with the producers of theatrical motion pictures, a percentage of the receipts realized by the distributor from licensing a copyrighted motion picture for exhibition on television is paid by the distributor directly to the "Directors Guild of America, Inc.-Producers Pension Plan" which is managed jointly by trustees designated by the Directors Guild and trustees designated by representatives of the motion picture and television industry. Payments from the Plan are, of course, made to qualified retired members of the Directors Guild and are also made in certain instances to the surviving spouse and/or dependent children of deceased members of the Directors Guild. The pickup by CATV Systems of telecasts of copyrighted motion pictures made by a television station which has paid the requisite copyright license fee to telecast the same and the transmission of such motion pictures by CATV operators to paying subscribers without the payment of a copyright license fee would thereby deprive the Plan and its beneficiaries of substantial funds. Not only the Plan but also individual members of the Directors Guild would be deprived of substantial funds by CATV transmission of theatrical and television motion pictures without the payment of a copyright license fee. Directors of films made primarily for television exhibition are, under all collective bargaining agreements, entitled to additional compensation each time the film is rebroadcast. Compensation from reruns can aggregate up to an additional 165% of the Director's initial fixed compensation. Moreover, many Directors enter into individual employment contracts with producers of theatrical and television motion pictures whereby in addition to their fixed compensation, the Directors also receive a percentage of the profits or of the gross receipts realized from exhibition of the film, including television exhibition. An additional 5% of such rerun fees and, subject to certain limitations, an additional 5% of such profit participation or gross receipt participation payments are payable to the Pension Plan, so the Plan is also being deprived of substantial funds from this source as well. While as pointed out heretofore, the members of the Directors Guild are not necessarily copyright proprietors, they have a vital artistic interest in the motion pictures they create. The copyright laws as they presently exist adequately protect the Director's interest in the completed film. The Directors Guild of America, Inc., therefore desires to go on record against any change in the copyright laws which would create an exemption for operators of CATV Systems which would have the effect of allowing them to utilize the artistic and creative work of others without paying any compensation whatever. STATEMENT OF NATIONAL BROADCASTING CO., INC., ON S. 1006 NBC submits this statement for consideration by the Subcommittee in its hearings on the necessity of special copyright legislation affecting CATV systems. We urge, in general, that the development and growth of CATV systems and the public and private interest in broadcasting will best be served through the negotiation of copyright licenses within the traditional framework of the copyright laws. NBC specifically opposes, therefore, the imposition of compulsory licensing or the grant of any royalty-free statutory exemption from the copyright laws for CATV systems. No necessity exists at this time for such legislation. Creating for one area of CATV operation a royalty-free license and leaving other areas to negotiation or compulsory licensing may result in an artificial and perhaps rigid structure which will adversely affect both the growth of CATV systems and broadcast stations, and their ability to serve the public interest. We believe it fair to say that until recently CATV systems had no serious interest in obtaining licenses for their transmission of copyrighted material. Therefore, copyright proprietors, including networks and stations, had little or no incentive to organize or administer the grant of such licenses. The recent decision of a Federal District Court, in a carefully reasoned and comprehensive analysis of CATV systems and their operations, concluded that under long-recognized copyright principles the use by CATV systems of copyrighted material infringed upon the rights of copyright owners. The right of authors to license for royalties their copyrighted works for CATV performance was, for the first time, specifically and explicitly confirmed. This decision has prompted CATV systems to propose special legislation to grant to the CATV industry complete or partial immunity from the copyright laws. Certainly there is nothing about CATV which would make it more in the public interest for copyright exemptions to be granted in that industry while regular broadcast stations, licensed by the Federal Communications Commission in the public interest and serving many more people than are served by CATV systems, are required to obtain their own copyright licenses. As a practical matter, we believe that if the copyright problems were left to the normal market-place and if CATV systems turned their efforts to negotiating licenses in the same way as other copyright users, an equitable licensing system would emerge. For example, we do not believe that CATV systems will have any difficulty in obtaining licenses