Enter suddenly, this Washington cable television system. It has no concern for the viability of the Capitals franchise; it merely wants to get paying subscribers on line. Importing the games of the Flyers, and the Rangers and the Bruins, will devastate the Caps' ability to bring people in the gate. Who, for instance, is going to pay to watch the Caps play the Flyers at the Capital Center when that very game is being imported right back from Philadelphia? Who is going to pay to see the Caps and the Kansas City Scouts play, when on the cable the distant signal of the Flyers and Buffalo Sabres is being imported? But the home gate is not the only area of injury. The Caps have a television package with Channel 9 for the telecast of a number of away games. WTOP-TV and the advertisers with whom it deals have purchased hockey exclusively in the Washington market. Suddenly, they no longer have it. What will happen to the television package of the Capitals when it is subjected to a constant barrage of Flyers, Rangers, and Bruins games? We respectfully urge this subcommittee to reinstitute the type of controlled protection which was a part of those bills originally introduced in the 93d Congress. I would like to move into two other areas of concern to the National Hockey League on a more detailed level in dealing with the bill. We urge Congress to retain the provisions of section 101 which allows a work to be fixed if a fixation is being made simultaneously with the transmission of the event. This imposes a burden on the property right holder to make certain there is both a transmission and a fixation. Absent either of the prerequisites, copyright does not attach to the product. We understand our burdens, and we are willing to live with them. On a more substantive question, however, we urge that the fee schedule embodied in section 111 be returned to its original form and there be periodic review powers vested. Furthermore, we urge statutory, or report, language recognizing the peculiar problems of professional sports vis-a-vis the compulsory license. For instance, the Royalty Tribunal is empowered under the legislation to change the royalty rate on the revenue basis on which the royalty fee payment by CATV shall be assessed. We sincerely feel that live sports gates and telecasting revenues will be more seriously impaired than other copyrighted efforts. Moreover, this will become a further issue in dealing with distribution of any compulsory licensing fees. Both the Royalty Tribunal and the Copyright Office must be statutorily aware of the unique problems of the organized professional team sports industry as a major component of communications. Furthermore, section 111 (d) (3) (A) allows some agreement among the copyright claimants. This language is identical to that of section 116(c)(1) and appears to have had obviously in mind music licensing organizations. Nevertheless, given the highly unusual nature of sports entities, we urge language specifically allowing organized professional team sports to develop policies relating to the acquisition of all of these fees, their collection, and distribution. For instance, if in my Washington hypothetical, there was intense cable saturation in this market, the National Hockey League, in its own wisdom, might choose to funnel fees gathered throughout the league here to offset this very specific negative impact. Obviously, moreover, it could also be used to aid minor league teams suffering as a result of cable importation. In any case, broad, or broader, statutory language allowing for the implementation of policies dealing with the entire cable question is appropriate. I appreciate this opportunity to address you this afternoon on questions which are of considerable significance to organized professional team sports. [The prepared statement of Don V. Ruck follows:] STATEMENT OF DON V. RUCK, VICE PRESIDENT, NATIONAL HOCKEY LEAGUE Thank you for the opportunity of appearing here this morning. My name is Don V. Ruck, and I am vice president of the National Hockey League and president of its marketing and television subsidiary, National Hockey League Services, Inc. The NHL urges this subcommittee to stop, for a moment, in its consideration of a highly technical and detailed piece of legislation to consider the unusual problem of professional sports. The legislation before you places us in a position of competing with ourselves, wherein an entity-cable television-never having bargained with property right holders in the marketplace can go out, “cherrypick" sporting events to best suit its own needs, and then bring in those events without regard to the consequences of that action. This potentially threatens the very foundation of professional sports. Professional sports is unlike any other entertainment medium. What Judge Grim said in the famous 1953 decision in United States v. National Football League (116 F. Supp. 319 (E.D. Pa. 1953)) about football is still true of all of professional sports: "Like other professional sports which are organized on a league basis, it has problems which no other business has. The ordinary business makes every effort to sell as much of its product or services as it can. In the course of doing this it may and often does put many of its competitiors out of business. The ordinary businessman is not troubled by the knowledge that he is doing so well that his competitors are being driven out of business. "Professional teams in a league, however, must not compete too well with each other in a business way. On the playing field, of course, they must compete as hard as they can all the time. But it is not necessary and indeed it is unwise for all the teams to compete as hard as they can against each other in a business way. If all the teams should compete as hard as they can in a business way, the stronger teams would be likely to drive the weaker teams into financial failure. If this should happen, not only would the weaker teams fail, but eventually the whole league, both the weaker and the stronger teams, would fail, because without a league no team can operate profitably." Id at 323. And if you are talking about the viability of teams in a league, you are talking, bottom-line, about two sources of income: the home gate and the value of the television package (both local and network). The impact of what you are considering today threatens the