I, perhaps, should have asked Mr. Evans. Is it my recollection that CBS was one of the parties that initially did not agree? One of your constituent members?

Mr. SUMMERS. Yes; two members of CBS were at that time members of the board, and they abstained from voting on this matter.

Mr. KASTENMEIER. It has been represented that the bill more or less conforms to the Consensus Agreement. But from your testimony, and from other testimony, the Consensus Agreement provided that ČATV systems with fewer than 3,500 subscribers would be exempt.

But that, of course, is not in this bill. How did that come about? Mr. SUMMERS. I just assume that one of the inputs at OTP by the cable people was they wanted some kind of exemption for their smaller systems. I assume that OTP felt that 3,500 was a reasonable figure, and it was included in the Consensus. And, of course, as I said, the parties did not have a chance to revise or qualify their acceptance, and so it is part of the Consensus and we do support that. We did support it in the hearings before Senator McClellan, but I must say that we support that 3,500 exemption as a package, as part of the total Consensus. We do not support it broken out as a separate provision.

Mr. KASTENMEIER. In other words, you are saying it was legislatively renegotiated, and that dropped out, as well as certain other things, that your side of the table had wanted?

Mr. SUMMERS. That is right. And something that I think Mr. Valenti overlooked this morning when you asked him what provisions of the Consensus are not included in the legislation, a very important one to broadcasters is what we call the trigger provision, which is an agreement by all parties that the copyright legislation would provide a compulsory license which would cover only those signals authorized by the FCC in their 1972 package of cable rules.

Any additional signals they might authorize at a later date would be subject to full copyright liability.

Mr. KASTEN MEIER. On page 3 you indicate, "At the present time the inequities are imbalanced in favor of CATV" referring, presumably, to the rules. And you go on to say, further, that "Indeed, the FCC made it clear that it would have to reconsider these aspects of the rules favorable to CATV if copyright legislation did not materialize." Is it your understanding, or your observation, the Federal Communications Commission is still in the same stance? That is to say, it might be disposed to reconsider both those aspects?

Mr. SUMMERS. I would certainly hope so. We have a petition before the FCC right now, a petition for rule making, in which we have reminded them-and this was not only one pronouncement, they made this pronouncement on three or four different occasions-reminding them that this was a balancing of the equities.

The need for copyright legislation, along the lines of the Consensus Agreement, was part of the overall package and they had promised, if copyright legislation of this nature did not materialize, they would have to go back to the so-called "distant signal" rules and the other aspects of the rules that were favorable to cable, and reconsider them. Mr. KASTENMEIER. One other point, and that is, in the bill and in the Consensus Agreement, a provision that broadcasters would have recourse to infringement suits along with the originating companies, who license the broadcasters.

What is your analysis of the law-or of your licensing agreements which would necessitate that particular provision in this bill?

Mr. SUMMERS. I personally cannot say I am familiar with the agreement or what they provide between the stations, so to speak, and the copyright proprietor, but I do know there is a great need in our industry for some quick way to remedy violations of the cable rules by cable television systems.

There is a provision in the Communications act for a cease and desist procedure, and show cause orders, but that is a very cumbersome procedure and usually a station that petitions the Commission to issue such proceedings is going to have to wait a year or more before anything happens.

So, I feel it is very important that the stations have a right, in purchasing programing, to remedy infringements of those rights directly with the courts.

Mr. KASTENMEIER. I would like to yield to the gentleman from New York, Mr. Pattison.

Mr. PATTISON. Just one question. On the distant signal importations, the FCC rules now provide for what in terms of importation of distant signals? I know, generally, what they provide, but is there a number?

Mr. SUMMERS. Yes. Let us talk, first, about the cable system that is located outside any television market. That is, a system that is beyond 35 miles of any television station. There are no restrictions on them. They can carry as many distant signals as they can physically bring in.

Mr. PATTISON. They can microwave them?

Mr. SUMMERS. Yes. They have some "must carry" provisions-there are certain stations they have to carry. In the top 50 markets cable systems are permitted to carry three network stations-and first they have to draw locally, obviously-and three independent stations.

And, in addition, they can carry two independent stations, but if in fulfilling their quota of three independent stations they have to bring in any independent stations to make that third independent station, then those they bring in count against that additional two.

You can always get two independents you do not have, but when you have to bring some in to make your quota of three and three, then those you bring in count against those two additional.

It is a little complex. In the second 50 markets, it is three network, two independents. Again, you are allowed two additional independents but if you bring in an independent to make your quota of two independents, it counts against the two additional that you are always entitled to.

In markets over 100, systems are entitled to three network and one independent.

