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engaged in the production of films for theater, television and cable viewing. Appended to my statement, which I will not take your time to read now, is a list of the craft unions and guilds for whom I am authorized to speak and that are united in the Hollywood Film Council. These unions and guilds have a membership of some 60,000 men and women whose livelihood depends directly on the viability of the American film industry.

I am here, Mr. Chairman, at the direction of the Film Council and its membership to express their deep concern on the question of the payment of copyright. I have been asked by Mr. Chester Migden, Executive Secretary of the Screen Actors Guild, to express his personal regret at his inability to be present today to speak for the Screen Actors. The officials of his guild are meeting in San Francisco today. We welcome this opportunity to express our views and are grateful to you and the Members of the Subcommittee for the opportunity to appear here.

Let me say first that we endorse in general terms the passage of the Chairman's bill, H.R. 2223, in short, the requirement that royalty payments be made for the use of copyrighted materials. We support fully the viewpoint expressed by Mr. Valenti, President of the Motion Picture Association of America, and request the most careful and serious consideration of the changes and modifications he has urged.

The enactment of an up-to-date copyright law is essential and important to labor. It is a bread and butter issue for those who work in Hollywood and New York in the production of film. Some people seem to have the idea that copyright royalty is something that accrues only to an already rich author, or composer, or maybe a highly-paid actor, or even to some large corporation. Maybe that's because the word "royalty" seems to connote something kingly or rich.

For the record, let me make it very clear that payments for the use of copy. righted material in the film industry mean employment-jobs-for thousands of people. Payment for copyright means both jobs and more money for carpenters, painters, electricians, teamsters, cameramen, costumers, grips, projectionists, property men and many others. In Mr. Migden's behalf, I speak also for the Hollywood creative guilds whose membership includes such creative people as actors, screen extras, film editors, musicians, writers, and directors. All are beneficiaries of copyright royalty payments.

We have experienced tremendous unemployment in Hollywood. Today, you people in Congress are concerned about an unemployment rate of 8% in the country. Last year unemployment rates in Hollywood ranged from a low of 1042% to 89% in our unions and guilds with a combined average unemployment rate of almost 40% across the board. VARIETY, the film industry trade paper, reported recently that film production by the majors was at an historic low. Thus, on top of several years of miserably low employment opportunities, these facts spell a worsening employment situation in the film industry. Payment of copyright fees means additional funds become available to bolster production and distribution.

Now, you are being told by cable interests that they comprise a special class ; that all or a portion of the cable industry's revenues should be exempt from paying for the program material that is the first and prime essential of their operation. Why should cable get a free ride? Why should any user get rich at our expense?

All of us prate about our free enterprise system. Cable television is a privately owned free enterprise business. It doesn't give anything away free. It charges its subscribers a fee for the programs it sends to their homes. That fee ranges from as low as $4.50 a month to more than $20 a month. The national accepted average is about $6 a month. What does the projected copyright fee add to that cost?

Well, it is simple enough to compute the effect of the fee schedule in the pending bill, the so-called Gurney schedule. Assuming the average $6 a month cost to each cable subscriber, that copyright fee amounts to an average of 3¢ a month per subscriber or 36¢ a year! That's what we are talking about.

Yet some cable system owners have the effrontery to suggest that this fee would put them out of business or would be a serious burden to their subscribers. That, I suggest, Mr. Chairman, is poppycock. It should be nailed as blatant propaganda and I want to nail it. The fact is that the cable business is, in the main, an exceptionally lucrative business. Rates of return of small to medium

sized systems range as high as 50% or even more on the investment. Yet these are the people who cry wolf.

Indeed, even the original copyright fee schedule first promulgated by Senator McClellan was wholly inadequate, compared to the copyright fee paid for the same material by television station users. Now this copyright fee schedule is before us, sliced in half. If the Congress persists in enacting any fee schedule, it is imperative that the Royalty Tribunal be established and authorized to move ahead promptly with detailed studies to determine a fair and reasonable copyright fee for the cable business.

Frankly, we find it hard to understand why the Congress should get into the copyright rate-making arena. We much prefer Chairman Kastenmeier's original proposal eight years ago that left it to the market place—free negotiation between seller and buyer. It has worked fine for theaters and television. Why, all of a sudden, should Congress prescribe copyright fees in one special area.

I am afraid, Mr. Chairman, that I am taking a bit too much time. But I cannot over-emphasize the importance of this matter to our members. I repeat it is a bread and butter issue. We urge you strongly to make sure that a fair and reasonable return is derived from cable's use of the product we make in Hollywood and New York. I thank you for your courtesy and patience.

