intrusion by cable of distant sports signals directly into the heart of Major League territories. It noted that, of the 304 cable systems authorized in that period to operate in Major League home territories, 171-over 55 percent-were granted permission to import the distant signals of television stations broadcasting the games of a competing baseball club. We have further confirmed the serious harm cable poses for broadcasters and Major League clubs. Factbook Research, Inc. of Washington, D.C. was asked to tabulate CATV systems carrying eleven flagship stations which originate baseball games. The stations selected were chosen to achieve a broad regional representation. The stations were: KTTV, Los Angeles, Cal.; KBHK-TV, San Francisco, Cal.; WGN-TV, Chicago, Ill.; WBZ-TV,' Boston, Mass.; WTCB-TV, Minneapolis, Minn.; KBMA-TV, Kansas City, Mo.; WOR-TV and WPIX, New York, N.Y.; WPHL-TV, Philadelphia, Pa.; KDKA-TV, Pittsburgh, Pa.; KXAS-TV, Fort Worth-Dallas, Tex. This recent study shows that more than 13,000 cable systems currently are picking up the baseball signals of the thirteen originating stations. These systems serve more than 5.8 million subscribers. However, the most significant statistic is that 270 cable systems distribute competing distant signals of baseball games within 75 miles of Major League cities.3 1 Includes only systems carrying distant signals. This excludes the situation where the cable system carrying another team's games, the other team's originating broadcast television station and the home team's over-the-air station are all within the same market. This study demonstrates the very significant present distribution of distant sports signals. When combined with the earlier study of new cable authorizations and even a conservative projection of the number of systems authorized to operate which will start up in the not-too-distant future, it provides a solid basis for our concern with the unfair competition which cable poses for broadcasters and sports entrepreneurs. Thus, in the absence of any more protection than that offered by the FCC's general distant proposed signal carriage rules, a massive invasion of Major League home territories by cable is virtually inevitable. Most Major League clubs are located in or near cities which are in the "top 50" television markets. Under the FCC rules, in addition to the signals of the three networks, cable systems in the "top 50" markets may carry signals from as many as three independent broadcast television stations. Cable systems in "second top 50" markets 1 As of the 1975 baseball season WSBK-TV will be carrying Boston's games. 2 This station's call letters were WBAP. 3 This figure of 270 systems is composed only of those signals that could truly be classifed as distant. Therefore, any cable system, within 75 miles of a home team broadenst television station, carrying the signal of another team's over-the-air station that itself is within 75 miles of the home team station, is not included in this figure. For example, a cable system within 75 miles of KBHK-TV, the San Francisco Giants' station, carrying the nearby Oakland A's team station, KPIX-TV, is not included in the figure since, for the purpose of this study, it is not a distant signal. 57-786-76-pt. 2- 8 are permitted to carry two independents. Many of the most popular independent stations selected for carriage are flagship stations for team networks.* The influx into a given home territory of a multitude of cable-transmitted games inevitably will decrease the value of all games. Consequently, teams can expect to receive less money for the sale of their television rights, while simultaneously experiencing a drop-off in home game attendance. Such a phenomenon would be in part attributable to the fact that sports events are unique among television fare. Once a game has been played, its value is, for all intents and purposes, spent. Thus, if a baseball team expects any returns, they must be generated at the time the game is actually played or initially telecast. When a home team is playing on the road and telecasting its game back to its home city, and a competing game is brought in by cable as a distant signal, the value of the home team's telecast is lessened. Baseball simply cannot afford this arbitrary diminution of its revenues. Our most recent data indicate that one-fourth of all team income is from broadcast revenues. When one also realizes that over one-half of the major league teams lost money last year, it becomes apparent that any severe diminution of broadcast revenues can be devastating. Beyond the immediate impact of cable on television revenues, there is the added factor that in many markets sports programs may be reaching a saturation point. Indeed, such a viewer-saturation effect can have an impact on home game attendance, since the increased availability of competing games by cable could satisfy a fan's desire to attend the live event. Further, cable's importation of distant signals threatens Baseball's minor league organizations which provide live professional competition in more than 100 cities across the nation. Almost 11 million fans enjoyed the 6,791 minor league baseball games played last year." Protection of minor league gate attendance is essential to permit the continuation of this important local community activity. Also, the minor leagues are the central source of young talent for the major leagues; the major league teams spend more than $25 million per year in player development. Without a viable minor league system, the majors could expect to suffer from severe diminution of player quality, fan apathy, and, ultimately, a severe dilution of the skill level of major league teams. The minors, which are already subsidized in large part by the major leagues, are likely to suffer even greater home gate losses if forced to compete with cable-imported major league games. We are fearful that the minor leagues cannot survive without some measure of protection from unconsented cable importation of distant signals. Significantly, home gate protection for minor league clubs within a limited geographical area is totally consistent with established Congressional policies. Further, most of the major league teams televise their games widely over team networks. Just as the home gate and the value of televised games in a team's home territory