to carry the programs of stations within whose regular market areas they are located. Such a license would be in the common interest of the stations and the networks, and within the original contemplation of the copyright owner or program supplier. Similarly, we do not believe there will be insurmountable difficulties for networks, in the normal market-place, to obtain the CATV rights to a large majority of the programs they carry, so as to be able in turn to re-grant those rights to CATV systems which supplement the service of their regular broadcast affiliates. Network program suppliers intend the networks to have the television rights throughout the United States. The problems involved in CATV systems extending the normal market areas of the stations they carry could be solved in much the same way as various other industries deal with such problems-negotiation and agreement. Once the patterns and procedures of obtaining rights and granting licenses to CATV systems are established, licensing will become a normal business practice. For example, a network may grant blanket licenses authorizing carriage of the entire network schedule with stated exceptions for those programs, if any, for which the requisite rights have not been obtained; a station could grant similar licenses for its non-network programs with stated exceptions, if any, for the same reason. The exemption proposals presented to the Subcommittee, including the plan suggested by the House Subcommittee, do not negate the need for development of a licensing system. Although they would exempt CATV systems located in the basic service area of a station, they assume that a licensing plan will work for systems in other areas. We believe that a licensing plan can be developed and made to work more readily and with greater equity if applicable to all CATV systems for all areas rather than if developed just for systems located outside the basic service area of a station. There is no basis, we believe, for the suggestion that licenses for CATV systems should be treated differently, in principle, under the antitrust laws than those in any other part of the broadcasting industry. In this connection, we take sharp issue with the statement of the Department of Justice. Further, it seems to us beyond question that in light of the service and economic interests of broadcasters in reaching the largest possible audience for their programming, the speculation expressed by the Department of Justice that copyright licenses will be improperly withheld from CATV systems or improperly granted, has no substance. Regulation of CATV systems by the Federal Communications Commission provides no basis for any special treatment of CATV systems insofar as copyright is concerned, just as it has provided no basis for special treatment of broadcast stations. One final fact deserves emphasis. CATV systems have been in operation well over ten years. The number of such systems has reached some 1,700, with ever increasing growth in subscribers and service. Copyright holders have not demonstrated any interest in putting CATV systems out of business or hampering their growth by copyright infringement actions. The fact of the matter is that CATV systems are not threatened with extinction or crippling license proposals. Certainly this Subcommittee does not have before it any picture whatsoever of an industry beset by infringement suits harassed by licensors seeking unreasonable terms or at the point of financial collapse which might otherwise prompt the Subcommittee now to grant some extraordinary legislative relief. We cannot now tell what licensing system or structure may evolve in the course of negotiations, assuming such negotiations go forward on a meaningful basis. But we believe the course of free and unrestricted licensing negotiations will afford the most realistic and desirable approach to providing for the growth of CATV systems and the interests of the public, broadcasters and copyright owners. Until such serious and sustained negotiation attempts are made in good faith and the results of such negotiations are seen, legislation exempting CATV systems wholly or partially from the copyright laws is, we believe, neither necessary nor desirable. INTERCOLLEGIATE CONFERENCE, Senator JOHN L. MCCLELLAN, The views expressed herein represent the position of the NCAA in this matter and on behalf of the Association it would be greatly appreciated if this letter could be included in and considered a part of your subcommittee's hearing record on S. 1006. The NCAA is a voluntary association of more than 625 of the nation's universities, colleges and affiliated organizations. The NCAA is devoted to the sound administration of intercollegiate athletics in all its phases as a vital national resource and as an integral feature of the system of higher education in this country. Through representative devices such as its annual convention and by referendum among the membership, the NCAA from time to time has adopted regulatory programs in various areas such as eligibility, recruiting of prospective studentathletes, and the award of financial aid to student-athletes. One of its most important regulatory programs is in the area of televising football games. As early as 1949 the NCAA recognized the potentially devastating effects of unrestricted televising of its