MEMBER ORGANIZATIONS

The list of the member organizations of the Hollywood Film Council includes the three International unions, International Alliance of Theatrical Stage Employees, American Federation of Musicians, and L.A, Joint Executive Board of Hotel & Restaurant Employees and Bartenders Union, and the following guilds and craft unions : Affiliated Property Craftsmen, IATSE Motion Picture Studio Electrical TechLocal 44

nicians, IATSE Local 728 American Federation of Musicians Lo- Motion Picture Studio Grips, IATSE cal 47

Local 80 Building Service Employees Local 278 Motion Picture Studio Projectionists, Composers and Lyricists Guild of Amer- IATSE Local 165 ica

Motion Picture Studio Teachers and Costume Designers' Guild

Welfare Workers, IATSE Local 884 Dining Room and Cafeteria Employees Office and Professional Employees Local 8

O&PEIU Local 174
International Photographers, IATSE Publicists Guild, IATSE Local 818
Local 659

Scenic Artists, IATSE Local 816
Motion Picture Art Directors, IATSE Screen Actors Guild
Local 876

Screen Extras Guild
Motion Picture Costumers, IATSE Script Supervisors, IATSE Local 871
Local 705

Studio Transportation Drivers Local 399 Motion Picture Film Editors, IATSE Studio Utility Employees, LIU Local Local 776

724 Motion Picture Screen Cartoonists, Make-Up and Hair Stylists, IATSE IATSE Local 839

Local 706

TESTIMONY OF WILLIAM K. HOWARD, PRESIDENT, HOLLYWOOD

FILM COUNCIL Mr. HOWARD. Thank you, Mr. Chairman. Mr. KASTENMEIER. You are welcome.

Mr. HOWARD. Mr. Chairman, and members of the subcommittee, my name is William K. Howard. My address is 1427 North La Brea Avenue in Hollywood, Calif. I am the president of the Hollywood Filmi Council, made up of the 27 largest craft unions and guilds in the motion picture industry. Their members are engaged in the production of films for theater, television, and cable viewing. Appended to my statement, which I will not take your time to read now, is a list of the craft unions and guilds for whom I am authorized to speak and

that are united in the Hollywood Film Council. These unions and guilds have a membership of some 60.000 men and women whose livelihood depends directly on the viability of the American film industry.

Mr. KASTENMEIER. Without objection, that list will be received and made a part of the record, as attached to your statement.

Mr. HOWARD. Thank you, Mr. Chairman.

I am here, Mr. Chairman, at the direction of the Film Council and its membership to express their deep concern on the question of the payment of copyright. I have been asked by Mr. Chester Migden, executive secretary of the Screen Actors Guild, to express his personal regret at his inability to be present today to speak for the Screen Actors. The officials of his guild are meeting in San Francisco today. We welcome this opportunity to express our views and are grateful to you and the members of the subcommittee for the opportunity to appear here.

Let me say first that we endorse in general terms the passage of the chairman's bill, H.R. 2223; in short, the requirement that royalty payments be made for the use of copyrighted materials. We support fully the viewpoint expressed by Mr. Valenti, president of the Motion Picture Association of America, and request the most careful and serious consideration of the changes and modifications he has urged.

The enactment of an up-to-date copyright law is essential and important to labor. It is a bread-and-butter issue for those who work in Hollywood and New York in the production of film. Some people seem to have the idea that copyright royalty is something that accrues only to an already rich anthor, or composer, or maybe a highly paid actor, or even to some large corporation. Maybe that is because the word "royalty" seems to connote something kingly or rich.

For the record, let me make it very clear that payments for the use of copyrighted materials in the film industry mean employmentjobs—for thousands of people. Payment for copyright means both jobs and more money for carpenters, painters, electricians, teamsters, cameramen, costumers, grips, projectionists, property men, and many others. In Mr. Migden's behalf, I speak also for the Hollywood creative guilds whose membership includes such creative people as actors, screen extras, film editors, musicians, writers, and directors. All are beneficiaries of copyright royalty payments.

We have experienced tremendous unemployment in Hollywood. Today, you people in Congress are concerned about an unemployment rate of 8 percent to 9 percent in the country. Last year, unemployment rates in Hollywood ranged from a low of 10.5 percent to 89 percent in our unions and guilds, with a combined average unemployment rate of almost 40 percent across the board. “Variety," the film industry trade paper, reported recently that film production by the majors was at an historic low. Thus, on top of several years of miserably low employment opportunities, these facts spell a worsening employment situation in the film industry. Payment of copyright fees means additional funds become available to bolster production and distribution.

Now, you are heing told by cable interests that they comprise a special class; that all or a portion of the cable industry's revenues should be exempt from paying for the program material that is the first and prime essential of their operation.

Why should cable get a free ride?

Why should any user get rich at our expense ?

All of us prate about our free enterprise system. Cable television is a privately owned free enterprise business. It does not give anything away free. It charges its subscribers a fee for the programs it sends to their homes. That fee ranges from as low as $4.50 a month to more than $20 a month. The national accepted average is about $6 a month. What does the projected copyright fee add to that cost?