continued viability of both of these sources. I think it is a given, therefore, that organized professional team sports are different than other entertainment entities. We would suggest to you that protection of the creators of these products indeed must be fashioned differently than the protection of the creators of most entertainment. Contrast for the moment the two following situations dealing with a hypothetical Washington, D.C. cable television system which imports the distant signal of a Philadelphia television station. This station carries, among other programming, the syndicated series of "Bonanza" and the television package of the Philadelphia Flyers hockey team, Stanley Cup Champions of the last two years. There is no doubt that the importation of the Bonanza series into Washington will undermine the potential sale of that program to a Washington television station. Therefore, under this proposed legislation and under the regulations of the Federal Communications Commission, the property right holder in Bonanza will either receive (ultimately) dollar compensation or his potential sale in Washington will be protected. The Philadelphia Flyers, however, have chosen not to attempt to sell their games in Washington. There is the implicit recognition that there may not be enough of a television market for it, but above and beyond that, the viability of the Washington Capitals hockey team will be affected if a Flyer television sale is made here. Enter suddenly, however, this Washington cable television system. It has no concern for the viability of the Capitals franchise; it merely wants to get paying subscribers on line. Importing the games of the Flyers (and the Rangers and the Bruins) will devastate the Caps ability to bring people in the gate. Who, for instance is going to pay to watch the Caps play the Flyers at the Capital Centre when that very game is being imported right back from Philadelphia? Who is going to pay to see the Caps and the Kansas City Scouts play, when on the cable the distant signal of the Flyers and Buffalo Sabres is being imported? But the home gate is not the only area of injury. The Caps have a television package with WTOP-TV for the telecast of a number of away games. WTOP-TV and the advertisers with whom it deals have purchased hockey exclusivity in the Washington market. Suddenly, they no longer have it. What will happen to the television package of the Capitals when it is subjected to a constant barrage of Flyers, Rangers and Bruins games? We respectfully urge this subcommittee to reinstitute the type of protection which was a part of those bills originally introduced in the 93d Congress. I would like to move into two other areas of concern to professional sports on a more detailed level in dealing with the bill. We urge Congress to retain the provisions of § 101 which allows a work to be "fixed" if a fixation is being made simultaneously with the transmission of the event. This imposes a burden on the property rightholder to make certain there is both a transmission and a fixation. Absent either of the prerequisites, copyright does not attach to the product. We understand our burdens and we are willing to live with them. On a more substantive question, however, we urge that the fee schedule embodied in § 111 be returned to its original form and that there be periodic review powers vested. Furthermore, we urge statutory (or report) language recognizing the peculiar problems of professional sports vis-a-vis the compulsory license. For instance, the Royalty Tribunal is empowered under the legislation to change the royalty rate on the revenue basis on which the royalty fee shall be assessed. We sincerely feel that live sports gates and telecasting revenues will be more seriously impaired than other copyrighted efforts. Moreover, this will become a further issue in dealing with distribution of any compulsory licensing fees. Both the Royalty Tribunal and the copyright office must be statutorily aware of the unique problems of the organized professional team sports industry as a major component of communications. Furthermore, § 111(d) (3) (A) says: “*** Notwithstanding any provisions of the antitrust laws ***, for purposes of this clause, any claimants may agree among themselves as to the proportionate division of compulsory licensing fees among them, may lump their claims together and file them jointly or as a single claim, or may designate a common agent to receive payment on their behalf." (The language is identical to that of § 116 (c) (1) and appears to have had obviously in mind, music licensing organizations.) Nevertheless, given the highly unusual nature of sports entities, we urge language specifically allowing organized professional team sports to develop policies relating to the acquisition of all of these fees, their collection, and distribution. For instance, if in my Washington hypothetical, there was intense cable saturation in this market, the National Hockey League, in its own wisdom, might choose to funnel fees gathered throughout the league here to offset this very specific negative impact. Obviously, moreover, it could also be used to aid minor league teams suffering as a result of cable importation. In any case, broad statutory language allowing for the implementation of policies dealing with the entire cable question is appropriate. I appreciate the opportunity to address you this morning on questions which are of considerable significance to organized professional team sports. Mr. HOCHBERG. If I may, sir, I would like to address some of the questions that have been addressed to Commissioner Kuhn by the members of this subcommittee. Mr. KASTENMEIER. You may do so, but in view of the hour please be concise. Mr. HOCHBERG. Yes, sir, Mr. Danielson has raised the point to Commissioner Kuhn as to whether there was ever any protection indicated for professional sports in a copyright sense by the Supreme Court. I would suggest to Mr. Danielson that there is language in the Teleprompter case which talks about protection. It distinguishes, sir, the normal television entertainment distribution pattern and talks about protection for live audiences, or protection for payments from live audiences. I would be very happy to submit a letter to the committee on that regard. On a number of other questions raised by Mr. Danielson, indeed, live telecast of professional