would be reduced in value by a proliferation of cable distant signals of competing games, so also would the value of the rights of the stations which widely carry the game on the team networks. Weaker, less attractive teams would bear a disproportionate share of the loss, compounding the problems associated with their already uncertain financial outlook. THE PROPOSED SOLUTION Baseball believes that a satisfactory resolution of the problems fomented by distant signal importation can most appropriately be accomplished through the Copyright Revision Bill. The power of a program producer to exercise control over his property is a logical component of any copyright scheme. Monetary compensation alone, as is provided by the compulsory licensing portion of Section 111 4 See Exhibit C. 5 In 1969 more than 25 percent of Baseball's total operating revenues were derived from the sale of broadcast rights. In re Amendment of Part 76 of the Commission's Rules and Regulations Relative to Cable Television and the Carriage of Sports Programs on Cable Television Systems (hereinafter "Amendment of Part 76"), Docket No. 19417, Comments by the Commissioner of Baseball at 14 (1972). Amendment of Sections 73.643(b) (2) and 74.1121(a)(2) of the Commission's Rules and Regulations pertaining to the showing of sports events on over-the-air subscription television or by cable casting, First Report and Order, Docket Nos. 19554, 18893, F.C.C. 75-369, at 16 (released April 4, 1975) (Robinson dissenting). The 11 million figure includes attendance in the Mexican League; the total of 6,791 games does not include those played in the Mexican League. Cf. United States v. National Football League, 116 F. Supp. 319, 323–25 (E.D. Pa. 1953). of the Copyright Revision Bill, is not a sufficient solution to this problem as far as Professional Baseball and other sports are concerned. It is highly unlikely that any system of copyright royalties could reimburse the public, the broadcasting television industry or Professional Baseball for their collective losses. Aside from the immediate impact of distant signals on over-the-air television and Baseball, ultimately, the public will suffer the most. The proposed law could force sports to cut back substantially on the number of games available over the air and require that sports look to alternative forms of distributing their games to the public. It should be perfectly apparent that Baseball strongly prefers the present system which permits over-the-air telecasts of so many games. For the reasons set out above, compulsory licensing as proposed in Section 111, without the imposition of restrictions such as those proposed by Baseballwhether as a result of Congressional or FCC action-will seriously impair the vitality of amateur and professional sports and their relations with over-the-air broadcasters. While the factual situation we discuss pertains specifically to major league baseball clubs, the general picture presented applies to all professional sports leagues and to amateur sports as well. A persuasive case can be made in support of the position Baseball advanced in the earlier Senate hearings on this matter-that the copyright owner of sports programs should retain the same full control over the distribution of his product by cable television that he has in the instance of over-the-air television. However, in a spirit of compromise, and in an attempt to assist in a prompt resolution of this matter, we have proposed a significant limitation on sports' control of their product vis-a-vis cable—a proposal which will still recognize the vital interests of telecasters and sports program originators. We believe that this compromise proposal can furnish the basis for a prompt and equitable resolution of this issue. The Baseball compromise is tailored to the legitimate and essential interests of sports, cable, and broadcasters. It has five elements: First, there should be a 75-mile zone around major league cities into which cable could not import distant signals on an unconsented basis. This area surrounding major league cities is preeminently important to professional sports. A 75-mile zone defines, at the very minimum, the drawing area for home games. The value of the telecaster's programming, of course, is dependent upon its exclusivity in the market. It is self-evident that no competing telecaster in the market has a compulsory license to bring in competing games; no cable competitor should have that power. Since the flagship station makes the major contribution to the sales value of a team's television package, it is vital that it not be subjected to devastating, uncontrolled competition from cable television. Second, we also recommend a twenty-mile zone of protection around minor league cities on the day a team is playing at home. This reflects the legitimate interests of home gate protection recognized in the Sports Broadcasting Act of 1961, exempting the pooled network broadcasts of Baseball and several other professional sports from the antitrust laws. Third, a thirty-five-mile zone of protection (or Grade A contour) should be imposed around stations on a team broadcast network on the same day that a given station is telecasting a game. This protection is essential to protect a broadcaster from a cable system's importing, on an unconsented basis, competing games which would dilute the value of the telecaster's programming. The Commission, in its recent pay cable First Report and Order, established that the development of cable services will satisfy the public interest standard only if it is done in such a fashion that programming on "conventional advertiser supported television broadcast stations" does not suffer a consequence. Fourth, all cable systems as they existed as of March 31, 1972 should be grandfathered. Cable operators were clearly warned by the Commission as of that date that their activities would be subject to the Commission's sports rule in this proceeding. Such a grandfather provision would protect well-established cable operations which serve the rural and mountainous areas of our country that require cable to provide adequate programming. Fifth, we also recommend no restrictions on cable picking up a sports program which is distributed on a nationwide basis. Thus, cable could carry the World Series, the All-Star Game, the Super Bowl, Monday