Mr. PATTISON. If we should pass this bill, and then the FCC should change its rules to provide for two additional independents, or something like that, there is nothing in our bill that would-the compulsory license would still apply as far as our bill is concerned?

Mr. SUMMERS. As far as your bill is concerned, it is open-ended. And, if the Commission, after enactment of this bill, allowed additional signals, distant signals, they would automatically come within the compulsory license. That is contrary to the Consensus Agreement. That is something we are concerned about.

Mr. PATTISON. How would you resolve that? We could not very well resolve it in our bill, could we?

Mr. SUMMERS. I would think so. You could simply take the provision of the Consensus Agreement that says the compulsory license is limited to the signals that are authorized by the FCC in 1972, and simply insert that in your bill.

It would be clear, then, that any additional distant signals that are authorized would be subject to full copyright liability. That is what the cable people agreed to.

Mr. PATTISON. I suppose we could do that, but we would end up locking the FCC into a position.

Mr. SUMMERS. It would not really be of any concern to the FCC. If they wanted to authorize additional distant signals, they could go ahead and do it, and then the cable people, in terms of those additional distant signals, would simply negotiate in the marketplace with the cable proprietors just like broadcast stations do, for the rightwhatever it costs to carry those additional signals.

We do this with the music people all the time.

Mr. PATTISON. It is my understanding that-the question I asked earlier today, that the broadcasters are allowed or authorized to bring suit, even though they are not the copyright holder?

Mr. SUMMERS. If it is provided in the contract.

Mr. PATTISON. I think that that is in the statute.

Mr. KASTENMEIER. In the proposed bill. That is what I was asking about.

Mr. SUMMERS. Right. We favor that provision.

Mr. PATTISON. I know you do, but could you give me some rationale for that? In other words, normally the only person who could bring an infringement suit is the owner of the copyright.

In this particular case, the broadcaster would be bringing an infringement suit, even though the copyright owner has no interest in it. The cable people are concerned about that.

Mr. SUMMERS. They are concerned about it, but they agreed to it in the Consensus and agreed to support legislation that provided just as this bill does.

I think you touched upon a very important item, just there, when you said the copyright proprietor might not be interested. That is very true, he might not, because to him one particular market where a cable operator is infringing, violating the rules, may not be important to him. But, believe me, it is very important to the station in that market that pays a lot of money to get a movie, or to get a series, and suddenly finds he is not getting the protection that the FCC rules permit him. I think it is extremely important that he have the right to enforce that right, especially where the proprietor may not believe it worthwhile to go to court to protect that copyright.

Mr. PATTISON. No more questions.

Mr. KASTEN MEIER. I just have one or two questions.

We have been talking about distant signals, and the concern of broadcasters and maybe copyright holders, particularly as to movies and series, so we have been discussing that.

How about sporting events? That is, professional sports? We are going to have some testimony on that, but is this not an equally serious area?

And, are the parties, more or less, in the same position as, let us say, the networks or independent stations are with respect to motion picture associations, or the Association of Motion Pictures and Television Producers?

That is to say, are the baseball clubs copyright holders of the games shown, or retransmitted, or shown later, or whatever, in terms of these various markets?

What I am asking is, are the legal roles played by professional sports teams in providing programs for broadcasters the same as motion picture producers?

Mr. SUMMERS. No, I do not think so, Mr. Chairman. I think they have a much more fragile commodity that they own. Unlike motion pictures and series, sports are sort of a one-time, instantaneous program. Therefore, I think you will find we agree with probably most of what the sports people will testify to today.

We believe that sports are in a different category and deserve protection, outside the compulsory license; that there should be full copyright liability for sports because of the very fragile, short nature of the life of the program that is being transmitted.

Mr. KASTEN MEIER. One of my questions is who, in fact, is the copyright holder? Who is the creator, author, of this work? In the case of a professional baseball game, transmitted over, let us say, a network instantaneously, whether it is ephemerally recorded or not?

Mr. SUMMERS. Well, I guess the club, or the league, is the copyright holder, but the station has purchased the right to broadcast that game, usually at a very large sum of money.

If those games-the interest in those games-is diluted in the local market by the importation of other games of the same sport from quite a great distance away, then that affects the value of the rights that the local station has purchased.

And, therefore, we are very much concerned about this.

Mr. KASTEN MEIER. I appreciate that, Mr. Summers.

Thank you, very much, for your testimony today.

Mr. SUMMERS. Thank you, Mr. Chairman.

Mr. KASTEN MEIER. We would like to welcome the Commissioner of organized Baseball, Bowie Kuhn, waiting patiently all day.