Well, it is simple enough to compute the effect of the fee schedule in the pending bill, the so-called Gurney schedule. Assuming the average $6 a month cost to each cable subscriber, that copyright fee amounts to an average of 3 cents a month per subscriber-or 36 cents a year. That is what we are talking about.

Yet some cable system owners have the effrontery to suggest that this fee would put them out of business or would be a serious burden to their subscribers. That, I suggest, Mr. Chairman, is poppycock. It should be nailed as blatant propaganda and I want to nail it. The fact is that the cable business is, in the main, an exceptionally lucrative business. Rates of return of small to medium sized systems range as high as 50 percent or even more on the investment. Yet these are the people who cry wolf.

Indeed, even the original copyright fee schedule, first promulgated by Senator McClellan, was wholly inadequate compared to the copyright fee paid for the same material by television station users. Now this copyright fee schedule is before us, sliced in half. If the Congress persists in enacting any fee schedule, it is imperative that the Royalty Tribunal be established and authorized to move ahead promptly with detailed studies to determine a fair and reasonable copyright fee for the cable business.

Frankly, we find it hard to understand why the Congress should get into the copyright ratemaking arena. We much prefer Chairman Kastenmeier's original proposal 8 years ago that left it to the marketplace—free negotiation between seller and buyer. It has worked fine for theaters and television. Why, all of a sudden, should Congress prescribe copyright fees in one special area.

I am afraid, Mr. Chairman, that I am taking a bit too much time. But I cannot overemphasize the importance of this matter to our members. I repeat, it is a bread-and-butter issue. We urge you strongly to make sure that a fair and reasonable return is derived from cable's use of the product we make in Hollywood and New York.

I thank you for your courtesy and patience.
Mr. KASTENMEIER. Thank you, Mr. Howard.

As a matter of fact, you were very, very brief and concise in your statement.

I take it none of your membership directly participates in copyright or copyright payment, but possibly some of Mr. Migden's people would- although, for the most part, their work is work for hire in terms of creative work, in terms of ownership of a copyright and the work of the film of itself; is that not correct?

Mr. Howard. This is partially true, except we do have a clause in many of the contracts that is called a supplemental market clause, by which certain payments for the reuse or the special use of a film would be paid into the workers' health and welfare pension fund. So, in effect, there is something in copyright that would help the people.

Mr. KASTENMEIER. In a nut shell, you are saying that the health of your industry very much reflects on the extent the employment and welfare, generally, of the 60,000 people employed in the industry that you represent; is that not correct

Mr. HOWARD. Yes; and the added product is bound to help us.

Mr. KASTENMEIER. Do any of your membership work for any television industry or the cable television?

Mr. HOWARD. A number of our members work in the television industry, as such, for the networks and independent stations.

None of our guild or craft members are involved in the cable industry; possibly some technicians in other unions may be in parts production.

Mr. KASTENMEIER. Would they agree with you as well ?
Mr. HOWARD. I feel they would, sir.
Mr. KASTENMEIER. I yield to the gentleman from Massachusetts.
Mr. DRINAN. Thank you very much, Mr. Chairman.

And Mr. Howard, pardon my ignorance, but would you explain to me the reference to the so-called Gurney schedule, on page 4.

Mr. HOWARD. Mr. Drinan, that information was furnished to me by the attorney for the Hollywood Film Council, and I believe Mr. Valenti could explain that much better than I could.

Mr. DRINAN. All right.

Now, you say that in general-I guess completely, you are behind what Mr. Valenti says. Then on page 5, you say, "We much prefer Chairman Kastenmeier's original proposal, rather than having the Royalty Tribunal.” But Mr. Valenti, on page 32, seems to say that the Royalty Tribunal is almost necessary in view of the situation.

And when you say, “we much prefer," does that include Mr. Valenti and the industry in general?

Mr. Howard. Basically—I cannot speak for Mr. Valenti, but as far as the Film Council, yes, it does.

Mr. DRINAN. In other words, you would much prefer to have the law of the marketplace and not have a Royalty Tribunal to set fees for cable.

Mr. HOWARD. Primarily, we would not want to see cable go scotfree without some sort of set copyright fee on it. Which one would be the best, I am not sure.

Mr. DRINAX. Thank you very much.

Mr. KASTENMEIER. The chairman observes that the so-called Gurney schedule refers to the schedule, page 16, 111(c), subsection 2(b), presently in the bill; that half, as you point out, of the original schedule, appears to be the amendment of Senator Gurney.

The gentleman from Illinois, Mr. Railsback.

Mr. RAILSBACK. Let me ask you a question that, I believe, was raised yesterday.

How do you respond to the argument that the network news or the television broadcasters take into account in their advertising expanded markets by reason of cable?

Mr. HOWARD. It is pretty hard for me to explain; in fact, I am not sure I understand the question completely. ...

in
We are in the field of cable television, primarily, are we not??.?
Mr. RAILSBACK. Primarily.
Let me just elaborate a little.

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