Night Football, etc. The only limitation would be that cable could not carry the game into specific team Localities where network broadcasters cannot do so under relevant legislation. With the exception of the limitations listed above, cable would be free to carry distant signals in accordance with the general Commission rules. The Baseball compromise is designed to recognize the legitimate interests of all three concerned parties-cable and its subscribers, broadcasters and their viewers, and the owners of copyright sports programs and fans of major and minor league teams. It is most important to emphasize that this compromise proposal does not involve a "blackout" of sports programming. Rather, what is involved here is simply the right of a program originator to determine when and where its property is to be made available. A broadcaster has no compulsory license permitting him to import a telecast of any given sports contest into a community. Certainly, no one would call it a "blackout" because the broadcaster must negotiate in the first instance with the sports entrepreneur. There is, likewise, no "blackout” of games carried by cable. The issue is whether cable should have compulsory license as a matter of law to import distant signals over the objections of the local broadcaster and the sports entrepreneur. EXHIBIT A NUMBER OF MAJOR LEAGUE BASEBALL GAMES TELECAST ON BROADCAST TELEVISION, 1970-74 2 Includes at least 41 away games. * No breakdown of this figure into home and away portions available, however, given the 1970 and 1971 figures, the 35 total figure was probably composed of 5 home and 30 away games. 4 This team was located in Washington, D.C., during 1970 and 1971. EXHIBIT B WARNER CABLE OF MASSACHUSETTS INC.. Boston, Mass., February 26, 1975. DEAR SUBSCRIBER: Warner Cable has some exciting news for you! Effective this Spring, Warner Cable will bring you by microwave the two independent New York channels, WOR-TV, Channel 9, and WPIX-TV, Channel 11. This will mean: 44 additional full-length movies, on the average, each week! Great added sports coverage: The New York Yankees (baseball) The New York Mets (baseball) The New York Knicks (Basketball) The New York Nets (basketball) The New York Islanders (hockey) The New York Sets (World Team Tennis) 14 additional comedy series, on the average, each week. 7 additional hours of drama, on the average, each week. It's really an exciting package! And remember-these are two of the outstanding independent stations in the United States, not just more of the same network-affiliated programming. A new channel guide, for use when the New York channels become available, is enclosed for your convenience. Our scheduled effective date for these channels is mid-March, barring any technical delays. At this time, we also have to report that inflation has severely affected Warner Cable, as it has every other business. As a result of spiraling costs, it is necessary to propose rate adjustments in accordance with the rules of the Massachusetts Community Antenna Television Commission. Determinations as to our rates will be made by the Issuing Authority of each municipality we serve, following public hearings held by the Authority at a time and place to be announced at a later date. A copy of our proposed rate schedule is on the other side of this letter. I wish to assure you once again that we at Warner Cable are determined to maintain our high standards and to continue to improve our service to our subscribers. The addition of the two New York channels reflects this determination. We are confident you will be as enthusiastic about them as we are. Our best wishes for continued great viewing on Warner Cable! Sincerely yours, JOHN W. FRENNING, [From the Boston Sunday Globe, Apr. 20, 1975] SPORTS REALLY STARTING TO OVERFLOW-REASON IS CABLEVISION SporTView/JACK CRAIG It has finally happened. That mysterious medium, cablevision, has landed with a bang on local sports. Some 32,000 households in six Greater Boston cities will be able to tune in the Mets and Yankees television schedule this season, for a total of 172 games. The action results from the importation of WOR-TV and WPIX-TV in New York City. The former carries the Mets, the latter the Yankees. In addition, WOR-TV picks up the road games of the Rangers and Islanders, Knicks and Nets, probably the WTT Sets, and later in the summer preseason games of the Giants. In fact, if the New York winter teams did not bomb out of the playoffs so quickly, the sports cup would be overflowing even more. The saturation is taking place in some 9000 homes in Somerville, 6700 in Medford, 5600 in Malden, 4800 in Everett, 3000 in Chelsea and 2800 in Winthrop. Each of these cities has a cable company that is part of Warner Communications, a national corporation underwriting pickup of the New York signals at a cost of about $1000 a month. By late summer the two New York stations are expected to be part of the cable service of Colonial Cable, which operates in Revere, Woburn, Stoneham and Burlington in approximately 10,000 homes. In Fitchburg, Gardner and Leominster where Teleprompter is the parent company, the New York stations already have piped in to 8500 homes and that cable system is expected to link up shortly in Worcester. The two New York stations are naturals for cable throughout the East because of their relative closeness and the fact they are strong independents which emphasize sports. Network affiliate stations are unattractive because they offer largely duplicate programming with local stations, and this is prohibited by the Federal Communications Commission. The Red Sox and Ch. 38 have reason to be unsettled by the arrival of so many Mets and Yankees games. There are no rights fees involved to either the local or out-of-town teams or stations involved. As cable inevitably grows there will be siphoning of TV revenue that is the underpinning of sports franchises. In fact, three Sox-Yankee games at Fenway this season not on Ch. 38 will be carried to local cable hookups via WPIX-TV. Major league baseball has filed a proposal, and the NHL soon will follow, asking for a ban on importing distant signals within 75 miles of a big league team, and within 20 miles of a minor league city. Also, the incoming games would be prohibited when the local team is at home, for either a day or night game. |