This leads to the second question-who will really pay. There is no doubt that your imposition of copyright on CATV would be, at least in part, a consumer tax on television viewing. Some have difficulty with the word "tax". But it is a form of territorial taxation, that is, a special television viewing charge to be paid only by cable viewers. Must the viewer himself pay it? It could stop at the cable company. But it will not because there are no free lunches. Is it a large amount? At the national average cable charge of $6 per month per home, the copyright bite is $1.80 per year-for the 2.5 percent rate, irrespective of number of signals carried.

In the seven Congressional districts of this Committee, there are approximately 73,000 cable homes. Under this bill, these 73,000 homes could pay to copyright holders up to $131,400 per year.

What about the television viewers? They care, too. We have already received more than 200 community resolutions opposing this viewing tax from cities as diverse as Eau Claire, Wisconsin, and Granville Village, New York.

These resolutions from municipalities will be supplied for the record. Further, the United States Conference of Mayors and the League of Cities also adopted a joint resolution opposing the inclusion of CATV in the copyright bill. Your constituents are concerned about higher CATV charges that will result from copyright legislation.

The third question concerns to whom copyright payment would be made. Jack Valenti, president of the MPAA, told Senator McClellan's Committee on the Judiciary on August 1, 1973, that he represents the Committee of Copyright Owners, composed of eight independent suppliers of copyrighted television programs: (1) Columbia Pictures Industries, Inc.; (2) Metro-Goldwyn-Mayer, Inc.; (3) Metromedia Producers Corporation; (4) Paramount Pictures Corporation; (5) Twentieth Century Fox Film Corporation; (6) United Artists Corporation; (7) MCA, Inc.; and (8) Warner Brothers, Inc. Mr. Valenti said: “*** the programs supplied by members of CCO to stations, and thereby to cable systems, constitute by far the largest part of all copyright programs carried by television and cable. * * *" CATA has completed a tabulation of copyright registrations for television programs broadcast in New York City during a recent week.

Of all program hours telecast by the three networks in New York City, between 5:00 p.m. and 11:30 p.m., in the sample week:

46.15 percent of all copyright-on-file program time on CBS was owned on record by one of these eight CCO firms; similarly, 31.58 percent for NBC; and 16.67 percent for ABC.

Finally, movie copyrights on file for that week reflected that 51 of 68 movies (60 percent) were owned by one of these eight firms. Clearly, Mr. Valenti is correct in his analysis of who owns copyright. But to make the analysis and our point more clear, please consider that the largest copyright owner of the big eight-MCA-had gross revenues in 1974 of $641 million-a third more than not the largest cable company, but all cable companies-the whole cable industry. Given the state of economic affairs in the cable industry, we are indeed saddened that we were not first in thinking of a relief act for our industry-a royalty from program suppliers to CATV for aiding viewers to see their programs. They can clearly afford to pay.

Mr. KASTENMEIER. Our next witness is Mr. Frederick W. Ford, counsel for the Ad Hoc Committee of Concerned Cable Television Operators for a Fair Copyright Law. Mr. Ford, would you like to introduce your colleagues?

TESTIMONY OF FREDERICK W. FORD, COUNSEL, AD HOC COMMITTEE OF CONCERNED CABLE TELEVISION OPERATORS FOR A FAIR COPYRIGHT LAW

Mr. FORD. Mr. Chairman and members of the committee, I am Frederick W. Ford, a member of the Washington law firm of Pittman Lovett Ford & Hennessey, with offices at 1819 H Street NW. I appear here today on behalf of the Ad Hoc Committee of Concerned Cable Television Operators for a Fair Copyright Law to suggest an amendment to the bill and to support passage of the bill, as amended.

Accompanying me are Ben V. Willie of Iowa; C. Warren Fribley of New York; Lawrence Flinn of Connecticut, and George Gardner of Pennsylvania.

I have conceded 5 minutes of the time alloted to me to Teleprompter Corp., which is the largest owner of cable television in the country. I have, therefore, cut my statement rather drastically. I would like to have the entire statement incorporated in the record, because I will eliminate large parts of it in order to confine myself to the allotted time.

Mr. KASTENMEIER. The chairman appreciates that, Mr. Ford, and without objection the 17-page statement and the appendixes will be received for the record.

Mr. FORD. The ad hoc committee opposes the payment of copyright on the community antenna function, and suggests an amendment to the bill to eliminate copyright liability of community antennas for carriage of television signals. That suggested amendment is contained in footnote 5.

