Television has now in large measure replaced film as a mass entertainment media. And screen actors now depend, as I said, for the bulk of their livelihood on television. And this market is a constantly expanding one. There is an immense amount of money to be made in it. In my view, the screen actors perhaps do not get their fair share of that. But that is no part of our present concern here before you. We feel that the protection of the copyright laws should remain just as the Court in a recent decision decided. The decision protects our rights too. And we most earnestly petition that this committee. arrive in its deliberations at the same conclusion.

Senator BURDICK. I was interested in what you had to say about the number of times a picture may be shown. And the more times it is run it redounds to the benefit of the performers in that picture?

Mr. HESTON. Yes; indeed it does. The actor is paid a certain feewe have attached a schedule outlining those fees at the conclusion of my statement for the original work he does, his original performance. But if that picture is rerun he is paid a certain proportion of his original base salary. Again, mind you, I am speaking of the minimum player in what we call the scale of players. And each time the show is rerun after that, up to six times, he is paid still additional amounts. And the total of rerun compensation can amount to more than he was originally paid in the first place. Most screen actors work very irregularly, and they depend on the rerun checks that come in to pay their bills, their rent, and electric lights and groceries, and milk for their kids. Since we began getting rerun checks for our members, something like 10 years ago, our 16,000 members have received many millions of dollars. And as I said, this is an enormously important part of the actors' livelihood, and anything that would diminish this income attacks him where it really hurts him.

Senator BURDICK. And when ČATV runs a program it is not counted as a rerun?

Mr. HESTON. It just does not exist at all as far as the actor is concerned; he doesn't get a nickle from it.

Senator BURDICK. Your thesis is that that represents a loss to the actor?

Mr. HESTON. It takes it right out of his pocket, because if the CATV were required to establish a normal commercial relationship with the people who made the program, as all other distributors of television programs are, that would count as a rerun, and a proportion of the money paid to the network or motion picture studio that originally made the program would eventually, through the channels of Screen Actors Guild, go directly into the pocket of the performer who acted in the film. As I said, concurrently in a market where regular TV stations must compete with CATV systems, any show that is shown on CATV obviously will not be bought subsequently by the TV station. So there is a kind of a double loss there we not only lose the CATV revenue but we lose the chance to get revenue from any other source in that market.

Senator BURDICK. In other words, you think CATV should have the same standing and be in the same position as any other TV broadcasting station?

Mr. HESTON. It seems to me reasonable to expect so. Most of American society has in the past tended to look with suspicion on special in

terests and special exemptions for however persuasive the reasons seem to be. In this case we at the guild cannot see that the reasons for CATV exemption are even persuasive.

Senator BURDICK. In other words, there is no area of the industry that you can think of now where exemptions would be justified?

Mr. HESTON. In my view, no, and that is the view of the guild I represent today.

(The statement of Charlton Heston follows:)

STATEMENT OF CHARLTON HESTON ON BEHALF OF SCREEN ACTORS GUILD, INC.

On behalf of the Screen Actors Guild, of which I am President, I wish to thank the Committee for according me this opportunity to appear before it and express the views of Screen Actors Guild on the subject of the operations of CATV companies under the Copyright Laws.

Screen Actors Guild is a labor union affiliated with the AFL-CIO and comprises over 16,000 actors who render services in the production of theatrical and television motion pictures.

Screen Actors Guild has had in effect for many years collective bargaining contracts with all of the major motion picture producing companies and independent motion picture producers, as well as with the television networks or their subsidiary companies engaged in the production of television motion pictures, which provide minimum compensation and working conditions for motion picture actors. These contracts provide a formula for the payment of additional compensation to actors when theatrical motion pictures are exhibited on television. For motion pictures produced in the period between August 1, 1960 and January 31, 1966, this formula requires the payment of a percentage of the world-wide gross receipts derived from the television exhibition of such motion pictures, for ratable distribution among the actors performing in such motion pictures.

For pictures produced subsequent to January 31, 1966, payments are to be made under a formula providing for the payment to each actor appearing in a motion picture, of certain percentages of a base fee, when such motion picture is first telecast and additional percentages when the distributor's gross receipts from such television exhibition reach certain stated amounts.

