16 CATV's operate within the normal coverage area of our Greenfield station representing some 45,000 CATV viewers. These CATV's pirated our signal and duplicated our programs by carrying distant stations which scheduled the same network and some of the same local film shows

as we.

Our audience and thereby our revenue was reduced until it was no longer feasible to operate as a local station. Therefore, we ceased local programming and the communities involved lost a source of local news, an important vehicle for the expression of local ideas, politics, and opinions.

In addition, local merchants lost a valuable advertising media.

Storekeepers

in the town served by the station could no longer expose their products or services on television. At the same time they suffered by having to compete with larger merchants in distant cities whose television advertising was brought into the communities by CATV. Thus the local entrepreneur was sacrificed to his larger volume competitors in the bigger cities within driving or mail-order distance from his town.

This resulted not only in loss of revenue to the local merchants-it will be threatening their survival-but also loss of jobs and income to the community. In addition, and not to be overlooked, was the loss of jobs to those who were formerly employed by the station itself. In our case we were the only source of viewable free television to a major portion of the local population. This local free service to the community has now been silenced by the unregulated and unfair competition of CATV. When a television station makes arrangements for showing motion pictures, syndicated films, or any other program prepared by a group or person not directly in his employe, he purchases with it normally the right to show or expose to the public these motion pictures or programs exclusively and for a predetermined fee.

The amount of the fee is determined by the potential number of people who are able to view these programs. This is called a television station's audience.

When one or more of these programs are broadcast by a distant station not located within or near the same community, picked up by a CATV system and retransmitted to homes throughout the area where the station has purchased the above-mentioned exclusivity, the station is damaged financially by the reduction of its audience for that particular program. Station revenues are clearly and directly commensurate with the size of the audience for each program.

The financial damage is accentuated when the cable transmits a program before the time the station had planned to show it. This is as clear a violation of the rights of the stations, the broadcasters of the programs, and the copyright holders, as other cases outlined. When this summary appropriation of a station's program is extended to a large portion of the broadcast day, as is frequently the case where CATV exists and carries a large number of stations, financial ruin is the inevitable result to the television station.

What is has to sell, its program, has been retransmitted without its consent, without any consideration to the harm it may cause to the station, and resold for profit by a company which performs all of the functions of the television station except those which have been promulgated by the Federal Communications Commission to protect the interests of and provide service to the public. Thus the station has a competitor without regulation while its standards of performance in all fields from programming through technical areas are rigidly controlled by a Federal Commission.

This constitutes unfair competition. I do not feel that it would be the interest of the public to reduce the amount of regulation of these factors as regards television stations.

Proper recourse would be to provide regulations for operators of CATV which would protect the stations from unwarranted usurpation of their rights, particularly in regard to copyrighted material.

There is at present no explicit copyright protection for the programs produced by a local station such as its own documentaries, news programs, weather forecases, even commercials produced by the station. Picking up and retransmitting these programs is as serious a copyright violation as the other areas mentioned, because the cable operators at present need not even secure the permission of the originating station.

In short, it has been my experience that cable operators who are unregulated do as they please, when they please, why they please, without regard to the rights of any individual station operator, network, program producer or anyone else, and they do this for profit without regard even to the rights of the public to free publice service television.

As an operator of a small market UHF station ruthlessly forced out of business by CATV, which competed against us for viewers, and which had none of the usual costs of programming, I can tell you that this unfair competition as it exists today is a threat to the hoped-for expansion of UHF broadcasting, and in order to allay this threat we have reluctantly entered the CATV business ourselves. We have done so because without effective FCC regulation and copyright protection we feel it is the only way to protect and thereby continue effective free local and public service television. It would be foolhardy for anyone from a business standpoint to enter the broadcast field in a small market under the conditions I have outlined. An important part of all stations' cost is directly attributable to program expense.

The usual portion of programming to the total cost varies from 30 to 40 per cent. Incidentally, as was brought out earlier in testimony, the CATV profit is estimated at about 57 per cent. Average station profit is about 27 per cent. CATV's under present conditions spend not one cent for programs. Since we and the CATV's compete for viewing audience our cost disadvantage resulted in our being forced to abandon local service. The fact that the CATV's paid nothing for programs permitted them to spend money to attract larger and larger audiences. They engage in advertising and public relations counsel while we were investing in programs designed to serve the local interests.

What happened to us in Greenfield is a microcosm of what is happening and what will happen throughout the country whenever a television station is forced to compete on these grounds with CATV. We learned the hard way and the viewing public, the public that legitimate broadcasters are bound to serve, are the real losers. They lose the opportunity for local expression through television in all fields of endeavor from political through the arts and entertainment.

(Whereupon, at 10:30 a.m. the committee adjourned, subject to the call of the Chair.)

AFTERNOON SESSION

The subcommittee met, pursuant to call, at 2:30 p.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. The next witness will be Mr. Charlton Heston, on behalf of the Screen Actors Guild, Inc.

Mr. Heston, your formal statement will be made a part of the record. You may proceed, and we will hear your testimony.

STATEMENT OF CHARLTON HESTON, GUILD PRESIDENT, SCREEN ACTORS GUILD

Mr. HESTON. Thank you, Senator. I will try to summarize the opinions expressed in this statement made here on behalf of the Screen Actors Guild.

Let me begin by thanking you on behalf of the Screen Actors Guild for giving my guild, which I am here representing today, a chance to express our views on this subject of the CATV industry's pleas to have the copyright laws amended in their behalf.

I would like to begin by clarifying a point about our membership. I think people in general tend to regard actors as a rich group of mountebanks lounging around fur-lined swimming pools. I would like to point out that the Screen Actors Guild is a labor union, and that it represents not such a group of affluent citizens, but on the contrary, 16,000 members of not a very lucrative profession. Acting is never a secure way of making a living. The public's attention is called always to that minority that do make a lot of money.

But the union of which I am president has 16,000 members whose average income is well under $3,000 a year. And the union is not primarily concerned with those few members who make a great deal more than that. And I do not appear on their behalf. We are concerned with what we call the minimum player, who is paid the standard wages for which we negotiate our contracts.

Those collective bargaining contracts we have negotiated over the years are with all the motion picture companies, and with the television networks and others who produce for television. Television programs today bring in the bulk of the revenue for screen actors. Far less than half, only about a third of the moneys paid to film actors, come from theatrical film. Television is by far the largest source of revenue for the members of my union.

And therefore what happens in television is of enormous concern to the membership of the Screen Actors Guild.

We have a series of very complicated formulas which we arrived at over the years, and by means of which actors are compensated. After a series of negotiations extended over several contracts we finally achieved something we have fought for for a long time. And that was that actors would be compensated additionally for each re-run of a television program. As you may know many are re-run many, many

69-173-67- -14