The ad hoc committee does not view the matter of copyright payments as an issue between it and the Office of Copyrights, the copyright owners, the NAB, AMST, or NCTA, because none of them will pay copyright, only the public ultimately pays copyright on television programs. The issue here is between the copyright owners and the subscribing members of the public to community antennas.

The issue is as follows: Should the Congress, contrary to the reason and logic of the U.S. Supreme Court, on two occasions, create the legislative fiction that CATV is engaged in the display or performance of a copyrighted work publicly and is, therefore, liable for the payment of copyright fees which, of course, it would have to collect from the public as a part of its antenna service?

The public should not be required to pay a second copyright fee for the same program because of the type of antenna it uses.

The Office of Copyrights makes its case for CATV copyright liability on the fact that CATV charges its subscribers a fee for its antenna. services which makes a profit and failure to share these profits could damage the copyright. The Supreme Court disagreed with these assumptions and found otherwise in TelePrompTer Corporation v. CBS, 415 U.S. 394 (1974). If the Office of Copyright's theory of liability is correct-which it is not-then anyone who makes a profit, directly or indirectly, from a performance of a copyrighted work should be liable. This liability would run to wire and receiver manufacturers and countless other business enterprises which enable the public to view the performance.

CATV services keeps the copyright owner honest by delivering the signal carrying his program to the public for which he has been paid.

At the present time, a sponsor who buys a program usually pays the copyright owner for one performance over one or more stations. The sponsor pays the copyright owner, directly or indirectly, for tickets to the show for everyone within the grade B contour of the stations televising it and as far beyond that contour as it can be received. This cost is passed on to the public eventually in the purchase price of the product.

It is a scientific fact, recognized in the Sixth Report and Order, however, that over average terrain only 90 percent of the locations in the grade A contour receive an adequate signal 50 percent of the time, and within the grade B contour only 70 percent of the locations receive an adequate signal 50 percent of the time. I will venture that most sponsors paying for a program think they are getting a potential of 100 percent of the locations 100 percent of the time, but that just isn't so, even though the copyright owner is probably collecting for 100 percent of the locations 100 percent of the time.

A community antenna television system within the grade B contour merely aids the sponsor in getting his money's worth from the copyright owner and the station by assuring the sponsor that anyone who desires the signal will receive it clearly, and thus increase the potential audience. Certain copyright owners are not satisfied with this. They collect from the sponsor who recovers his cost from the public and they would like to collect again from the CATV operator who must also pass his cost on to the public. Some way or other it does not seem right for the public to have to pay for "two tickets to the same performance." No one has attempted successfully, to my knowledge, to refute this argument. They merely ignore it and talk about something else.

Cable television or its advertisers will pay for any copyrighted program it originates, whereas the public would receive nothing for the cash the broadcasters would have the copyright owner siphon from the public via CATV which otherwise could be used for copyright fees for more diverse programing.

There is a basic conflict between communications policy and any copyright law in which a cable antenna system is required to pay copyright on any signal it is authorized to receive and distribute on its system by the Federal Communications Commission.

The proposed legislation would compel CATV to pay copyright owners for distributing signals carrying their copyrighted works. The broadcaster has the right to pick and choose the copyrighted works he will buy and broadcast.

Congress should set the record straight. If the Commission is confirmed by Congress in the power to require carriage of particular signals by CATV, then CATV will remain a supplemental reception service, perform nothing, and owe nothing.

If it is desired to require copyright payment by CATV for its supplemental role, then CATV should be entitled to carry whatever programs it desires, delete the advertising, and substitute its own. This is strictly a communications policy question. The broadcaster should not be permitted to have it both ways-collect additional revenue from sponsors for the added carriage of CATV and require CATV to pay copyright fees.

In short, the broadcaster is arguing for the morality of unjust enrichment to copyright owners at the expense of the public CATV serves, as a means of using copyright to restrict the growth of CATV. It is the public who will unjustly enrich the broadcaster and/or the copyright owner, not the CATV operators. These anti-consumer provisions should not be enacted into law.

We urge the Congress not to compromise the fundamental legal principles established by the U.S. Supreme Court on two occasions.

decisions that are on the side of the viewer. The broadcaster, whatever his motives are, is wrong in trying to saddle its viewers with extra copyright payments to view its "free" programs through use of a more efficient rented antenna.