For example, a free lance actor (actor engaged for a single picture) who works in a motion picture for a period of one week, is entitled to be paid 30% of a base fee of $300, or $90, when such motion picture is first exhibited on television. When the distributor's gross receipts from television reach the sum of $125,000, an additional 12% of such base fee becomes payable. Similarly, when such gross receipts reach certain additional amounts, further percentages of such base fee becomes payable to the actor. For your information there is attached to this Statement as Exhibit "A" a copy of the complete formula providing for such payments.

In addition, some actors and other creative artists who have the requisite bargaining power, enter into individual employment contracts with producers of motion pictures whereby they receive a percentage of the profits, or of the gross receipts, derived from the exhibition of the motion pictures in which they appear, including television exhibition. But the overwhelming majority of journeymen actors are unable to bargain for individual compensation and must rely entirely on the Guild's collective bargaining contracts for compensation for their television performances.

Actors who perform in motion pictures made primarily for television exhibition are likewise entitled to be paid additional compensation called "rerun fees" each time a motion picture is retelecast up to a total of six telecasts. Such rerun fees may aggregate up to an additional 165% of the actor's initial minimum applicable scale. Additional amounts equal to 5% of such rerun fees are also payable to the Producer-Screen Actors Guild Pension and Welfare Fund to provide pension and welfare benefits to such actors.

In short, the compensation which actors receive from the television exhibition of the pictures in which they appear is directly geared either to the producer's gross receipts from such television exhibition or to the number of times the film

is replayed on television. Many years of study and effort have been expended by the Screen Actors Guild in negotiations with motion picture producers to establish this system of compensation which has proven to be the fairest and most equitable way of compensating actors for their creative services in the television field. As you will no doubt be advised, other important creative groups in the motion picture industry have collective bargaining contracts containing similar provisions for compensation for their members.

The heart of this entire system of compensation is the protection which producers have under the present Copyright Laws against the unauthorized reproduction of their motion pictures on television. Unfortunately, the Copyright Laws of the United States do not extend copyright protection to an actor in his performance or the interpretation of his role in a motion picture; consequently, actors have had to rely entirely on derivative rights established by contract with the producers to secure just compensation for the exploitation of their performances on television. It is the license fees which motion picture producers and distributors receive from television stations for the use of such copyrights that generate the funds from which actors are paid.

If CATV companies were to be permitted to pick up and reproduce for their paying subscribers, copyrighted motion pictures broadcast by television stations that have been licensed to make such broadcasts, without making any payment to the producer or distributor, members of the Screen Actors Guild would necessarily suffer a substantial financial loss. In the first place it would give to CATV companies, which are commercial enterprises operated for profit, a “free ride” on the coattails of the licensed telecasters. Such "free ride", by denying to producers and distributors revenue in the form of license fees from such CATV companies, would have the direct effect of depriving actors of compensation since it would reduce the funds out of which such compensation is paid.

Moreover, if motion pictures can be seen over a CATV system in a community whose residents would not otherwise be able to receive such programs, it is obvious that local stations in such community would not pay for the privilege of telecasting such motion pictures. Hence, the license fees which otherwise might have been obtained from such local telecasters will not be paid and the actors appearing in such pictures will be deprived of compensation to which they are justly entitled for their performances in such city.

It is fair to say, therefore, that exemption of the operations of CATV companies from the Copyright Laws would have the immediate and direct effect of depriving thousands of motion picture actors of the fruits of their artistic endeavors.

The Screen Actors Guild is therefore opposed in principle to any change in the present Copyright Laws which would exempt CATV companies from liability for infringement when, without authorization from the copyright owner, they pick up and send out to their subscribers copyrighted television programs. In engaging in such activities CATV companies are, in effect, television stations and should, we submit, stand on the same footing as other television stations which seek the right to telecast copyrighted television programs. They should compete in the market place for such product and pay whatever license fees may be negotiated between them and the copyright owners for the rights they seek to acquire. We are unable to see any basis on which CATV companies are entitled to special treatment in this area.

We therefore respectfully urge that no change be made in the present Copyright Laws with respect to their application to the operations of CATV companies.

EXHIBIT A

1. Television Exhibition of Theatrical Motion Pictures the Principal Photography of which Commenced after January 31, 1966

(a) Schedule of Payments.-With respect to each theatrical motion picture produced hereunder. the principal photography of which commences after January 31, 1966, which is released by Producer for exhibition on free television anywhere in the world, Producer agrees to pay to each actor whose services are included in such motion picture when telecast, compensation not less than the amounts provided herein. The term "actor" means those persons covered by the Basic Agreement and includes actors, singers, stuntmen and airplane pilots.

