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out as the sole subject of copyright that is entitled to exclusive rights. This did fall by the wayside in the Senate in 1974. It was rather vigorously debated on the floor, and was dropped completely and was not really revived in the markup earlier this month. I may be wrong, but I would suggest as a hypothesis that this may have passed as a major issue.

I think you obviously need to consider the arguments that were put forward. But I do not think that sports exclusivity is really part of the package as it now stands.

Finally, an important issue which I hope my long exegesis on this will have been made clear to you the relationship between the FCC regulations and copyright. In the absence of court decisions or legislation, and in furtherance of national communications policy from its viewpoint, which is partly that of the House and Senate Commerce Committee, the FCC has promulgated rules protecting the rights of copyright owners. We did not advocate congressional action to abrogate those rules as inconsistent with Federal copyright policy, and I do not believe this was ever really suggested, although it may have been hinted at.

We also tend to doubt whether an attack on the exclusivity rules would succeed on constitutional grounds. I think the argument could be made, but I doubt if it would succeed. However, we do very seriously question the wisdom of administrative rules giving copyright protection in cases where either the courts or Congress have chosen to withhold it. At the very least, we believe the Commission should carefully reconsider its 1972 exclusivity rules as soon as the revision bill has been enacted. In other words, we think there is some merit in the argument that cable operators make that the bill should not require them to pay for the carriage of signals which they must black out, or which they are not able to carry at all. I do think that the FCC should be abjured if possible to take another look at its rules, at the very least, in the light of the creation of copyright liability, if that is your decision.

The Teleprompter Corp. has put forward formally, I gather a proposal which does come very late in the game that would restructure the royalty rate bases, and the method for collecting and distributing the money, the method for computing the rates. And they are, I think, attacking the Royalty Tribunal in principle; they prefer to take the Rovalty Tribunal out of this, although I do not think that is the essential issue. As I read their proposal, it would cover only distant signals, and would not cover any network signals, and would compute the fees based on a formula that is intended to reflect the actual nonnetwork signals that are being carried, and to identify what they would be worth if they were off-the-air television signals.

In other words, the formula would be an attempt to approximate, on the basis of trade statistics, what the value of a broadcast signal is, based on counties.

Mr. KASTENMEIER. Is that proposal, has it been advanced in Senate deliberations?

Ms. RINGER. No. The Senate Judiciary Committee had finished its work when this was first broached. I put it forward simply because it is a new factor in the field. I do not endorse it. I think it is too early to take any real position with respect to it.

The first reactions I have heard to it have been somewhat unfavorable. But I do not want to go any further in commenting on it. I have studied it, and I think it has some attractive features and some unattractive features. I would say probably its most unattractive feature is its complexity.

Mr. KASTEN MEIER. On behalf of the committee, it might be useful for us if you would undertake to transmit that with any particular comments you would wish to make. Copies of the proposal-you say it comes off late in the game; but insofar as we have not heretofore received any proposal formally, it might be useful at least to have it in the discussion.

Mr. RAILSBACK. Mr. Chairman, I wonder if I might just add to that. I wonder if any objectors to the proposal who have not had a chance to register specific concerns about it-I think we ought to consider it. I think it ought to be before us, because I think we ought to hear from both sides.

Ms. RINGER. I agree.

Mr. KASTENMEIER. I am sure there would be no objection to that. Any other parties interested in appropriately commenting on the proposal, and care to do so, their views will be considered.

Ms. RINGER. In fairness to Teleprompter, I should say this put for ward only as a fallback from their basic position, which is that there should be no payment at all.

Mr. KASTENMEIER. I think it is understood that many cable operators, depending on what organization they belong to, how they operate, what their personal view might be, vary from opposing any provisions to some sort of compromise. Furthermore, you did allude to concern that I think some of the copyright proprietors, broadcasters, filmmakers have; that, namely, in terms of the rate structure, that there be some flexibility considering the base computation, because of what some people foresee as radically altered bases for revenue in terms of cable television or pay television, or whatever it may be in the years ahead.