sporting events are not copyrightable in the view of this counsel. Nevertheless, the U.S. District Court in the Western District of Pennsylvania in 1938 recognized the concept of unfair competition where there was a radio pickup of a live broadcast of a game in the Pittsburgh Athletic Club case. Finally, I think that perhaps on that one matter, sir, it is noteworthy that we could probably resolve all of Mr. Danielson's threshold copyright questions by merely delaying the telecast of a game for a minute or so. It would no longer, the telecast would no longer be contemporaneous with the play of the game but it would satisfy any threshold copyright questions. Mr. KASTEN MEIER. Thank you. Incidentally, let me compliment you for a very concise, clear state ment. Mr. Danielson. Mr. DANIELSON. I will be equally brief. Thank you for your comments. You have at least faced the issue directly. The fixation and then let's say 1- or 5- or 10-minute delay in transmission, I seriously doubt would suffice. However, you have, I believe, correctly faced the issue here. You talked about your concern on page 1 competing with yourself. The quotation from that 1953 definition on more than one place refers to competition. On page 3 you mention Philadelphia Flyers. In effect, that they do not want to be competing with the Washington Capitals in the hockey game, for example. On page 4 you talk about your need for protection. You are talking about protection from competition which erodes your market. I think you have a complaint. I think you have a problem. My only difference, probably, with you is that this may be the wrong forum. I think probably the Federal Communications Commission or some law regulating interstate commerce could provide that you cannot transmit these signals in a competitive manner. But I do not think that copyright is the correct forum here. That is my only point. I think you have got a problem. I think you just went to the wrong doctor. Thank you very much. Mr. KASTENMEIER. Any questions, Mr. Badillo? Mr. BADILLO. No questions. Mr. KASTEN MEIER. Mr. Pattison? Mr. PATTISON. No questions. Mr. KASTENMEIER. There is a vote and we will have to again recess for that. If you propose to give us a further statement, either in terms. of the Teleprompter case or anything else which expands on your comments that you made, we would be pleased to have them. Mr. HOCHBERG. Thank you, sir. Hon. ROBERT KASTEN MEIER, O'CONNOR AND HANNAN, Washington, D.C., March 26, 1976. Chairman, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, Rayburn House Office Building, Washington, D.C. DEAR CHAIRMAN KASTEN MEIER: In a colloquy with Representative Danielson on June 12, 1975, while testifying on H.R. 2223, I made the following statement: Mr. Danielson has raised the point as to whether there was ever any protection indicated for professional sports in a copyright sense by the Supreme Court. I would suggest to Mr. Danielson that there is language in the Teleprompter case which talks about protection. It distinguishes, sir, the normal television entertainment distribution pattern and talks about protection for live audiences, or protection for payments from live audiences. I would be very happy to submit a letter to the Committee in that regard. Transcript at 210. You invited a written statement to amplify on that remark. Transcript at 212. In the case of TelePrompter Corp. v. Columbia Broadcasting System, Inc. 415 U.S. 394, 94 S. Ct. 1129 (1974), the Supreme Court in part refused to accept the argument of the copyright holder that liability should attach because of the deleterious impact of . . . [cable television] retransmission upon the economics and market structure of copyright licensing. Id. at 410, 94 S. Ct. at 1139. The Court said that cable television systems merely extend the viewability of a broadcast program and cause no interference with the copyright holders' "means of extracting recompense for their creativity or labor." Id. at 412, 94 S. Ct. at 1140. However, the Court distinguished "ordinary" television programers from those who receive direct compensation, such as propagators of other copyrighted material, such as those who sell books, perform live dramatic productions, or project motion pictures to live audiences. (Emphasis added.) Id. at 411, 94 S. Ct. at 1139. Given this language, therefore, consider the following situation: A live performance from the Kennedy Center in Washington is telecast by a Philadelphia television station but is not televised in the Washington area. However, a Washington area cable system imports the distant Philadelphia signal, thereby doing away with a considerable part of the incentive of patrons to attend the live performance. Or, a movie distributor sells the right to telecast a movie in Philadel phia, while it is still being shown in Washington-area theaters. A Washingtonarea cable system imports the distant Philadelphia signal, thereby destroying the incentive of patrons to attend the theater showing of the motion picture. In both of these cases-where the copyright holder still depends on live audience compensation-an importation of the distant signal negatively affects his property rights in a manner recognized by the TelePrompter doctrine. So too with a sporting event. When the Washington Capitals entertain the Philadelphia Flyers at the Capital Centre and the game is televised in Philadelphia (but not in Washington), an importation of that distant Philadelphia television signal affects the ability of the Washington team to draw at the gate. In a very similar fashion, the importation of a telecast between two excellent teams when the Capitals are playing a poor drawing team or even when they are not playing at all affects the ability of the Capitals to attract live patrons through the gates-far and away the most significant source of sports revenue. Sports has long made the argument that a league can only be as strong as its weakest member; for weak teams to suffer importation of their own games and outstanding telecasts of other teams in the very same league will merely be the first step in eroding the financial base of the various teams in the league. I appreciate the opportunity to submit this letter for the record. Sincerely, PHILIP R. HOCHBERG. Mr. KASTENMEIER. Is Captain Coppedge in the audience? Mr. KASTEN MEIER. Do you still want to bear with us, Captain? |