Said compensation herein called "television fees" shall be computed on the following amounts (hereinafter referred to as base amounts) for the applicable length of engagement:

(1) Actors employed by the day

Number of Days Worked or Guaranteed, whichever is Longer:

One (1) day

Two (2) days---

Three (3) days-

Base amount

$100

150

200

250

Four (4) days--.

NOTE. Five or more days shall be covered by the schedule below for all other actors.

All other actors

Number of Weeks Worked or Guaranteed, whichever is Longer :

One (1) week

1

Two (2) weeks 1.

Three (3) weeks or more--

Base amount

$300 400

500

1 In applying the foregoing schedule an actor who works or is guaranteed a fractional week in excess of one week or two weeks shall be deemed to have worked a full additional week.

Percent

(2) Television fees shall be computed on foregoing base amounts When such theatrical motion picture is initially exhibited on free television anywhere in the world, the following percentage of the applicable base amount shall be due..

When Distributor's gross receipts (as defined in subsection (b) below) from the distribution on free television of such motion picture amount to $125,000, the following additional percentage of the base amount shall be due..

When such gross receipts from the distribution on free television of such motion picture amount to $200,000, the following additional percentage of the base amount shall be due_

When such gross receipts from the distribution on free television of such motion picture amount to $300,000, the following additional percentage of the base amount shall be due..

When such gross receipts from the distribution on free television of such motion picture amount to $400,000, the following additional percentage of the base amount shall be due_.

When such gross receipts from the distribution on free television of such motion picture amount to $500,000, the following additional percentage of the base amount shall be due_

After each additional full increment of $100,000 of such gross receipts in excess of $500,000 the follow additional percentage of the base amount shall be due____.

30

1212

25

2212

2212

20

10

Senator BURDICK. Mr. Heston, I want to thank you. You have given the committee some very important testimony. It has been a great contribution, and we will consider CATC carefully. And thank you for your time in coming.

Mr. HESTON. Senator Burdick, I appreciate the time that the committee has given me.

(Whereupon, at 3:45 p.m., the subcommittee recessed, subject to call of the Chair.)

COPYRIGHT LAW REVISION-CATV

THURSDAY, AUGUST 25, 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 9:57 a.m., in room 1318, New Senate Office Building, Senator Quentin N. Burdick presiding. Present: Senator Burdick.

Also present: Thomas C. Brennan, chief counsel; Stephen G. Haaser, chief clerk, Subcommittee on Patents, Trademarks, and Copyrights; and George S. Green, professional staff member, full committee.

Senator BURDICK. The first witness this morning will be Mr. Edwin M. Zimmerman, Acting Assistant Attorney General. Will you identify your assistants for the record, please.

STATEMENT OF EDWIN M. ZIMMERMAN, ACTING ASSISTANT ATTORNEY GENERAL; ACCOMPANIED BY STEPHEN G. BREYER AND LIONEL KESTENBAUM OF THE DEPARTMENT OF JUSTICE ANTITRUST DIVISION

Mr. ZIMMERMAN. Thank you, Senator. On my right is Lionel Kestenbaum of the Department of Justice Antitrust Division and on my left is Stephen Breyer of the Antitrust Division.

I am pleased to have the opportunity to discuss with you a proposal contained in a bill now being considered by this committee, S. 1006, which comprehensively revises existing copyright law.

I might interject that this is my second attempt to testify and, in the intervening period, we have received a number of presentations from the different interests involved.

We have attempted to educate ourselves to the extent that it was possible for us to do so and we have incorporated that education into this testimony, although I might add that we come out the same way. The proposal would subject CATV systems to copyright liability. As a result of enactment of the proposal, CATV systems would have to secure the permission of copyright owners in order to transmit copyrighted material.

The Department of Justice believes that enactment of this proposal would be unwise. It believes that this explicit and blanket extension 1

1 Whether or not CATV systems are subject to copyright liability under present law is. in our view, an open question. A Federal district court in New York has held that CATV systems must pay copyright royalties, but the Court of Appeals for the Second Circuit has agreed to review the decision.