Imposing copyright fees on the community antenna function and, in effect, making the American public pay tribute twice to the 28 corporations in New York and Hollywood that own substantially all of the copyrighted material on TV, to watch "free TV" is wrong. If the copyright owners or merchandisers exercise forbearance on the short-term profit of double payment and permit cable television to flourish, they will be amply rewarded with even greater profits from the insatiable requirements of cable television for material to fill its many origination channels in the years to come.

The Commission's power to limit the number of distant signals imported by microwave has been confirmed. No further power is needed to protect the copyright owner and the public interest.

Now that the "unfair competition" shibboleth has been discredited, the only bases for contending that CATV should pay copyright are: One: That it makes a profit from the use of copyrighted material, and

Two: That it really does engage in public performance for profit. Neither one of these positions are sound. There is no principle of copyright law which assesses liability for copyright based on profit alone and certainly none exists in the pending bill.

As to the display or performance of copyrighted works publicly by community antennas, the complete answer is that a reception antenna does not perform. The cable operator does not convert the electronic signal into pictures and sound-he merely delivers a signal to the subscriber who furnishes his own equipment to convert the signal to pictures and sound in order to receive and view the performance. The CATV operator does not use or sell any program or the peformance thereof either publicly or privately. A CATV operator sells a receiving antenna service, just as a manufacturer sells a receiving antenna from which he makes a profit. But, community antennas do not perform anything.

Despite the FCC's push for copyright liability, the copyright law is not the place to bypass the Commerce Committees and embed regulatory flexibility in concrete. The Senate Commerce Committee in its report on S. 1361 stated that "it believes that in view of the potential impact of certain provisions in S. 1361 on our nationwide communication service, ample opportunity should have been afforded it to consider those provisions in-depth and to have held hearings on the communications issues."

Certainly, CATV should be eliminated from this bill, if for no other reason than to permit the Commerce Committees to develop a national communications policy on cable television before any copyright policy on the community antenna function is undertaken.

Based on the foregoing review of the background and the provisions of this legislation, it must be concluded that the provisions of H.R. 2223 concerning CATV are philosophically unsound. An across-theboard payment, including payment by the public for two tickets to the same performance or for distant signals as limited by the Commission's rules, is, in our opinion, soaking the consumer.

We believe that this subcommittee is justified and should adopt the community antenna industry's historical position by amending this bill to eliminate any copyright liability for the community antenna function, under section 106 or other provisions of H.R. 2223, but not, of course, the origination function of cable television systems for which it should be liable like anyone else.

Thank you.

Mr. KASTENMEIER. Thank you, Mr. Ford. The Chair yields to the gentleman from New York, Mr. Pattison.

Mr. PATTISON. I have no questions. It seems to me that this statement is basically-there are no substantial disagreements between your position and the position that was stated just a few minutes ago.

Mr. FORD. Well, I haven't heard all of the statement, I haven't seen it. Some of the answers I would not agree with. I think, fundamentally, I am making a very decided distinction between the performer and the viewer.

Mr. PATTISON. I have no further questions.

Mr. KASTENMEIER. The gentleman from California, Mr. Wiggins. Mr. WIGGINS. Mr. Ford, I am going to make an argument to which I do not expect you to agree, but I would like you to give me your reasons for disagreeing.

I think it can be stated fairly and accurately that there is some relationship between payment of copyright and the market to be served by the copyrighted work. For example, the sale by a playwright to an individual producer for the performance of a play does not carry with it that all other producers may reproduce that play for profit without a further payment.

Similarly, the production of a movie for showing at residential theaters does not carry with it the implication that it can be reproduced on television without the payment of an additional copyright fee.

The reason, I think, is that the owner of a copyright bargained for a particular market, and that he did not bargain for more than that. Now, if there is some validity to this argument, could it not be said that the owner of a copyright, selling copyrighted work, the original transmitter, bargains for a market, and he did not bargain for the expanded market by cable television, and that accordingly, he should get some additional compensation by reason of that expanded market. Mr. FORD. Well, my response is that he does in fact bargain and receives payment for every person who has a receiver within the reach of that television station. So, he makes his bargain, he gets his cash. He intends to sell it, and he dedicates it to the public within the bounds of that station.

And when he figures his price, he knows substantially how many people are there. He knows precisely what he is selling, and who he is dedicating this program to.

Mr. WIGGINS. Well, I am assuming something that you may challenge, that the cable opens up a new market that is not available to normal transmission.

Mr. FORD. But the advertiser receives the benefit of that. And the copyright owner, as the Supreme Court pointed out, will increase his fee to compensate him for the reception of that program by all the people within that area. That was the logic on which the Supreme Court permitted the distant signal to be brought in because it said it