Some people, of course, see as I say a radically changed market, in which proprietors-owners of copyright material-may be dealing directly with pay TV or modified cable television operators. But the basis for revenue might be quite different than the subscription or the gross receipts tables that presently are in the proposed bill-I do not really know that we are prepared to make any judgment about that. But it is another late factor, it seems to me, in a consideration of this section.

Are there other comments or questions of the members of the committee?

Mr. DRINAN. Mr. Chairman, I wonder if you or Ms. Ringer could address themselves to whether that same jurisdictional dispute might exist between the Judiciary Committee and Commerce Committee concerning cable. I would be very happy to give cable to them, if the Commerce Committee would want it.

Mr. KASTEN MEIER. May I respond to that, because that is a good question. It is the posture of the Chair to maintain some sort of communication with the chairman of the subcommittee, of the Commerce Committee, the gentleman from Massachusetts, Mr. Macdonald, on this question. And as we proceed, we have to keep him not only fully

informed, but he and members of this committee, as far as I am concerned, may participate-or at least have an input-into our deliberations.

I think it is necessary for us to move forward, obviating the impasse that we confronted in early 1967. But on the other hand, it is not necessary, I think, to do what the Senate did; to literally share jurisdiction with the copyright bill with that subcommittee. I think we can arrive at an agreement with them. At least, we can consult with them, and we can achieve a result which would not come to, let us say, jurisdictional disputes later in legislative proceedings.

Mr. DRINAN. Thank you.

Ms. Ringer, on your last page-page 32-you say "We do not advocate congressional action to abrogate those rules as inconsistent with Federal copyright policy." If this bill were enacted, would some of those rules be set aside?

Ms. RINGER. No. I do not think there would be any automatic action. This is a much-debated point in the whole area right now. I might add, in fact, that the trade press has indicated that within the last 2 or 3 weeks, the Domestic Council in the White House has been addressing this question under its deregulation activities, and apparently has focused in on cable and these rules in the copyright context, in part. I would say that the chances of a constitutional attack on the rules under this bill would be less than 50/50. I would personally prefer to see copyright matters handled by copyright law, but I do not think that things are quite that compartmentalized.

The Supreme Court, in the Southwestern case, upheld the FCC's right to regulate the importation of distant signals by cable, which does involve both communication and copyright aspects. What I would certainly hope is that the FCC would see the light, and, Congress having taken a position that this should be handled by compulsory licensing, would rethink a lot of its exclusivity details, which are extraordinarily complex and are capable of criticism on that ground.

Mr. DRINAN. Is there any way by which we could fashion the law, or write in the report a congressional policy that the new congressional policy supersedes whatever rules might be inconsistent? Could that preclude a lot of expensive, time-consuming litigation?

Ms. RINGER. I confess it would please me to see you do that. But I think it would displease a great many other people. This is a much broader problem than actually what is covered in section 111, and I am not sure that this could be sustained in both Houses and gotten through both Houses of Congress. Rather than daring something as large as that, I would be inclined to approach it on a somewhat more low-level basis.

Mr. DRINAN. Is there any pending litigation that might result in decisions which would modify some of the conclusions you made here? Ms. RINGER. The FCC nonduplication rules have been attacked in court, and I believe they are still in court. I do not know the details of that litigation. I do not think this would alter basically anything you would be doing here, unlike the previous situation.

Mr. KASTEN MEIER. The gentleman from Illinois?

Mr. RAILSBACK. You do not seem to address yourself to the issue of public broadcasting-or maybe you did.

Ms. RINGER. That is the next chapter.

Mr. RAILSBACK. Excuse me. I will wait, and will come back for the next chapter.

Ms. RINGER. I hope we can get into it a little bit this morning.

Mr. RAILSBACK. You have always recognized a distinction between the importation of distant signals and retransmission of local, and you are still recognizing that distinction. But you are not really suggesting how we might handle it. Do you have any further thoughts about that?

Ms. RINGER. If you want a single conclusion, it is the approach of the present bill-the general approach is probably about as good as you can do.

Mr. RAILSBACK. The graduated percentage?

Ms. RINGER. I agree with you that you now have before you this Teleprompter proposal, which is basically an effort to try to distinguish between the two and not pay for local signals. But in order to do that, you have got to do a lot of other things which alter some very fundamental aspects of the present bill. I am not so wedded to drawing a line between local and distant that I would strongly advocate that.