members' football games upon the in-person attendance at college football games which in the main provide financial support for the broad intercollegiate sports programs and related intramural, physical education and recreational activities. Concerns as to these effects were sustained and documented by extensive research, and as a consequence there was instituted in 1951 a series of television control plans developed by, approved by, and operative upon the Association's institutional members. The stated purposes of the current plan, corresponding to like declarations in preceding years, are "to reduce insofar as possible the adverse effects of live television upon football game attendance and, in turn, upon the athletic and physical education programs dependent upon the proceeds from that attendance; to spread television participation among as many colleges as practicable; to seek in all appropriate ways possible the promotion of intercollegiate football through the use of television as a means of advancing the over-all interests of intercollegiate athletics; and to provide football television to the public to the extent compatible with the other objecives." The plan governs all forms of simultaneous telecasts of football contests by NCAA members for the regular football season (in 1966, from September 9 through December 11). Its central feature is the offering by a national network of fourteen college football programs on thirteen specified Saturday afternoons and on Thanksgiving Day. On eight of these dates the programs consist of a single game, carried nationally, and on the remaining six dates the programs include four games, each of which is carried by the network on a regional basis. Provision is made for the geographic diversification of the televised games and rotation of the institutions appearing in the series. The design is to promote college football through nation-wide television exposure, with direct guarantee to television viewers in various parts of the nation of frequent opportunity to see teams from their own territories in action on television. At the same time there is an effort to reduce, through diversification, the impact which persistent televising of games of great local interest would have upon other games being played concurrently. The limited exceptions to this format include an opportunity for local televising of games of great interest in a particular college community under these circumstances: 1. A game for which tickets of admission are not available for public sale, i.e., a sell-out game, may be telecast in the local television station areas of the home and visiting colleges; and 2. a game played more than 400 miles away from a visiting team's campus may be televised in the visiting team's home television area; but 3. games may be televised under these conditions only if no appreciable damage will be done to any concurrently conducted college game. 'Appreciable damage" is considered to be created by the existence of another concurrent game to which admission is charged, not itself televised or "sold-out", within 120 miles of the transmitter if it is to be telecast by a VHF station or within a 45-mile radius if a UHF station is involved. It will be recognized that the thrust of the NCAA plan and program format, made graphic in the case of the local telecast exceptions and the "appreciable damage rule", is to provide for the measured impact of live televising upon inperson attendance at other concurrent games. The success of these control measures is attested by the overwhelming support of the program by the diversi fied NCAA membership and by clear evidence that record attendance at college football games (24.7 million in 1965) would not have been possible without the controls represented by the NCAA Television Plan. The emergence of CATV systems, with a vast coverage potential, casts a distinct cloud over the effectiveness of this control program to the extent that these systems can and do appropriate the authorized telecasts for proliferated transmission into areas where only measured impact of game telecasts upon games in progress is contemplated by the control plan. These effects are realized whenever a CATV system transmits into another region the telecast of a game otherwise limited in its authorized release to one regional network. The premises of the exceptions granted for local telecasting and the principle of the "appreciable damage rule" are completely vitiated when a CATV system appropriates the signal of the authorized local telecast and carries it into other areas where games are being played. Although CATV may be said to be in its infancy, the NCAA already has had experience with these effects, notably in breaches of its exceptions for local televising of "sell-out" games. The Association is gravely concerned that the capacity of CATV systems to embrace broader and broader areas of coverage to the point of blanketing the nation can thwart the purposes of its protective plan. The NCAA believes that these effects can and should be regulated through protections against unauthorized appropriation and transmission of telecasts afforded by the copyright laws. To this end we urge that S. 1006 make it explicit that live sports telecasts are subject to copyright regulation. To accomplish this it is suggested that the clear analogy between motion