[The prepared statement of Mr. Kuhn follows, as well as the statement of the National Basketball Association:]

STATEMENT OF BOWIE KUHN, COMMISSIONER OF BASEBALL

INTRODUCTION

I appear here today on behalf of Professional Baseball, including 23 Major League teams and more than 110 Minor League Teams. My remarks are addressed to H.R. 2223-the Copyright Revision Bill-as it applies to professional and amateur sports, commercial broadcasters, and cable television operators.

The central theme of my statement is the necessity for action-either as a result of Congressional legislation or Federal Communications Commission ("FCC") rulemaking-limiting the wholesale, unrestricted and unconsented cable importation of distant signal sports programming into Major League markets, Minor League cities, and team network viewing areas. Our great concern is that wholesale cable importation of distant sports signals under the compulsory license provisions of this Bill can lead to less, rather than more, sports programming for the American public.

Section 111 (c) of H.R. 2223 would permit any broadcast signal to be retransmitted by means of a cable television system, where permissible under the

FCC's rules, as long as the CATV user paid a copyright fee to the program originator. Thus, the issue of concern to professional sports centers on whether, and to what extent, cable TV operators should have a compulsory license to pick up and transmit at will, across the country, broadcast signals of sporting events. Cable has asked for the right to transmit sports signals without the permission, or even directly contrary to the interests, of the sports teams and broadcasters involved. This, of course, is a right not possessed by over-the-air broadcasters. Currently, there is an FCC rule-making proceeding in progress which is reviewing this area. However, the Commission's proposed distant signal/sports rule is directed to only one of the issues associated with distant signal sports programming-same day, same game protection of sports teams' home games. It totally fails to deal with the paramount aspect of the distant signal/sports problemthe unfair competitive position which has been forced upon television stations and suppliers of copyrighted sports programming that are subjected to cable's importation of distant sports signals without consent of the broadcasters or the sports entrepreneurs.

LARGE NUMBERS OF BASEBALL GAMES ARE TELECAST EACH YEAR ON
BROADCAST TELEVISION

Last year, more than 190 television stations carried more than 1,100 games to fans across the country. In addition to the network broadcasts, which include such feature events as the Monday Night Games and post-season events, each club provides local broadcasts of its games over team network stations. The total number of games telecast to the public over team networks in each of the last five years is set forth in Exhibit A.

CABLE THREATENS TO DISRUPT THE CURRENT PATTERN AND FREQUENCY OF TELEVISED BASEBALL

Historically, Baseball has sold television rights at two levels-locally and nationally. The national rights are sold through the Commissioner of Baseball and include the World Series, All-Star Game, League Championship Series and Saturday and Monday Games of the Week. Baseball has no objection at all to CATV systems carrying these games throughout the country.

Baseball's problem develops at the local level where each club sells varying numbers of its games for exclusive regional telecasts.

Promiscuous importation into a team's home territory of distant sports signals by cable television permitted by Section 111-whether a team is playing at home, on the road or, indeed, not even playing on that date-foreshadows a grave disruption of the present system of Major League Baseball. The most immediate impact is upon the marketability of a baseball's television package at a time when there is no shortage of televised baseball games.

The FCC's general distant signal carriage rules, 47 C.F.R. § 76.51, et seq., Subpart D, offer totally inadequate protection to a club experiencing an oversaturated market in which to promote its events.

One development has recently come to light, which provides an actual illustration of the disruption, provoked by unrestrained distant signal importation, on the sale by Baseball clubs of the rights to their property. In 1975 the Boston Red Sox consummated an agreement with WSBK-TV in Boston, Massachusetts for the sale of their television rights. WSBK-TV, a UHF station, made a considerable expenditure for what it and the Red Sox thought was the purchase of exclusive television rights to Baseball in the Boston market. The station planned to feature the Red Sox games in an attempt to improve its viewer ratings. Both the station and the Red Sox were dismayed to discover that the viability of their television package was undercut by eleven cable systems within 35 miles of Boston authorized to carry WPIX-TV, the New York Yankees station, and WOR-TV, the New York Mets station. See Exhibit B. WSBK-TV and the Red Sox will be forced to bear the unfair competition in their home territory of approximately 200 Mets and Yankee games a season, over Boston cable systems that carry the New York games without consent and without bearing the expense of compensation.

Indeed, under the present provisions of Section 111, when the Yankees are playing at Boston, the Boston cable systems will import the Yankee television signals from New York in direct competition with the gate for the Red SoxYankee game.

A study Baseball conducted, examining all new cable authorizations granted between March 31, 1972, and March 31, 1973, reflected the sustained and pervasive