You must understand, Mr. Chairman, that we face special problems because live sports telecasts are unique among all programming fare. Sports events are current and ephemeral; unlike most other programming which can be shown time and time again, and from which revenues can be derived repeatedly, a live sports telecast has little or no value after the game is played. We must earn income from our product at the time it occurs, or not at all. Thus, the unrestricted importation by cable television systems of distant signal sports telecasts into our clubs' markets significantly undercuts our ability to derive revenue because it competes unfairly with our home gate, our over-the-air telecasts and our cablecasts. Indeed, the injury increases over the long by the saturation of the club's market by the repeated cable retransmissions of another league member's games. For these reasons, throughout the decade-long debate on the copyright revision legislation, and since the enactment of the 1976 Act, the professional sports leagues have maintained that compulsory licensing is inappropriate for sports telecasts. If H.R. 5949 is adopted without provisions designed to resolve the special problems compulsory licensing poses for sports, we fear that we will be forced to avoid with greater frequency the marketing of our product to television broadcast stations. We are not alone, Mr. Chairman, in our belief that cable's compulsory licensing is an anachronism that should be replaced by a free marketplace. The same position has been espoused by the Chairman of the Federal Communications Commission, the Justice Department, the Register of Copyrights, the former and current heads of the National Telecommunications and Information Administration of the Department of Commerce, the past Chairman of the Copyright Royalty Tribunal, and others.' Not only have these eminent and impartial authorities called for the elimination of compulsory licensing and the introduction of marketplace bargaining between program producers and cable systems; they have also emphasized 1 See, e.g., Besen, Manning & Mitchell, Copyright and the Coase Theorem, 21 J. Law & Econ. 67 (1978); Moreover, they have recognized the unavoidable consequences of maintaining without change the current system of compulsory licensing for sports telecasts the potential reduction in the significant amount of such telecasts currently available on free, over-theair television. Certainly, there can be no stronger evidence of the need to reform the current system, particularly as it affects sports, than the recommendations of these officials who have absolutely no economic stake in the outcome of the controversy. Congressman Railsback, the ranking minority member of the Subcommittee on Courts, Civil Liberties and the Administration of Justice, also recognized the importance of addressing the sports-cable controversy in H.R. 5949.2 Congressman Railsback offered an amendment to H.R. 5949, narrowly-defeated in the Judiciary Committee by a 13-11 vote, which would have required cable systems in our home territories to bargain for the right to import distant signal telecasts of our games at least 2 See Separate Views of Cong. Railsback, H.R. Rep. 97-559 Part I, 97th Cong., 2d Sess. 38, 39-41 (1982). 98-703 0-82--9 under very limited circumstances. We believe that Congressman Railsback's amendment would afford our clubs rights which are less than the record would support. Nevertheless, the principle embodied in this amendment that cable should not receive a blanket exemption from marketplace forces is one that we fully support. Despite this widespread rejection of compulsory licensing, the Judiciary Committee again has chosen, as it did in 1976, to deal with this complicated problem by adopting a compromise reached by parties who have quite naturally focused on their own individual concerns. Whatever one thinks of this type of solution to a complex problem, it cannot be condoned unless all of the interested parties are a part of the agreement. As I have said, Mr. Chairman, the sports leagues were not permitted to participate in the compromise negotiations and, accordingly, our concerns are not in any way met by the bill before you. Quite to the contrary, Mr. Chairman, H.R. 5949 actually worsens our position. Through a last-minute addition to H.R. 5949, without any hearings, the Subcommittee on Courts, Civil Liberties and the Administration of Justice accepted NCTA's proposal to overturn a recent federal court decision in a copyright infringement suit brought by one of our clubs, the New York Mets.' The result of that decision would simply be to require the so-called resalers to bargain with our clubs for the right to sell our clubs' telecasts to cable systems. The amendment to the Section 111(a)(3) exemption in H.R. 5949 is an effort by NCTA to shortcircuit the appeals process in the Eastern Microwave litigation, and to revoke the marketplace right for which the Mets had fought so hard. You may recall, Mr. Chairman, that for a number of years prior to the passage of the 1976 Copyright Revision Act, bills to provide for a comprehensive revision of the copyright laws exempted entirely professional sports from compulsory licensing. Those responsible for this exclusion correctly recognized that sports programming deserves "special consideration" because of its unique ephemeral nature and because 3 Eastern Microwave, Inc. v. Doubleday Sports, Inc., F. Supp. (N.D.N.Y. March 12, 1982), appeal pending. Eastern Microwave, a resaler, places the Mets telecasts on satellite and microwave and then sells these telecasts to cable systems throughout the country -- without obtaining the consent of or paying any compensation to the Mets. The District Court, interpreting provisions of the 1976 Copyright Revision Act, held that Eastern Microwave's activities are not immune from liability by reason of the statutory exemption for "passive" carriers. 17 U.S.C. § 111(a)(3). |