pictures and electronic recordings of live sports events be fully developed by amending the definition of motion pictures in S. 1006 to include specifically television broadcasts of sports events which are recorded simultaneously with the conduct of the event and the transmission of the telecast. Yours sincerely, WILLIAM R. REED, NCAA Legislative Committee. WESTINGHOUSE BROADCASTING COMPANY, INC., THOMAS C. BRENNAN, Esquire, Chief Counsel, United States Senate, Committee on the Judiciary, Subcommittee on Patents, Trademarks, and Copyrights, Washington, D.C. DEAR MR. BRENNAN: In accordance with our telephone conversation, and in response to your letter of June 22, the Westinghouse Broadcasting Company, Inc. (Group W) herewith submits its proposal (draft attached) for resolution of the CATV/copyright problem. Under this proposal CATV operators in underserved areas (less than three television stations) would receive an automatic license, under copyright, to carry copyrighted works upon payment of a fee established by the statute. Group W is licensed to operate the following radio and television stations: Two other Group W companies, Clearview of Georgia, Inc. and Micro-Relay, Inc., respectively own and operate several community antenna television systems (CATV) in Georgia and a microwave relay system serving Clearview of Georgia and other CATV systems not owned by Group W. In addition, WBC Productions, Inc. and WBC Program Sales, Inc., also Group W companies, produce television programs and syndicate them to television stations throughout the country. The undersigned is Vice President of the Westinghouse Broadcasting Company, Inc. and President of Clearview of Georgia, Inc. and Micro-Relay, Inc. As can be seen from the foregoing, Group W has a strong interest in seeking a reasonable resolution of the CATV/copyright problem as a station operator, CATV operator and copyright owner of syndicated television programs. Group W is of the strong opinion that its proposal represents a fair resolution of the interests of the three major contending groups (CATV operators, copyright owners and broadcasters), while at the same time protecting that segment of the public which, from the viewpoint of the public interest, is not receiving what is generally conceded to be at least the minimum acceptable level of television programming-locally originated programming plus full network service. The first concern, of course, is the public interest. It is generally agreed that television, in both its entertainment and informational aspects, satisfies a real public need. It is also generally agreed that the public interest requires Americans to have readily available to them, as a minimum, substantially the full programming of the three television networks plus locally originated programming of one or more local television stations. By and large the overwhelming majority of Americans has at least this minimum level of programming available to it at a cost of no more than the price of a television set and, occasionally, a simple outdoor antenna. For many Americans, however, this is not the case. The great majority of this latter group live in small towns which; a) are too far removed from any television station for satisfactory reception; or, b) are limited to only one or two nearby stations; or, c) are of such distance from stations as to make the technical quality of the reception inferior and completely unsatisfactory; or, d) represents a combination of the last two cases. Often residents of those communities pay as much as $200-$300 for a small tower, antenna and rotor (a price beyond the reach of many) to improve picture quality. CATV has been able to satisfy the needs of this substantial but comparatively small segment of the public (there are approximately 2,000,000 families presently subscribing to CATV) at a price which most of them can afford to pay. Looking at the CATV/copyright issue in terms of the public interest in having a minimum acceptable level of television programming available to as much of the public as possible, there appear to be three issues: (i) if carriage of a copyrighted work on CATV is to be considered "performance" for purposes of the Copyright Act, will this ultimately result in a material reduction in the availability of this minimum level of programming to any substantial segment of the public; (ii) if the answer to (i) is yes, should the rights of the copyright owner then be restricted; and (iii) if the answers to (i) and (ii) are yes, what form should that restriction take? In terms of television programming available to the public off the air, the economic viability of the average television station, and thus its ability to broadcast television programs to the public, has not been under any stress because the television station operator must bargain for his filmed programming in an open market. In practice the television operator is generally on a bargaining parity with the film syndicator, with the result that not only is he able to obtain programming at a price which permits him to operate at a profit, but more important, to do so without any adverse effect on the viewers in the area served by his station. However, families which are able to receive the minimum acceptable level of television service only by paying a monthly fee to a CATV system will be directly |