I might say that in the earlier efforts, the line was drawn between compulsory licensing for local and full liability for distant. Now, we are in a situation where you are paying as compulsory licensing for everything, and it seems to me there that when everybody has access, and pays depending upon a graduated scale, it is not quite as important as it was before.

Mr. RAILSBACK. In respect to baseball or major league sports, it seems to me that there maybe ought to be a distinction between the minor leagues and major leagues. And there seems to be there at least are allegations-that perhaps Boston, although Boston did very well this year, but we use it as a hypothetical-anyway, I wonder if maybe there is not some justification for exclusivity, based on where you have a spectator sport. And yet, the people who gave testimony did not have any empirical data supporting their argument, I wonder if you

Ms. RINGER. Considered as a theoretical matter, I suppose you could make that argument.

Mr. RAILSBACK. I think it is a valid distinction.

Ms. RINGER. I agree with you. If you are going to try to do it this way, this is a valid point. But to include organized sports, an exclusive right cutting cable out of the retransmission of one of its principal business assets, which is the ability to retransmit sporting events, it seems to me out of place in a completely compulsory licensing section which we have now.

In the Senate, in September 1974, they had gotten past the point where they were seriously considering putting it in the bill. But Senator Hart put forward a proposal that the FCC, which is considering this question, be directed to deal with it. I do not think it was too clear as to what they were supposed to do, but they were directed to address the problem of sports blackouts and the protection of gate receipts. The Hart amendment was defeated.

Mr. RAILSBACK. Thank you.

Mr. KASTENMEIER. The gentleman from New York, Mr. Pattison? Mr. PATTISON. Is the $25,000 exemption which has been suggested, is that a quarterly?

Ms. RINGER. Yes.

Mr. PATTISON. So it is $100,000 per year.

On the sports issue, is it your position that that really is more of a-better dealt with as a communications policy with the FCC, rather than as copyright?

Ms. RINGER. Yes; I do not want to express an opinion, pro or con, on this. But I think that broadcasts of sporting events contain copyrightable elements, and the contributions of the cameraman, director, and to some extent the people that direct the halftime events, and so forth. I do not think that the game itself, as a game, and activities of the participants, the players, are actually copyrightable; and I think, in all candor, that copyright has been seized upon as a possible way of protecting blackouts. If Congress wants to protect organized sports this way, it should do it directly rather than through the guise of cable exclusivity.

I mentioned before that the first time I looked at the Senate version of the bill that emerged in 1973, it struck me very forcefully that everything was subject to compulsory licensing except organized sports, which was given a complete protection. This seemed a little bit out of place in the orderly scheme of things.

Mr. PATTISON. In your opinion, would the Teleprompter proposal tilt in favor of the urban systems, and essentially put the burden of copyright on the fringe area systems?

Ms. RINGER. It would certainly work in their favor. I do not think there is any doubt about this; it would work in the favor of a system like Teleprompter, which gets most of its subscription fees from the retransmission of local signals in big urban areas. I do not think there is any doubt about that. It might have some beneficial effects for other types of systems, and it might have some beneficial effects for copyright owners, in comparison to this section 111 you now have. But I cannot really say what those ultimate effects would be. Mr. PATTISON. Would that not be essentially contrary to, for instance, the exemption for the small system at $25,000 a quarter? Ms. RINGER. It depends on what the small system is carrying. Mr. PATTISON. I agree. But is it not fairly typical that the small systems are fringe systems, small towns-and therefore, primarily carry imported signals?

Ms. RINGER. This is true.

Mr. PATTISON. It would be really very contrary. The exemption in the Teleprompter system would really be two directly contrary approaches to the same problem.

Ms. RINGER. Yes; this is one of the reasons why the $25,000 exemption was put forward by NCTA as a possible solution to this. You are saying, if I understand you, that these are really counter to each other.

Mr. PATTISON. The argument is very arguable and logical that you only charge for the imported signal. If you could handle it some way without terrible complexity-but that kind of a ruling would favor the urban system, which basically picks up local signals and may make all of its money, and tend to make most of its money, from paid TV.

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